The Crypto Compass Issue #53

Hello readers,

In recent cryptocurrency developments, the landscape is evolving rapidly with key events shaping the sector. Intense competition emerges in Bitcoin ETFs with new players and lower fees. The crypto community faces challenges with IRS's new tax reporting rules. Bitcoin celebrates its 15th anniversary, underscoring its growth and resilience. Meanwhile, Ethereum Name Service (ENS) token bucks market trends with a surge following Vitalik Buterin's endorsement, showcasing the influential dynamics of the crypto world.

Intensifying Fee War in Bitcoin ETF Market

There is a brewing fee war among fund groups launching spot bitcoin ETFs. Fidelity initially proposed a low fee of 0.39%, but competitors like BlackRock, Bitwise, VanEck, Franklin Templeton, Ark, and 21Shares plan even lower fees, ranging from 20 to 29 basis points. Grayscale Investments, with its existing Bitcoin Trust, is considering reducing its fee from 2% to 1.5%. The industry is eagerly awaiting the SEC's ruling on these ETFs by January 10, a decision that could be a milestone given the past approval of Bitcoin futures ETFs.

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Challenges in Complying with New Crypto Tax Reporting Rules

Under the bipartisan infrastructure bill signed by President Biden in 2021, crypto brokers must report transactions over $10,000 to the IRS, including personal details like sender's name, address, and social security number, within 15 days. However, Coin Center executive director Jerry Brito highlights the difficulties in meeting these requirements due to the unclear guidelines. For instance, it's uncertain how to report transactions in cases like anonymous donations or decentralized exchanges. Brito suggests that the IRS should consider a de minimis exemption for small transactions to mitigate these challenges. The expanded reporting requirements, which were initially to take effect in January 2023, are expected to pose significant compliance challenges in 2024.

Bitcoin's 15th Anniversary: Triumphs and Growth

Celebrating its 15th anniversary, Bitcoin, the original cryptocurrency, has risen to become one of the world's top ten most valuable assets. The genesis block of Bitcoin was mined on January 3, 2009, marking the beginning of its journey. Over the years, Bitcoin has overcome skepticism from critics, media, and governments. Key milestones include the establishment of Bitcoin ATMs, with the first one becoming operational in October 2013, and a network peak of nearly 40,000 ATMs worldwide in 2021.

Despite a temporary decline in ATMs due to geopolitical tensions and a bear market, about 34,000 remain operational as of January 2024. Bitcoin's network has processed millions of transactions across 825,000 blocks in its 15 years. In terms of mainstream adoption, countries like El Salvador have embraced Bitcoin as legal tender, while others like China and Saudi Arabia continue to restrict its use.

Remarkably, Bitcoin's market capitalization has reached nearly $900 billion, ranking it as the 9th most valuable asset globally. This growth trajectory suggests the possibility of Bitcoin climbing even higher in global asset rankings in the near future.

Happenings of the week

• Bitcoin surpasses $47,000 for first time since late 2021

• Spot bitcoin ETF applicants file amended S-1 forms in final step toward approval

• Ethereum validator exit queue spikes as Celsius, Figment withdraw stakes

• Someone sent $1.2 million of bitcoin to the Genesis wallet mined by Satoshi Nakamoto

ENS Token Rises as Crypto Markets Fall, Boosted by Vitalik Buterin's Endorsement

The Ethereum Name Service (ENS) token experienced a significant boost, moving against the trend of the broader crypto market, following an endorsement from Ethereum co-founder Vitalik Buterin. Buterin praised ENS as "super-important" and emphasized the need for layer-2 networks to work on trustless, merkle-proof-based CCIP resolvers. This endorsement led to a flurry of trading activity, resulting in a 55% spike in ENS prices.

Despite a recent market downturn where the token fell to $9, it rebounded to $14 after Buterin's comments, holding gains at around $12.89. This rise contrasts with the overall crypto market, which saw a $100 billion decline and significant drops in major cryptocurrencies like Bitcoin and Ethereum, as well as other altcoins. ENS's unique position in the market, offering domain names on the Ethereum blockchain, has 2.1 million active domains and 801,000 unique participants, showcasing its growing relevance in the crypto space.

Stay tuned for more updates next week! If you haven't yet, hit that subscribe button to ensure you never miss an issue. Found value in this edition? Please consider sharing it with your friends, colleagues, and fellow crypto enthusiasts. Together, let's navigate the world of crypto with clarity and insight!