Crypto Pirates

Following a security breach on Monday, approximately $33.8 million in crypto assets were stolen from Crypto.com.

The official statement from the Singapore-based crypto exchange following a halt on withdrawals after detecting "suspicious activities" in user accounts clarifies the Crypto.com security breach saga.

Crypto.com revealed in a statement on Thursday that "4,836.26 ETH, 443.93 BTC, and approximately US$66,200 in other currencies" had been taken from clients' accounts without their permission. According to current market value, the total loss is currently valued at around $33.8 million.

Several Crypto.com users have reported that their money has been stolen as a result of a security breach. However, previous responses from the company had failed to assuage concerns.

According to the official document, Crypto.com's risk monitoring systems detected "unauthorised activity on a small number of user accounts" on Monday at around 12:46 a.m. UTC, where transactions were authorised without the user entering the two-factor authentication (2FA) control.

As detailed in the statement, the exchange then halted withdrawals and revoked all customer 2FA tokens, adding even more security-hardening measures that required everyone to relog in and reactivate their 2FA token before allowing only authorised action. The withdrawal infrastructure was down for 14 hours in total.

To prevent such an accident from happening again, Crypto.com claims to have added an extra layer of security by requiring a new whitelisted withdrawal address to be registered within 24 hours of the first withdrawal.

"Users will be notified that withdrawal addresses have been added, giving them adequate time to react and respond," according to the statement.

On Wednesday, Kris Marszalek, CEO of Crypto.com, told Bloomberg that the exchange had received no communication about the event from regulators. He continued, saying:

"Obviously, it's a great lesson, and we're always working to improve our infrastructure."

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North Korean hackers are likely to incorporate new play-to-earn (P2E) crypto games into their illicit cyber-enabled financial schemes.

Pyongyang has shown increasing interest and capability in utilising new financial technology to obtain valuable foreign currency required for its weapons development programmes. Given the growing popularity of cryptocurrency trading, North Korean hackers are likely to incorporate new play-to-earn (P2E) crypto games into their illicit cyber-enabled financial schemes.

Previously reserved for professional gamers winning massive cash prizes at national and global tournaments, video gaming has evolved to now provide amateur gamers and crypto enthusiasts with opportunities to earn large amounts of cryptocurrency with relative ease. Most video games use play-to-win (P2W) mechanics to entice players to complete a series of puzzles, tasks, and activities in order to "beat the game" or advance to the next level. Professional players typically participate in tournaments organised by third parties to win cash prizes and other financial rewards in order to earn money. P2E crypto games, on the other hand, use blockchain technology to enable the earning of cryptocurrency within the game or non-fungible tokens (NFTs) that can later be sold for cryptocurrency. The technological mechanics of P2E crypto games eliminate the need for tournaments or third-party organisers to provide players with potential financial rewards outside of the game, which introduces new financial risks into the online gaming world.

The online gaming industry has a history of illicit actors using its networks and user base to conduct and facilitate cyber-enabled financial crime. North Korean hackers have already demonstrated their ability and intent to exploit the online gaming community to Pyongyang's financial advantage. The Seoul Metropolitan Police Agency reported in 2011 that a joint operation involving North Korean operatives and several South Korean nationals compromised the personal data of approximately 660,000 South Korean citizens and generated at least 6.4 billion Korean won (approximately $5.3 million) for Pyongyang. According to the report, several South Korean nationals travelled to China to receive infected software for a South Korean online game from North Korean operatives. The software was allegedly created by North Korean computer programmers affiliated with the US-sanctioned Korea Computer Center (KCC). South Korean accomplices then sold and distributed the infected gaming software within South Korea, and Seoul police later arrested 15 people in connection with the case. While ultimately successful, this operation most likely required a significant amount of North Korea's limited logistical resources to plan the operation, as well as enlist and train all parties involved. In comparison to P2W games, the technological and financial mechanics of new P2E crypto games would allow Pyongyang to obtain valuable cryptocurrency with significantly less effort and resources.

