BTC Bounces Around As Oil Markets Face Disruption

The Internal Revenue Service (IRS) maintains that crypto staking rewards are taxable income, challenging investor Joshua Jarrett and his argument that they should be classified as new property instead. According to the IRS, tokens earned through staking are subject to taxation, despite a previous legal resolution that favored Jarrett.

Back And Forth

Jarrett contends that staking rewards represent new property and should not be taxed until they are sold or otherwise realized as income, prompting him to take legal action once again. The outcome of this case could have far-reaching implications for U.S. crypto investors as regulatory scrutiny intensifies.

In his current lawsuit, Jarrett is seeking a refund of $3,293 in taxes paid on 8,876 Tezos tokens he earned through staking. This is not his first legal challenge regarding the issue as in 2022, Jarrett filed a similar suit and eventually received a refund. However, the case was dismissed without establishing a legal precedent because the government issued the refund before oral arguments took place. Since then, crypto staking has become more widespread, leading the IRS to reevaluate its policies.

High Stakes

The IRS argues that Jarrett should pay taxes on the tokens based on their market value when they were received, reinforcing its position that staking does not generate new taxable assets. This decision is in line with broader efforts by the IRS to increase oversight of cryptocurrency activities. In 2023, the agency introduced new reporting forms for crypto income, brought in blockchain experts, and began utilizing AI tools to detect tax evasion.

Although the timeline for resolving this case is uncertain, the stakes are high. If Jarrett wins, it could mark a significant victory for U.S. crypto investors and potentially change the way staking rewards are taxed across the country. However, if the IRS prevails, it will solidify its position to tax staking rewards as immediate income.

Russian authorities are reportedly set to implement a ban on cryptocurrency mining in 10 regions and impose seasonal restrictions in three others starting January 1st, 2025, due to rising concerns over energy shortages.

More Restrictions

As outlined in a recent report by the state-controlled news agency TASS, the full ban will impact areas such as Dagestan, Ingushetia, Kabardino-Balkaria, Karachay-Cherkessia, North Ossetia, Chechnya, and the newly annexed regions of Donetsk, Lugansk, Zaporizhzhia, and Kherson. This prohibition is expected to remain in place until March 15th, 2031.

Additionally, three regions in Siberia, namely Irkutsk, Buryatia, and Zabaikalsky, will experience seasonal restrictions on mining during peak energy consumption periods. These limitations will be enforced between January to mid-March 2025 and will extend between November to March in subsequent years.

Mitigating Power Shortages

These actions come as a response to the cryptocurrency mining legislation signed by Russian President Vladimir Putin in late 2024, which aims to mitigate power shortages and blackouts. TASS reports that the energy-intensive process of PoW (Proof-of-Work) mining has strained the local power grid, especially in regions with limited infrastructure.

Under these new measures, both individual miners and mining pools will be required to halt operations during restricted periods. Earlier this year, Bitcoin (BTC) miners in Russia reportedly generated billions of dollars worth of the flagship cryptocurrency, maintaining a substantial share of the global market.

Charles Hoskinson recently found himself in an unexpected public exchange with an AI bot named RoastMaster9000 over smart contract capabilities after commenting on a thread about a YouTuber who left academia for OnlyFans.

Arguing With A Bot

The bot responded by mocking Cardano, drawing a comparison between abandoning a tough PhD program and turning to OnlyFans for content creation. It also criticized Cardano for not delivering working smart contracts.

In his reply, Hoskinson directly challenged the bot to provide proof that the smart contracts on Cardano do not work. However, RoastMaster9000 sidestepped the request, instead shifting focus to transaction speeds. Hoskinson called out the bot for dodging the issue and attempted to steer the conversation back on track. The debate quickly went viral, with many users under the impression that Hoskinson had not realized he was arguing with an AI.

A Curious Development

After the exchange, Hoskinson admitted he did not initially recognize that he was engaging with a bot, but once he realized it, he was curious to test its limits. He said that he had never seen a bot like it before and that he was naturally curious how sophisticated it could be before it started looping and deflecting.

He also revealed that Input Output Global (IOG) is developing a project called Me-Box, aimed at creating digital representations of individuals. The curiosity by Charles stems via the idea of having a digital copy of himself on X and allowing people to interact with it as part of a social experiment, he said.

Dogecoin (DOGE) is currently seeing a notable increase in network activity, signaling potential for long-term growth and broader adoption. This renewed interest in the meme cryptocurrency comes amid strengthening metrics, boosting overall confidence.

