Recent Developments in Cryptocurrency: Resilience, Central Bank Digital Currency, and Security Measures
As the crypto market experiences a downturn with Bitcoin and Ethereum hitting 6-month lows, the interest from both day traders and long-term institutional investors remains robust. This monthly roundup covers significant events in the crypto space, emphasizing resilience, central bank digital currency (CBDC) considerations, and heightened security measures.
Federal Reserve's Stance on CBDC:
In a highly anticipated paper, the Federal Reserve refrained from committing to or dismissing the idea of a Central Bank Digital Currency (CBDC). The paper underscores the necessity for robust cybersecurity measures in any proposed CBDC system. While acknowledging the potential benefits of a CBDC, such as supporting the dollar's international role and enhancing cross-border payments, achieving these goals demands substantial international cooperation.
Crypto.com's Security Breach:
This month, Crypto.com disclosed that the login issues reported by users were, in fact, a result of a $30 million hack. The breach involved the theft of 4,836.26 ETH (approximately $15 million) and 443.93 BTC (around $18 million). The funds were laundered through a cryptocurrency tumbler, making the trail untraceable. In response, Crypto.com introduced the "Worldwide Account Protection Programme," covering user compromises up to $250,000. This signals a shift towards enhanced user protection and maturity among centralized exchanges in handling compromise-related costs.
Cryptocurrency Youtubers' Compromise:
On January 23, several prominent cryptocurrency YouTubers faced compromise as a hacking group posted videos on their compromised accounts, urging users to send funds to the attackers' BNB address. Swift action was taken to identify and mitigate the threat, with the compromised wallet holding only approximately $850 at the time of writing.
Rise in Cryptocurrency Money Laundering:
According to Chainalysis, cryptocurrency-related money laundering increased by about 30% to reach $8.6 billion in 2021. This surge is unsurprising given the heightened interest in cryptocurrencies from both legitimate and illegitimate investors. A noteworthy finding from the report is that scammers often transfer stolen crypto to wallets on centralized exchanges. This underscores the importance for exchanges to implement robust customer identification processes like KYC and employ advanced techniques such as machine learning to detect transaction anomalies.