DLT

IOTA makes 40%+ move after $100M ecosystem foundation announcement

IOTA price saw a high volume surge that took the altcoin to a near one-year high, but are there reasons to support further upside?

Iota, an open-source distributed ledger focused on the Internet of Things (IoT), saw its native IOTA token rally 43% on Nov.

According to a press release from the project, the foundation will be seeded with $100 million in IOTA tokens, which will be vested over a four-year period.

Historically, ecosystem and developer incentives by blockchain and DeFi protocols tend to attract liquidity to the project and boost market participants’ sentiment.

In August 2021, Avalanche’s AVAX (AVAX) token went on a 1,400% tear after the announcement of the Avalanche Rush decentralized finance (DeFi) incentive program.

A similar outcome was seen with Trader Joe’s JOE token in the months following December 2022 after the DeFi protocol announced plans to establish a presence on Arbitrum.

Currently, the Arbitrum ecosystem is hosting liquidity and developer incentives, and these initiatives align with the recent 62% resurgence in the ARB token’s price.

Was IOTA’s price move another sell-the-news event?

On Nov.

Traders often interpret funding rates and longs-to-shorts ratios as sentiment gauges and indicators of how active investors are positioned.

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Fed governor Waller says crypto ecosystem has distinct parts with varying potential

Christopher Waller praised the emerging applications of distributed ledger technology, smart contracts and tokenization, but he changed his tune for crypto assets.

The parts that make up the cryptocurrency ecosystem are not all equal, the United States Federal Reserve Board of Governors member, Christopher Waller, told a conference audience on Feb. 10. He had clear preferences among the three elements of the ecosystem that he identified.

Waller was hosted by the Global Interdependence Center at its “Digital Money, Decentralized Finance, and the Puzzle of Crypto” conference. He separately considered crypto assets, blockchain technology and trading technology, such as smart contracts and tokenization.

Waller focused on the broader applications of crypto technology. Research on applications of distributed ledger technology to “a wide range of data management problems” is underway. Smart contracts can be applied to non-crypto assets, and tokenization, combined with data vaults, can protect privacy without promoting money laundering. Waller said:

“While these technological developments are still in their infancy, they have potential applications beyond the crypto ecosystem that could lead to substantial productivity enhancements in other industries.”

The bulk of Waller’s talk was devoted to crypto assets. He compares crypto assets, which he said have no intrinsic value, to a commodity — corn — and used economic theory to explain that intrinsically valueless objects may be traded at a positive price due to the “the social contrivance of money.“ But there is an inherent problem, he added:

“What if one day, beliefs change and I no longer believe that someone will pay me for this object in the future? Then I clearly shouldn’t pay anything for it today, so its price goes to zero. […] However, if you buy crypto-assets and the price goes to zero at some point, please don’t be surprised and don’t expect taxpayers to socialize your losses.”

Even sophisticated, institutional investors have lost money in the crypto winter, Waller noted.

Related: US federal agencies release joint statement on crypto asset risks and safe practices

A clear idea of the differences between the parts of the crypto ecosystem will help ensure that regulation will mitigate the risks of crypto assets without impeding innovation of “the positive features of the crypto ecosystem,” he concluded.

Waller has previously expressed his cynicism about a U.S. central bank digital currency.


Bank of Italy selectively encouraging DLT, preparing for MiCA, governor says

Italian central banker Ignazio Visco talked about fostering or discouraging crypto assets during a lengthy speech to the Italian financial markets association.

The Bank of Italy is looking for new ways to apply distributed ledger technology (DLT) and is preparing for the advent of Markets in Crypto-Assets (MiCA) regulation, bank governor Ignazio Visco told a congress of Assiom Forex, the Italian financial markets association, on Feb. 4. 

DLT may offer benefits such as cheaper cross-border transactions and increased financial system efficiency, Visco said. The Italian central bank “is focused on the need to identify areas” where DLT can contribute to financial stability and consumer protection.

Visco expressed the desire to see regulations that sorted out the crypto-asset market to separate “highly risky instruments and services that divert resources from productive activities and collective well-being” from those that bring tangible benefit to the economy:

“The spread of the latter can be fostered by developing rules and controls similar to those already enforced in the traditional financial system; the former, instead, must be strongly discouraged.”

Visco specifically mentioned “crypto-assets with no intrinsic value” among the former group.

