The report points out stablecoin’s possible low stress resistance and overuse in leveraged cyptocurrency trading, reiterates its position on CBDC.

The United States Federal Reserve Board released its semiannual Financial Stability Report on Monday. The report points to volatility on commodities markets brought on by the Russian invasion of Ukraine, the spread of the Omicron variant of Covid and “higher and more persistent than expected” inflation as sources of instability.

Stablecoins and some types of money market funds were singled out in the report and noted to be prone to runs. According to the Fed, stablecoins have an aggregate value of $180 billion, with 80% of that amount represented by Tether (USDT), USD Coin (USDC), and Binance USD (BUSD). They are backed by assets that may lose value or become illiquid during stress, leading to redemption risks, and those risks may be exacerbated by a lack of transparency, the central bank said.

Besides that, the increasing use of stablecoin in leveraged trading of other cryptocurrencies “may amplify volatility in demand for stablecoins and heighten redemption risks.”

The report reflects information as of April 25. Since the Federal Open Market Committee voted for an interest rate hike of 50 base points on May 4, some of the signaled instability has been manifested. Terra USD (UST) flipped Binance USD to become the third-largest stablecoin on April 18, then temporarily de-pegged from the dollar and dropped to $0.67 on Tuesday. The USDT/BTC margin lending ratio remained bullish, however.

Related story: The United States turns its attention to stablecoin regulation

The Fed report featured a boxed discussion of central bank digital currencies that largely covered familiar ground. It reiterated the findings of the Fed’s January discussion paper that a U.S. digital dollar would best meet the country’s needs if it were privacy protected, identity verified, intermediated, and transferable. It went on to restate its neutral position on the issue of creating a U.S. CBDC.

Source: https://cointelegraph.com/news/the-fed-cites-worries-about-stablecoin-in-its-latest-financial-stability-report

In a note authored by Michael Saylor, Nic Carter and Darin Feinstein, the Bitcoin Mining Council alleges that lawmakers can't tell the difference between a data center and a power plant.

The Bitcoin Mining Council (BMC) has responded to a letter sent to United States Environmental Protection Agency (EPA) Administrator Michael Regan by Democratic legislators last month with a letter of its own seeking to rectify inaccuracies about Bitcoin (BTC) mining and its environmental impact.

Penned by MicroStrategy CEO Michael Saylor, Castle Island Ventures partner Nic Carter and Darin Feinstein of Core Scientific, the BMC letter, which has over 50 signers, highlights alleged misconceptions in the document sent to Regan. In particular, the authors said that the original letter, which was signed by Democratic Representative Jared Huffman and 22 members of Congress, “confuses datacenters with power generation facilities,” among other inaccuracies.

The Democrats’ letter urges the EPA to ensure that digital asset miners comply with “foundational environmental statutes like the Clean Air Act or the Clean Water Act” and goes on to air several concerns relating to cryptocurrency mining, such as electronic waste and noise pollution. The BMC letter seizes on eight points and rebuts them at length.

According to the industry group, the original letter's assertion that Bitcoin mining facilities across the country are "polluting communities” is inaccurate. According to BMC, Bitcoin mining facilities produce no pollution, rather power generating facilities do. The failure to make that distinction comes up more than once. The authors also debunk what they see as outright misinformation, such as “A single Bitcoin transaction could power the average U.S. household for a month.”

However, BMC may have revealed its own prejudices in its response to the claim that proof-of-stake (PoS) processing is less energy-intensive. After holding PoS to several criticisms, the industry group states the following:

“Given that Proof of Stake and Proof of Work are qualitatively different, it’s misleading to refer to Proof of Stake as a more ‘efficient’ form of Proof of Work, since it does not achieve the same thing.”
The letter also points out that many miners engage in high-performance computing, which has many beneficial applications beyond Bitcoin and digital assets.

BMC is an industry association open to all Bitcoin miners. It originated from a meeting of North American Bitcoin miners initiated by Michael Saylor in May 2021. Currently, the group has 44 “advisory members.” It has also published several reports on the environmental impact of Bitcoin mining and proof-of-work more generally. Some of the findings in its reports have been disputed.

Related: Go green or go home? What the NY State mining moratorium could mean for crypto industry

The BMC letter was signed by some of the crypto industry's most prominent names and supporters, including Block Inc.’s Jack Dorsey, Fidelity Investments senior vice president Tom Jessop, Fordham Law School Professor Donna Redel, Grayscale Investments CEO Michael Sonnenshein and SkyBridge Capital founder Anthony Scaramucci.

source: https://cointelegraph.com/news/bitcoin-miners-rebut-claims-made-by-us-democratic-legislators-to-epa-administrator

Mastercard targets banks and merchants that need help when adopting crypto-enabled technologies and nonfungible tokens (NFTs).

