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Record amounts of crypto were stolen in DeFi hacks last quarter

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Record amounts of crypto were stolen in DeFi hacks last quarter

Edge › Hacks

Over $1.26 billion worth of crypto was stolen from DeFi protocols in the first three months of 2022 — and it’s about to get worse.

3 min read

Updated: May 13, 2022 at 8:11 am

Cover art/illustration via CryptoSlate

After the record-breaking DeFi summer of 2020, the crypto industry has gone parabolic when adopting decentralized technologies.

The industry has been racing to reinstate traditional financial services in the decentralized world throughout the last year, drastically expanding the DeFi market.

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CBDCs

EU regulators criticize stablecoins to promote Euro CBDC

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EU regulators criticize stablecoins to promote Euro CBDC

E.U.› Terra · Tether › Regulation

EU regulators are using the attack on UST and USDT stumbling as proof that Europe needs a CBDC

2 min read

Updated: May 17, 2022 at 6:51 am

Cover art/illustration via CryptoSlate

EU regulators are using the recent Terra Luna situation to push forward with a Digital Euro CBDC.

Many will see the volatility created by the attack on the algorithmically backed stablecoin, UST, as a reason to increase the regulation of stablecoins. With $16 billion worth of UST evaporating within days, it is hard to argue with the calls for more protection for investors.

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The identity of the UST attacker is currently unknown. There are many theories but no hard evidence to suggest government or institutional involvement at this time. However, a common thread among the theories is that the goal was to create instability within the stablecoin market to fast-track the adoption of CBDCs.

Janet Yellen spoke in front of the US Treasury committee during the crisis, the UK Treasury reaffirmed its desire to regulate stablecoins, and now the EU is putting its hat in the ring. Fabio Panetta of the European Central Bank (ECB) and the person in charge of developing a CBDC for Europe said,

“Recent developments in the market for crypto assets illustrate that it is an illusion to believe that private instruments can act as money when they cannot be converted at par into public money at all times… There is no guarantee that they [stablecoins] can be redeemed at par at any time — just last week the world’s biggest stablecoin temporarily lost its peg to the dollar.”

A clear rationale for a frosty approach to crypto-backed stablecoins is that no other currency has made any real headway into the space. Over 99%  of all stablecoins in circulation are backed by USD rather than GBP, EUR, or countless other fiat currencies.

The chart below shows the market share of cryptocurrencies made up by the top fiat system.

The ongoing news from traditional media focuses on the environmental impact of Bitcoin and the benefits of proof of stake instead of proof of work.

Any CBDC report that has been released focuses on a proof of stake model with minimal energy usage. Panetta added “that a digital euro “can only be successful if potential users find that it adds value to current payment options.”

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Bank of International Settlement

Israeli central bank yet to make decision on pursuing CBDC despite public support

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Israeli central bank yet to make decision on pursuing CBDC despite public support

Israel› CBDCs

A research by the Bank of International Settlements (BIS) shows that nine out of ten central banks are working on a CBDC project presently.

2 min read

Updated: May 10, 2022 at 6:14 pm

Cover art/illustration via CryptoSlate

The central bank of Israel has yet to decide whether to create a digital version of its fiat currency shekel, despite the public supporting the notion, Reuters reported.

Bank of Israel considering CBDC

Discussions over creating digital shekels have been going on since 2017, but the central bank only began to take it seriously in 2021 when it started researching its potential.

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The public believes that a digital shekel project will help the economy by reducing cash usage and improving financial technology.

The central bank received 33 responses to its request for public opinions on the plan, with 17 of the responses being from fintech companies.

The regulator said:

All of the responses to the public consultation indicate support for continued research regarding the various implications on the payments market, financial and monetary stability, legal and technological issues, and more.

The central bank also noted that there is divergence on the issue of privacy amongst respondents, with some wanting complete anonymity. In contrast, others say it should be subject to anti-money laundering rules.

No decision has been made on the implementation or launch of the project, as the bank stated that it would continue to dialogue with stakeholders about the CBDC.

Central banks are embracing CBDC projects 

Central bank digital currency projects are on the up, as recent research from the Bank of International Settlements (BIS) shows that nine out of ten central banks are presently working on a CBDC project.