The financial mechanics involved in P2W and P2E games differ significantly, raising a different set of potential financial risks. The majority of financial transactions involving P2W games involve players sending digital payments from their personal bank accounts or credit cards to either the game company to purchase in-game items, or to professional "power levelling" services to enlist gamers to play on their behalf to increase their level. Popular P2E crypto games, such as Axie Infinity, allow players to earn special in-game tokens that can be sold to other players within the game or to cryptocurrency exchanges for cryptocurrency. Axie Infinity players in the Philippines reportedly earned enough cryptocurrency in 2021 that the Filipino government passed legislation requiring players to pay income tax on earnings generated by the game. While most P2E crypto games give players NFTs or other tokens to trade for cryptocurrency, Coin Hunt World directly rewards players with cryptocurrency such as Bitcoin or Ethereum after completing certain tasks. The rapid expansion and diversity of different financial mechanics incorporated into P2E crypto games present a new genre of potential financial risks within the online gaming world.

While Pyongyang is unlikely to instruct its hackers to spend valuable hours playing P2E crypto games, it may instruct its talented software developers to identify vulnerabilities within the games and write codes that will allow the automation of in-game activities to earn cryptocurrency. North Korean hackers have already demonstrated significant success in obtaining cryptocurrency by issuing malicious codes that, when activated, can steal, extort, and obfuscate digital transactions. While no North Korean presence in P2E crypto games has been detected, Pyongyang may seek to manufacture and distribute P2E crypto game-specific software programmes that can rapidly complete in-game tasks to earn cryptocurrency at a rate faster than any human gamer could. The previous case of North Korean computer programmers creating malicious gaming software for purchase and distribution in South Korea suggests similar implications for P2E crypto games.

Pyongyang has successfully stolen millions of dollars' worth of cryptocurrency through sophisticated cyber operations targeting banks, cryptocurrency exchanges, and individuals over the years. Popular P2E crypto games are likely on North Korean hackers' radar for 2022, as they continue to expand their illicit financial operations in the crypto space.

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Opera has unveiled a new browser based on Web3 and the decentralised internet. The Crypto Browser is currently available in beta for PC, Mac, and Android, with an iOS version on the way. Opera emphasises that its new product is a Web3-specific browser. This includes a built-in non-custodial crypto wallet that allows users to access cryptocurrency and use decentralised apps without the need for an extension. Web3 refers to the third stage of web development. Web3 is named after Web2 and Web1, and it will be more secure than previous versions.

The built-in non-custodial wallet is a significant feature that will enable blockchains such as Ethereum, Bitcoin, Celo, and Nervos right away. It has also announced collaborations with Polygon and other companies. You can buy cryptocurrencies with fiat money, store them in your wallet, send and receive them, and view your wallet balance. It also has a secure clipboard that prevents other programmes from copying or pasting your information.

Web3 is based on cryptocurrency and a decentralised internet. Decentralised applications, also known as DApps, are natively supported by browsers that support Web3. Web3 is also in favour of decentralised money (Defi). Many ordinary web browsers are still unfamiliar with these concepts, which Opera is attempting to address. According to Opera, its new Crypto Browser is part of a larger effort to make blockchain technologies more understandable.

Opera's Web3 browser also includes a Crypto Corner news and data aggregator, which will include important information on crypto headlines, crypto asset values, and gas taxes, as well as crypto events, airdrops, and even podcasts.

The popularity of Web3 is growing, but none of the current online browsing experiences are designed to provide a seamless and secure user experience in the decentralised web. Users will benefit from Opera's Crypto Browser Project, which promises a simpler, faster, and more private Web3 experience. It clarifies a user experience that can be perplexing for non-technical users. Opera believes that for the decentralised web to reach its full potential, Web3 must be simple to use. Opera's new browser is currently in beta, and interested users can download it here.

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While steep cryptocurrency price drops have caused many retail investors to pause, institutions and wealthy individuals are charging headlong into this brave new world.

It's hardly a scientific theorem, but market observers could be forgiven for noticing a strange relationship between the holiday season and cryptocurrencies.

Bitcoin, the world's largest digital currency by market capitalisation, arguably began its return to mainstream Australian news headlines and investment portfolios only a year ago.

"Bitcoin is back," declared a feature article in The Australian Financial Review's Christmas bumper edition in December 2020, arguing that the much-maligned token was increasingly being viewed as an appealing asset to hold for the long term by some.

The most visible cryptocurrency then more than doubled in value last year, reaching an all-time high of $US68,000 in November after beginning the year at around $US30,000.