Continuing its goal to pursue a spot within the crypto industry, Mastercard recently announced that the firm is expanding its consulting business with practices that are dedicated to crypto.

In the announcement, Mastercard’s Data & Services President Raj Seshadri says that the financial institution will continue to help clients navigate the ever-changing world of finance, and help them identify challenges and anticipate what is coming next.

“Over the past 20 years, we’ve worked with our customers across banking, fintech, retail, travel and other sectors, helping them understand and navigate every challenge and opportunity thrown their way.”
The firm’s consulting efforts target banks and merchants that need assistance when adopting crypto. This includes helping create crypto-enabled loyalty programs and developing strategies for crypto and NFT integration. Apart from this, Mastercard will use its partnerships with “digitally native firms” to offer crypto solutions and help businesses enter new markets.

Additionally, the global financial institution is also focusing on assisting central banks as they explore the creation of central bank digital currencies (CBDCs). According to Mastercard, its testing platform allows central banks to perform research, testing and consultation with experts in payment systems, regulation and governance before launching their CBDCs.

Related: ConsenSys launches Rollups for privacy-enabled transactions on Ethereum blockchain with support of Mastercard

In December 2021, Mastercard’s Liza Oakes, executive vice president of market development, had a chat with Cointelegraph’s Editor-in-Chief Kristina Cornèr at Global Impact Week. According to Oakes, aside from CBDCs, the firm is also looking into “stablecoins and how to support their developments.” Oakes also recognized that there are security challenges in the realm of NFTs and mentioned that the company is developing solutions for this.

Last month, Mastercard partnered with Coinbase to allow non-crypto users to be able to purchase NFTs with their credit cards, without setting up a wallet and buying Ethereum (ETH). With this, purchasing NFTs in the Coinbase NFT marketplace is simplified for crypto beginners who want to use their fiat.

Source: https://cointelegraph.com/news/mastercard-expands-consulting-with-crypto-dedicated-practices

The penalty comes after months of heightened regulatory attention to crypto lending platforms.


On Feb. 14, the Securities and Exchange Commission, or SEC, announced actions against crypto lending company BlockFi over its failure to register high-yield interest accounts that the agency deems to be securities.

New Jersey-based BlockFi will pay $50 million in settlement to the SEC and another $50 million to 32 U.S. states that brought similar charges. These are some of the heaviest penalties ever imposed by a U.S. federal regulator on a cryptocurrency service provider. The firm also agreed to stop onboarding new customers to the unregistered service, BlockFi Interest Accounts, and attempt to bring it into compliance with the Investment Company Act of 1940 within the next 60 days.

BlockFi Interest Accounts, launched in March 2019, allowed investors to lend their crypto assets to the platform in exchange for monthly interest payments of up to 9.5% — significantly higher rates than interest-bearing deposit accounts in most traditional financial institutions offer.

Despite the widespread critique that securities laws written in the 1930s and 1940s could have limited applicability to digital asset-based products, SEC chairman Gary Gensler lauded the settlement as an instructive precedent for crypto lending platforms. Gensler said in a statement:

"Today’s settlement makes clear that crypto markets must comply with time-tested securities laws, such as the Securities Act of 1933 and the Investment Company Act of 1940. It further demonstrates the Commission’s willingness to work with crypto platforms to determine how they can come into compliance with those laws."
Cryptocurrency lending products began attracting increased scrutiny from both federal and state regulators last September. According to a January report, the SEC was investigating products similar to BlockFi Interest Accounts offered by Gemini, Celsius Network and Voyager Digital to determine whether these offerings constituted securities.

Source: https://cointelegraph.com/news/sec-hits-blockfi-with-a-100-million-penalty-gives-60-days-to-comply-with-a-1940-law

The separately managed account will be exclusively available for Coinbase Prime users and specifically targets the institutional investor.

Cryptocurrency exchange Coinbase has penned a partnership agreement with One River Digital Assessment Management to provide institutional-grade wealth managers with an exclusive platform to acquire digital asset investments and engage in related activities.

Detailed in an official blog post, Coinbase claimed that the creation of the ONE Digital SMA will grant exposure to “a suite of digital investment strategies and indexes in an easy-to-use separately managed account platform."

