Author: Jody McDonald

Jody is a Brisbane-based freelance writer who specialises in writing about business, technology, and the future of work.

Categories
Australia Banking CBDCs Crypto News

Australia Explores Multi-CBDC Platform For International Settlements

The central banks of Australia, Singapore, Malaysia and South Africa, in conjunction with the Bank for International Settlements (BIS), have released a report outlining the results of a project to create two prototype multi-CBDC platforms.

Project Dunbar, which was launched in September 2021, concluded that multi-CBDCs are technically viable but significant coordination, governance and jurisdictional challenges will need to be overcome before they can be fully implemented in real-world situations. 

What Did Project Dunbar Involve?

Project Dunbar involved the creation of two multi-CBDC platforms shared by multiple central banks to transact with each other using different digital currencies. The use of such systems could potentially reduce reliance on intermediaries and lead to significant reductions in the cost and time taken to complete international transactions between financial institutions.

Diagram illustrating multi-CBDC platform. Source: Project Dunbar report

The prototypes were built using two different technology platforms – one developed primarily by R3 on the Corda platform, the second developed on the Quorum platform.

The report found that financial institutions could successfully use these shared multi-CBDCs to directly transact with each other, stating that:

This initial phase of the project successfully developed working prototypes and demonstrated practicable solutions, achieving its aim of proving that the concept of multi-CBDCs was technically viable.

Project Dunbar report

Technically Viable But Hurdles Ahead

While the report found that shared multi-CBDCs are technically viable, it also identified governance, jurisdictional and trust issues that need to be solved before the tech can become truly viable.

The report identified three key questions that need to be addressed:

  1. Which entities should be allowed to hold the digital currencies and access the shared platform?
  2. How can cross-border payments be simplified while respecting regulatory differences across different jurisdictions?
  3. What kind of governance arrangement would make countries comfortable sharing access to critical infrastructure such as payment systems?

Michele Bullock, assistant governor of the Reserve Bank of Australia (RBA), echoed these concerns, explaining:

Project Dunbar has provided valuable insights into the opportunities and challenges associated with developing a shared platform for multiple CBDCs to enhance cross-border payments. Allowing entities to directly hold and transact in CBDCs from different jurisdictions could reduce the need for intermediaries in cross-border payments, but it would need to be done in a way that preserves the security and resilience of these payments.

Michele Bullock, assistant governor, RBA

Australia’s involvement in Project Dunbar is another indication of the Reserve Bank’s growing interest in CBDCs, having last year sought to hire cryptocurrency experts to work in its Central Bank Digital Currency research team.

Categories
Blockchain Crypto News Markets OriginTrail

OriginTrail (TRAC) Soars 150% After Pharmaceutical Supply Chain Deal

TRAC, the native token for the OriginTrail network, has soared 150 percent following the rollout of its AidTrust pharmaceutical supply chain tracking system in more than 80 Indian treatment centres, and the launch of an upgrade on its testnet.

According to CoinGecko, the price of TRAC surged from a recent low of US$0.37 on March 16 to a high of US$0.90 on March 23. Over the same timeframe, 24-hour trading volume exploded from just over US$1 million to around US$30 million.

Supply Chain Tracking System Drives Price Action

The launch of AidTrust, a pharmaceutical supply chain tracking and tracing system developed in partnership with British-based BSI Group, has been a major driver of TRAC’s current price action:

The project aims to bring transparency and trust to medicine and vaccine supply chains. It is being rolled out in hospitals and treatment centres in India with plans to bring the system to more than 40 additional countries.

What is OriginTrail?

OriginTrail isn’t actually a blockchain – it’s a set of protocols run on a decentralised network of nodes that can augment blockchain functionality by enabling trusted data sharing between organisations and blockchains. 

Using OriginTrail, information from disparate sources – including different blockchains and oracles – can be shared and secured in what is known as a decentralised knowledge graph, which is searchable. It’s like a Google for blockchains.

The TRAC token functions as both collateral to ensure the accuracy and immutability of data and as a form of payment to compensate data holders for the use of their resources.

Origin Trail v6 Launched on Testnet

A second important driver of the price increases was the testnet launch on March 10 of OriginTrail v6, the latest version of the decentralised knowledge graph protocol. This update introduces a range of new features which aim to bring enhanced ‘Google-like’ capabilities to Web3:

The latest upgrade also significantly improves the scalability and performance of OriginalTrail. Following a thorough testing phase, OriginTrail v6 will launch on mainnet later in the year:

Blockchain-based supply chain tracking systems similar to OriginTrail, such as the Australian-based Security Matters, saw significant interest earlier in the Covid pandemic as transparency and trust within vaccine handling supply chains became a major point of concern.