However, it has been on a steady decline since then, down 19.6 percent year to date and 36.7 percent since those heady November highs. More broadly, the global market for crypto assets has dropped from nearly $US3 trillion in November to around $US2 trillion now.

The prospect of rising interest rates may have contributed to the Christmas crash. This is because market experts believe that in a low-interest-rate environment, the low or non-existent returns on savings and cash accounts were a partial motivator of demand for this gleaming but volatile new asset class, particularly among retail investors.

Investors' concerns have been exacerbated by regulators' repeated warnings. The Australian Securities and Investments Commission warned self-managed superannuation fund investors this week that they are increasingly being targeted by cryptocurrency-related scams. "Superannuation is an appealing target for scammers," according to ASIC. "Cryptoassets are a speculative and high-risk investment."

"My personal warning to people is to be careful and don't put all your money into crypto," ASIC chairman Joe Longo told Financial Review on Thursday.

It is estimated that approximately 2 million Australians have invested in crypto assets. According to the Australian Taxation Office, self-managed superannuation funds had a total of $228 million allocated to cryptocurrencies in September of last year. This amounts to 0.037 percent of the total assets held by SMSFs.

Although Bitcoin was the most traded crypto asset among Australian users of the investment platform eToro, a number of alt-coins are on the rise. Cardano's token, ADA, jumped seven spots to become the second most-traded asset, while so-called meme coins gained ground. Shiba and Dogecoin (both born as internet jokes) made the top ten for the first time.

Whatever the motivation, it is clear that some investors' enthusiasm has waned. The drop in market value demonstrates this, but local trading platforms also report a drop in customer activity.

"We've seen a decrease in trading volumes, which is consistent with global market trends," says Caroline Bowler, CEO of local cryptocurrency exchange BTC Markets.

"Market sentiment has deteriorated, particularly among retail investors," says Tommy Honan, head of strategic partnerships at cryptocurrency platform Swyftx.

But, beneath the headline figures, there could be another trend at work. "Swyftx has observed strong buyer conviction from higher nett worth investors, indicating an intent to accumulate throughout the Christmas and New Year period," Honan says.

"According to anecdotal conversations, these investors are accumulating for a five- to ten-year period or longer and are unconcerned about day-to-day price movements."

Jeff Yew, founder and CEO of crypto-specialist investor Monochrome Asset Management, agrees that more affluent investors see the recent drop as a buying opportunity, rather than proof that the crypto sceptics were correct all along.

"Volatility is one of the main concerns people may have about bitcoin," Yew says. "However, during periods of volatility, we see an increase in inquiries."

"The investor class we work with has typically done extensive research and due diligence prior to investing in the Monochrome Bitcoin Fund and is not easily shaken by short-term price movements."

This fund has nearly 100% passive exposure to bitcoin and is only available to institutional and wholesale investors who have at least $2.5 million in assets or earn more than $250,000 per year. It requires a minimum investment of $25,000 to participate.

Other funds have shown similar resilience, according to Yew, citing Canada's Purpose Bitcoin ETF, which has seen strong inflows from institutional investors during market downturns, including the last few months.

Bamboo, a cryptocurrency micro-investing app, has reported a 17% increase in sign-ups from SMSF investors in the last month. "They see this event as a chance to invest in cryptocurrency at a discount," says Tracey Plowman, Bamboo's chief operating officer.

'In down markets, smart investors buy.'

Those with a stake in the crypto markets will naturally be eager to discuss its long-term demand. However, more objective voices support the thesis that more sophisticated investors are still interested in crypto.

"When most investors sell or invest less when investment prices fall, smart investors are likely to buy more in a down market," says Helen Nan, founder of Plan For Your Future and a certified financial planner (CFP). "That is how wealth is passed down."

Because amateur and retail investors vastly outnumber institutional and wholesale investors in the crypto market, she believes prices will continue to fall.

That is a poor reason not to invest in crypto, according to true believers.

"Price drops are a natural part of any market, whether it's cryptocurrency, commodities, or stocks," Bowler says. "It is a normal part of the trading cycle and has no bearing on the long-term outlook for cryptocurrency in the blockchain economy."

