December 3, 2022
Issue No. 31
Welcome to this week's AtherXplorer, covering the latest in gaming, blockchain, and everything in between.
This week’s top picks include:
- Blockchain & Defi: Attackers Made $15M From Helio After Ankr Exploit; Phantom Wallet Adds Support for Ethereum and Polygon
- NFTs: ToysRUs Reveals NFT Launch Date and Phygital Plans; Apple Forces Coinbase Wallet to Disable NFT Transfers
- Web3 & Metaverse: Porsche Opens Up About Its Web3 Plans; Telegram Planning to Build Non-Custodial Wallets
- Gaming: Ghost Raises $3.1M for Gaming Platform; FaZe Clan Launching Digital Collectible “FaZe Forever”
- Legal Landscape: Brazil Approves Bill Regulating Crypto Transactions; Israel Proposes New Guidelines for Regulating Digital Assets
Blockchain & DeFi Developments
How Attackers Made $15M From Staking Platform Helio After Ankr Exploit
An unknown group of attackers was able to drain some $15 million in liquidity from BNB Chain-based staking platform Helio on Friday morning after exploiting an oracle issue on the protocol, on-chain data shows.
Oracles are third-party services that fetch data from outside sources to within a certain blockchain. Oracles are extensively used by decentralized finance (DeFi) protocols to ensure their lending, borrowing and other services are accurate. Delays, however, could mean the loss of funds as malicious traders take advantage of price differences.
The Helio exploit came hours after the DeFi Ankr was attacked for $5 million. The Ankr attacker was able to mint 6 quadrillion aBNBc tokens, which they eventually turned into roughly 5 million USDC, as CoinDesk reported.
The Ankr exploit caused the prices of aBNBc tokens to plunge 99% in the minutes following the attack, setting the base for the second exploit on Helio. It is unclear at writing time if both attacks were conducted by the same attacker or group of attackers.
Blockchain data shows that the Helio attacker acquired some 183,000 aBNBc tokens with 10 BNB during Asian morning hours on Friday. Delayed oracle data on Helio then allowed the attacker to borrow $16 million worth of HAY stablecoin.
Phantom Solana Wallet Adds Support for Ethereum and Polygon
Phantom, the popular self-custody wallet for Solana-based decentralized applications and NFTs, announced today that it would be adding support for rival blockchains Ethereum and Polygon to its desktop, iOS, and Android apps.
The company argues that an easy-to-use self-custodial wallet is essential as an alternative to centralized exchanges and companies that handle sensitive user data.
"We are excited to bring the Phantom experience to the wider Web3 community," said Brandon Millman, CEO, and co-founder of Phantom, in a statement.
The aim, the company says, is to provide the ability to interact with the three largest blockchain ecosystems in one location and address critical usability and securities challenges in the digital collectibles market.
Phantom says it worked closely with Polygon to build a first-class wallet experience, which the company claims has already onboarded over 3 million active users. The company says it wants to make crypto more accessible to everyone by offering a simple, easy-to-use wallet with a unified interface for storing and viewing assets across multiple blockchains.
The company also says a private multi-chain beta will go live in the coming weeks, with a public launch later this year.
"The Polygon ecosystem has been growing exponentially, and we are excited about bringing more people into the Web3 ecosystem," said Ryan Wyatt, CEO of Polygon Studios.
"Working with Phantom will allow us to deliver a feature-rich wallet that's ready for mainstream consumers to use when interacting with apps powered by Polygon."
Solana’s Flagship Gaming and Social Media Funds Only Partially Deployed
At Breakpoint 2021, Solana Labs announced two flagship funds: a $100 million fund focused on decentralizing social media and a $150 million fund to encourage blockchain-based gaming.
The social media fund was in partnership with Reddit co-founder Alexis Ohanian, while the gaming fund was in partnership with blockchain gaming startup Forte and VC firm Griffin Gaming Partners — and was expected to be fully deployed within 18 months.
A year on, the funds have only been partially deployed and the focus has been on small seed round investments, according to Solana Labs CEO Anatoly Yakovenko, speaking in an interview earlier this month in Lisbon at Breakpoint 2022. In terms of the social media fund, Yakovenko said the amount deployed so far is “nowhere near half.”
“We've done like a bunch of small investments like usually our seed level checks from Solana ventures are $100K or something like that. So we're never a big lead,” he said.