Categories
Australia Crypto Exchange Cryptocurrency Law Regulation

Australian ‘2022 Digital Services Act’ Published for Crypto Custody Providers

The Australian Treasury has released a consultation paper outlining its proposed regulatory approach to crypto markets with a view to potentially introducing a Digital Services Act in the next 12 months. 

Industry has been given until May 27 to provide feedback on the proposals.

This follows appearances by NSW Liberal Senator Andrew Bragg and Jane Hume, the federal Minister for the Digital Economy, at Blockchain Week where they spoke about the need for a Digital Services Act to allow Australians to safely invest in crypto and to encourage investment and innovation in the burgeoning sector.

Government Focused on Secondary Service Providers

The proposed approach focuses on the regulation of what the government calls crypto asset secondary service providers (CASSPrs), which includes exchanges, brokers, assets managers, custodians and DeFi services such as decentralised exchanges.

According to the consultation paper, the digital services legislation would effectively seek to impose two types of regulation on CASSPrs: 

  • regulation of, and the introduction of a licensing system for CASSPrs; and
  • regulations relating to custodians and the secure handling of private keys.

Purpose of the Act

The overarching purpose of the proposed regulation is to provide more protections for investors and thereby increase public confidence and drive innovation in crypto. 

This focus was reaffirmed by Minister Hume during her March 21 Blockchain Week address, describing the proposed regulation as providing an “Australian-made badge of approval for CASSPrs”. She added:

The Morrison government wants to make sure that consumers can trust the exchanges that they use to buy crypto.

Jane Hume, Minister for the Digital Economy

Specifically, the proposed regulations will seek to mitigate the risk of investors losing their assets due to exchange insolvency or lack of liquidity and security risks such as hacking.

Government on Front Foot

These newly proposed regulations are part of a broader crypto focus by the federal government which includes a crypto taxation review and a token mapping exercise, both of which are due to be completed by the end of 2022.

This follows the release of a 12-point crypto regulation plan last October and recent calls from NSW Senator Bragg for Australia’s crypto industry to pick up its pace or risk missing opportunities.

Categories
Blockchain Cardano Hydra Tokens

Cardano Exploring Token Burning Mechanism Similar to Ethereum

The latest roadmap status update from Cardano suggests the blockchain may be investigating adding some form of token burning functionality, a feature that was added to Ethereum last year as part of the London hard fork update.

The Cardano update, released on its website on March 18, was vague about what is planned in terms of token burning, simply saying it was an option under consideration by the Hydra Team:

Finally, they inspected the options of token minting and burning within a Hydra Head along with scenarios of using tokens instead of datums.

Cardano status update

Confusion About Token Burning

The mention of token burning in this update was taken by some in the crypto industry to signal that Cardano founder Charles Hoskinson had dropped his known, long-standing opposition to token burning on the blockchain:

However, close followers of Cardano emphasised that the update stated token minting and burning may be coming to the Cardano layer-2 scaling solution Hydra, not the main Cardano blockchain itself:

Hydra is a layer-2 scaling solution for Cardano currently under development. Matthias Benkort, a Cardano software engineer, describes it as “an off-chain mini-ledger between a restricted set of participants, which works similarly (albeit significantly quicker) to the on-chain main ledger”.

Token burning being restricted to Hydra implies that the overall supply of ADA, Cardano’s native token, won’t be reduced and therefore won’t cause upward price pressure for ADA investors.

Hoskinson Attempts to Clarify

Hoskinson himself weighed in on the debate, retweeting a suggestion that Cardano is exploring token burning on its main blockchain and adding a GIF of an exasperated-looking Jackie Chan to express his frustration with the confusion:

Across the broader crypto market, token burning functionality has been implemented on many blockchains as a deflationary mechanism in order to increase token price. Last year, Binance burnt over 1.3 million BNB, at the time valued at almost US$400 million, in one of its quarterly token burns.

Categories
Gaming Investing NFTs

Favoured Meme Stock ‘GameStop’ Confirms It Will Launch a Premium NFT Platform by July

Video game retailer GameStop, widely known as the company whose stock kickstarted the meme stock investment craze, has announced it intends to launch a premium NFT platform by the end of Q2 2022.

The planned launch date was announced in GameStop’s Q4 2021 earnings call, released on March 17. 

GameStop Eyes Crypto Opportunities

In a further sign of its increased interest in crypto, GameStop also mentioned the significant growth potential it sees in the sector in its 10-K filing, explaining:

As we scale and expand our core offerings we will simultaneously invest in additional growth, including blockchain, digital assets (including non-fungible tokens), Web 3.0 technology, and new destination formats for our stores.

GameStop K-10 Filing

Given its existing status as a well-known video game retailer, GameStop plans to focus its NFT efforts on in-game assets and other game-centric virtual assets, including character skins and in-game real estate.