The Bank of Italy is working at the European and global levels to develop the technology and a framework of standards, Visco said. It is also collaborating with Italian securities market regulator CONSOB and the Ministry of Economy and Finance to initiate the “authorization and supervision activities” of MiCA.

Related: EU postpones final vote on MiCA for the second time in two months

Italy recently imposed a 26% capital gains tax on crypto-asset trading over 2,000 euros in 2023. However, Italian taxpayers have the choice of paying a 14% tax on their crypto-asset holding as of Jan. 1. This alternative is intended to incentivize taxpayers to declare their digital holdings.

Visco estimated the number of Italian households that own crypto assets at 2% and said those holdings were “modest amounts on average.”

BMW taps Coinweb and BNB chain for blockchain loyalty program

BMW will integrate decentralized tech in two phases- first in its daily operations to eliminate complex paperwork, and the second phase would see the development of a customer loyalty program.

German car manufacturer BMW plans to integrate blockchain technology into its daily operations and create a blockchain loyalty program for its customers in Thailand. The popular carmaker has onboarded blockchain infrastructure firm Coinweb as its decentralized architecture provider and BNB Chain for settling transactions.

The integration of blockchain technology into BMW’s workflow will take place in two phases. First, the decentralized tech will be integrated into BMW’s daily operations with the goal of automating time-consuming manual processes and streamlining the company’s automobile financing services.

The second phase of the project would see Coinweb develop a customized Web3 application for BMW’s customer loyalty program. The program will use a blockchain-based rewards scheme to incentivize BMW Group customers. A customer’s tier and status in the ecosystem will be determined by the loyalty rewards they have acquired via various actions.

Related: F1 Monaco GP: Bybit’s Red Bull Racing NFTs, crypto-F1 partnerships and more

Owners will be able to use their rewards to purchase goods and services from BMW as well as from a linked ecosystem in the future. Binance’s native BNB chain will be used to settle transactions.

Talking about how customers will be rewarded under the upcoming loyalty program, Coinweb CEO Toby Gilbert, told Cointelegraph that customers will be rewarded every time they have touchpoints with the BMW ecosystem, be it “buying a new car or they go for a service,” he explained further:

“Customers will be rewarded with loyalty points and they will be able to spend within the ecosystem. Our hope is that there will be a future global rollout but currently our partnership is for Thailand.”

BMW Thailand’s leasing head Bjorn Antonsson said that the firm has been actively monitoring the progress of decentralized tech and its various use cases over the years. Antonsson hoped that the integration of blockchain tech in their daily operations would eliminate the manual paperwork and contribute toward the company’s efficiency and transparency.

The interest of automobile manufacturers in decentralized tech is nothing new, and BMW has been involved with the tech since 2018. BMW first used blockchain technology to track its cobalt supply and ensure its products are being supplied using ethical practices. Apart from BMW, another popular German carmaker Mercedes has actively used nonfungible tokens and crypto coins as promotional tools.

Italian carmaker Alfa Romeo used blockchain tech to track car records, while Ferrari’s new deal has hinted at NFT integration as well.

Algorand to support bank and insurance guarantees platform in Italy

This is the first time an EU member state will use blockchain technology for bank and insurance guarantees, according to Algorand.

Layer-1 blockchain platform Algorand has been chosen as the public blockchain to support an “innovative digital guarantees platform” to be used in Italy’s banking and insurance markets.

The Algorand-supported platform is expected to launch in early 2023. According to Algorand’s Dec. 13 announcement, this is the first time a European Union member state will use blockchain technology for bank and insurance guarantees.

A bank guarantee is when a lending institution promises to cover a loss if a borrower defaults on a loan. It’s an alternative to providing a security bond or a deposit to a supplier or vendor. An insurance guarantee is similar but is offered by an insurance company rather than a bank. 

Algorand said that blockchain technology was ideally suited for the “digital sureties” platform because of its fast, efficient, low-cost and scalable data transactions, as well as its ability to provide protection against fraud.

The blockchain-backed digital sureties platform is being developed by the Research Center on Technologies, Innovation and Finance of the Catholic University of Milan (CETIF) and is a part of Italy’s National Recovery and Resilience Plan, an initiative set to boost Italy’s economic recovery following the COVID-19 crisis. 

