Bitcoin Plunge Has Newbies Scrambling to Google Double-Spend
A report from BitMEX Research suggested that a “double-spend” had occurred in the Bitcoin blockchain. However, it was a false alarm. Double-spend *attempts* happen frequently, which is why transactions need to be confirmed via multiple blocks. In this case, a slowing of transaction confirmations opened up the potential for someone to try to double spend their coins. What likely happened is that two blocks had the same transaction from the same address but that one entire block was ultimately excluded. The need for transactions to be confirmed via multiple blocks are a design feature of Bitcoin, rather than a bug. Six confirmations (blocks) are often considered “secure.” The need for multiple confirmations slows Bitcoin transactions and, at the margin, undermines the idea of it becoming a dominant currency of exchange.
President Biden freezes FinCEN’s proposed crypto wallet regulations
U.S. President Joe Biden has frozen all Federal regulatory processes, including the self-hosted crypto wallet regulations proposed by former Administration. The announcement came in a White House memorandum for the heads of various federal agencies, the Financial Crimes Enforcement Network (FinCEN) included. The edict doesn’t specify the crypto wallet proposal, but places a general freeze on all agency rulemaking pending review, effective for 60 days from the date of the memorandum.
Grayscale Continues to Buy the Dips
Grayscale continues with its massive Bitcoin (BTC) purchasing program. So far this week they have purchased 25,000 BTC which is nearly 7x of the amount of BTC mined this week and brings its total portfolio to 641,520 BTC, representing more than 3.4% of BTCs’s circulating supply. Meanwhile, the premium on Grayscale Bitcoin Trust has come down from the December 22 high of 40.2% to 6.3% more recently. However, Grayscale hasn’t bought any Ethereum since December 9 but continues to add some Ethereum Classic, Bitcoin Cash, Litecoin, Stellar, and Horizen.
BlackRock Gives Funds Go-Ahead to Invest in Bitcoin Futures
BlackRock is adding cash-settled Bitcoin futures as an eligible investment to three funds. It filed updated prospectuses with the U.S. Securities and Exchange Commission that included cash-settled Bitcoin futures among the assets they can buy. The three funds are the Global Allocation Fund, Strategic Income Opportunities Portfolio, Emerging Markets Flexible Dynamic Bond Portfolio.
Shenzhen to issue 20 million digital yuan in Spring Festival red envelopes
Shenzhen will issue 20 million digital yuan as part of a pilot program to promote the application of the new form of currency. This is the third time the city will issue the currency in “red envelopes,” worth 200 yuan each, via a random draw. In the previous rounds, 10 million yuan and 20 million yuan were issued in October 2020 and early January, respectively. The money can be used for shopping in over 3,500 designated businesses with a digital currency transaction system in place in Longhua District from February 1 to 9.
Sweden is reportedly working with DLT for its CBDC proof-of-concept
Sveriges Riksbank Deputy Governor Cecilia Skingsley reportedly confirmed during a CfC St. Moritz conference panel that the central bank is investigating Corda’s distributed ledger technology for its central bank digital currency (CBDC) proof-of-concept.
RBI announces Working Group on digital lending
The Reserve Bank of India (RBI) has announced the establishment of a working group to study digital lending activities in the regulated financial sector as well as by unregulated players so that an appropriate regulatory approach can be put in place.
* The views expressed herein are those of the author and should not be attributed to the International Monetary Fund, its Executive Board or its management.