Rising Address Activity
Dogecoin experienced an increase in new addresses by 102.4%, active addresses by 111.32%, and zero-balance addresses by 155.46% in the past week. These figures highlight a growing level of user engagement and the onboarding of new participants.

The increase in active addresses further points to consistent user interactions within the network. As a result, these trends reflect the expanding role which Dogecoin has within the cryptocurrency space, as more users continue to join its ecosystem.

Mixed Market Sentiment

Despite the strong growth in address metrics, the transaction activity of DOGE presents a different picture. Daily transactions have dropped below 40,000, raising concerns about its practical utility. Although more users are entering the network, the decline in transaction volume suggests that widespread adoption has yet to fully match the growth in new users.

This gap between address expansion and transaction volume highlights the need for more robust use cases to maintain momentum. Still, the sentiment surrounding Dogecoin remains optimistic, with its Open Interest (OI) increasing by 6.38% over the last 24 hours, now standing at $2.05 billion. This uptick suggests that traders are optimistic, positioning themselves for potential price movements.

$PENGU is a popular meme coin featuring a playful penguin mascot. Despite experiencing an airdrop disaster recently, $PENGU has been steadily growing in the market, especially following its debut on both Crypto.com and Hyperliquid.

Hyperliquid Adds $PENGU With 5x Leverage
As aforementioned, Hyperliquid has listed $PENGU on their platform while also introducing a highly requested feature, the option to trade the token with up to 5x leverage. This gives traders the opportunity to enhance their exposure to $PENGU, whether they aim to capitalize on its upward potential or take advantage of potential price drops.

Leverage offers traders the chance to make bigger moves, but it is not without risk. Essentially, leverage trading amplifies both profits and losses, so it is essential to exercise caution. Nevertheless, by community demand, $PENGU can now be longed or shorted with up to 5x leverage.

Growing Investor Confidence

Crypto.com is among the leading crypto exchanges worldwide and offers a range of services including trading, wallets, staking, and debit cards for cryptocurrencies. As one of the largest and most recognized platforms in the industry, a listing on Crypto.com can significantly boost investor confidence in that specific token. $PENGU being added to Crypto.com highlights this confidence in both the meme coin and the company behind it, Pudgy Penguins.

In any case, the addition of $PENGU on both Crypto.com and Hyperliquid is noteworthy. What began as a fun, lighthearted project in the crypto world is now receiving serious attention by traders and investors across the globe. The ability to trade with leverage on Hyperliquid enhances its appeal, providing traders with an added boost to their strategies.

According to Odaily, the Securities and Exchange Commission (SEC) of the Philippines has introduced comprehensive regulations for managing crypto assets, with an emphasis on disclosure, public offerings, trading, and marketing practices.

Enhancing Safety And Transparency

The new rules are designed to bolster investor protection and ensure greater transparency in the fast-evolving digital asset sector. As per the updated guidelines, crypto asset issuers are required to submit disclosure documents to the SEC at least 30 days prior to any marketing activities or public sales.

These documents must provide detailed information about the issuer, the key features of the corresponding crypto asset, its associated risks, and the underlying technology, along with a clear warning about potential risks such as value depreciation and limited transferability.

Complying With The System

Crypto assets deemed to be securities must have an SEC-approved registration statement before they can be publicly issued. Additionally, entities involved in the issuance or trading of crypto assets must adhere to anti-money laundering (AML) regulations and SEC reporting obligations. The Philippines SEC warns that failure to comply could lead to penalties, suspension, or even the revocation of licenses.

In any case, crypto adoption in the country continues to grow, especially since the national currency, the Philippine peso, has sharply weakened over the last 4 years and is currently among the weakest in Southeast Asia.

Aave is considering integrating the new Smart Value Recapture (SVR) oracle to address maximum extractable value (MEV) in its ecosystem. MEV occurs when blockbuilders reorder transactions for profit before finalizing blockchain blocks, often benefiting them at the expense of users.

An Intriguing Proposal

On December 23rd, Chainlink launched the SVR oracle to capture MEV profits and return them to DeFi protocols. Aave proposed using SVR to capture MEV through liquidations and send it to the Aave DAO for redistribution. The proposal aims to capture profits via MEV-related backrunning and redirect them to protocol users, helping reduce the overall negative impact of MEV.