Cody Harmon, a CFP, director of Hard Line Wealth, and keen observer of crypto markets, goes even further, arguing that excluding crypto assets from a portfolio may not be prudent.

"There will be bull and bear markets, just like in equities, and a long-term diversified approach makes sense," Harmon says. "There is potentially much more value to come in the space, which means that leaving the space entirely could mean foregone gains."

Investing in cryptocurrency is like investing in the stock market on steroids, according to James Gerrard, certified financial planner and Coincurrent co-founder.

The extent to which crypto assets truly add a diversifying element to portfolios, on the other hand, is debatable. This month, the International Monetary Fund warned that bitcoin and other large-cap digital assets are behaving more like stocks.

"The increased and significant co-movement and spillovers between crypto and equity markets indicate a growing interconnectedness between the two asset classes, allowing the transmission of shocks that can destabilise financial markets," wrote IMF financial counsellor Tobias Adrian and his team.

Bowler responds to the IMF analysis, saying, "No asset class exists in isolation, especially in these extraordinary times." As it fills out its role for investors, some convergence is to be expected."

CFP James Gerrard, co-founder of cryptocurrency research platform Coincurrent, agrees that as the market matures, it makes sense that it will begin to behave more like traditional asset classes.

"Investing in cryptocurrency is like investing in the stock market on steroids," he says. "Whereas a bad day in the stock market might result in a 3% daily drop, a bad day in the crypto markets is more likely to result in a 30% drop."

"However, as traditional financial markets and Wall Street investment firms 'buy in' to cryptocurrency as a long-term trend, we will see more crossover and correlation."

A growing number of publicly traded companies, for example, derive revenue from cryptocurrency-related activities or have balance-sheet exposure to crypto assets.

Cryptocurrencies, according to Harmon, are broadly similar to equities in that they are effectively shares in a decentralised autonomous organisation (DAO), which functions somewhat like a crypto-land equivalent of a listed company – albeit one that is "newer and more scalable."

He compares stablecoins (which are tied to official, central bank-controlled currencies) to bonds and fixed income, and non-fungible tokens (blockchain-enabled digital artworks) to collectibles in other parts of the crypto landscape. 

Regardless of the benefits of diversification, Nan of Plan For Your Future says it's critical to keep crypto's risk profile in mind at all times, especially for those exposing some of their retirement assets to these nascent markets.

"It's highly volatile, and cryptocurrency security is a major concern," she says. "The first thing SMSF trustees should consider before adding any crypto to their portfolio is whether their retirement will still be on track even if the value of their crypto investment becomes zero."

Direct investments vs. managed funds

But, for those willing to take those risks and potentially pocket the profits if bitcoin and the altcoins stage another epic comeback, the question becomes: in what format?

While millions of investors around the world hold direct stakes in cryptocurrency tokens through digital wallets, others invest in managed funds that provide exposure to crypto markets.

Others are still waiting for Australia's much-touted bitcoin- and ethereum-backed exchange-traded funds, a number of which are currently in development and will be listed on the Australian Securities Exchange and competitor Chi-X in the near future.

Financial advisors are divided on whether it is better to invest in cryptocurrency directly or through a managed fund structure (just as they are split on whether investors should expose their portfolios to crypto at all).

Gerrard is sceptical of the market's suite of bitcoin and cryptocurrency funds. "They frequently charge very high management and performance fees – I have seen fees of up to 50% of the return," he says. "Second, given the sector's youth, I'm not convinced of the expertise or value-add that comes with a crypto managed fund."

Instead, he advises investors to conduct research and select a variety of "coins with promising futures" to hold in a diversified digital wallet for the long term.

Nan, on the other hand, is encouraged by the flood of new crypto-related investment products that are hitting the market.

"Buying cryptocurrency ETFs listed on a regulated exchange can provide many more benefits than directly purchasing tokens," she says.

According to her, the third-party analysis that comes with a traditional managed fund structure eliminates some of the research risk, while using a traditional fund custodian reduces the risk of hacking or other security threats.

"However," she cautions, "cryptocurrency ETFs do not reduce the volatility of crypto assets."

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A Thursday outage hampered MetaMask's ability to automatically display new NFTs, which is dependent on OpenSea.

