By Darren Parkin
Data from CryptoCompare shows that the price of Bitcoin moved from around $19,000 to roughly $20,400 at the beginning of the week, before enduring a correction that saw it drop right back to $19,200, the cryptocurrency’s current level.
Ethereum’s ether, the second-largest cryptocurrency by market cap, traded in a way similar to BTC, starting the week around $1,300 and quickly jumping to get close to the 1,400 mark before a correction took ETH back to its current $1,320 level.
Headlines in the cryptocurrency space this week focused on a number of topics, with a major development coming from the Financial Stability Oversight Council, whose first major report on cryptocurrencies warned the market needs more oversight, as the widespread adoption of digital assets poses risks if the market grows without it.
The report notes that the scale of digital asset activities has increased over recent years and that although “interconnections with the traditional financial system are currently relatively limited, they could potentially increase rapidly.”
A panel of experts has emphasised that existing laws already cover many of the activities in crypto markets, and urged agencies, including the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), to prioritize crypto enforcement. It recommended that Congress provide more resources to police the crypto market.
Over the week, the European Council also voted through the European Union’s Markets in Crypto-
Assets (MiCA) regulation. MiCA sets to bring the issuance of digital assets under the wing of institutional regulation, and establishes a first-time regime for digital asset service providers in the EU.
MiCA also imposes reserve requirements on stablecoins and is meant to avoid a collapse similar to the one seen in Terra’s ecosystem earlier this year. The regulation includes a 12–18-month adaptation period to prepare for the new laws.
These developments came during the same week that SWIFT, the Society for Worldwide Interbank
Financial Telecommunication, presented a framework for a global central bank digital currency (CBDC) system while claiming to have a solution for interoperability between different networks.
The move comes after experiments involving the central banks of France and Germany as well as commercial banks, including HSBC, Standard Chartered, and Wells Fargo. SWIFT says it carried pit
transactions between different blockchains using both CBDCs and fiat currencies.
SWIFT’s framework is relevant as central banks have for years been eyeing digitizing fiat currencies through blockchain technology, but concerns surrounding how different countries’ CBDCs could interact using these different networks arose. Per SWIFT, they could be interlinked for cross-border payments through a single gateway.”
Solana suffers major outage, BNB Chain halted over $100m exploit
Over the week, there were several high-profile incidents in the cryptocurrency space. The week
started with Solana, a high-performance blockchain, suffering a major outage that stopped it from
processing transactions over a misconfigured node. The network was restarted to resolve the issue.
This isn’t the blockchain’s first major outage. So far this year, Solana has dealt with a number of
multiple outages and degraded performance issues. In September 2021, Solana went offline for 17
hours.
Popular cryptocurrency exchange Coinbase also suffered an outage over the week, with a technical problem halting withdrawals involving U.S. bank accounts. The exchange revealed over the weekend that for unspecified technical reasons, it was “unable to take payments or make withdrawals involving US bank accounts” and added its team was aware of the issue and working on resolving it.
Moreover, the BNB Chain, the blockchain of Binance’s native BNB token, was halted over an exploit to its cross-chain bridge that saw attackers make off with an estimated $100 million worth of cryptocurrency.
BNB Chain reassured the public its systems were contained and user funds were safe, and the
network was resumed shortly after being halted.
These incidents are known to affect confidence in the market and come during a prolonged bear market that saw the total assets under management across all digital asset investment products plunge. In September, they dropped another 12.7% to $22.5 billion, according to CryptoCompare’s Digital Asset Management Review.
The AUM of Bitcoin-based digital asset products fell 10.7% to $15.6 billion, while the AUM of Ethereum-based digital asset products fell 19.3% to $5.49 billion, now accounting for 24.5% of total AUM, opposed to Bitcoin’s 69.4% market share.
MakerDAO to invest $500m
The decentralised autonomous organization behind Maker, the organization that supports the cryptocurrency-backed stablecoin DAI, is allocating $500 million to invest in U.S. Treasuries and
corporate bonds.
The funds come from the protocol’s overcollateralized stablecoin, of which 80% are going toward
US short-term Treasurys, whilst 20% are going to investment-grade corporate bonds. The move
comes after a MakerDAO community voted on it after a proposal was made in late June.
The fixed-income allocation is meant to diversify the DAO’s balance sheet, limit its exposure to any one asset, and expand its revenue.
Francisco Memoria is a content creator at CryptoCompare who’s in love with technology and focuses on helping people see the value digital currencies have. His work has been published in numerous reputable industry publications. Francisco holds various cryptocurrencies.
Featured image via Unsplash.
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