Related: Algorand Foundation outlines $35M exposure to crypto lender Hodlnaut

Federico Rajola, professor at CETIF, said they chose Algorand for its “unparalleled level of innovation” among permissionless digital ledger technologies and its “leadership in sustainability,” adding: 

“Our goal is to help Italy not only recover from the economic impact of Covid-19, but also excel through innovation and leadership […] We believe these platforms can and will dramatically contribute to the country’s competitive sustainability for the benefit of all.”

In September, Cointelegraph reported that Algorand had increased its transaction speed, processing capacity, and cross-chain functionality with a major protocol upgrade. The layer-1 blockchain network implemented state proofs to its mainnet, enabling trustless communication between different blockchain protocols. The upgrade increased Algorand’s processing speed from 1,200 to 6,000 transactions per second.

Malta prepares to revise regulatory treatment of NFTs

The revision seeks to remove nonfungible tokens from Malta’s Virtual Financial Assets framework.

The Malta Financial Services Authority (MFSA) is currently reviewing requests to revise the “regulatory treatment” of nonfungible tokens within its Virtual Financial Assets framework. 

Under the current regulatory framework, NFTs are included within the scope of the Virtual Financial Assets Act, which also includes virtual tokens, virtual financial assets, electronic money and all financial instruments built or dependent on distributed ledger technology.

However, the MFSA is proposing to have NFTs removed from the Virtual Financial Assets framework since they’re unique and nonfungible and therefore incapable of being used as payments for goods and services or for investment purposes. 

According to the MFSA, “The inclusion of such assets within the scope of the VFA framework may run counter to the spirit of the Act, which sought to regulate investment-type services offered in relation to VFAs falling outside the scope of existing traditional financial service asset categories. “

The governing authority is currently inviting feedback from stakeholders before officially implementing these new revisions into its framework.

Related: Chinese court says NFTs are virtual property protected by law

In November, Cointelegraph reported that Malta was leading the way in Southern Europe with regard to cryptocurrency regulation. 

In 2018, the Maltese parliament enacted three laws establishing a comprehensive regulatory framework for blockchain and digital currencies. The Virtual Financial Assets Act regulates the field of initial coin offerings, digital assets, digital currencies and related services, while the Innovative Technological Arrangements and Services Act enables the Malta Digital Innovation Authority to oversee the registration of technology service providers.

The country’s current financial regulatory framework recognizes four distinct categories of digital assets, subject to different sets of rules: electronic money, financial instruments, virtual (utility) tokens and virtual financial assets.

Aussie stock exchange abandons blockchain plans, leaving $170M hole

The blockchain-backed upgrade in the works for nearly five years has potentially cost Australia’s primary exchange over $170 million.

The long-anticipated plans by the Australian Securities Exchange (ASX) to use blockchain to bring its clearing and settlements system into the 21st century have just been canceled.

In a Nov. 17 statement, ASX announced it had paused all current activities of its “CHESS replacement project” following an independent review from technology consulting firm Accenture, which identified “significant challenges with the solution design and its ability to meet ASX’s requirements,” stating:

“Current activities on the project have been paused while ASX revisits the solution design.”

For the last five years, ASX had been working on a distributed ledger technology (DLT) solution that would replace its 25-year-old Clearing House Electronic Subregister System (CHESS) used to record shareholdings and manage transaction settlements.

Originally the system was slated for a 2020 launch, but the project was marred by multiple delays over the years with the ASX saying it needed more time for testing, had uncertainty around COVID-19, needed more time for development, capacity overhauls and even more testing before it went live.

Amongst findings in its 47-page report, Accenture said that business workflows are “not tailored for a distributed environment,” the DLT-based system was too complex, and the completion timeline was uncertain regardless of the application software being over 60% complete.

ASX chairman Damian Roche apologized for the disruption, adding “there are significant technology, governance, and delivery challenges that must be addressed.”

Helen Lofthouse, ASX managing director and CEO said “it’s clear we need to revisit the solution design” adding “we have some work to do before updating and consulting with stakeholders more deeply.”

Related: Rivals steadfast even as two Aussie crypto ETF providers bail

Thee announcement has drawn criticism from the Australian Securities Investment Commission (ASIC) and the Reserve Bank of Australia (RBA) — respectively the country’s financial market regulator and central bank — which released a joint statement on the matter.

RBA Governor Philip Lowe called the ASX announcement “very disappointing” and ASIC chair Joe Longo said the ASX “failed to demonstrate appropriate control of the program to date, and this has undermined legitimate expectations that the ASX can deliver a world-class, contemporary financial market infrastructure.”