OpenSea, one of the most popular marketplaces for non-fungible tokens (NFTs), announced a "database outage" on Thursday. As a result, a number of services that rely on OpenSea's APIs, including the popular crypto wallet MetaMask, are having difficulty displaying NFTs.

"We're caching that data so their outage doesn't wipe the wallet," said MetaMask co-founder Dan Finlay. "We keep track of how many NFTs the user has in their wallet." Because of the OpenSea outage, we are currently not auto-detecting new NFTs sent to the user's wallet, though users can always tell the wallet about NFTs they have by manually entering their addresses."

"Because we use OpenSea to detect new NFTs, the outage would only affect NFTs minted during the outage." Users can continue to manually add NFTs to our wallet, and this only affects NFT auto-detection," Finlay explained. "Auto-detection (the thing that isn't working) is a feature that we're going to make opt-in anyway to improve user privacy, so privacy advocates may prefer the current behaviour."

In other words, because OpenSea is down, some NFT owners who recently purchased tokens may be unable to view their expensive JPEGs even in their crypto wallet.

"We are experiencing technical issues that are causing a site outage." "Teams are investigating right now," the company wrote around 9 a.m. ET. As of this press, OpenSea had released an update stating that "a fix has been implemented and we are monitoring the issue." "Programmatic access is still restricted."

Some are using this situation to argue that the NFT market and the so-called web3 are not as decentralised as their supporters claim.

Jane Manchun Wong, a security researcher who specialises in reverse engineering popular services and apps to identify unreleased or upcoming features, discovered that Twitter uses OpenSea's API to display NFTs in an unreleased feature. So, now that OpenSea is down, Twitter is unable to display the NFTs.

"I just think there are too many platforms that rely on OpenSea." And it becomes a single point of failure, especially since OpenSea has been unreliable recently," Wong told us.

A request for comment from OpenSea and Twitter was not immediately responded to.

Earlier this month, Moxie Marlinspike, the founder of Signal, criticised supporters of web3, the idea that the internet is moving towards a new era of decentralisation based on cryptocurrencies and blockchains, pointing out that the crypto world is currently more centralised than many would like to admit.

Marlinspike explained in a viral blog post that he conducted an experiment to demonstrate exactly what he meant. He created MetaMask, an NFT that displays differently depending on the market it's seen on and always looks like a poop emoji in users' wallets.

"MetaMask doesn't do much; it's just a view onto data provided by these centralised APIs," Marlinspike explained. "This means that if you remove your NFT from OpenSea, it will also be removed from your wallet." It doesn't matter that my NFT is indelibly recorded on the blockchain somewhere, because the wallet (and increasingly everything else in the ecosystem) is just using the OpenSea API to display NFTs, which started returning 304 No Content for the query of NFTs owned by my address!"

This is essentially what is happening now that OpenSea is down. To be clear, users still "own" a unique string of characters—or hash—that demonstrates to the world that they "own" their expensive JPEGs, and most users will be able to view their NFTs just fine thanks to MetaMask's caching workaround. Others, however, will be unable to see new NFTs in MetaMask until OpenSea is restored.

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Twitter has just made NFT owners' lives easier by announcing the availability of NFT profile pictures for iOS users. Twitter enabled Bitcoin tipping in September of last year and announced that users will soon be able to authenticate NFTs. Twitter's keen interest in crypto adoption is demonstrated by this announcement.

Twitter's Support for Cryptocurrency Isn't Going Away

Twitter CEO Jack Dorsey is well-known for his pro-Bitcoin stance and efforts to make BTC a global asset. Twitter announced today, under the new leadership of Indian CEO Parag Agrawal, that NFT profile pictures will be integrated for Twitter users and NFT owners.

The integration will be available to all IOS users worldwide, allowing them to display their cool NFTs as Twitter profile pictures. This service is only available to Twitter Blue subscribers, who pay a monthly fee to use Twitter.

The new advertisement, which was tweeted by the official Twitter handle, features well-known Crypto influencers such as @bobbyhundreds as well as well-known NFT collections such as BoredApes. The majority of featured influencers also owned a.eth Ethereum Name Service (ENS) domain.

What is the new CEO's position on cryptocurrencies?

