Initiatives announced in Germany and Hong Kong boost demand for stablecoins
By Robert A. Musiala Jr.
Recent reports have highlighted the growing demand for stablecoins. According to one report, the PYUSD stablecoin market cap recently surpassed $500 million, with PYUSD’s total supply increasing by 97% since June 26. The report attributes PYUSD’s expansion to its recent introduction onto the Solana network, increased adoption on centralized exchanges, and integration into decentralized finance protocols.
According to another recent report, the USDT stablecoin recently surpassed $55 billion in 24-hour trading volume, surpassing the combined 24-hour trading volume of BTC, ETH, USDC, SOL and FDUSD. The report noted that USDT regularly sees daily volumes exceeding $25 billion, while BTC and ETH regularly see daily volumes between $4 billion and $8 billion.
In other stablecoin news, recent reports suggest that a global asset management firm owned by a major German bank is planning to introduce the first euro-denominated stablecoin regulated by Germany’s financial regulator BaFin. The company reportedly plans to launch the stablecoin by June 2025.
Also in Hong Kong, the Hong Kong Monetary Authority (HKMA) recently issued a press release announcing that the HKMA and the Financial Services Board (FSTB) have published “Consultation Conclusions on Legislative Proposals to Implement a Regulatory Regime for Fiat-Referenced Stablecoin (FRS) Issuers in Hong Kong.” According to the press release, the HKMA and FSTB aim to introduce the stablecoin bill “as soon as possible,” and that the HKMA is currently “processing applications for the stablecoin issuer sandbox, and the list of sandbox participants will be announced shortly.”
For more information, see the following links:
New publication covers technical concepts of DeFi, staking and block construction
Christopher Lamb
The Enterprise Ethereum Alliance (EEA) has released the first edition of the DeFi Risk Assessment Guidelines, a document to help identify and mitigate risks for DeFi protocols. The guidelines were drafted with input from multiple organizations in the crypto space and cover a range of risks arising from governance, tokenomics, software, liquidity, regulatory compliance, and other external market factors. The guidelines aim to establish a framework as a resource for DeFi protocol founders and developers. According to recent reports, the guidelines have already been used to assist the Foundation in obtaining licenses from regulators in the Abu Dhabi Global Market and the United Arab Emirates.
In related news, Solidus Labs recently published a whitepaper titled “Helping Risk in the Staking and Blockbuilding Ecosystem.” The whitepaper aims to provide “an in-depth examination of Ethereum’s current staking and blockbuilding landscape.” In doing so, it reviews the global regulatory landscape regarding blockbuilding and staking, identifies potential risks from a legal and compliance perspective, and explores recent technological innovations being used to enhance risk management.
For more information, see the following links:
CFTC Chairman Speaks of Need to “Close Regulatory Gaps” for Digital Assets
By Robert A. Musiala Jr.
The U.S. Commodity Futures Trading Commission (CFTC) recently released testimony given by CFTC Chairman Rostin Benham at a U.S. Senate Committee on Agriculture, Forestry and Fisheries hearing on digital commodity oversight on July 10. Chairman Benham began his testimony by emphasizing the need to “close the regulatory gap.” Among other comments on the topic, the Chairman stated that “this gap of non-security tokens continues to represent a large portion of the digital asset market as measured by market capitalization…Federal legislation is urgently needed to create a path toward a regulatory framework that protects U.S. investors, and potentially the financial system, from future risks.”
On enforcement, the Chairman noted that “the CFTC has brought more than 135 total digital products cases.”[t]The rate of increase in digital asset enforcement cases since 2020 reflects the accelerated and sustained adoption of digital assets by U.S. investors.” The Chairman also highlighted a recent decision by the U.S. District Court for the Northern District of Illinois in which the CFTC prevailed in a fraud prosecution involving “digital asset products,” noting that “in the decision, the Court reaffirmed that both Bitcoin and Ether are commodities under the Commodity Exchange Act.”
Finally, the Chairman reiterated the need to “close the regulatory gaps” and identified the following “components of the framework” to ensure the CFTC has the tools to provide customer and market protection: (1) a “principles-based oversight model” that strikes “the right balance between clear outcomes-based requirements and prudent flexibility to meet those outcomes”; (2) adequate funding in the form of “a permanent fee model imposed exclusively on digital asset registrants and commensurate with the responsibilities outlined in the bill”; and (3) “[L]”The CFTC has legislative authority to require registrants to provide comprehensive disclosure programs.” (4)[C]”Comprehensive authority regarding anti-money laundering, know-your-customer and customer identification programs” (5)[A] “A disciplined and balanced framework for determining whether tokens are products or securities under current law,” and (6) “[A] It aims to implement a “comprehensive education and outreach program” to “enable investors to understand both the risks and opportunities of this technology.”
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Cryptocurrency exchange hacked, $235 million stolen; illegal miners steal $723 million worth of electricity
By Keith R. Murphy
A report from Elliptic details the recent hack of Indian exchange WazirX, which reportedly resulted in the loss of $235 million worth of crypto assets, including Ether, Shiba Inu, Matic, and Pepe. According to the Elliptic report, the hackers have ties to North Korea and are already using decentralized services to launder the stolen funds.
A recent report said that illegal cryptocurrency miners in Malaysia allegedly stole $723 million worth of electricity between 2018 and 2023. Malaysian authorities have reportedly been cracking down on illegal mining activities using methods to spot areas with unusually high electricity usage, seizing more than 2,000 machines in October 2022 alone.
A recent blog from Chainalysis featured a preview of the company’s new Money Laundering and Cryptocurrency report, which focuses on the complexities of money laundering in the cryptocurrency system. According to the blog, “The comprehensive report not only shows how to track known illicit funds on the blockchain, but also showcases advanced data techniques to identify potential money laundering activities for lead generation.” The report, which is now available, aims to expand the company’s money laundering analysis to cover suspicious transaction patterns that may be indicative of money laundering activities related to off-chain crimes, as stated in the blog.
For more information, see the following links:
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