According to the report:

Globally, more than two-thirds of central banks consider that they are likely to or might possibly issue a retail CBDC in either the short or medium term. Central banks consider CBDCs capable of alleviating key pain points such as the limited operating hours of current payment systems and the length of current transaction chains.

Countries like China, Russia, and Nigeria have stepped up the use of their CBDC projects. A local media report stated that the central bank of Nigeria is improving its eNaira digital currency to support bill payments.

On the other hand, China has continued to trial its Digital Yuan in several major cities in the Asian country. Russia has also been forced to step up its Digital Ruble project amid severe economic sanctions.

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Top ECB Official Ramps Up Anti-Crypto Rhetoric, Calls For Global Regulations

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Top ECB Official Ramps Up Anti-Crypto Rhetoric, Calls For Global Regulations

Comparing the rise of crypto assets to the gold rush, a top executive at the European Central Bank has urged governments to take action to prevent “a lawless frenzy of risk-taking.” Speaking in the U.S., the ECB official called for a global regulatory clampdown on cryptocurrencies and stepping up efforts to issue central bank digital currencies.

ECB’s Fabio Panetta Lashes Out at Crypto Assets, Says They Fail to Fulfill Promise

A century and half after Americans pushed westward to seek fortune, a growing distrust of banks and technological innovation have led to a new, digital gold rush beyond state control, Fabio Panetta, member of the Executive Board of the European Central Bank (ECB), said in a recent address at Columbia University in New York.

In his speech, which the eurozone’s monetary authority published this week under the title “For a few cryptos more: the Wild West of crypto finance,” the high-ranking ECB official remarked that the cryptocurrency market is now larger than the $1.3 trillion sub-prime mortgage market in 2008, which triggered the last global financial crisis. He likened its dynamics to a Ponzi scheme and stated:

Crypto evangelists promise heaven on earth, using an illusory narrative of ever-rising crypto asset prices to maintain inflows and thus the momentum fueling the crypto bubble. But appearances are deceptive. Satoshi Nakamoto’s dream of creating trustworthy money remains just that – a dream.

Panetta went on to allege that cryptocurrency transfers can take hours to process and highlighted the wild fluctuation in the prices of digital coins like bitcoin and ether. He also pointed out that the “supposedly anonymous transactions leave an immutable trail that can be traced.”

The majority of crypto holders, the banker also noted, rely on intermediaries which is contrary to the philosophy of decentralized finance, as he put it. “Crypto assets are bringing about instability and insecurity – the exact opposite of what they promised. They are creating a new Wild West,” Fabio Panetta added.

ECB Executive Suggests Global Efforts to Regulate Crypto Assets

Fabio Panetta is convinced that as speculative assets, cryptocurrencies can cause “major damage to society” when “this house of cards collapses, leaving people buried under their losses.” He warned authorities around the world they should not repeat previous mistakes by waiting for the bubble to burst, before they realize “how pervasive crypto risk has become in the financial system.”

“We need to make coordinated efforts at the global level to bring crypto assets into the regulatory purview,” the ECB official insisted. He also suggested that regulators should ensure that cryptocurrencies are subject to standards that are similar to those implemented regarding the traditional financial system. He elaborated:

In doing so, we will have to deal with complex trade-offs, balancing the goals of promoting innovation, preserving financial stability and ensuring consumer protection. We should make faster progress if we want to ensure that crypto assets do not trigger a lawless frenzy of risk-taking.

The executive stressed, however, this wouldn’t be enough as market growth in the crypto space has revealed an increasing demand for digital assets and instant payments. Public authorities should satisfy it with central banks engaging in digital innovation by upgrading wholesale financial infrastructures and working to issue central bank digital currencies (CBDCs).

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Panetta maintained that the European Central Bank is leading in these areas. “We are focusing on a digital euro, in order to allow citizens to use sovereign money to make payments anywhere in the euro area, while protecting its role as an anchor for the payment and monetary system,” said the ECB board member who oversees the advance of the digital currency project.

Tags in this story

CBDC, CBDCs, Central Bank, Central Banks, Crypto, crypto assets, crypto market, Cryptocurrencies, Cryptocurrency, Digital Assets, Digital Currencies, Digital Currency, digital euro, ECB, EU, Eurozone, Fabio Panetta, Regulation, Regulations

Do you expect regulators around the world to adopt a global approach to regulating crypto assets and markets? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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