LATERALUS NWSLTR

🖲 Blockchain Businesses Request Extension in Light of Fresh MiCA Guidelines

• Crypto companies are seeking a more extended transition period before implementing the MiCA regulations in the EU, expressing concerns about the potential complexity, cost, and impact on innovation and competition in the crypto space.

• MiCA regulations aim to address concerns related to investor protection and market integrity in the fast-paced and cross-border crypto market, highlighting the challenge of balancing regulation and innovation while ensuring a harmonized approach among EU member states and adapting to the evolving nature of the crypto industry.

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🇺🇸 Falling Behind: The United States' Struggle in the Crypto Race

• In 2023, the United States, despite its history of technological innovation, is facing uncertainty and challenges in the crypto industry, with regulatory actions and incidents of criminality causing disruptions.

• Notably, the total value of digital assets fell from over $3 trillion in November 2021 to below $850 billion by December 2022. Regulatory actions have been taken, including legal cases against major crypto exchanges like Coinbase and Binance. Some reputable crypto companies, originally founded in the US, are exploring more supportive jurisdictions, raising concerns about the country's competitiveness in the crypto market. However, there is potential for the US to regain its footing by introducing measures that support early-stage crypto businesses and focusing on user education, all while striking a balance between innovation and regulation.

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🏛 ESMA and European Banking Authority Release Framework for Assessing Cryptocurrency Entity Suitability

• The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) have issued joint guidelines for assessing the suitability of management body members and shareholders or members holding qualifying stakes in issuers of asset-referenced tokens (ARTs) and crypto asset service providers (CASPs).

• These guidelines aim to establish standardized criteria for evaluating knowledge, expertise, integrity, and time dedication for management body members and provide a shared approach for assessing the suitability of shareholders in the cryptocurrency market. They are designed to instill trust and integrity while minimizing potential rule application discrepancies and arbitrage. The consultation period for these guidelines remains open until January 22, 2024, as the regulatory landscape for the crypto market continues to evolve.

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🇪🇺 European Regulators Advocate Significant Privacy Enhancements for Digital Euro

• European data protection authorities have issued recommendations for enhancing data privacy in the proposed digital euro, suggesting decentralized storage of user identifiers and a reevaluation of verification procedures for account balances.

• These recommendations are timely as the European Central Bank (ECB) enters the "preparation phase" for the digital euro. They call for a more nuanced approach to fraud detection, "less intrusive measures," and the establishment of a "privacy threshold" for low-value transactions. The joint statement from European regulatory bodies plays a pivotal role in shaping the digital euro and sets a precedent for data protection in future digital currencies, influencing their operational integrity and privacy compliance.

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⛓️ Layer 2 and DeFi Take the Spotlight in 2023, While NFT Hype Wanes: Insights from Nansen

• In 2023, Ethereum has experienced significant changes, with over 300,000 daily active addresses. DeFi remains dominant, outnumbering NFT and layer 2 users more than twice.

• The 'Layer 2, Bridging, and Infrastructure' sector has seen a remarkable 149.28% increase in user interactions, indicating a shift toward scalability solutions. In contrast, NFT users have declined by over 50% since the start of the year, while DeFi users have maintained their dominance, suggesting a stable growth rate.

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🏦 JPMorgan Predicts SEC's Potential Approval of Spot Bitcoin ETF in Near Future

• There is increased optimism about the approval of spot Bitcoin exchange-traded funds (ETFs), with JPMorgan stating that the Securities and Exchange Commission's (SEC) decision not to appeal a recent ruling in the Grayscale case brings approval closer.

• While the exact timing of approval remains uncertain, it is expected to happen within months and possibly before the final deadline for the Ark 21Shares applications on January 10. The approval of a spot Bitcoin ETF is anticipated to attract mainstream investment into the cryptocurrency sector, and JPMorgan believes the SEC is likely to approve multiple applications at once, encouraging competition in ETF fees.

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🌐 Exploring Financial Implications: European Central Bank Advocates for Regulatory Clarity on DAOs

• The European Central Bank (ECB) highlights the transformative potential of decentralized autonomous organizations (DAOs) but underscores the need for a robust regulatory framework to address inherent risks and protect consumers.

• The ECB's paper also supports the digital euro, Europe's proposed central bank digital currency (CBDC), and emphasizes its coexistence with decentralized finance (DeFi) solutions as long as they comply with appropriate regulations. The paper addresses the regulatory challenges and potential risks associated with DAOs, stressing the importance of a clear legal status for these entities.

