Last summer, Facebook brought the concept of basketcoins, i.e. stablecoins backed by multiple assets rather than just one, into the limelight with its reveal of the Libra project.
Since then, Facebook and the other 26 members of the Libra Association have notably backed away from plans for a pure basketcoin product. The retreat isn’t because basketcoins aren’t viable, to be sure, but rather because multiple regulators have made it clear they don’t want Facebook releasing its own de facto stab at a world currency.
Zooming out, this retreat has paved the way for another, more nimbler institution to outmaneuver Facebook in releasing a major basketcoin project similar to what the Libra was originally envisioned as. According to news out of China this week, among the institutions to do so first could be the People’s Bank of China (PBoC).
Regional Asian Basketcoin Proposed
Cryptoeconomy chatter around China’s central bank has lately centered on the institution’s in-progress digital yuan, the highest-profile central bank digital currency (CBDC) initiative in the world right now. Yet the bank may help release a separate basketcoin project first.
That’s per a proposal delivered this week amid China’s “two sessions,” which are the national legislative and advisory conferences held annually in the Asian superpower.
The advisory session, dubbed the Chinese People’s Political Consultative Conference (CPPCC), is not akin to a meeting of the U.S. Senate or the U.K. House of Lords. And at the body’s latest session, Neil Shen, a founding partner of Sequoia Capital China and member of the CPPCC, joined with 9 other specialists to call for the creation of a PBoC-backed basketcoin.
In particular, Shen and his peers suggested the new digital currency should be underpinned by reserves of the Chinese yuan, the Hong Kong dollar, the Japanese yen, and the Korean won. The proposed basketcoin’s reserves would be weighted according to the performance of the economies of China, Hong Kong, Japan, and South Korea as such.
Why a basketcoin, then? The initiative’s proposers said the digital currency could spur trade and optimize cross-border payments for the participating nations. They also said it could be launched in close coordination with Hong Kong Monetary Authority and alongside a regulatory sandbox aimed at boosting related innovations.
It’s entirely possible this basketcoin proposal doesn’t move any further in China’s contemporary landscape, but it’s live for consideration now and demonstrates once again that digital currencies are becoming a mainstream topic at China’s highest political levels.
A Sore Spot for Facebook?
There’s no question that with Facebook’s global reach, the Libra basketcoin as originally envisioned could have come to rival traditional world currencies. That’s why the Libra effort hit a regulatory firestorm early on, and that’s why rumors swirled earlier this year that Libra’s initial model was going to have to be reconfigured.
That’s why analysts in the cryptoeconomy weren’t surprised back in April when the Libra Association published an update to the Libra’s whitepaper for the first time. Per the redesign, the body was henceforth going to be releasing multiple single-currency stablecoins, e.g. one pegged to the dollar, another pegged to the euro, and so forth.
With that said, the Libra Association said it would still back a Libra offering, just in indirect fashion and thus not in token form.
“Under this change, ≋LBR will simply be a digital composite of some of the single-currency stablecoins available on the Libra network,” the new whitepaper explained.
The retreat will likely leave the Libra Association thinking what could have been. That is especially true if the PBoC does end up bringing a real basketcoin product to market while avoiding widespread international regulatory pushback.
Congress Fears US Is Losing Battle to Malware and Darkweb Cyberweapons
In a May 28 virtual roundtable before the congressional Subcommittee on National Security, International Development and Monetary Policy, witnesses and congresspeople alike feared that they are not keeping up with criminals hacking the financial system.
Criminals have better resumes than government agents
One witness, Guillermo Christensen, a partner at law firm Ice Miller, admired the cyber talent operating illegally:
“We are always playing catch up with the criminals. […] It’s very hard to find people who are as qualified as some of these criminal hackers, frankly, to take apart their schemes and trace them.”
Another issue is the overclassification of government information, presenting a barrier to private-sector security efforts. “The information sharing between the private sector and the public sector is very valuable but it could be better,” saft Naftali Harris, co-founder and CEO of SentiLink, an anti-fraud software company.
