Global Crypto News by Killerwhale
Welcome to the Global Crypto News hub! Articles by Killerwhale go over the news you may have missed that involves crypto, but had a real world effect. Sit back, relax, and enjoy! News is gathered throughout the week and posted every Saturday!
China Inaugurates Digital RMB Industrial Park, Solidifying its Position as a Frontrunner
China, a frontrunner in the digital currency realm, was among the first nations to adopt a central bank digital currency (CBDC). Now, it is moving further ahead with the inauguration of an industrial park in Shenzhen, a city of strong economic dynamism, dedicated entirely to its e-CNY.
The opening of the Shenzhen Digital RMB Industrial Park marks an important milestone in China's quest to dominate the digital currency space. The dedicated park aims to attract businesses and support their expansion and success in the digital RMB market.
Indeed, the Chinese government is offering generous incentives for companies to develop their businesses in the new industrial park. Commercial banks can earn bids up to 20 million yuan ($2.7 million) for establishing themselves in the facility, while small firms and startups can benefit from up to three years without rent and up to 50 million yuan ($6.9 million). These initiatives are in addition to hard wallets, smart contracts, payment methods, and major advertising efforts for the digital yuan.
Overall, the Chinese government has allocated a whopping 100 million yuan ($13.7 million) over the next three years to advance digital currency implementation and foster technological innovation in the country.
The purpose is to bolster the digital RMB ecosystem by forming a national cluster at the cutting edge of technology and building a whole ecosystem around the national digital currency by encouraging imitation among fintech companies, banks, payments firms, and blockchain specialists.
The inauguration of the Shenzhen Digital RMB Industrial Park has significantly bolstered China's ambition to lead the global digital currency market. The park contributes to the larger digital economy by creating an environment favorable for the expansion and development of digital RMB industries. It is also anticipated to create job opportunities and stimulate regional economic growth.
However, there will be challenges to the growth of the digital RMB ecosystem. Potential roadblocks include those related to regulations, technological constraints, and commercial adoption. Despite these challenges, the park's inauguration represents a bold step forward in China's digital currency journey and sets a standard for other nations to follow.
The Importance of Audits and Transparency in the Cryptocurrency Industry, a case study of Tether
The recent depeg of USDC, the second most popular cryptocurrency and trusted stablecoin, has sent its main rival, Tether to other highs, now accounting for nearly 70% of the stablecoin market, achieving a tremendous success “in Q1 2023, with our reserves’ surplus reaching an all time high of $2.44B,” said Paolo Ardoino, actual CTO of Tether and CEO to become in December.
Despite having such systemic significance and being the keystone for issuers to build trust in the stability of their product, not much is understood about how Tether operates.
Tether has also continued to contend with a perceived lack of transparency over its controversial choice to prove stability and solvency by using attestations instead of audits, as attestations “only evaluate whether the data being examined by the ‘attestator’ is accurate at that precise moment in time. Hence, any iteration of attestation is pretty useless, especially as a matter of due diligence.”
In 2021, the firm was banned from operating in New York for lying about its collateral pile and misleading about the health of its reserves. This investigation led to a deal with the New York Attorney General (NYAG) in 2021, requiring Tether to disclose quarterly audits of its reserves.
With the new Tether’s CEO, Paolo Ardoino, coming in December, Tether is aware that a lack of transparency from the industry's biggest players could have a cascading effect on the ecosystem. This week, Tether announced a change of auditing firm, partnering with BDO Italia for the auditing and publication of its USDT reserves on a monthly basis, rather than quarterly.
Additionally, the stablecoin issuer is set to release real-time data on the reserves backing USDT in 2024. Supposedly, this should enable the fiat-reserve data to be fully transparent and real time. However, this does not offer substantially more assurance about Tether’s actual reliability and credibility as real effect mechanics are hidden.
As we all know, and exemplified above, Tether has a long history of opacity and secrecy. Since its deployment, the company has been accused of making false statements about its reserves and being reluctant to release financial information to the public. Such an announcement surely releases doubts about Tether’s sudden commitment to transparency, even with its new audits implementation.
As Riyad Carey, a research analyst at data firm Kaiko, said: “Tether is absolutely crucial to the industry and represents the vast majority of trading volume on centralized exchanges. It’s hard to even speculate what the market would look like if [a USDT shutdown] came to pass.”