Earlier in November 2021, Twitter's new CEO, Parag Agrawal, took over for Bitcoin advocate Jack Dorsey. In his previous role, Parag was the CTO of Twitter, and it was speculated that Twitter would maintain its positive stance towards the cryptocurrency market. Twitter's announcement today that NFTs will be permitted as profile pictures demonstrates the new management's commitment to the NFT and crypto space.

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After days of selling pressure, investors snapped up stocks and other "risk assets" on Thursday, causing Bitcoin and other cryptocurrencies to rally.

In afternoon trading, bitcoin was up 2.3 percent to $43,000. According to CoinMarketCap, Ether, Solana, Terra, and other major tokens were also rallying, bringing the overall market value up 2.3 percent to $2 trillion.

According to Bloomberg News, Google is developing a new blockchain unit, the latest indication that Big Tech is considering how to profit from the crypto economy.

According to Bloomberg, Shivakumar Venkataraman, a Google engineering vice president, leads a unit focused on "blockchain and other next-gen distributed computing and data storage technologies."

Google, did not respond immediately to a request for comment.

Venture capital is also pouring into the cryptocurrency industry. According to the Financial Times, one of the largest players, Andreessen Horowitz, plans to raise $4.5 billion for a new fund focused on blockchain-based companies.

According to PitchBook, more than $30 billion in venture capital and other forms of private equity will be invested in crypto startups in 2021, a sevenfold increase over 2020.

Nonetheless, capital may be pouring into cryptocurrency at a difficult time for the industry and technology as a whole. As the Federal Reserve tightens monetary policy, investors have grown concerned about rising interest rates. High-priced technology stocks have taken a hit. Cryptocurrencies have also suffered; the overall market has lost a third of its value, or $1 trillion, since peaking at $3 trillion in November.

Tighter monetary policies are one of several reasons why UBS warns of a second "crypto winter" in a research note published on Jan. 14. The previous "winter" in 2018 saw Bitcoin and other cryptocurrencies plummet by more than 75% from previous highs. It took them about three years to get back to their 2017 highs.

According to UBS, cryptos exploded in 2021 as a result of unusual monetary policies that flooded global markets with excess liquidity. However, central banks are expected to gradually normalise policies, putting downward pressure on alternative currencies such as Bitcoin, which have benefited from "associated excess liquidity."

According to UBS, the notion of Bitcoin serving as a store of value in an inflationary environment is also being questioned. While sovereign "fiat" currencies may lose purchasing power in the face of high inflation, their supply is flexible, allowing them to contract and expand in response to economic growth and other factors.

This adaptability may aid sovereign currencies in retaining long-term value, as opposed to "the likes of Bitcoin, which are supply-limited and constrained by volatility in their ability to function as units of account or media of exchange," according to UBS.

Another impediment is that blockchain technology may take a long time to penetrate mainstream financial markets, if at all. Blockchain networks, such as Bitcoin, began as decentralised ledgers with the goal of improving the security, transparency, and accessibility of payment systems dominated by banks and other institutions. However, as the network's miners consolidate, the Bitcoin network itself is becoming more centralised.

Furthermore, many of the newer blockchains are controlled by corporations and entities, and the industry is shifting to a "proof of stake" model for transaction processing, potentially concentrating networks in the hands of a few large operators.

"Blockchains do not scale in practise without becoming the same 'plutocratic' systems they were designed to replace," UBS says. Blockchains are also vulnerable to hacking, fraud, and theft, and due to technological complexity, even changing an account's password is difficult.

Finally, speculative excesses are on the rise—as blockchain-based apps and services gain more users and economic value, they will inevitably attract increased regulatory scrutiny. "High-flying stablecoins and DeFi projects appear almost certain to face larger setbacks from authorities in the coming months," according to UBS.

The takeaway is that cryptos will not necessarily collapse overnight, losing value like Dutch tulips that never had much utility. Venture capital is pouring in because blockchain technology has the potential to be transformative, opening up new venues for trading and borrowing securities, as well as entirely new ways to monetise digital collectibles using non-fungible tokens, or NFTs.

However, as liquidity dries up, leaving less capital to go around for all, the market may become more picky about which cryptos and blockchain companies will thrive.

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Developers are working on a blockchain service on Telegram that could drive cryptocurrency adoption to new heights.