Fintech’s vulnerability during the pandemic
In response to a question from subcommittee chairman Emanuel Cleaver (D-MO) as to the vulnerability of fintech to hacking, cybersecurity strategist Tom Kellermann warned that the current system is vulnerable to new developments and increasingly remote workflows:
“Financial institutions have the best security in the world, but because of telework and because of the customized malware or weaponry that are being developed in the darkweb, primarily the Russian-speaking darkweb. […] They’ve learned ways around the perimeter defense of the network security espoused by the standards of regulators around the world.”
Kellerman continued to explain that telework allows hackers easy access to well-defended financial networks via the worse-defended home systems of executives. He further called out APIs as adding another element of risk:
“The greatest vulnerability of fintech is they build out these APIs that allow them to connect to other financial institutions as well as other fintech vendors. Those APIs themselves are being exploited left and right.”
During the hearing, Chairman Cleaver commented that “It seems that we are losing this battle.” His closing remarks were no more optimistic. “Your comments were very informative but also very scary,” the chairman said.
JPMorgan Chase Settles Crypto Credit Card Lawsuit for $2.5M
Banking giant JPMorgan Chase settled a 2018 lawsuit recently, with a $2.5 total payout — the result of unclear fees charged when using credit cards for crypto purchases.
A May 26 court document detailed:
“The Court notes that Defendant JPMorgan Chase Bank, N.A., f/k/a Chase Bank USA, N.A. (“Chase” or “Defendant”) has agreed to provide a Cash Settlement Amount of an aggregate of $2,500,000 in cash.”
The lawsuit stemmed from lack of clarity
The legal action took flight later in 2018, seeing Brady Tucker, Ryan Hilton, and Stanton Smith press charges against the banking entity.
Reuters said in a May 27, 2020 brief:
“In a motion filed Tuesday in Manhattan federal court, plaintiffs said the settlement would result in class members getting about 95% of the fees they said they were unlawfully charged.”
March news settled in May
The plaintiffs’ legal action requested compensation for the deceptively-charged fees, as well as $1 million for damages, with a 75-day window for settlement detail submission, as of Cointelegraph’s March 2020 article.
The movement was unopposed, according the May 26 court document.
“JPMorgan is not admitting wrongdoing as part of the deal, according to the motion,” Reuters noted in the brief.
Emin Gün Sirer’s AVA Labs to Distribute 2M Tokens Ahead of Full Launch
AVA Labs, a blockchain protocol founded by Cornell’s Emin Gün Sirer, is planning to distribute 2 million tokens in its final testnet before the project’s full launch in summer.
The so-called “Denali Testnet” will serve as the final stage of the AVA network testing before AVA’s mainnet launch. The new testnet will allow each validator to earn up to 2,000 AVA network’s native tokens, AVA Labs announced on May 29.
AVA Labs tokens are not yet listed on any cryptocurrency exchange and are not available for public purchase, a spokesperson at AVA Labs told Cointelegraph.
The testnet to run from June 1 to June 15
While testnet registration starts immediately on May 29, the first phase of the testnet launch will start on June 1. At that time, participants are expected to set up live nodes, an AVA Labs representative explained. The Denali testnet consists of three core challenges, which run until June 15. While AVA Labs expects to move to its mainnet in summer 2020, there is no specific date for the full launch of the project, an AVA Labs’ spokesperson said.
The Denali testnet follows AVA’s first successful testnet known as “Cascade.” Launched in mid-April 2020, AVA’s Cascade testnet amassed 300 developers setting up and running validator nodes.
AVA network is purportedly going to be the “Internet of blockchains” once launched
Initiated by Sirer in 2019, AVA Labs is an open-source platform and a layer 1 protocol for launching decentralized finance, or DeFi, applications and enterprise blockchain solutions. The platform is designed to unify DeFi applications and blockchain deployments in one scalable and interoperable ecosystem. According to AVA co-founder, Kevin Sekniqi, the best way to describe the new protocol is the “Internet of blockchains.”
In late April 2020, AVA Labs’ Sirer said that as much as 95% of all existing cryptocurrencies do not represent any tech advancement and should be regarded as nothing but scams.
AVA network’s token is not to be confused with Travala.com’s proprietary token, AVA. Backed by the world’s largest cryptocurrency exchange, Binance, Travala.com is a blockchain-based travel booking platform that features payments and loyalty rewards in its native crypto, AVA token.
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