December is a time of reflection on how the past year went and hope for the year ahead. This time, it’s our turn to close 2021. It was a year that, for many, wasn’t as expected (yes, COVID-19 is still with us) but it was very favorable for cryptos. Let’s check December and 2021 in the cryptocurrencyA digital currency running on a blockchain and built with cryptography. Contrary to central-bank issued currency, cryptocurrency issuance rules are... world.
December in the crypto world
Regulations on crypto
- On December 13, Russia’s Central Bank banned cryptocurrency investment funds. It also reiterated that, on previous occasions, it had warned investors about cryptoassets.
- Turkey is making progress in regulating cryptocurrencies. In this regard, at the end of December, the Binance exchange was fined $750k by the government of this country. The fine comes after the government banned the use of cryptocurrencies as a payment method in April. That was due to the current context of a social and economic crisis the country has been going through.
- In Spain, December was the month in which some taxpayers received requests for information from the Treasury to declare the possession of cryptoassets during the last four years. In the country, the wealth tax places cryptoassets from 19% of the total balance. However, it doesn’t indicate a specific formula to stipulate it in the income tax return.
Crypto security
- Mexico was in the crosshairs of hackers during 2021. Compared to the previous year, ransomware attacks increased by 127% in this Latin American country. According to Avast Software, attacks of this type will continue to increase worldwide.
- The number of cryptocurrencies seized by the US IRS multiplied 8 times in 2021 compared to last year. Thus around $1.2 billion of cryptocurrencies were added to the agency’s wallets, which stated that its database does not include seizures in addition to money laundering or tax evasion.
A crypto summary: 2021
- The market capitalization of cryptocurrencies increased by 200% in value compared to the beginning of the year [CoinMarketCap]. In November, it almost reached $3 trillion, up to $1 trillion after just six months. BitcoinBitcoin is the first decentralized digital currency. It was created in 2009, by an anonymous founder or group of founders... More reached a new ATH of $69,000 on November 10.
- In January 2021, Tesla CEO Elon Musk began driving Bitcoin adoption, with the purchase of $1.5 billion in BTCAn abbreviation for Bitcoin.. Subsequently, the company sold 10% of this stockpile. In March, Tesla enabled the purchase of its cars with the cryptocurrency, although it later suspended this payment method, claiming that Bitcoin mining affects the environment. The rest of the BTC has been held by the company. All the announcements around Tesla affected the price of the cryptocurrency positively and negatively.
- The gas price for Ethereum transactions peaked on May 12, 2021. On that day, the average transactionA cryptocurrency transaction is an entry on the blockchain ledger, noting sender, receiver and number of coins transacted. was almost $70. The rise in popularity of Non-Fungible Tokens (NFTs) and the sustained boom in DeFi ecosystems were responsible for the fact that throughout the year transaction fees on this network remained so high. These fees closed the year below $20.
- Also in May, the American Colonial Pipeline was attacked with ransomware. This system provides about 45% of the east coast’s supply of diesel, gasoline, and jet fuel. Therefore, the ransomware lockdown caused a major crisis and President Joe Biden declared a state of emergency. To release the system, they had to pay $ 5 million in BTC as a ransom. Soon after, the United States declared war on ransomware.
- 2021 was the year in which not just one, but three Bitcoin ETFs were listed on Wall Street for the first time. BITO and XBTF on NYSE, and BFT on NASDAQ. These are the Bitcoin ETFs that took 8 years to be approved by the SEC.
- This was also the year of NFTs. On Nov. 15, sales of NFTs reached their ATH at $46 billion. Axie Infinity tops the list of most played NFT games this 2021, with a volume of $563.6 million, a capitalization of $18.31 million, and over 770k players. Among the entities that entered the NFT market this year are McLaren, Dolce and Gabbana, Twitter, Coca-Cola, TikTok, EA, Sony Music, and Samsung.
- The International Monetary Fund (IMF) reiterated its determination to regulate Bitcoin. Its representatives referred to the need to regulate bitcoin on several occasions throughout 2021. In April, they called it “a reality” that should be regulated by entities around the world. In its Global Financial Stability Report, they recognized cryptocurrencies as the second topic of global interest in financial matters. In December, its executives recalled the need for global regulation on cryptos.
- 2021 was the worst year for Bitcoin in China. This country held 65% of the total Bitcoin mining hashA hash is a mathematical function that turns a set of data into a short string of random numbers and... and was part of the world’s largest cryptocurrency market. However, this 2021, the Chinese government ended up banning all economic activities with Bitcoin and cryptocurrencies in the country.
- El Salvador surprised the world with an announcement in the middle of the year: Bitcoin would become legal tender in this country. Only three months were enough for the measure to become a reality with the Bitcoin Law. Thus, anyone with the necessary infrastructure is under the obligation to receive payments with cryptocurrency. Other countries, like Cuba and Ukraine, also made Bitcoin officially legal.
- Among the plans of Nayib Bukele, the president behind this initiative is the creation of a Bitcoin City. This city would be built with national bonds linked to Bitcoin. On the subject of cryptocurrency mining, the country’s government also decided to use the energy of its volcanoes and put to work around 300 machines that connect to the network via satellite.
- The Central American country closed in 2021 with the purchase of 21 BTC, totaling 1,391 BTC units in its national treasury.
- Poly Network was the protagonist of the largest DeFi hack in history during 2021. In August, a hacker stole more than $600 million in ETH, USDC, DAI, UNI, SHIB, FEI, MATIC, and various BSC tokens from them. Fortunately, the hacker returned 100% of the funds and stated that they did it just for fun.
2021, in general, was a year of economic recovery for the cryptocurrency world. 2022 and the introduction of the metaverse promises much greater distribution of cryptocurrencies among the masses and a breakthrough in building Web 3.0.
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