Japan, United Kingdom, Sir John Cunliffe discussed on The Crypto Overnighter


Here, encrypted, it's 10 p.m. Pacific time, my name is nicodemus and welcome back to the crypto overnighter, where we take a nightly look at the crypto NFT and metaverse space, and keep in mind nothing in this show should ever be considered financial advice. It's 10 p.m. on a Monday, folks. December 26th, 2022. You know how urban legends are cautionary tales. Babysitters take care of your children or a bad man that's going to get them. Things like that. Well, that's what's going on with the fall of FTX. Except for the concern is both valid and real. It's being seen as a warning for the need for more careful regulation by the public and private sector players in the United Kingdom. The Bank of England deputy governor Sir John cunliffe recently gave an interview to Sky News in which he emphasized the need for increased protection for investors in the UK who want to invest in cryptocurrency markets. He emphasized that people who want to use or invest in cryptocurrencies should have a structure in place that provides consumer protection and integrity similar to that of conventional financial markets. He explained that the growing interest in cryptocurrency markets from financial institutions and retail users is the main reason for the need for increased regulatory oversight in the United Kingdom. He stated we had banks and investment funds and others who wanted to invest in it and I think we should think about regulation before it becomes integrated with the financial system and before it becomes a systemic problem. He also used the collapse of FTX as an example of a situation where existing regulatory parameters that apply to traditional finance sector could have provided protection to users who lost money. He also mentioned that issues such as missing client funds, conflicts of interest between different operations and transparency audit accounting arose in the collapse of FTX. Cunliffe compared the situation to the gambling sector in the UK. He stated that investors should have access to a regulated environment that prevents them from losing access to funds, like what happened with FTX. Mitch McConnell is a partner at investment firm blockchain co investors. He believes that financial institutions and regulators still see value in blockchain technology and digital assets in the post Brexit British economy. He stated, quote, British financial institutions and banks, many of whom are already investing heavily in blockchain technology, continue to want to participate in the digitalization of commerce, which starts with digital assets, monies and commodities. He also believes that the collapse of FTX shows the importance of prudent regulation. He also mentioned that astute regulators in both the U.S. and the UK are distinguishing between offshore and fraudulent enterprises like FTX and legitimate blockchain technology solutions that enable the digitalization of assets, money and commerce. Meanwhile, Japan's financial services agency will lift a ban on the distribution of foreign stablecoins. The ban on foreign stablecoins like tether and USD C will be lifted in 2023. Japan's new stablecoin regulations will allow local exchanges to trade stablecoins as long as they follow certain rules. These rules include things like keeping deposits safe and limiting the amount of money that can be sent. The report says that if stablecoin payments become more popular, it could make international money transfers easier and cheaper. In order to allow stablecoin distribution in Japan, more regulations related to the preventing of money laundering will be needed. That's according to the FSA. The agency recently began collecting feedback on proposals to lift the ban on stablecoins in Japan. A bill to ban non banking institutions from issuing stablecoins was passed by Japan's parliament in June of this year. This new measure will greatly affect cryptocurrency trading in Japan. As no local exchanges currently offer trading in stablecoins like tether or USD C. None of the 31 Japanese exchanges registered with the FSA, including blitz fire and coincheck, were trading stablecoins as of November of this year, according to official data. A bit flyer, one of Japan's largest cryptocurrency exchanges currently has 5 cryptocurrencies that they trade, including Bitcoin, eth, Bitcoin, cash, XRP, and stellar. Japanese authorities have been busy creating regulations for cryptocurrencies. The ruling party is tax committee in Japan, approved a proposal on December 15th that removes the requirement for crypto companies to pay taxes on paper gains from issued tokens. Previously, local regulators also advised against using algorithmic stablecoins like Terry USD. And it seems like crypto winner is hacking season. Because we do have some hacking news for you. First off, we have defrost finance. There are decentralized finance protocol. They announced that they were hacked on December 23rd. Pec shield claims that the hack may have been a rug pull that resulted in the theft of $12 million. Another security company stated that it has been unable to contact members of the finance team. On December 25th, the defrost team posted a series of tweets explaining that a first attack used a flash loan to drain funds from its V two product. They set a second larger attack exploited the owner key on its V one product. The protocol, which provides leverage trading on the avalanche blockchain, did not disclose the amount of funds that were taken. Pec shields analysis shows that the attack on defrost finance involved the use of a fake collateral token and manipulated pricing. Defrost finance has about $13 million in locked funds in recent weeks. According to DeFi Lama data. However, that amount dropped to less than $93,000 on December 25th. If the attack on defrost was a rug pull, it's unusual because the team behind the scheme typically goes silent and can't be contacted. However, defrost finance announced that the attack and stated in a tweet that it is willing to negotiate with the perpetrators for the return of the stolen funds. Which usually that's something you don't do if you're doing a rug pull. Despite this, efforts to reach defrost finance through Twitter were unsuccessful because direct messages have been disabled on the account. Because they're asking for info. On December 26th, certificate tweeted that it tried to contact multiple members of the team, but received no response. And accompanying graphics stated that cerdic confirmed defrost finance is an exit scam. DeFi yield is a company that provides a security layer for smart contracts to help investors avoid scams and hacks. They said that it conducted an audit of defrost finance one year ago and identified the smart contract vulnerability that was used in the hack. On December 26th, cerdic issued a warning stating that defrost finance had suffered an exit scam. This warning came just as defrost announced that the hacker involved in the V one hack but not the V two hack returned the funds. Cervix stated that it had seen an exit scam on defrost finance on December 24th, and that it had tempted to contact multiple members of the team, but got no response. The team behind defrost finance, by the way, is not KYC. But cerda is using information that it has to assist authorities. Immediately after the exploit, pec shield also issued a warning, stating that the operation was a rug pull. Peck shield claimed to have community Intel warning about the rugby of defrost finance, and that its analysis

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