Due to a prevalence of well-capitalized VC funds that are interested in the Solana ecosystem, Solana Labs has been able to be frugal with its investments, he added. When it comes to social media, Yakovenko said a number of products are in development, including Dispatch, Squads, Dialect, and Wordcell, which are effectively decentralized versions of Reddit, WhatsApp, Twitter, and other social media platforms.
“So every permutation of social is being tried. It's still very early, right?” Yakovenko said, adding that the projects have had only 12 months to build so far and are under the gun to grind for product market fit. “I would love to see like a million users across all of them by next Breakpoint.”
As for the gaming funds, more capital has been deployed there, a spokesperson for Solana Labs chimed in. But it’s the same picture. Yakovenko said only small checks have been written and Solana Labs hasn’t had to deploy most of the funds.
As for the state of blockchain gaming on Solana, Yakovenko said that 37 games are either live or in the process of going live. He contrasted it with the previous Breakpoint, where there was a dearth of gaming teams.
ToysRUs Reveals NFT Launch Date, Shares “Blueprint” Including Phygital Collectibles
NFT Launch Date
On their Official Tweet, ToysRUsNFT has shared the launch details of their first NFT collection. The launch will take place on Magic Eden, as their digital collectibles will be Solana NFTs, and will happen @December 9, 2022.
ToysRUsNFT, the official Crypto Twitter account for ToysRUs’ NFT collection, has recently shared its interactive “blueprint-style” roadmap.
To summarize, here’s what they’ve shared from their roadmap:
1. 10K Collection → The art is based on Geoffrey the Giraffe.
2. Earn $GCoin → NFT Holders can earn $GCoins, their SPL token, by staking their collectibles, attending events, shopping, and playing with toys
3. Unique Experiences → NFT Holders can also unlock “unique experiences” including VIP access to ToysRUs stores and exclusive shopping events.
4. Phygital Toys → They are partnering with AnybodiesNFT to bring an interactive experience that combines NFTs, NFC, and AR technology to bring toys into the digital world.
5. Collaborating with Other NFT Projects to create limited-edition physical collectible toys
6. Digital Stores → Digital ToysRUs stores will be brought into video games and/or metaverse experiences to sell toys.
7. Marketplace → Buy, sell, and trade physical & digital toys, and get unique perks.
8. REDACTED → They finish off the thread with number 8 being “REDACTED 👀”, hinting that there’s more in store.
Limit Break will do a Free NFT mint During Super Bowl Commercial
Gabe Leydon, CEO of Limit Break, wants to make history with his next television commercial for the Super Bowl.
Fresh from raising $200 million for his blockchain gaming company, Leydon announced in October he planned to spend $6.5 million on a Super Bowl ad for Limit Break’s first game based on its DigiDaigaku NFT game.
And now he said in an interview with GamesBeat that the commercial will include a QR code so that players can use it to apply for a free NFT mint. Limit Break will be giving away a limited number of NFT-based dragon characters through the Super Bowl commercial QR code.
“We’re doing an extremely small collection, especially compared to the audience — something like 50 million people are going to see the commercial,” Leydon said. “There will be a QR code on the screen. And anybody can scan it and then mint an NFT from the DigiDaigaku collection. I think this is going to be a really big deal because I think it’s going to change television advertising.”
The ad will run during Super Bowl LVII on February 14, 2023. The free mint will allow a limited number of viewers of the Super Bowl ad to receive one of an extremely limited supply of free NFTs. It will be a highly exclusive event where only lucky viewers who are quick at the draw will obtain a free DigiDaigaku Dragon NFT, Leydon said.
He believes it will be the most highly anticipated free NFT minting event in history. Leydon has done Super Bowl commercials before. He and his Limit Break cofounder Halbert Nakagawa were also the founders of Machine Zone.
While CEO of Machine Zone, Leydon ran a couple of Super Bowl ads for the games Game of War: Fire Age and Mobile Strike. Those ads starred model Kate Upton and actor Arnold Schwarzenegger, and Leydon said that was the best marketing the company ever did as people remembered the ads for years.
The company espoused a “free-to-own” business model where it gave away its DigiDaigaku non-fungible token (NFT) collection of anime characters. It posted multiple free collections already.
Leydon said the campaign will add a new dimension of viewing TV for Web3 advertising. Last year, Coinbase did a giveaway where it used QR codes in a Super Bowl commercial, giving away some Bitcoin to anyone who signed up for an account.
“I’m pretty excited about it,” he said. “Nobody [in Web3] has done it this way on television before. The point of it is to get a digital asset, and they’re going to be extremely rare and hopefully collectible as a result.”
