Monat: Dezember 2023

• Basel Committee proposes maturity limits for stablecoin reserve assets.
• Overcollateralization required for longer-term assets to ensure stability.
• Credit quality criteria defined for reserve assets to bolster stablecoin stability.

In a move to enhance the stability of stablecoins, the Basel Committee on Banking Supervision, part of the Bank for International Settlements (BIS), has recommended targeted adjustments to its standards on banks’ exposure to crypto assets.

The proposed measures, outlined in a consultative document released on Dec. 14, 2023, focus on refining prudential standards for stablecoin exposure, building on the committee’s initial standards published in December 2022.

Addressing redemption risks with maturity limits

The committee’s first proposal centres on mitigating redemption risks during periods of extreme stress, where stablecoin issuers might face mass withdrawal claims, leading to fire sales. To address this, the committee suggests imposing a maximum maturity limit for individual reserve assets. This measure aims to restrict stablecoin exposures to longer-term maturities, potentially safeguarding against abrupt and large-scale withdrawal demands.

If longer-term assets are allowed, the committee emphasizes the necessity for over-collateralization. This means that such assets must exceed the claims of stablecoin holders, providing a buffer against potential declines in asset values. This ensures that stablecoins remain redeemable at their pegged value, even in challenging market conditions.

Credit quality criteria for stability

The second proposal focuses on establishing criteria for credit quality concerning reserve assets. The committee suggests a list of reserve assets suitable for stablecoin issuers, including central bank reserves, marketable securities guaranteed by sovereigns and high-credit-quality central banks, and deposits at banks with a high credit rating.

By specifying assets with high credit quality, the committee aims to bolster the stability of stablecoins, reinforcing their ability to maintain value, particularly in volatile market conditions.

The Basel Committee invites comments on these proposed amendments until March 28, 2024. Whether amended or not, the prudential standards for stablecoin exposures are slated for implementation on January 1, 2025.

These recommendations reflect the ongoing efforts of global regulatory bodies to address potential risks associated with stablecoins and fortify the resilience of the financial system in the rapidly evolving landscape of crypto assets.

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• Coinbase has announced the launch of non-US spot markets for institutional investors.
• Eligible non-US institutional investors will access BTC/USDC and ETH/USDC as from December 14, 2023 on Coinbase International Exchange.
• The exchange plans to expand the product to retail investors in coming months.

Crypto exchange Coinbase has announced an expansion of its non-US spot markets offering for institutional investors.

Coinbase expands non-US spots markets to institutional investors

In an announcement published December 13, the US-based crypto platform said it had launched spot trading markets for Bitcoin and Ethereum for eligible institutional clients using the Coinbase International Exchange. 

The assets will be traded against USDC, with BTC/USDC and ETH/USDC available as from Thursday, December 14.

Non-US institutional customers will be able to access these pairs via API.

We are excited to announce the next phase of our Coinbase International Exchange expansion – the launch of non-US spot markets for eligible customers, designed to address the unique needs and demands of our global user base. pic.twitter.com/JWEChT5BDa

— Coinbase 🛡️📞 (@coinbase) December 13, 2023

According to the exchange, the expansion is part of its plans to address needs and demands unique to its global user base, while also reinforcing its strategic mission to provide customers with trusted products and services.

Coinbase will initially focus on building liquidity and creating a robust foundation for the listed non-US spot markets. However, the plan is to steadily expand this product to retail investors and add more crypto assets over the coming months.

The exchange will also unveil features designed to allow for new trading strategies as they look to enhance capital efficiency.

Coinbase launched its international exchange in May this year, with the move coming amid the regulatory crackdown by the US Securities and Exchanges Commission (SEC). Since then, the platform has reportedly seen over 100 institutions onboarded. 

According to today’s update, Coinbase’s international platform registered nearly $10 billion in trading volumes for perpetual futures in the third quarter alone.

Growth included the launch of perpetual futures for eligible retail users on the company’s Coinbase Advanced. The exchange also listed 15 perpetual contracts that account for “over 70% of the addressable perpetual futures trading market,” it said in the release.

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• Swarm announced the launch of its permissionless real-world assets (RWAs) trading platform.
• “Open dOTC” is a decentralised public goods service platform on the Ethereum blockchain.
• Traders can access tokenized US Treasury bond ETFs, while tokenized stocks for companies such as Apple, Tesla are to be added.

Swarm, a BaFin-regulated decentralised finance (DeFi) platform, has launched its permissionless real-world assets (RWAs) trading platform.

