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Crypto week at a glance: New tax laws lead to big drop in trading volume

By WazirX

The new cryptocurrency tax policy is now active and has led to a significant drop in trading volumes on major Indian crypto exchanges. Given that the overall market is moving towards the upside, it is likely that the activity has moved towards the grey market to avoid taxation.

Pressure on SEC increases
Michael Sonnenshein, the CEO of the world’s largest digital asset management firm Grayscale, mentioned in an interview that it might sue the SEC if its application to convert its Bitcoin trust into a Bitcoin ETF is rejected. This comment might stem out of frustration as Grayscale’s GBTC, which has over 30.6 billion dollars in AUM, has been trading at a discount of approximately 25 per cent from its NAV (net asset value).

GBTC used to trade at a premium (above the NAV or net asset value of the fund) primarily due to the lack of an alternative institutional investment vehicle for Bitcoin. However, that has significantly changed. This can be attributed to the increase in competition and to the extremely high fixed management fee of 2 per cent making Gbtc (not Bitcoin) undesirable.

A Bitcoin spot ETF could be the next catalyst when it comes to mass adoption as an ETF eliminates the complexity barrier. The investor does not need to know about hardware wallets, crypto exchanges and anything technical. All he has to do is buy the publicly available ETF and it is in the best interest of Grayscale to make this happen.

The $600 million hack
The gaming industry is a multibillion-dollar industry. It is one of the 1st industry to jump into the crypto space and Axie Infinity is spearheading it. Unfortunately, Axie Infinity’s Ronin network was exploited and a staggering $600million in Ethereum and USDC was stolen. The hack was possible due to a certain level of centralization on the Ronin chain. It had nine validator nodes that were responsible to verify deposits and withdrawals. The hacker got access to 5 nodes to sign off on their transactions. The interesting part of the hack was that it was not noticed for a week.

Cardano making a comeback
Ever since Cardano’s smart contract update went live in late 2021, the price of ADA has been plummeting. This can be attributed to the lack of activity within the network. However, things are starting to turn for Cardano as the TVL or the total value locked has almost increased by 100 times since the start of the year. As an added bonus “Coinbase” has just enabled people to stake their Cardano via their exchange. This means that all the Cardano collecting dust on their Coinbase wallets can earn passive income, thus removing more and more Cardano from exchanges.

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