Such giveaways are common in Japan, but not so much with Web3 in the U.S. where gamers have often viewed NFTs with derision. Of course, a lot of people may be unhappy if they don’t win the digital items in the giveaway, as Limit Break will only give away tens of thousands of items, but many more people will see the ad with the QR code.
Apple Forces Coinbase to Disable NFT Transfers on Its Wallet App
Coinbase’s Wallet iOS application no longer supports NFT transactions because of Apple’s strict new policies on NFTs, which were announced in October.
“You might have noticed you can't send NFTs on Coinbase Wallet iOS anymore. This is because Apple blocked our last app release until we disabled the feature,” the Coinbase Wallet account shared on Twitter Thursday.
While NFTs aren’t outright banned on Apple’s mobile app store, they are subject to a hefty 30% tax on every transaction. If developers aren’t able to implement that requirement, their app will be blocked from the store.
Coinbase said Apple wants to take a 30% fee on any gas fees (i.e., transaction fees on the Ethereum network) paid on NFT transfers completed through the wallet app, which Coinbase says is “not possible.”
“For anyone who understands how NFTs and blockchains work, this is clearly not possible,” Coinbase said. “Apple’s proprietary In-App Purchase system does not support crypto so we couldn’t comply even if we tried.”
Every time a user makes a transaction on the Ethereum network, even when simply transferring an asset like an NFT to a different wallet, the user must pay a fee known as gas. These fees are required for the network to run. But they’re more complicated than a flat fee and can’t be controlled by any single entity.
Gas prices—which are measured in gwei but paid in ETH—vary depending on Ethereum network traffic and the efficiency of a smart contract’s code. And more advanced users can opt to pay more to put their transaction closer to the front of the queue.
Pudgy Penguins’ Sotheby’s Auction Raises Over $128K
Web3 & Metaverse
Porsche Opens Up About Its Web3 Plans
Recently, Porsche unveiled plans to release a 7,500-piece NFT collection based on the classic Porsche 911. It will drop in January 2023, with Hamburg designer and 3D artist Patrick Vogel set to create each piece in the collection. At nft now and Mana Common’s The Gateway at Art Basel, Porsche revealed the details of its upcoming release.
“If a project wants to be successful, it needs to bring people together,” explained Porsche’s Director of Brand Management and Partnerships Deniz Keskin while speaking at the panel. “Web3 is exactly in the same spirit. Porsche isn’t going into the space for some economic reason. We’re going there because we want to engage with you to build something.”
In fact, the German automaker aims to make its NFT designs a decentralized proposition — enabling consumers to have a hand in curating tomorrow’s blockchain assets.
Porsche’s emphasis on community co-creation
People who buy a Porsche NFT will be able to help shape the design of their digital token by choosing a “route” for it, selecting from Performance, Lifestyle, or Heritage options. These routes reflect a particular characteristic of the company’s brand identity, and they will modify the overall design of the NFT itself. In the months following the collection’s release, Vogel will work with user input to ready each NFT as a 3D asset in Unreal Engine 5.
Lars Krämer, Porsche’s manager of innovation and methods, likewise underscored the importance of collaborative NFT creation in the company’s upcoming release. Noting that the team’s Discord channel has shot up to 13,000 active users since the announcement yesterday, Krämer explained that holders will be invited to collaborative input sessions on what future NFT designs might look like or involve.
“The core of the project is the community,” reiterated Krämer.
“We want to get into contact with you guys and have co-creation. That’s the goal. I’m looking forward to having the first co-creation session with holders in the future. We can test the designs of the artists in the future and bring you guys together with the artists and our whole team.”
Krämer also explained that future NFT utility will involve access to exclusive physical and virtual events and merchandise. Keskin emphasized that some of Porsche’s future Web3 plans are still in flux by design — the goal is very much to evolve the company’s NFT initiatives alongside the community of Porsche enthusiasts.
Telegram is Planning to Build Non-custodial Wallets and a Crypto Exchange
Telegram is gradually making its way into the cryptocurrency realm. It had added support for cryptocurrency payments, according to a tweet from the TON (Telegram Open Network) Foundation, in April. The TON token can be used to make cryptocurrency payments on Telegram.
The 550 million users of Telegram have now been exposed to blockchain technology and cryptocurrencies, thanks to the initiative. However, new announcements have surfaced about the instant messaging app. It is now planning to launch a non-custodial wallet and a decentralized cryptocurrency exchange.