The function will be exclusively accessible to Coinbase Prime users, a premium subscription service offering enhanced trading capabilities, and a bespoke custody model to protect assets tailored for the niche requirements of high net-worth individuals.

In the announcement, Coinbase summarized the service by saying:

“ONE Digital SMA is a solution for wealth managers that want to give clients access to crypto through direct ownership of assets, complete transparency and the ability to optimize future returns through value-added services, like staking.”
Related: One River Digital raises $41M from Goldman Sachs and Coinbase

Coinbase Ventures were one of three cryptocurrency firms alongside Liberty Mutual Insurance and banking titan Goldman Sachs, to invest in the $41 million Series A funding raise of crypto hedge fund One River Digital — a subsidiary of One River Asset Management — in September 2021.

The initiative sought to enhance the exposure and subsequent adoption of the digital asset space among institutional clientele in the United States and wider regions. Recent valuations calculate that One River Asset Management holds in the region of $2.3 billion in assets-under-management (AUM).

Source: https://cointelegraph.com/news/coinbase-partner-with-oneriver-to-roll-out-new-institutional-platform

Many users bought Punks' NFTs on the basis that there were only going to be 10,000 of them, not potentially 20,000.

Late Monday, popular nonfungible tokens, or NFTs, platform OpenSea once again delisted the CryptoPunks v1 collection, which spiraled into existence along with the iconic CryptoPunks v2 collection due to a smart contract bug. This was allegedly due to a Digital Millennium Copyright Act takedown notice issued by CryptoPunks v2 developers Larva Labs to OpenSea. As the company is also the creator of the CryptoPunks v1 collection, this move has struck some as strange.

For many years, OpenSea banned the CryptoPunks v1 collection as users shunned their authenticity. However, the collection's recent listing on competing NFT platforms, such as LooksRare, led to an increase in recognition and led OpenSea to rescind its first ban. At the time of publication, the wrapped CryptoPunks v1 collection had surpassed 315.44 Ether (ETH) ($974,000) in total volume traded and continues to operate.

But the battle for the authenticity of the NFT collection appears to be heating up. In an announcement posted in the official CryptoPunks v1 Discord, developer Velinova.eth alleges that they've spoken with a "top-tier IP attorney from the U.S." who claims they are "lawfully able to carry on in the trade of these CryptoPunks." Meanwhile, the community is preparing a counter-notice to the OpenSea takedown. On top of that, its NFT holders have chosen to rename the collection to "CryptoPunks V1 313 WPV1," partly to reflect the NFTs' wrapped nature for patching up the aforementioned bug.

The issue of CryptoPunks' authenticity may have significant financial consequences. With a total of 824,947.17 ETH traded ($2.55 billion), CryptoPunks v2 is the most popular NFT collection globally. However, a part of the collection's high demand stems from its scarcity as its supply is fixed at 10,000 Punks. If another 10,000 images from CrptoPunks v1 are legitimized, it could potentially dilute the brand, leading to a rapid decrease in the NFTs' price.

Source: https://cointelegraph.com/news/opensea-once-again-delists-cryptopunks-v1-as-legal-battle-heats-up

The scam involves sending users a text message with a link to cancel withdrawals, leading users to a fake website designed to harvest their login credentials.

Binance CEO Changpeng “CZ” Zhao has alerted the crypto community against a “massive” SMS phishing scam targeting Binance customers.

Tweeting on Friday, CZ alerted users of a phishing scam campaign directed at Binance users through SMS.

Per the screenshot shared by CZ, the scam involves sending users a text message with a link to cancel withdrawals, leading users to a fake website designed to harvest their login credentials.

The CEO has warned Binanc users not to click on any links from SMS messages and advised them to always type the URL for the exchange into their browsers manually.

Several cases of hacking and phishing have emerged so far in 2022, with some platforms suffering significant losses as a result of these attacks.

Related: Hodlers beware! New malware targets MetaMask and 40 other crypto wallets

As reported by Cointelegraph, the Wormhole token bridge was subject to a security vulnerability on Wednesday, resulting in the loss of 120,000 Wrapped Ether (wETH) tokens ($321 million) from the platform. On Jan. 17, $33.8 million in crypto assets was stolen from Crypto.com following a security breach.

Users of digital currencies have also been warned of a new malware that targets browser plugin wallets, such as MetaMask and Coinbase Wallet.

Source: https://cointelegraph.com/news/scam-alert-binance-ceo-warns-users-of-massive-sms-phishing-scam

It’s not just scalability: could a new smart contract development paradigm be the key to unlocking mainstream DeFi?