NFTs Will Launch On Immutable X

Having flagged its intention to enter the NFT space in May 2021, in January 2022 GameStop announced it had chosen to partner with Immutable X its platform. GameSpot has cited Immutable X’s zero gas fees for minting NFTs and its carbon-neutral status as crucial strengths. 

Immutable X is an Ethereum-based layer-2 system built specifically for NFT trading. It uses zero-knowledge rollup technology developed by StarkWare to complete over 9000 NFT transactions per second.

Categories
Cryptocurrency Law Regulation Ukraine

Ukraine’s President Signs Crypto Bill into Law Amid Fighting a War

Ukrainian President Volodymyr Zelenskyy has signed into law a bill that legalises the cryptocurrency sector and establishes a more favourable regulatory environment for virtual asset markets in the war-torn nation.

Ukraine had previously passed laws that recognised virtual assets, provided some consumer protections and clarified their tax status, but this new law goes much further towards creating a fully fledged legal framework for crypto:

Defined Legal Status, New Regulatory Body

In a statement released by the Ukrainian government on March 16 describing the new law, its main effects will be to:

  • determine the legal status and ownership rights of virtual assets;
  • appoint the National Bank of Ukraine and the National Commission on Securities and Stock Market as the regulators; and
  • determine who can provide virtual assets and handle registration.

Establishing the National Commission on Securities and Stock Market as the regulator of the crypto sector means that virtual assets will now be treated much more like traditional securities. 

The Ukrainian government says the new regulator will be given responsibilities including:

  • shaping policy in the field of virtual assets;
  • issuing permits to virtual asset service providers; and
  • conducting regulation, supervision and financial monitoring of virtual assets.

Crypto Seen As Source of Opportunities

The new law follows a massive influx of crypto donations into Ukraine from around the globe, with over US$100 million already donated.

But it’s not only crypto donations that have encouraged Ukraine to accelerate its adoption of crypto – the sector is a seen as a source of significant economic opportunities by the Ukrainian government. 

In a tweet following the signing of the new law, Alex Bornyakov, Ukraine’s Deputy Minister of Transformation, praised the move: 

Categories
Australia Cryptocurrency Law Investing Regulation

Australian Insurers Include ‘Crypto-Asset Exclusions’ in their AFSL Policies

Australian insurance providers have begun including specific crypto-asset exclusions in their professional indemnity coverage for financial services licensees, despite a growing demand for informed crypto investment advice.

According to Jared Timms from PNO Insurance, many insurers have felt the need to clarify their stance on crypto-assets and may soon update their policies accordingly. He stated in a recent blog: 

Having spoken to the major insurers of AFS licensees, the feedback has been there is no intention to cover advice from financial planners around cryptocurrency and it is likely specific exclusions may soon start to appear on Financial Planning PI policies. 

Jared Timms, senior account manager, PNO Insurance

Timms warns: “Any financial planner considering recommending investments into cryptocurrency should think about the uninsured risk they are potentially exposing to their business.” 

Insurance and regulatory roadblocks were key topics of discussion at the Professional Planner’s Researcher Forum in Sydney last week, where some financial services firms expressed an openness to adopting digital assets. 

What Does It Mean For Crypto Investors?

Insurance industry caution indicates that financial advisers covered by these policies cannot include crypto-assets in their approved product list and therefore cannot provide any advice on these assets without exposing themselves to significant risk. 

For now, crypto investors looking for advice will generally have to continue to look somewhere other than to qualified financial advisers. Despite this, crypto in Australia continues its slow march toward legitimacy. 

Recent news such as the CommBank offering crypto services to its customers, the announcement of the first Australian Bitcoin and Ethereum ETFs, and the CEO of the ASX predicting that crypto companies will soon start to play a bigger role in Australia’s tech sector all indicate crypto is gaining ground.

Interestingly, this lack of insurance cover for advice on crypto-assets now leaves some organisations, such as CommBank, in the potentially awkward position of offering investment products on which they cannot provide any advice.

Categories
Bitcoin Crime Crypto Wallets

BTC Mixer ‘CoinJoin’ Starts Blacklisting BTC Linked to Illegal Activity

The CoinJoin coordinator that facilitates the coin mixing functionality built into the privacy-focused Wasabi Wallet has started blacklisting accounts linked to criminal activity, in a move seen by many in the crypto industry as a blow to user privacy:

Essentially this means that Bitcoin addresses that have been linked to criminal activity in the past will be prevented from using the CoinJoin functionality offered by Wasabi Wallet.

Blacklists to Prevent Legal Trouble

According to blockchain analytics firm Elliptic, Wasabi Wallet’s CoinJoin functionality has likely been used numerous times in high profile thefts and scams to evade authorities. 