Aave allows users to borrow cryptocurrencies using collateral, which can be liquidated if its value drops too much. While the liquidation system works, it also creates an opportunity for MEV, allowing blockbuilders to extract profits with minimal contribution to the process.

Mitigating Risks

The SVR oracle could help by auctioning rights to back-run the price feed of Chainlink during liquidations, capturing about 40% of MEV profits and redistributing them within the ecosystem. As the Ethereum (ETH) network grapples with MEV, users are turning to private transactions, known as dark pools, to avoid MEV extraction.

In fact, a recent report by Blocknative showed that private transactions now dominate the order flow within Ethereum. Order flow refers to the routing of buy and sell orders to exchanges or liquidity providers for execution, determining the sequence and timing of transactions.

It can be beneficial by providing liquidity, ensuring smooth transactions, and supporting fair price discovery. However, it can also be problematic if manipulated, such as through frontrunning or MEV extraction, which can exploit users and drive up costs. To mitigate such risks, private order flow, like dark pools, is often used to protect against exploitation and ensure fairness.

White-hat hackers are reportedly utilizing a new trick nowadays where they fool unsuspecting crypto thieves and scammers by sharing certain seed phrases to online wallets.

Caught In The Act

Mikhail Sytnik, an analyst at cybersecurity firm Kaspersky, stated in a recent blog post that he found numerous comments in finance-related videos on YouTube and other platforms where users asked about transferring Tether (USDT) between wallets, alongside a shared seed phrase.

The wallet with the shared seed phrase, as observed by Sytnik, contained around $8,000 worth of USDT on the Tron network, which was used as bait. To take the USDT, the would-be thief first needed to send a small amount of TRX to cover network fees.

However, once the thief sends TRX to the bait wallet, the TRX is immediately transferred to another wallet controlled by the white-hat hackers. This is because the bait wallet is set up as a multisignature wallet, requiring multiple approvals for any outgoing transactions.

Scams On The Rise

Sytnik described the scammers as being like digital Robin Hoods since the scheme mainly targets other dishonest individuals. He warned users never to attempt to access crypto wallets belonging to someone else, even if they are given the seed phrase, and to remain cautious of strangers online claiming to have crypto offers.

In July, Kaspersky revealed a more advanced scam aimed at greedy individuals. This scheme involved baiting victims on Telegram with links to legitimate crypto exchanges and disguising traps as exposed files that could be exploited. The goal was to install malware on various computers in order to steal sensitive data and assets.

Euro-pegged stablecoins have become a key catalyst for growth within the European cryptocurrency sector, fueled by the introduction of the Markets in Crypto-Assets Regulation (MiCA). These digital assets achieved new milestones in monthly trading volumes, drawing in significant liquidity and attracting institutional interest across Europe.

MiCA Drives Adoption Of Euro-Pegged Stablecoins
In November, the monthly trading volumes for euro-backed stablecoins reached their highest level in years, soaring to almost &euro800 million. A recent report by Kaiko and the Netherlands-based crypto exchange Bitvavo reveals that this surge was primarily driven by the EURI stablecoin, which gained substantial momentum following its listing on Binance. Other stablecoins in line with MiCA, such as EURC and EURCV, also contributed to the growth.

The regulatory clarity provided by MiCA, which came into effect in June, was instrumental in boosting investor confidence, driving liquidity, and attracting institutional investors. However, regulatory concerns continue to cause issues, as was highlighted by Tether deciding to discontinue its euro-backed stablecoin, EURT.

Explosive Expansion
In November, weekly trading volumes surpassed &euro12 billion, more than double the volume seen in October, as Bitcoin (BTC) hit an all-time high above $108,000. Meanwhile, the euro solidified its position as the third most traded fiat currency in global crypto markets, following the U.S. dollar and the Korean Won.

Several exchanges such as Bitvavo, Kraken, and Coinbase also played a pivotal role, with Bitvavo leading the charge in euro-denominated trading volumes, capturing nearly 50% of the market. These exchanges significantly expanded their offerings, listing over 331 new euro-denominated pairs in 2024 to cater to growing demand. Liquidity in the euro markets also improved dramatically, with the combined market depth for euro-denominated pairs increasing twofold by November.

Metaplanet has made its largest Bitcoin (BTC) acquisition to date, purchasing nearly 620 BTC as the cryptocurrency hovers below $100,000. The massive amount was bought by the Japanese investment firm on December 23rd, marking its biggest single purchase since it began investing in Bitcoin in May, nearly quadrupling its previous record buy of 159.7 BTC on October 28th.