The beating heart of any ecosystem of decentralized applications, DApps, is its underlying technology stack. For Ethereum (ETH), this is its “Nakamoto” consensus, Ethereum Virtual Machine (EVM) execution environment, and Solidity programming language. Together, these technologies have allowed smart contract developers to propel decentralized finance (DeFi) from concept to reality.

For DeFi to make the next leap - to mainstream adoption - scalability is the technological requirement that garners the most attention. But an often overlooked but equally important aspect of layer-one platforms is their approach to smart contract development.

While Solidity and the EVM are the core technologies that allowed Ethereum to unquestionably be DeFi’s pioneer, pioneers are also the ones to make all the mistakes. Ever wonder why it feels like there are a never-ending series of DeFi hacks and exploits today? It’s the result of a programming approach that makes it incredibly hard to manage tokens securely. Because when Ethereum was being designed, DeFi didn’t exist.

But a fix isn’t easy. Major changes to Solidity and the EVM aren’t possible as this would break the majority of DApps that have already been built. Therefore, newer platforms have a real opportunity to learn from and improve upon the developer experience –– because the improved DApps that those developers build could enable the next wave of DeFi adoption.

Why DeFi development is hard on Ethereum
Whether it’s tokens for decentralized borrowing and lending, tokens for an NFT game or art piece, or tokens for a financial derivative, they are at the core of practically every use case in DeFi and crypto.

However, the only token that the Ethereum platform natively understands is ETH. All other tokens, whether under the ERC-20, 721, 1155, or any other standard, only exist as variables (regular old numbers) inside each smart contract.

The Tether token – USDT –– is a list of accounts and associated balances inside the USDT smart contract. The same goes for Shiba Inu (SHIB) and every other token built on Ethereum. This is why you can’t swap ETH on Uniswap (UNI), and, instead, you have to, bizarrely, swap wrapped-ETH (wETH), which is an ERC-20 token backed by ETH held in custody.

This brings problems. You cannot “send” tokens from one person to another because the tokens don’t live in a user’s wallet. They live only as a balance associated with an account inside each individual contract.

To swap USDT for SHIB, a message is sent to debit your account in the USDT contract and credit your account in the SHIB contract. But the USDT debited from your account must go to some other account in the USDT contract, and likewise, the SHIB credited to your account must have come from some other account in the SHIB contract.

With the burden of implementing a new token in each and every smart contract and for developers to ensure that their contracts are safe under all possible scenarios, developers spend nearly all their time, up to 90%, on testing and validation. This leaves hardly any time left over for them to build what they actually want: DeFi functionality.

With such a frustrating developer experience, is there a better way?

Tokens as the core of DeFi development
DeFi is all about tokens. This means tokens shouldn’t be an afterthought to the development experience - they should be front and center - right at the very core of the platform.

That’s why the right programming language can accelerate the development of not only a single platform but an entire industry. An example of this being done is Radix, a layer-one protocol, which uses “asset-oriented” programming and is introducing it with its Scrypto programming language.

How does it work? First, tokens are no longer defined inside a smart contract, as with the list of accounts and balances described above. Instead, tokens live in a separate layer, following rules that the platform enforces. Just as the Bitcoin platform enforces that BTC can’t be double spent, drained or lost in a transaction, so too does asset-oriented programming ensure these same kinds of logical behaviors but for every token created on the platform.

With those rules in place, tokens gain the same properties as you would expect from a physical coin in your pocket. You can physically give it to someone else, but the platform guarantees that it is impossible for the token to be in two places at once, nor can it disappear.

Given this physicality of behavior, DeFi developers can then build DeFi DApps as they would intuitively draw them on a whiteboard. Words like “take” and “put” in the programming language actually take and put tokens in places.

No more defining the rules of finance within every single smart contract, from scratch, as with Solidity. With Radix, developers are provided all the tools they need to build secure code quickly –– supercharging their productivity.

Ultimately whether developers flock to a new paradigm or prefer the old one depends on a fine-grained balance between the network effect of the old versus the advantages of the new.

Learning a new approach to developing DeFi takes work. And this is especially risky if the ecosystem you’re building for is starting from scratch, compared to one with thousands of DApps, mature developer communities and millions of users.

But as we saw over 2021, new layer ones can grow quickly. With the right execution, there’s a chance that we may see a new upstart in town. One that might very well be capable of galvanizing a community of developers laser-focused on the mainstream adoption of DeFi.

Source: https://cointelegraph.com/news/how-a-game-engine-for-defi-could-facilitate-accelerated-development