Crypto Compass by BitcoinWalletSG #103

Happy 2025 Fam!

As Bitcoin continues to gain recognition as a strategic reserve asset among institutions and nations, its role in global finance is poised for significant expansion. Countries like the United States are exploring the establishment of national Bitcoin reserves to enhance economic security and hedge against currency devaluation.

Simultaneously, the integration of artificial intelligence (AI) within the cryptocurrency sector is accelerating, with AI-driven projects enhancing efficiency, security, and functionality across blockchain platforms. This convergence of Bitcoin adoption and AI innovation is set to redefine financial strategies and technological advancements in the coming years.

Bitcoin's Institutional Adoption and Market Recap

In 2024, Bitcoin's institutional adoption surged, propelled by the U.S. approval of spot Bitcoin exchange-traded funds (ETFs) and an increasing number of companies incorporating Bitcoin into their treasuries. This mainstream integration contributed to Bitcoin's price climbing nearly 130% this year, approaching the significant $100,000 mark.

The approved ETFs have attracted net inflows of $36 billion, collectively holding over 1 million BTC. Notably, companies like MicroStrategy have significantly increased their Bitcoin holdings, with some firms allocating up to 90% of their surplus cash to BTC. This trend underscores the growing confidence in Bitcoin as a strategic asset among institutional investors.

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IRS Finalizes Controversial DeFi Broker Regulations

The U.S. Internal Revenue Service (IRS) has finalized regulations classifying certain decentralized finance (DeFi) protocols as brokers, mandating Know Your Customer (KYC) compliance and transaction reporting. This move has prompted significant backlash from the crypto industry, with organizations like the Blockchain Association, filing lawsuits challenging the IRS's authority and the constitutionality of these rules.

Montenegro Approves Do Kwon's Extradition to the U.S.

Montenegro has approved the extradition of Do Kwon, co-founder of Terraform Labs, to the United States, where he faces charges related to the $40 billion collapse of TerraUSD and Luna cryptocurrencies in 2022. Kwon was arrested in Montenegro in March 2023 for attempting to travel with falsified documents. Both the U.S. and South Korea sought his extradition; however, Montenegrin authorities have decided in favor of the U.S. request. Kwon is accused of fraud and financial crimes that significantly impacted global cryptocurrency markets. The timeline for his transfer to U.S. custody remains unclear.

Happenings of the week

• HyperLiquid staking launches as HYPE token price soars

• MicroStrategy buys 2,138 BTC for the 8th straight week

• Grayscale Research updates its top 20 crypto assets for Q1 2025

• FTX repayments to be paid within 60 days of January 3rd

Ai16z's Strategic Moves in AI and Blockchain Integration

AI16z, a decentralized autonomous organization (DAO) built on the Solana blockchain, is exploring significant changes to its tokenomics and considering the launch of a Layer 1 blockchain tailored for AI applications. The proposed adjustments include introducing a token launchpad in early 2025, which would serve as a central hub for deploying AI projects based on its Eliza framework, positioning the AI16z token as the primary currency for agent-to-agent interactions. These strategic developments aim to enhance value accrual and expand AI16z's ecosystem within the rapidly evolving AI and blockchain sectors.

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