Telegram CEO Pavel Durov announced the app’s crypto plans
As per the latest announcement from Pavel Durov, founder and CEO of Telegram, the instant messaging app is laying the foundation for ramping up its cryptocurrency journey. Druov stated in the announcement that centralized exchanges, including FTX, have resulted in a lot of people losing their money. He emphasized the blockchain’s promise of decentralization and how it devolved into the current centralized situation.
“The solution is clear: blockchain-based projects should go back to their roots – decentralization. Cryptocurrency users should switch to trustless transactions and self-hosted wallets that don’t rely on any single third party.”
Durov mentioned that the next step for Telegram is to build a set of decentralized tools. These include non-custodial wallets and decentralized exchanges for safe and secure storing and trading of cryptocurrencies. He also stressed that with technologies like TON, the blockchain industry will be able to give power back to the people.
Companies File Fewer Metaverse Trademark Applications
As of the end of October, companies filed 4,997 metaverse-related U.S. trademark applications. The number already dwarfs 2021’s total of 1,890 for the entire year.
But things are decelerating. Application filings peaked in March with 773, according to trademark lawyer Mike Kondoudis. For October, the number was less than half that at just 334.
The totals aren’t yet tallied for November, but among those Kondoudis has flagged as submitting applications are Nike, Mastercard, BMW, Home Deport, the University of Alabama, Enterprise, and Rolex.
Meta filed four new trademark applications claiming plans for virtual and augmented reality hardware on Nov. 4.
Stripe Launches Customizable Fiat-to-crypto Onramp
As per Stripe’s latest blog post, they have been focused on giving crypto companies access to Stripe’s Global Payments and Treasury Network (GPTN) over the past year.
For example, we’ve partnered with NFT marketplaces like Nifty Gateway to onboard, KYC creators and allow them to accept payments for their work. We’ve also begun enhancing the GPTN with crypto capabilities. We rolled out support for crypto payouts to 67 countries, which allows platforms like Braintrust to pay out USDC to contractors around the world. Today, we’re announcing a fiat-to-crypto onramp for Web3 developers.
Their onramp is a widget in nature, and customizable so that developers can embed directly into platforms such as DEXs, NFT Marketplaces, wallets, etc. Once integrated into the developers’ platform, Stripe handles everything related to the transaction such as KYC, payments, and Anti-Money-Laundering compliance. As per Stripe, “you can integrate it with just 10 lines of code”.
For end users, the onramp is a seamless checkout experience, optimized for conversion, allowing for instant settlement of crypto. Users save their payment and identity information to Link, enabling an instant and convenient one-click checkout experience on all future purchases across any Link-enabled Stripe surface.
Those looking to integrate their onramp should sign up for access. The onramp is available for US customers to start, and we’ll be expanding availability over time.
Games & Blockchain Gaming
Ghost Raises $3.1M for Gaming Platform
As NFTs have taken hold, a growing number of games are using crypto assets for interactive in-game items, as well as tokenized economies. But a new startup is taking a different route in the space: a casual gaming platform in which NFTs are the prizes.
That’s what Burn Ghost is building, and the company revealed exclusively to Decrypt today that it has raised $3.1 million in funding to realize its vision.
The seed round, which was completed in April, was co-led by Drive by DraftKings and gaming-centric fund Bitkraft Ventures, with participation from Pillar VC as well.
Rather than develop complex, robust games built around NFTs—which have rubbed some gamers the wrong way—Burn Ghost will focus on simple, approachable casual games that have a skill component to them. CEO and co-founder Steve Curran told Decrypt that trivia experiences will be among the first original games on the web-based platform.
“We feel like we've cracked the code on making it accessible to anybody so that it's not just the Ken Jennings of the world that are going to play this and be good at it,” he said.
Burn Ghost’s games will reward top finishers with NFTs, including some that the company has acquired as well as those sourced through partnerships with NFT creators. Players will pay an entry fee to play the games that offer up NFT prizes, although they can also earn credits by playing other fully free-to-play games on the platform.
The entry fees will initially be paid via crypto, but the platform will expand to accept fiat payments as well. Additionally, Burn Ghost may charge placement fees for projects that want to put their NFTs in front of players, with the platform potentially serving as a marketing outlet for creators seeking to reach a broader audience.
Burn Ghost is set to open up to the public in the first quarter of 2023, although Curran said that the platform will open up to more and more players on the waiting list in the meantime. Additional games beyond trivia will come from the arcade and action genres, for example, with reward NFTs coming from Ethereum as well as other blockchains.
Rumble Kong League Teases Some Gameplay!
