Product Integrations and Data Indicate Increased Interest in DeFi
By Amos Kim
MetaMask, a web3 Ethereum Network cryptocurrency wallet, recently announced a new integration with a major U.S. payments and fintech firm. According to a blog post, the new integration will allow MetaMask users to use their balance held with their account at the fintech firm, or their bank account or debit card linked to their account at the fintech firm, to purchase and add ETH directly to their MetaMask wallet. The integration also allows the transfer of ETH from their crypto account with the fintech firm to their MetaMask wallet. According to reports, the fintech firm recently disclosed that as of March 31, 2023, it held $943 million in crypto assets on behalf of its customers.
According to a recent report by CCData, a digital asset data and index provider, the trading volume on the largest decentralized exchange was higher than the trading volume on one of the largest centralized U.S. exchanges for four consecutive months. According to CCData, factors for the increased trading volume on the decentralized exchange include the depegging of the USDC stablecoin from the U.S. dollar as a result of recent bank failures, and increased regulatory focus on centralized exchanges. In a related development, a recent survey conducted by the largest decentralized exchange found that “many U.S.-based CeFi users are interested in experimenting with DeFi” but are hesitant due to complexity, lack of understanding, and cost.
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Fintech Firms and BIS Pursue CBDC Initiatives
By Robert A. Musiala Jr.
According to a recent press release, a major U.S. fintech firm has announced the launch of its Central Bank Digital Currency (CBDC) platform, which is described as “a frictionless end-to-end solution for central banks, governments, and financial institutions to issue their own central bank digital currency.” The same fintech firm recently acquired a cryptocurrency custody startup for $250 million, according to reports.
In related news, Swiss-based fintech firm Temenos recently announced “that it has proven integration of its leading banking platform with multiple DLT-based Central Bank Digital Currency (CBDC) technology stacks, successfully executing end-to-end retail CBDC use cases for commercial bank touch points.” According to a press release, Tenemos leveraged the R3 Corda blockchain platform in one integration project and leveraged the Hyperledger Besu Ethereum client in another project.
As part of “Project Polaris,” the Bank for International Settlements (BIS) recently published its “Handbook for offline payments with CBDC.” According to a BIS press release, “[t]he handbook provides a comprehensive overview of the key aspects of offline payments with CBDC and is intended to serve as a guide for central banks considering implementing offline payments capabilities.” Through the handbook, BIS intends to help central banks understand CBDCs and the available technologies and security measures; the main threats, risks and risk management measures; privacy issues, inclusion needs and resilience options; design and architecture principles; and potential operational and change management issues.
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Blockchain Applications Announced for DAO Voting, Oracles and Data Security
By Robert A. Musiala Jr.
A major U.S. cryptocurrency custody and infrastructure provider recently announced that it will integrate Snapshot, a token-based voting and governance tool, to allow its users to participate in protocol governance proposals with tokens custodied on its platform. According to reports, users will be able to vote on governance proposals using the public key associated with their custody account without having to transfer any cryptocurrency tokens off the custody platform.
According to reports, a major U.S. cryptocurrency exchange recently onboarded its cloud service as a node operator for the Chainlink oracle network. The move will reportedly improve the security and reliability of Chainlink’s decentralized price feeds and other Chainlink data oracles.
In a final notable item, the U.S. Department of Defense (DOD) recently finalized a Phase III contract with blockchain startup Constellation, which provides blockchain infrastructure to support decentralized marketplaces and maintain data provenance and integrity. According to reports, Constellation recently completed a Phase II DOD contract that led to a “well-defined deliverable prototype” focused on modernizing the cybersecurity of DOD systems to provide “a secure way to effectively and efficiently transfer confidential data across [DOD] Defense Transportation System commercial airlift partners without sacrificing cost or speed.” The Phase III contract will reportedly focus on commercialization of the Phase II prototype.
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SEC Brings Crypto Fraud Charges, IRS Trains Ukraine on Crypto Investigations
By Christopher Lamb
According to a recent litigation release by the U.S. Securities and Exchange Commission (SEC), the SEC issued a complaint against defendants that allegedly “conducted fraudulent offerings of securities, including crypto asset mining pools, through dozens of websites,” including GA-Investors.org. These websites offered “exorbitant returns – in some cases as high as 61.9% in 24 hours – for investments in securities.” According to the complaint, the GA Investor’s website “offered guaranteed daily returns ranging from 2% to 4.5%” and “investors were directed to purchase crypto assets from a separate crypto asset trading platform and transfer those crypto assets to a GA Investors wallet address.” When investors sought to make withdrawals from their accounts, “the defendants froze investor accounts and misappropriated the investor funds.”
In other recent news, according to a press release by the Internal Revenue Service (IRS), the IRS Criminal Investigation (IRS-CI) and private sector are “delivering blockchain analysis tools and cyber training to Ukrainian law enforcement agencies in April and May.” According to the press release, these trainings and license deliveries are made in an effort to “identify all Russian assets on the territory of Ukraine.” As part of the delivery, IRS-CI donated licenses for Chainalysis Reactor, a cryptocurrency investigative platform, and will provide advanced training for Ukrainian investigators that includes “hands-on instruction in blockchain and cryptocurrency tracing, as well as instruction on developing operational leads.”
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FATF Chief Urges End to ‘Lawless Crypto Space’
By Joanna F. Wasick
The Financial Action Task Force (FATF), a global financial crimes watchdog, recently issued a letter, “An end to the lawless crypto space,” urging G-7 members to “lead by example” in implementing the FATF Recommendations — global standards on combating money laundering, terror financing and proliferation financing. As its title suggests, the letter emphasizes the supervision of “crypto assets,” which FATF states “continue[s] to operate in a virtually lawless global environment,” thereby empowering criminals, terrorists and rogue states. Specifically, FATF urges countries to implement and enforce its “travel rule” on the cryptocurrency sector, which requires virtual asset service providers (VASPs) to identify the sender and receiver of cryptocurrency transactions. “Around the globe, countries have made progress in implementing most of the standards; however, progress on implementing FATF’s updated requirements on crypto assets has been relatively poor,” FATF states, adding that 73% of countries are still fully or partially noncompliant with the watchdog’s standards with respect to virtual assets and VASPs.
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