Previously, Telegram, a leading instant messaging service provider, made headlines due to its intention to incorporate cryptocurrency into its operations.

This discovery made it the darling of many crypto enthusiasts, who saw it as a vehicle to drive mass adoption of the industry, but the dream quickly faded.

However, a recent Forbes report suggests that the project may be resurrected.

Will Telegram Include a Crypto Option?

According to Forbes, some Telegram Open Network (TON) developers may be planning to launch their own version of the project that will be integrated with the platform.

According to the report, the revived project now has the backing of some of the key associates of Telegram founder Pavel Durov. Aside from that, it has the backing of "third-party developers and product creators."

Speaking about the project's new grand design, Oleg Andreev, a developer working on it, stated that the design is being created in such a way that it can be integrated with Telegram.

Aside from that, it is intended to be interoperable with cryptocurrency exchanges. The developer did not rule out the use of the payment option in the gaming world.

The Founder's Tacit Support for the New Development

Durov had previously warned the public against projects claiming to be similar to TON, claiming that they do not have his company's blessing. However, towards the end of last year, he sent a cryptic Telegram message in which he stated:

I was inspired to see the winners of Telegram's coding competitions continue to work on the open TON project. I'm proud that the technology we developed is still alive and well. When it comes to scalability and speed, TON is still light years ahead of the competition in the blockchain space.

This implies that the popular messaging site's founder may be up to date on the latest developments surrounding the project.

Telegram's blockchain activity had reached a climax when it raised over $1.5 billion from notable investors in two pre-sales events.

The events had compelled authorities in the United States to take action, claiming that the firm was selling unregistered securities to US residents.

While Telegram has denied any wrongdoing, it has been forced to reimburse its investors because it was unable to continue with the project.

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The Federal Reserve released its long-awaited paper on the benefits and drawbacks of a central bank digital currency (CBDC) on Thursday, as the debate over cryptocurrency regulation heats up.

The Fed outlined the benefits and drawbacks of implementing a CBDC but did not reach a formal decision. The move comes as countries such as China push ahead with their own digital currency plans, as well as in the midst of a wide-ranging debate over how cryptocurrencies are transforming the financial sector — and how they should be regulated.

The Fed wrote in the paper, "The introduction of a CBDC would represent a highly significant innovation in American money."

The CBDC would be a liability of the Fed rather than a commercial bank. In collaboration with the private sector, the Fed would try to avoid any disruption to the US financial system by leveraging banks' existing privacy and identity-management frameworks and innovation.

Among the benefits, the Fed stated that a digital currency could help support faster and cheaper payments, expand consumer access to the financial system, and help preserve the dollar's international status as a reserve currency. According to the central bank, it may also help lower-income consumers gain access to the financial system.

Policymakers also believe that a CBDC would provide the general public with broad access to digital money that is free of credit and liquidity risk. The Fed considers it a less risky alternative to other cryptocurrencies and stablecoins, though Fed Chair Jerome Powell has stated that private sector stablecoins could coexist with a CBDC.

However, the Fed also outlined several risk scenarios, including how banks that rely on deposits may see those decline if a CBDC is widely adopted. As a result, bank funding costs may rise, as will credit costs for individuals and businesses. According to the Fed, a digital currency could make financial firm runs more likely, if not more severe.

It also noted that a digital coin could prompt the Fed to expand its balance sheet to accommodate CBDC growth, similar to the impact of issuing increasing amounts of physical currency in circulation.

According to the Fed, if adopted, the CBDC would need to protect consumer privacy, protect against criminal activity such as hacking and money laundering, and be a widely accessible means of payment that could transfer funds seamlessly between parties.

The Fed has not stated how such a currency would be issued, or whether it would use the same blockchain that supports other digital tokens such as Bitcoin (BTC) and Ether (ETH). It could have a ledger, or it could function similarly to a physical dollar, which does not have a ledger. Furthermore, because the Fed does not house personal bank accounts, it was unclear how CBDC bank accounts would function.

The central bank has requested public comments on the paper for a period of 120 days, and is seeking input on a variety of issues. These include whether a CBDC should pay interest or limit the amount held by individual users. Officials are also debating what types of companies should act as middlemen for a CBDC and how that structure might look.

In Congress, battle lines have been drawn.