FaZe Clan Launching Digital Collectible “FaZe Forever”, Partners with MoonPay and Blankos Block Party
Esports and gaming content organization FaZe Clan has launched “FaZe Forever”, their digital gaming ecosystem.
Forever Cartridge — Digital Collectible
The first digital collectible, V.A.S. “Forever” Cartridge, is free to claim and will be available from @December 1, 2022 to @December 3, 2022. To claim the collectible, simply navigate to their website https://forever.fazeclan.com/ and sign in through their MoonPay log-in service — no wallet necessary.
Partnership with MoonPay
FaZe Clan has also announced a multi-year deal that makes payments platform MoonPay its official crypto partner.
MoonPay currently enables millions of users in 160 countries to buy and sell cryptocurrencies and NFTs. The terms of its deal with FaZe Clan were not disclosed
The partnership will also comprise promotional media for MoonPay launching early next year within existing FaZe franchises and forthcoming originals, as well as creator events and additional campaigns that tap into FaZe’s professional esports teams. FaZe will also use MoonPay’s platform for its forthcoming NFT and digital goods initiatives.
Partnership with Blankos Block Party
If the MoonPay partnership wasn’t big news already, FaZe Clan has also partnered with Blankos Block Party!
Holders of the Forever Cartridge will be eligible to claim FaZe Clan Accessories in the Blankos Block Party.
A16z Leads $15M Round for Game Studio Roboto Games
Roboto Games, a new game studio aiming to bridge the Web2 experience and accessible Web3 in-game elements, has raised $15 million in a Series A funding round led by noted venture capital firm Andreessen Horowitz (a16z), which launched its first game-focused fund in May with a $600 million commitment.
The funding will go toward building out the company’s second game and hiring across a variety of roles, including artists and marketers, Roboto Games founders Curt Bererton and Mathilde Pignol told CoinDesk in an interview. Other participants in the round included Ancient8, Animoca Brands, Gumi Cryptos Capital, Harrison Metal Capital, Makers Fund, Merit Circle, Transcend and a number of angel investors. Total funding now stands at $19.5 million to date, including a 2019 seed round.
Headquartered in San Mateo, Calif., Roboto Games aims to make free-to-play games that are playable across the web, mobile, and PC and can be played with or without Web3 elements such as non-fungible tokens (NFT) – or in-game elements coded to prove their uniqueness – or regular tokens. There are also plans for a user-generated content (UGC) platform.
Roboto Games has already released the fast-moving battle game Last Mage Standing, which has a few million players, according to Bererton. However, the team is primarily focused on the development of a survival/crafting massively multiplayer online (MMO) game that’s codenamed Foragers and Fighters, with plans to launch an initial playable version of the game in the first quarter of 2023. The game – described as Minecraft meets Genshin Impact – will feature character collection and asset crafting aspects but will initially lack Web3 elements by design.
“We want to make sure that we have the game core solidified and it's working well and it's really fun first before we launch any sort of NFTs or tokens associated with the project,” explained Bererton. “Because, for example, if we change a big aspect of the game, we don't want those NFTs to be invalidated by some design change that we make.”
In 2007, the team behind Roboto Games created ZipZapPlay, which made 20 social Facebook games including Baking Life and a UGC platform with over 200,000 games on it. They sold the company to PopCap a few months before Electronic Arts acquired PopCap in July 2011.
The free-to-play games made by ZipZapPlay require actively managed servers, which eventually went offline and made the games unplayable. Roboto Games, therefore, sees blockchain technology as a way to prevent future game deaths. If a Roboto game one day shuts down, the team could simply turn the code over to the players to continue on, noted Pignol.
“Something that I think is not covered a lot in Web3 media is the permanence of the data behind the blockchain, and what that can allow you to do,” said Bererton.
Magic Eden to Debut Code Enforcing NFT Royalties, Allowing ‘Gamification' of Collections
Solana's biggest NFT marketplace, Magic Eden, has followed in the footsteps of OpenSea in releasing code that allows creators to enforce royalties on new NFT collections.
The move appears to be a change of heart from its previously stated stance on creator fees. Earlier in October, the marketplace announced a switch to an optional royalty model — a move that meant those buying or selling NFTs on its marketplace could choose what percentage cut of the sale is returned to the original artist.
The decision was controversial and sparked criticism from a plethora of collections. At the time, co-founder Zhuoxun “Zedd” Yin likened the decision to a case of prisoner’s dilemma.