The over-the-counter platform is dubbed “Open dOTC”, a decentralised non-governed public goods service network built on the Ethereum blockchain, Swarm said in a blog post published on Wednesday.

Targeting the tokenized RWAs market

Open dOTC will utilise smart contracts to remove slippage, provide for instant settlement and reduction of credit and counterparty risks via fully collateralised trades.

Tokenized US Treasury bond ETFs are available to traders, while tokenized stocks of publicly-traded companies such as Apple, Tesla and others will be added in due course. Users can also add and trade any of the assets currently available on SwarmX, according to the announcement.

The tokenization market, estimated to grow to over $10 trillion by 2030, is seeing rapid expansion across the globe. Swarm hopes to play a crucial in this sector.  

“Adoption of tokenized assets is impeded by a lack of viable platforms where they can be traded. We know the crypto market is bifurcating into regulated and non-regulated offerings, and we think it is imperative people have a choice of how they trade and access assets,” Swarm co-founder Timo Lehes said. 

Lehes added:

“The launch of this public goods service means more people can take advantage of the RWA narrative that has exploded in 2023 and will continue in 2024 and beyond.”

Open dOTC comes after three years of engagement with European regulators, Swarm noted, with the company’s “head start” on other players key amid the upcoming MiCA regulation. Swarm co-founder Philipp Pieper said:

“Swarm has been in the regulatory process for three years so we have had a head start on most players in the space. We know there is a whole crypto and DeFi ecosystem that believes in permissionless infrastructure and open dOTC has been designed with them in mind. To date, innovation has happened in the largely unregulated area of DeFi, which regulated players are now taking advantage of. We hope to see the same trend with Open dOTC as a complimentary offering to Swarm’s regulated activities.”

While Swarm has unveiled this new feature, it will continue to run its permissioned platform. According to the company, this will ensure users intent on using a regulated, decentralised platform continue to do so.

The Open dOTC will have a fixed 0.25% trading fee cost, with this used to buy and burn Swarm’s ERC-20 token $SMT. This is likely to impact the value of $SMT, which currently trades around $0.31. Over $8.3 million worth of assets is locked on the Swarm Protocol.

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• Worldcoin introduces an upgraded World ID 2.0 featuring seamless integrations with major platforms, including Shopify.
• Shopify, Mercado Libre, Reddit, and Telegram users can now verify their humanity without divulging personal information curtsey of the integration.
• World ID 2.0 also offers App developers flexibility allowing them to choose between “lite” and “max” authentication levels.

Worldcoin, the controversial digital currency, has launched an upgraded version of its World ID feature, known as “World ID 2.0.” This release introduces groundbreaking integrations with major platforms, including Shopify, Mercado Libre, Reddit, and Telegram.

The move by Worldcoin aims to redefine user authentication methods while addressing security concerns and minimizing losses attributed to fraudulent activities.

World ID 2.0: bridging security and convenience

The World ID 2.0 builds upon Worldcoin’s mission to provide secure and user-friendly authentication across a spectrum of applications. The platform integrates seamlessly with Shopify, Mercado Libre, Reddit, and Telegram, offering users the ability to prove their humanity without compromising personal information.

App developers now have the flexibility to choose from different authentication levels, ranging from “lite” to “max.” This innovation allows developers to tailor the security measures of their applications, ensuring that users share only the necessary information. For example, applications with heightened security demands may necessitate an orb-verified ID, while those focused on convenience may only require a “Device Auth” World ID tied to the user’s mobile phone.

This multifaceted approach is set to revolutionize user verification, providing diverse options for individuals based on the specific security requirements of the applications they use. Worldcoin contends that this strategic initiative will significantly reduce losses incurred by retailers, estimated at a staggering $100 billion annually due to issues like return fraud, bots, and coupon stacking, as reported by CNBC.

Controversy surrounding Worldcoin’s Iris scanning

Worldcoin has not been without its share of controversy, particularly regarding its highest-security level of authentication, which involves iris scanning.

Critics express concerns about potential leaks of biometric information through this process. The project was banned in Kenya where over half a million people had already had their Irises scanned. Worldcoin, however, asserts that it only stores the proof of the iris scan and not the scan itself, emphasizing a commitment to user privacy while ensuring robust security measures.

On the bright side for Worldcoin, over 200,000 Chileans signed up for Worldcoin in September 2023. Worldcoin also recently announced that it will allow governments and businesses to use its ID-verifying technology as covered in our previous news coverage.

In the dynamic landscape of digital authentication, Worldcoin’s World ID 2.0 emerges as a pivotal player, addressing security concerns while offering a nuanced approach to user convenience across diverse applications.

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