If the Fed decides to proceed with a CBDC, the central bank will require congressional approval. The Fed insisted that it would not proceed without explicit support from Congress and the White House.

Lawmakers, on the other hand, are defining key battle lines in the broader crypto regulation debate, which is likely to include central bank digital coins. Recently, Republican Senator Pat Toomey of the Senate Banking Committee pressed Fed Chair Jerome Powell on the importance of individual privacy protections in the design of a CBDC.

"I strongly believe that individual privacy is of fundamental importance in the design of any potential CBDC," Powell responded. A key component of that discussion will be soliciting feedback on the best ways to protect individual privacy."

In response to whether well-regulated, privately issued stablecoins serve as a check on the design and management of any American CBDC, the Fed chief wrote that a "critical question is whether a CBDC would yield benefits more effectively than alternative methods."

"Another option could be well-designed and appropriately regulated stablecoins...

Well-regulated, privately issued stablecoins could coexist with a CBDC, according to Powell. "In the future, CBDCs, stablecoins, and other types of money may serve different needs or preferences."

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Russia's central bank has proposed a ban on cryptocurrency use and mining on Russian soil, citing threats to financial stability, citizens' well-being, and the country's monetary policy sovereignty.

For years, Russia has argued that cryptocurrencies could be used to launder money or fund terrorism. It eventually granted them legal status in 2020, but prohibited them from being used as a form of payment.

In a report released on Thursday, the central bank stated that speculative demand was primarily responsible for cryptocurrencies' rapid growth, and that they exhibited characteristics of a financial pyramid, warning of potential market bubbles that could jeopardise financial stability and citizens.

The bank proposed prohibiting financial institutions from conducting any cryptocurrency transactions and suggested that mechanisms be developed to prevent transactions involving the purchase or sale of cryptocurrencies for fiat currencies.

Cryptocurrency exchanges are among those targeted by the proposed ban. Binance, a cryptocurrency exchange, stated that it was committed to working with regulators and hoped that the publication of the report would spark discussion with the central bank about protecting the interests of Russian crypto users.

According to Elizaveta Danilova, head of the central bank's financial stability department, restrictions on cryptocurrency ownership are not in the works.

According to the bank, Russians are active cryptocurrency users with an annual transaction volume of approximately $US5 billion ($6.9 billion).

The Chinese government is cracking down on cryptocurrencies.

The central bank stated that it would collaborate with regulators in countries where crypto exchanges are registered to collect data on Russian clients' operations.

It referred to steps taken by other countries, such as China, to limit cryptocurrency activity.

In September, China stepped up its anti-cryptocurrency crackdown with a blanket ban on all crypto transactions and mining, causing bitcoin and other major coins to plummet and putting pressure on crypto and blockchain-related stocks.

"At this time, there are no plans to ban cryptocurrencies, as China has done," Ms Danilova said.

"The method we proposed will suffice."

Joseph Edwards, head of financial strategy at cryptocurrency firm Solrise Group, downplayed the significance of the report, saying that no one outside of Russia would be concerned.

"Moscow, like Beijing, is constantly rattling its sabre over 'crypto bans,' but Russia has never been a pillar of any facet of the industry in the same way that China has been at times," he said.

The mining of digital currencies

Russia is the world's third-largest bitcoin miner, trailing only the United States and Kazakhstan, though the latter may see a miner exodus due to concerns about tightening regulations following unrest earlier this month.

According to the Bank of Russia, cryptocurrency mining is causing energy consumption issues.

Bitcoin and other cryptocurrencies are "mined" by powerful computers competing against other computers connected to a global network to solve complex mathematical puzzles. The process consumes a lot of energy and is frequently run on fossil fuels.

"The best solution is to ban cryptocurrency mining in Russia," the bank stated.

In August, Russia accounted for 11.2% of the global "hashrate," which is the amount of computing power used by computers connected to the bitcoin network.

BitRiver, a Moscow-based company that operates data centres in Siberia that house bitcoin miners, stated that it does not believe a complete crypto ban is likely, and that it expects a balanced position to emerge after different ministries discuss the proposals.

The central bank, which intends to issue its own digital rouble, has stated that the spread of crypto assets would limit monetary policy sovereignty, with higher interest rates required to keep inflation under control.

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