G20: Biggest Win For Crypto Regulations?

PLUS: RBI says India's CBDC has 1.5M users and 300k merchants. Vitalik Buterin's X account hacked.

Author

Manan Vora
September 11, 2023

Snapshot Web3

September 11, 2023

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Regulatory and Legal News

The G20 leaders, concluding their summit in New Delhi, have endorsed the Financial Stability Board's (FSB) recommendations for regulating crypto-assets and global stablecoin arrangements. They emphasized the need for consistent global implementation to prevent regulatory arbitrage. The leaders also welcomed various reports on crypto assets, including the IMF-FSB Synthesis Paper, which includes a roadmap for a comprehensive regulatory framework. Central bank digital currencies (CBDCs) were also discussed, with a focus on their potential macro-financial implications, particularly in cross-border payments and the international monetary system. The IMF and BIS reports on CBDCs were anticipated for further discussion.

India's central bank digital currency (CBDC) has gained 1.5 million users and garnered acceptance from over 300,000 merchants, according to Reserve Bank of India (RBI) Governor Shaktikanta Das. The CBDC pilot, operating through 13 banks across 26 cities, demonstrated substantial growth since its launch last year. Das highlighted full interoperability with UPI QR codes and aims for 1 million daily CBDC transactions by December. Additionally, RBI Executive Director Ajay Kumar Choudhary mentioned plans for a wholesale CBDC pilot for interbank borrowing, potentially launching in October, positioning India's digital rupee as a rival to cryptocurrencies.

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Innovation and Launches

Cardano developers are focusing on enhancing Peer-to-Peer (P2P) functionalities to boost the protocol's capabilities. This includes addressing peer sharing issues and improving network efficiency. They're also working on bootstrapping peers for network health. Notable milestones include system-level benchmarks for UTXO-HD and performance optimizations. Updates from various teams show progress in collateral setup, network optimization, and Plutus Tx enhancements for better performance.

Mastercard has launched a program to support central bank digital currencies (CBDCs), aiming to enhance their accessibility and usability. The initiative, featuring partners like Ripple and Consensys, emphasizes interoperability in payments. Mastercard remains flexible regarding open or closed CBDC systems, prioritizing central banks' preferences. The goal is to facilitate secure and regulated digital transactions in line with the evolving financial landscape. Visa is also exploring CBDC integration, actively sharing insights with central banks.

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NFT and Metaverse

"Leap to NFT" is a pioneering blockchain NFT game designed for Game Boy, allowing players to earn exclusive NFTs. Developed by Italian startup Hoken Tech, it runs on the EOS blockchain, offering a unique gaming experience. Google has updated its advertising policy to allow NFT game promotions, with restrictions on gambling-related content.

After 17 years, Roblox will finally launch on PlayStation in October, announced CEO David Baszucki. The popular 3D gaming platform has been available on various platforms, but PlayStation support has been in the works. The addition will enable cross-platform gameplay across mobile, console, and VR. Baszucki hinted at plans for one or two more platforms in the future.

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Scams and Hacks

A crypto individual conducted a sophisticated Sybil attack, manipulating 21,877 zkSync wallets. They funded each with small Ether amounts, introduced the non-open source Gemstone (GEM) token, and whitelisted the wallets for token claims. The attacker created a private DEX for indirect transfers and added liquidity to boost GEM value. Automated transactions were executed with precision, avoiding manual intervention. Matter Labs is actively addressing the attack through GEM token claim contract detection.

Cryptocurrency security firm SlowMist identified a flaw in the LDO token contract that enabled fraudulent deposit attacks on exchanges. The issue stems from the contract's deviation from the ERC20 standard, leading to incorrect transaction results. Hackers exploited this to deposit more LDO tokens than they had, potentially withdrawing other assets. SlowMist advises exchanges to scrutinize transaction results, analyze token contract code thoroughly, and conduct regular security audits.