The two organizations highlighted their expectations saying the CHESS replacement must be live before the current system no longer meets requirements and that “market and service continuity be secured” by the current system.

The ASX must also “uplift its capabilities” and address “the serious deficiencies identified by the independent report” starting by creating a plan to address them.

The ASX said the project had racked up a pre-tax charge of between $164.6 million and $171.3 million ($245 to 255 million Australian dollars).

China floats idea of ‘Asian yuan’ to reduce reliance on US dollar

The proposed distributed ledger technology-backed “Asian yuan” token would supposedly help reduce Asia’s dependence on the U.S. dollar for international business.

Researchers from a Chinese state-run think tank have floated the idea of an Asia-wide digital currency with the aim of reducing its reliance on a United States dollar-based economy. 

The views of researchers Liu Dongmin, Song Shuang and Zhou Xuezhi from a unit of the Chinese Academy of Social Sciences (CASS) were published in an issue of the World Affairs journal posted online in late September, who said the establishment of an Asian yuan token would lower Asia’s reliance on the USD.

Much like similar existing and trialed central bank digital currencies (CBDCs), the researchers said distributed ledger technology (DLT) would form the backing of the Asian token, which would be pegged to a bundle of 13 currencies.

The currencies would include those of all 10 of the member nations in the Association of Southeast Asian Nations (ASEAN) along with China’s yuan, Japan’s yen and South Korea’s won, according to the researchers.

“More than 20 years of deepened economic integration in East Asia has laid a good foundation for regional currency cooperation. The conditions for setting up the Asian yuan have gradually formed,” the researchers wrote in the journal seen by the South China Morning Post.

The journal is affiliated with China’s Foreign Affairs department, with the researchers hailing from the “Institute of World Economics and Politics” one of many research units under CASS, a think tank with various ties to the country’s ruling party.

The U.S dollar and, more recently, cryptocurrencies have become a popular method for those in South East Asia to conduct business, send remittances and hedge against the inflation of their respective local currencies.

Related: China accounts for 84% of all blockchain patent applications, but there’s a catch

The research came a few weeks before a milestone in China’s CBDC pilot, the Bank of China on Oct. 10 said its e-CNY had transacted around $14 billion in value, or 100 billion yuan, with around 5.6 million merchant stores already supporting the digital yuan.

The country’s central bank is also partaking in Project Inthanon-LionRock, a DLT-backed cross-border payment CBDC trial also involving the ​​Thai, Hong Kong and United Arab Emirates central banks.

In September the trial saw the “successful” transaction of over $22 million worth of value in a month on its “Multiple CBDC Bridge” platform overseen by the Bank for International Settlements (BIS).

Blockchain interoperability goes beyond moving data from point A to B — Axelar CEO Sergey Gorbunov

Axelar’s co-founder shared his views on blockchain infrastructure and adoption at Converge22 in San Francisco.

Cross-chain communication between blockchains is more than just moving data from point A to B, but how it can connect applications and users for enhanced experiences and fewer gas fees in Web3, outlined Sergey Gorbunov, Axelar Network co-founder and CEO, speaking to Cointelegraph’s business editor Sam Bourgi on Sept. 28 at Converge22 in San Francisco. 

As the crypto industry has developed over the past few years, blockchain interoperability has seen a surge in demand, attracting venture capital and welcoming players, such as Axelar, which reached unicorn status in February. According to Gorbunov, the company, founded in 2020, started with a premise that cross-chain and multichain capabilities would come to define the crypto space. “The idea is not just to talk about how to connect A to B, but how to connect many to many, right? How to connect everybody with everyone else. And that includes applications and includes users,” he explained. 

Interoperability is a buzzword in the crypto industry that refers to the ability of many blockchains to communicate, share digital assets and data, and work together, thereby sharing economic activity. As an infrastructure, interoperability is crucial for broader adoption of the technology, as Gorbunov explained:

“We need an ability for the user to execute one call on one chain, and that transaction actually taking place on other chains without them having to go and get a native token of that chain, pay gas, execute themselves and move it back and forth.”

Axelar’s CEO highlighted that, beyond better experiences for users, interoperability also means higher economic outcomes, as interoperable chains can have unified liquidity and thus spend less on gas fees for transactions. “Our Web2 experience is a lot simpler, and we have to get to the same level in Web3 with simpler experiences, and that is what cross-chain enables us to do, to help build those simple experiences.”