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🤖 Google's Swift Embrace of Web3: Progress and Potential Implications

• Google has shown a strong commitment to Web3 adoption, including blockchain and decentralized technologies. In January 2022, the company established a dedicated division for blockchain and distributed computing technologies. Google Cloud introduced its Blockchain Node Engine, and in April, launched a startup program to assist companies in developing Web3 applications, offering $200,000 in Google Cloud credits and technical support.

• Google's partnership with Polygon Labs, collaboration with NEAR, and integration of Web3 technologies with generative AI are paving the way for transformative changes in the tech industry. This move is prompting a shift in tech companies' strategies toward decentralized technologies, leading to potential business model adaptations, increased competition for Web2 platforms, and a growing demand for tailored Web3 solutions.

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🇦🇹 Transforming Tourism: Austrian Providers Look to Tokenize Your Vacation with Web3

• Austrian tourism providers are partnering with Web3 firms to offer "Web3 tours" in Salzburg and other regions. Tourists can use NFTs to verify their attendance at museums, and these NFTs can be used for discounts at restaurants and entertainment venues.

• The expansion of Web3 tourism projects aims to offer tourists a more interactive and blockchain-enabled experience, reducing the need for intermediaries in the tourism industry. The Palauan government, for example, is developing a digital residency program to attract tourists and digital nomads.

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🎮 Nintendo Accounts Confirmed to Play Key Role in Next-Gen Transition

• Nintendo Accounts will play a crucial role in ensuring a smooth transition to a potential next-generation gaming console, according to Nintendo of America President Doug Bowser.

• The unified account system, represented by Nintendo Accounts, aims to minimize disruptions during console shifts and provide a seamless experience for players. While specific details about a new console remain undisclosed, this focus on account continuity reflects Nintendo's commitment to delivering a user-friendly and convenient gaming ecosystem.

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✋ Democratizing Web3: Making It Accessible to Everyday Individuals

• Web3, with its complexity and jargon, poses a significant barrier to mass adoption among everyday users. Cryptocurrency terms, complex transaction processes, and a lack of user-friendly experiences hinder Web3's transition to consumer culture.

• The author suggests that bridging the gap between Web2 and Web3 requires simplifying the language and improving user experience (UX). Simplified terminology, user-friendly processes, and tools like social recovery and two-factor authentication can help make Web3 more approachable and secure for everyday users.

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❤️ Enhancing Philanthropy Accountability with Blockchain: A Fit for All?

• Charities, often plagued by bureaucratic issues, mismanagement, and lack of transparency, can benefit from blockchain technology's potential to provide real-time tracking of donations and transactions. During 2021, the Australian division of the Red Cross was allocated $90 million to provide assistance to individuals affected by the wildfires that severely impacted different areas of New South Wales and Victoria.

• Blockchain enhances transparency, allowing donors to track the use of their donations and providing detailed breakdowns of fund allocations, thereby building trust. Immutable records, smart contracts, and the ability to record and verify every transaction can also increase transparency in charity operations. However, successful blockchain adoption by charities requires well-defined objectives, careful platform selection, internal readiness, security measures, scalability planning, data accuracy, and community acceptance. Independent audits and comprehensive reports are also recommended to increase transparency and build donor trust.

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🖲 Elevating Your Web2 Business Using Blockchain Technology

• Incorporating blockchain technology into Web2 businesses is gaining importance, enabling them to remain relevant in the digital world. The transition to Web3 is not solely for startups; established businesses can benefit from blockchain's transformative potential.

• Web2 businesses adopting blockchain should focus on simplifying user experiences, ensuring internal processes are efficient, and establishing closer connections with their customer base. Blockchain technology can empower users by granting them control over their data and digital identity while enhancing data security and transparency. This transition can lead to more engaging, secure, and trustworthy brand interactions.

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🕹️ Equity in Gaming: The Necessity of Decentralized Randomness

• Random numbers are crucial in various applications like games, security, DAO governance, and NFT generation within the metaverse. However, many random number generators (RNGs) used in these applications are not truly random but pseudo-RNGs, relying on fixed equations to generate values. These pseudo-RNGs can lack unpredictability, tamper resistance, and verification capabilities, which are vital for applications with higher stakes and trustless systems.

• To ensure fair and reliable operations, especially in blockchain applications, developers should prioritize decentralized, verifiable, secure, and truly random RNGs. A robust RNG is necessary to maintain trust and prevent manipulation, as technical failures or security breaches can have significant consequences for applications.

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