Binance CEO Changpeng Zhao (CZ) is urging the use of hardware 2FA for all crypto platforms after Vitalik Buterin's social media account was hacked to promote a crypto scam. CZ highlighted the need for caution on social media and called for enhanced security features like 2FA. He recommended using Yubikey, a USB-based security tool, to protect accounts. Responding to inquiries, Binance suggested using a combination of Authenticator and Yubikey for added security. The incident raised concerns about the use of SMS-based 2FA and emphasized the importance of robust security measures in the crypto space.

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Interesting Reads

Executives at Korea Blockchain Week predict that 2023 will be the year of genuine cross-chain interoperability. They foresee the end of "chain tribalism" and the rise of hundreds of interconnected chains. Products like Chainlink’s Cross-Chain Interoperability Protocol (CCIP) and ZetaChain are expected to play pivotal roles in this shift. The goal is to make it irrelevant which blockchain a project uses, focusing instead on the ability of contracts to communicate across different networks. The industry believes achieving seamless cross-chain interoperability is crucial for Web3 applications to gain real-world traction and legitimacy.

A Bitcoin user recently paid an exceptionally high transaction fee of 19 Bitcoin (BTC), equivalent to $509,563. This fee is significantly higher than the average transaction cost, leading to speculation about the reasons behind it. Possible explanations include a mistake, a misconfiguration in transaction software, or specific motives known only to the transactor. The incident has sparked various reactions in the cryptocurrency community, with some expressing disbelief and others using it to discuss Bitcoin's scalability and efficiency.

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Quick Links

FTX exchange plans to liquidate $3.4 billion in cryptocurrencies. This could impact the market, especially for assets like Solana (SOL) and FTX's token (FTT). FTX aims to sell up to $200 million in digital assets weekly. They're also taking legal action to recover funds from LayerZero and others. The exchange is reviewing promotional fees paid to celebrities like Naomi Osaka and Shaquille O'Neal.

Kaiko's report on crypto market liquidity reveals high concentration among top exchanges. Binance leads in both market depth (30.7%) and trade volume (64.3%). The top eight exchanges control 91.7% of market depth and 89.5% of trading volume. This concentration brings advantages but also risks, as seen in the FTX collapse. Other major players include OKX, Bitfinex, Coinbase, KuCoin, Kraken, and Bybit.

Coinbase CEO Brian Armstrong highlights the growing influence of crypto voters in the 2024 U.S. elections. He anticipates candidates will face scrutiny over their stance on crypto, given that around 56 million Americans have engaged with cryptocurrencies. Armstrong also suggests potential regulatory shifts, including leadership changes at the Securities and Exchange Commission. This aligns with candidates like Ron DeSantis and Robert F. Kennedy Jr. expressing their views on crypto, while Joe Biden and Donald Trump are viewed as open to exploring central bank digital currencies.

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Funding

Animoca Brands, a Hong Kong-based web3 investor, has raised $20 million for its project Mocaverse, which focuses on web3-native tools for gaming and entertainment. Mocaverse aims to serve as the identity and point system for web3 gaming, culture, and entertainment. The funding round was led by CMCC Global, with participation from Kingsway Capital, Liberty City Ventures, and GameFi Ventures, among others. Animoca plans to use the capital to further develop Mocaverse, including launching Moca ID, a non-transferrable NFT collection for crafting on-chain identities and engaging in the Mocaverse ecosystem.

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Resource of the Day

Smart contracts are self-executing agreements on a blockchain, initially proposed by computer scientist Nick Szabo. They automate binding functions, and Ethereum, with its Turing complete capabilities, became a key platform for them. These contracts, typically written in Solidity, enable a wide range of applications beyond financial transactions. However, they come with risks like software bugs. Despite this, smart contracts have transformed digital currency, allowing trustless trading, streamlined lending, creation of digital tokens, and the rise of decentralized organizations, revolutionizing the landscape of digital transactions.

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The information provided in this newsletter is for informational purposes only and should not be interpreted as investment advice, endorsement, or recommendation. Cryptocurrency investments carry significant risk due to their volatility. You should consider your financial situation, investment goals, and risk tolerance before making any investments. We strongly recommend consulting a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.

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