Dubbed the Open Creator Protocol (OCP), the new tool is built on top of Solana’s SPL managed-token standard. From Dec. 2, the company said that creators launching new collections who opt into using the protocol will be able to protect their royalties and use customizable token transferability.
OCP will allow creators to ban marketplaces that have not enforced royalties on their collections. For new NFT collections that don’t adopt the code, royalties will remain optional on Magic Eden.
Customizable transferability could include a collection’s tokens remaining untradable before the mint closes, or limitations on tradability by time, the total number of trades, or metadata text. Creators are now able to gamify the rules of their own collection’s trading behavior, Magic Eden said. At the same time, the marketplace is rolling out bulk transfers on the platform — so collectors can move their NFTs freely for collections using the Open Creator Protocol.
The code will enable a dynamic feature, which specifies a relationship between an NFT’s sale price and royalty amount via a linear price curve. This will potentially reduce the nominal value of royalties for buyers who pay a higher price for the NFT.
“The Solana community has been waiting for solutions to NFT royalties,” Jack Lu, CEO, and co-founder of Magic Eden said in a statement. “We have been in active conversations with multiple ecosystem partners to identify solutions for creators in a timely manner.”
On launch day, there will be a free mint, which will supply a couple of thousand gift boxes — some of which will contain prizes that include a free MacBook Air laptop, whitelist access to Tomorrowland’s December mint (The Symbol of Love and Unity), access to Genopet’s game, and free NFTs from Degen Trash Panda and Liberty Square.
Does Supporting Royalties Cost Market Share? (Yes)
Despite attempts by other markets to lure away its customers with low-or-no transaction fees, removing royalties, and tempting customers away with airdrops, OpenSea remains the most popular platform for NFTs on Ethereum.
It has generated over $1 billion in royalties for creators from Jan 1. and stood by the royalty system even as other prominent marketplaces said they had no choice but to make them optional.
But its market share has shrunk substantially in the face of its aggressive new competitors.
At the start of this year, it had 95.9% of the Ethereum NFT market. By the end of November, that had fallen to under 45%.
On Solana, Magic Eden faced a similar dilemma of shrinking market share earlier this year. But it made royalties optional, even while singing their praises and pledging to find ways to enforce them.
But the switch to optional royalties on its own platform had the desired effect, and it has clawed back market share from competitors. Since Oct.14, it has expanded its share from just under 80% to 93%.
National Policies & Legal Updates
Brazilian Chamber of Deputies Approves Bill Regulating Crypto Transactions
Brazil's Chamber of Deputies approved a bill on Tuesday regulating the crypto industry.
The bill, which was approved by the Senate in April and had been stuck in the Chamber of Deputies, now requires the approval of the executive branch to become law.
The bill, authored by deputy Aureo Ribeiro, establishes a new crime of fraud involving virtual assets, with a penalty of between two and six years in jail plus a fine. It also stipulates the creation of a “virtual service provider” license, which is to be requested by companies, including exchanges and other crypto firms.
According to the text, companies will have 180 days to adapt to the new rules before the law will be enforced.
The text stipulates that crypto assets considered securities will be regulated by the Brazilian Securities and Exchange Commission (CVM), while other digital assets not falling into that category will fall under the responsibility of another body to be appointed by the executive branch. The Central Bank is expected to be chosen.
Israel’s Ministry of Finance Proposes New Guidelines for Regulating Digital Assets
Israel's Ministry of Finance published a set of recommendations Monday for the regulation of digital assets, advancing the country’s foray into the world of cryptocurrencies.
The recommendations call for the creation of new regulatory infrastructure, legislating licensing powers and supervision over the issuance of backed digital assets, including stablecoins, and the provision of financial services through them. The recommendations also call for legislation to be passed that would transfer supervision over digital assets “that have a significant stability or monetary effect” to the Bank of Israel.
The guidelines also include a proposal for allowing the payment of taxes on crypto held abroad through the Bank of Israel. In addition, the proposal would establish an inter-ministerial committee to oversee the regulation of decentralized autonomous organizations (DAO).
The taxation of cryptocurrencies comprises a major part of the proposal. According to Israel’s tax authority, uncollected crypto taxes from 2019 to 2022 could amount to several billion shekels (one shekel is worth about US29 cents).
Israeli officials have been dipping their toes into the digital asset industry in recent months. In October, the Tel Aviv Stock Exchange (TASE) revealed it was looking into establishing a blockchain-based digital asset trading platform. A month earlier, Israel's markets regulator granted the first permanent license to a private company to “engage in crypto activities.”
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