Apparently this illicit usage has concerned Wasabi Wallet’s parent company zkSNACKS. According to a series of tweets from one of its developers, the decision to implement blacklists on their CoinJoin coordinator is a bid to avoid legal and regulatory trouble:

In response to the move, Bitcoin users have aired concerns that it may impact their privacy and result in a slippery slope where legitimate use ends up being targeted by authorities:

Across the broader crypto market, privacy protocols have seen a growth in popularity recently, with the Ethereum-based mixer Tornado Cash surging 94 percent following recent updates.

What is CoinJoin?

CoinJoin is an open-source mixing protocol for the Bitcoin blockchain which allows users to perform anonymous transactions known as CoinJoins. 

CoinJoins create anonymity by obscuring the source and destination addresses used in the transaction – this process is also known more generically as coin mixing. CoinJoin coordinators play a vital role in finding users to participate in transaction pools and ensure anonymity.

CoinJoin Available on Alternative Services

Users do not need to use Wasabi Wallet to perform a CoinJoin transaction. While it is one of the most popular providers of the functionality, numerous other wallets and dedicated mixing services also offer automated CoinJoin functionality. 

Users can manually perform a CoinJoin, though this is difficult and requires advanced technical knowledge.

Categories
Blockchain Ethereum Polygon

Polygon Employs Temporary ‘Hotfix’ as Upgrade Causes 11-Hour Outage

Layer-2 Ethereum scaling solution Polygon was down for over 11 hours last week after an earlier network upgrade inadvertently introduced a bug, which disrupted the network’s consensus layer:

On March 10, Polygon notified users via its online forum that the network would be down from 5:50PM UTC to allow developers to correct the bug. The network was brought back online approximately 11 hours later after the Polygon team deployed a hotfix to address the bug.

Bug Prevented Network Consensus

As explained by the Polygon development team, the bug resulted in different Heimdall validators – part of Polygon’s consensus layer – being on different versions of the blockchain, which prevented the network from achieving 2/3 consensus, and in turn caused the entire blockchain to stop producing blocks.

Although still under investigation by the team, we suspect there may have been a bug in the upgrade which affected consensus, and caused different Heimdall validators to be on different versions of the chain, thereby not reaching 2/3 consensus. When using Tendermint consensus, this situation will cause the Heimdall chain to halt.

Team Polygon

Hotfix Partially Restores Network Functionality

In a forum post to announce the hotfix, the Polygon team explained that the Polygon Bridge – the functionality which allows users to make Ethereum transactions using Polygon to sidestep high Ethereum gas fees – would not be functional until a full update was applied at a later date:

“Kindly note, with this temporary hotfix, Polygon Bridge will not be active/available until we deploy the final solution.”

Outage Raises Concerns

Although users were notified of the outage in advance, many began expressing their concerns as it dragged on far longer than expected:

Only last December, Polygon experienced another critical bug which put over US$24 billion worth of tokens at risk. Polygon is by no means the only major blockchain experiencing uptime issues recently – for example, Solana has seen several significant outages since December.

Categories
Blockchain Crypto News ICON Korea Markets Regulation

New South Korea President Sends ICX Token Soaring 70%

The native token of the South Korean-based ICON blockchain, ICX, has jumped 70 percent following the election of a new crypto-friendly president.

In the 24 hours following the election of Yoon Suk-yeol, the ICX token went from a low of US$0.61 to a high of US$1.06. It has since retraced some of those gains and currently sits at US$0.83 – still down some 93 percent from its all-time high of US$13.16, reached in January 2018.

Crypto Plays Important Role in Close Result

Yoon Suk-yeol, who only came to politics in 2021 having previously worked as a high profile prosecutor, was the candidate for the conservative opposition party, People Power Party. His victory was not clear-cut, with the final margin being under 1 percent, reflecting how contentious politics has become in South Korea recently.

Suk-yeol ran on a platform promising to deregulate digital asset markets, lower taxes on crypto and reimburse victims of crypto fraud, in addition to tackling the stagnating South Korean economy and soaring housing prices.

New Direction for Crypto in South Korea

The previous South Korean president, Moon Jae-In, had been relatively anti-crypto, cracking down on South Korean-based exchanges in 2021 and forcing the vast majority of them to shut down.

The new president has taken a forward-looking approach to crypto, vowing to take what he characterises as a more realistic regulatory stance:

To realise the unlimited potential of the virtual asset market, we must overhaul regulations that are far from reality and unreasonable.

Newly elected South Korean President Yoon Suk-yeol

Crypto Becoming More Politically Relevant 

In a sign of its growing political significance, crypto was used by both major parties to appeal to younger demographics. In addition to offering crypto-friendly policies, the candidates from both major parties minted election-related NFTs to demonstrate their crypto bonafides during the campaign.

Following the executive order released by US President Biden this week, this election in South Korea may signal the beginning of a trend towards increased regulatory clarity and adoption for cryptocurrencies globally.