Related: Circle Product VP: USDC chain expansion part of ‘multichain’ vision

At Converge22, Axelar was announced as one of the networks set to integrate with Circle, the financial technology company behind the USD Coin (USDC) and Euro Coin (EUROC). Circle is launching a new cross-chain transfer protocol to help developers build frictionless experiences for sending and transacting USDC natively across blockchains.

Earlier this week, Axelar disclosed a partnership with Mysten Labs, the infrastructure company behind the Sui blockchain, to deliver cross-chain communication for developers through General Message Passing and advance the prospect of a so-called “super DApp.”

Writer and editor Sam Bourgi contributed to this story.

Australian Securities Exchange takes step towards tokenized asset trading

“There’s a strong value proposition here that we can essentially tokenize any asset and bridge that into the ASX ecosystem,” said Zerocap CEO Ryan McCall.

Companies on the Australian Securities Exchange (ASX) could be able to trade tokenized bonds, equities, funds, or carbon credits after a successful proof-of-concept trial led by the digital asset investment platform Zerocap.

On Monday, Melbourne-based digital asset investment platform Zerocap told Cointelegraph it had successfully used Synfini to bridge over its custody infrastructure onto the platform as part of a trial program, allowing for the trading and clearing of Ethereum-based tokenized assets.

The trial is part of ASX’s distributed ledger technology (DLT)-based settlement project Synfini which was launched in November. The platform offers clients access to ASX’s DLT infrastructure, data hosting and ledger services, enabling them to build blockchain applications off of it.

Zerocap co-founder and CEO Ryan McCall stated that it occurred last year and that “it got a lot of interest” in the institutional sphere, particularly from companies that are exploring ways to tokenize and trade bonds, funds or carbon credits:

“Thinking beyond Bitcoin, Ethereum and other crypto assets, the tokenization of bonds, equities, property, carbon credits, private equity, and anything that’s essentially illiquid, there’s a strong value proposition here that we can essentially tokenize any asset and bridge that into the ASX ecosystem.”

McCall outlined that the companies dealing with especially “opaque and difficult to access markets” such as bonds and carbon credits are seeking out ways to efficiently cut costs, save time on issuance and open up broader investment access via tokenized offerings.

Questioned on whether the ASX would be able to offer crypto trading via Synfini, McCall stated “yes” but that he hasn’t seen any indicators of interest in this field, as the ASX and others are primarily focused on tokenizing traditional/real-world assets.

It is worth noting however that Synfini is a separate initiative from ASX’s blockchain-based CHESS system replacement that has yet to be implemented after facing years of technical issues.

McCall went on to suggest that Zerocap could be looking to officially launch asset tokenization and trading services via Synfini to institutions in the near future, as it has just cleared the necessary steps for legal approval.

“Since then we’ve been going through the certification process to get into the production environment, which as you can probably imagine, for any sort of enterprise software, but certainly for an exchange, it’s a fairly stringent process. So we’ve just cleared the production certification. So getting ready to deploy this now,” he said.

McCall also highlighted that with the ASX being a reputable source to host digital asset trading, doing so would likely dampen institutional concern over counterparty risk relating to the crypto sector.

Such risks have been thoroughly prevalent this year due to several major crypto firms either facing liquidity issues, or going completely bankrupt in the case of Celsius, Voyager Digital and Three Arrows Capital:

“So counterparty risk, you know, credit risk specifically I guess is the biggest talking point in crypto at the moment with the 3AC disaster. And I think that just demonstrates the use case for what the ASX is trying to do here.”

“You know, thinking about the ecosystem and investor protections and all the things that it offers, there’s definitely a need for something like that in digital assets,” he added.

The Zerocap CEO also suggested that Synfini will likely be utilized by a wide range of firms, as the platform is user-friendly and removes a lot of variables for companies.

“If a custodian or a fund manager or any application developer wants to come and build a blockchain application, they can do that on this Synfini platform without having to really worry about managing any of the infrastructure, which is pretty cool,” he said.

Related: ASIC chair troubled by sheer amount of ‘risk-taking’ crypto investors

Zerocap recently had a hand in a tokenized carbon credit transaction in late June, with the firm providing market-making services and liquidity for an exchange between major Australian family office Victor Smorgon Group and BetaCarbon, a blockchain-based carbon trading platform.

The deal was also facilitated via A$DC, a fully AUD collateralized stablecoin developed by “big four bank” Australian bank ANZ.