Morning Post - September 5

headlines

▌Federal Reserve Research Paper Warns of Future Risks of Encrypted CeFi and DeFi

The Federal Reserve’s research arm published two papers last week exploring the implications of DeFi and digital assets for financial stability. The Federal Reserve and its leadership have pushed for more oversight of the crypto industry, especially in the context of its ties to the broader financial sector. Its paper on financial stability touches on regulation, with the authors recommending stricter oversight of firms that handle client money. Under appropriate circumstances, oversight, full disclosure, and capital and liquidity requirements can increase the resilience of entities in the digital asset ecosystem, the paper said. The stability paper concluded that the crypto ecosystem is “prone to accumulating financial vulnerabilities.” , but later added that the financial stability risk is not widespread because the digital asset ecosystem does not provide important financial services and its interconnection with the traditional financial system is limited. The authors note that, nonetheless, this risk may Financial stability risks could quickly become serious if the digital financial system becomes more interconnected with traditional systems or expands the financial services it provides, they write.

policy

▌UK forces crypto exchanges to report alleged sanctions violations

Cryptocurrency exchanges must report suspected sanctions violations to British authorities under new rules, amid concerns that bitcoin and other crypto assets are being used to circumvent restrictions imposed in response to Russia's invasion of Ukraine. The official guidelines were updated on Aug. 30 to explicitly include “crypto assets” among assets that must be frozen when sanctions are imposed on individuals or companies. In addition to digital currencies such as Bitcoin, Ethereum, and USDT, crypto assets can also include other digital assets of nominal value, such as NFTs. The rules, set by the Treasury Department’s Office of Financial Sanctions Enforcement, would mean it would be a criminal offense for cryptocurrency exchanges to fail to report customers designated for sanctions. Under the rules, cryptocurrency exchanges must take immediate action if they suspect that one of their clients has been sanctioned, or that they are violating sanctions, imposing similar obligations on them to professionals such as real estate agents, accountants, lawyers and jewelers.

cryptocurrency

▌Head of SEC Internet Enforcement Office: The idea of decentralization is completely fraudulent

John Reed Stark, founding director of the SEC's Office of Internet Enforcement, said in an interview that there are many reasons to be skeptical about cryptocurrencies, the consequences of blockchain technology being used for cryptocurrencies, NFTs, decentralized finance, all of which All wreaking havoc, not just in ransomware, human trafficking, drug dealing. A wave of crypto crime is sweeping the globe. Then there are the environmental concerns associated with cryptocurrency mining. The idea of decentralization is a total fraud. There are miners, digital wallets, platforms, exchanges, etc. There are too many middlemen, and every time you read it, there is more and more content. Gary Gensler is considered a leading critic of cryptocurrencies. But I've never heard him condemn blockchain as a hoax. In fact, in a 2018 MIT lecture, he was open to potential innovations in encryption and blockchain technology.

▌Solana Joint Innovation: The average daily transaction volume of Ethereum is only 1/30 of Solana

Solana co-founder and CEO Anatoly Yakovenko said in a new interview with Real Vision’s Raoul Pal that Solana’s goal of processing transactions at a super-high rate presents various challenges, explaining: “This is our biggest challenge, perhaps Is a challenge I like because all these challenges come because we have users. Solana has about 30 million transactions per day when you look at the normal transactions on the app from users only from people using the web Transactions, peaked at 65 million, which is more than all other blockchains combined. Binance Smartchain’s transaction volume is only one-tenth that of Solana, and Ethereum’s is only about one-thirtieth. Due to this load, we Saw some unforeseen circumstances, but it seems a bit short-sighted for some to express displeasure with Solana."

▌BIS: Cryptocurrencies Outperform Fiat Ecosystems in Achieving Advanced Goals of Future Monetary Systems

Governments across the globe are looking at central bank digital currencies (CBDCs) as a means of improving the existing fiat ecosystem. A publication from the International Monetary Fund (IMF) suggests that the technical prowess of cryptocurrencies, backed by the underlying trust of central banks, is key to enabling a rich monetary ecosystem. A BIS study in June showed that cryptocurrencies outperform fiat ecosystems in achieving the high-level goals of a future monetary system. By embracing the core of trust that central bank money provides, the BIS executive noted, the private sector can adopt the best new technology to foster a rich and diverse monetary ecosystem. It further recommends that central banks leverage innovations such as tokenization to allow purchases using multiple fiat currencies – further benefiting merchants and customers.

▌The United States, China, and India have become the three gathering places for Web3 talents

According to the Global Blockchain Industry Talent Insight Report, global Web3 talents will increase by 76% year-on-year in 2022. The United States, China and India are the three major gathering places for blockchain talents; the NASSCOM report "Crypto Tech India" shows that the Indian Web3 industry has been Growth of 39% in five years, employing nearly 50,000 people.