Following the announcement, Metaplanet saw its stock experience a 5% increase on the Tokyo Stock Exchange but has fallen nearly 13% over the past week, according to Google Finance. Despite the recent dip, the stock has skyrocketed more than 2,100% this year as it embraced Bitcoin, hitting a record high of $26 on December 17th.

Fantastic ROI

With this latest purchase, Metaplanet now holds 1,762 BTC, worth approximately $168 million, with an average purchase price of around $75,600 per Bitcoin. The acquisition also propels its Bitcoin holdings to the twelfth largest among publicly traded companies, following behind medical technology firm Semler Scientific.

Metaplanet reported that its Bitcoin Yield between October 1st to December 23rd reached 310%, a substantial increase comparative to the 41.7% yield seen between July to September. The company uses BTC Yield as a metric to evaluate the performance of its Bitcoin acquisition strategy, which aims to benefit shareholders, it explained.

Going Beyond Bitcoin

In a separate announcement on December 18th, Metaplanet projected that it would achieve its first operating profit since 2017, emphasizing its goal to expand beyond simply accumulating Bitcoin as part of its treasury strategy.

The firm disclosed plans to formalize its Bitcoin accumulation and management as a distinct business division, focusing on financial products like loans, equity, convertible bonds, and other instruments to buy and hold BTC. In late November, Metaplanet also announced it intended to raise over $62 million through a stock acquisition program to purchase more Bitcoin for its treasury.

According to Donald Trump himself, former congressional candidate Bo Hines has been named the Executive Director of the Presidential Council of Advisers for Digital Assets. This appointment is part of a larger effort to expand the new Trump administration, reflecting a heightened focus on cryptocurrency policy.

A Noteworthy Transition

At 29 years old, Hines will collaborate with David Sacks, who has already been tasked with overseeing initiatives related to crypto and artificial intelligence. This dual leadership structure signals a coordinated approach to digital asset policy, with Trump emphasizing the importance of fostering innovation while ensuring that the industry receives robust support.

The appointment for Bo follows an active political career in North Carolina, where he secured the Republican nomination in 2022. Although he lost the general election to Democrat Wiley Nickel, Hines maintained his political presence. He later ran unsuccessfully in the 2024 Republican primary for the local 6th district, placing fourth with 14.4% of the vote.

Why This Matters

The appointment is noteworthy due to Hines previously having ties to crypto funding during his 2022 campaign, including donations by pro-crypto PACs. One significant contributor was Ryan Salame, a former executive at FTX, who is now serving a prison sentence for campaign finance violations.

While Hines does not have a significant public record on crypto policy, his appointment alongside established industry leaders like David Sacks hints at a shift toward more unified digital asset policy development. The creation of a dedicated Crypto Council underscores a growing focus on crypto regulation and the future of the industry.

Michael Saylor has put forward a proposal for a Digital Assets Framework in the United States, which includes creating a Bitcoin (BTC) reserve that he claims could generate up to $81 trillion for the U.S. Treasury.

Prioritizing Efficiency, Accessibility, And Innovation

The proposed framework outlines six key categories, namely digital commodities like Bitcoin, digital securities, digital currencies, digital tokens, non-fungible tokens (NFTs), and asset-backed tokens. The overall goal is to clarify the roles of issuers, exchanges, and owners, while stressing that no participant should engage in dishonesty or fraud. It also specifies clear rights and responsibilities for each participant group.

Additionally, the framework proposes a simplified compliance system with cost limits of no more than 1% of assets under management for token issuance and 0.1% annually for ongoing maintenance. Digital asset regulation should prioritize efficiency and innovation, avoiding unnecessary bureaucracy and friction, the proposal asserts, advocating for industry-led compliance instead of direct regulatory oversight.

Mixed Reactions

The framework also aims to drastically lower issuance costs while simultaneously expanding market access to 40 million businesses, with an emphasis on rapid asset issuance. One of the final objectives of the proposal is to establish the U.S. dollar as the global leading digital reserve currency. It additionally envisions expanding global digital capital markets to $280 trillion.

While many have praised the proposal, Peter Schiff, a well-known Bitcoin critic, dismissed it as complete nonsense, claiming it would do the opposite of what Saylor believes. According to Schiff, it would weaken the dollar, worsen the national debt, and turn the U.S. into a laughing stock.