The world of digital money moves quickly and is time consuming to keep up to date with. To keep you up to speed with the most important pieces of news that have lasting implications especially for stablecoins and CBDCs, the monthly Stablecoin and CBDC News Digest takes care of it for you.
What happened in the stablecoin space?
Stablecoin Issuer Tether Ordered to Produce Documents Showing Backing of USDT.
Tether has been ordered by a U.S. judge in New York to hand in financial records relating to the backing of USDT. The order requires Tether to produce general ledgers, balance sheets, income statements, cash-flow statements, and profit and loss statements and records of any trades or transfers of cryptocurrency or stablecoins by Tether. Additionally, Tether has to share details about the accounts it holds at crypto exchanges (i.e., Bitfinex, Poloniex and Bittrex). The backing records order forms part of a lawsuit that has been going on since October 2019. It alleges Tether conspired to issue the stablecoin as part of a campaign to inflate the price of bitcoin (BTC). Tether states that the order to provide evidence of USDT backing is part of routine discovery in court cases.
Binance is suspending spot, future and margin trading with USDC, USDP and TUSD.
Binance, as the largest global crypto exchange by volume, announced it will no longer support spot, future and margin trading with the three stablecoins (i.e., USDC, USDP and TUSD) that compete with their own stablecoin Binance USD (BUSD). Circle’s USDC, the most important of the affected coins, is the second-largest stablecoin at a capitalization of about $52 billion. TUSD and USDP stand as the sixth- and seventh-largest stablecoins, capitalized at just over $1 billion and just under $1 billion, respectively. BUSD is the third-largest stablecoin by market capitalization. Since Binance eliminated trading fees for bitcoin (BTC) on its platform earlier this year, their stablecoin has increasingly been growing its share of stablecoin trading volumes.
What happened in the CBDC space?
The Norwegian Central Bank uses Ethereum to build national digital currency.
The Norges Bank, Norway’s central bank, announced that Norway’s central bank digital currency (CBDC) prototype infrastructure will be based on Ethereum. Ethereum was chosen to offer a “core infrastructure” for the “issuance, distribution, and destruction” of digital central bank money, or digital signal processor. The open source sandbox for it is now available on GitHub and has a role-based access control meaning that proper credentials are needed to access the complete CBDC environment. Further, the transactions on the test network are private and developers can engage with the test network, enabling features like minting, burning and transferring ERC-20 tokens. Advanced use cases like batch payments, security tokens and bridges, will be introduced in the future.
The European Central Bank (ECB) announced that it will collaborate with five companies to develop potential user interfaces for the digital euro.
The ECB has selected from a pool of 54 front-end providers, who will each focus on one specific use case of the digital euro in collaboration with the ECB team.
The companies include:
CaixaBank - who will peer-to-peer online payments;
Worldline - for peer-to-peer offline payments;
European for Payments Initiative - point of sale payments initiated by the payer;
Nexi - who will focus on point of sale payments initiated by the payee;
Amazon - who will deal with e-commerce payments.
The aim of this prototyping exercise is to test how well the technology behind a digital euro integrates with prototypes developed by companies. Simulated transactions are set to be initiated using the front-end prototypes developed by the five companies and processed through the Eurosystem’s interface and back-end infrastructure.
This prototyping will be the penultimate step of the digital euro’s investigation phase before the ECB and European Commission make a decision to commence with the realization phase of the digital euro.
What happened in regulation?
EU Finalizes Legal Text for Landmark Crypto Regulations Under MiCA
This month, sources from CoinDesk noted that the European Union has finalized the full text of its landmark Markets in Crypto Assets legislation.
Once passed into law, MiCA will require crypto assets-issuers to:
publish white papers that include technical roadmaps,
platforms to register with relevant authorities, and
require stablecoin issuers to hold capital and be prudently managed.
It is key to note that MiCA seeks to be preemptive in its pronouncements and is adopting a “substance over form” approach where national and EU regulators should consider “the features of the asset in question to determine its qualification, not its designation by users”.
What happened in crypto?
On September 15th 2022, Ethereum's long-awaited move to proof of stake known as "the merge" finally took place.
The Ethereum merge was executed without any major issues and the implementation of Proof-of-Stake was successful. By all accounts, key metrics showed that the validators have behaved as expected so far.
As a result there were no major price fluctuations post the merge, although there was a noted downturn in ETH prices which is not out of sorts with the overall bear market.
The Ethereum network will now consume up to 99.9% less energy after switching to Proof-of-Stake. The move to proof of stake is one of many notable planned upgrades with the next being Sharding which will look to improve Ethereum’s scalability and capacity.