Arijit Sarkar
The overnight collapse of two major traditional banks — Silicon Valley Bank (SVB) and Signature Bank — triggered a series of events that impacted millions of businesses, venture capitalists and bottom-line investors alike. However, United States President Joe Biden assured taxpayers that they would not feel the burn as the federal government takes action to protect depositors.
On March 11, major stablecoins, including USD Coin, USDD (USDD) and Dai , depegged from the U.S. dollar after Circle announced that $3.3 billion of its $40 billion reserves were stuck in SVB.
Knowing that numerous other entities tied to the collapsing banks may suffer irreparable damage, Biden announced, on March 12, his commitment to hold the responsible people accountable for the event.
While the federal government’s proactive approach to minimizing damage was appreciated, many pointed out that it’s the taxpayers that would ultimately suffer the depositors’ bailout. On March 13, Biden addressed concerns through a tweet.
Biden assured American citizens that the traditional financial system was safe after the federal intervention. He further stated that taxpayers would not be burdened for saving SVB and Signature Bank depositors:
“People’s deposits will be there when they need them – at no cost to the taxpayer.”
However, Biden’s followers on Twitter were not completely sold on this idea, as many pointed out that “everything you do or touch costs the taxpayer!”
In parallel, the U.S. Federal Reserve is closely investigating the factors that led to the failure of SVB, including how it supervised and regulated the now-collapsed financial institution.
As previously reported by Cointelegraph, SVB was shut down by the California Department of Financial Protection and Innovation on March 10, with no specific reason offered for the bank’s forced closure. However, it is suspected that SVB was on the edge of collapse due to severe liquidity troubles relating to major losses on government bond investments and unprecedented cash withdrawals.
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Jesse Coghlan
More than 280 blockchain networks are at risk of “zero-day” exploits that could put at least $25 billion worth of crypto at risk, according to cybersecurity firm Halborn.
In a March 13 blog post, Halborn warned of the vulnerability it dubbed “Rab13s” — adding it has already worked with some blockchains, such as Dogecoin, Litecoin and Zcash, to institute a fix for it.
Halborn said it was contracted in March 2022 to conduct a security review of Dogecoin’s codebase and found “several critical and exploitable vulnerabilities.”
It later determined those same vulnerabilities “affected over 280 other networks” that risked billions of dollars worth of cryptocurrencies.
Halborn outlined three vulnerabilities, the “most critical” of which allows an attacker to “send crafted malicious consensus messages to individual nodes, causing each to shut down.”
It added these messages over time could expose the blockchain to a 51% attack where an attacker controls the majority of the network’s mining hash rate or staked tokens to make a new version of the blockchain or take it offline.
Other zero-day vulnerabilities it found would allow potential attackers to crash blockchain nodes by sending Remote Procedure Call (RPC) requests — a protocol allowing a program to communicate and request services from another.
It added the likelihood of RPC-related exploits was lower as it requires valid credentials to undertake the attack.
“Due to codebase differences between the networks not all the vulnerabilities are exploitable on all the networks, but at least one of them may be exploitable on each network,” Halborn warned.
The firm said at this time it’s not releasing further technical details of the exploits due to their severity and added it made a “good faith effort” to contact all affected parties to disclose the potential exploits and provide remediation for the vulnerabilities.
Dogecoin, Zcash and Litecoin have already implemented patches for the discovered vulnerabilities, but hundreds could still be exposed, according to Halborn.
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Derek Andersen
The United States should lead the development of central bank digital currencies (CBDCs) away from being “surveillance coins” and toward being “freedom coins,” says the former chair of the Commodity Futures Trading Commission.
In a March 13 op-ed in The Hill, Christopher Giancarlo said that the U.S. “must influence” CBDC development toward protecting “democratic values like freedom of speech and the right to privacy,” leveraging current technology used by some cryptocurrency protocols.
Nicknamed “Crypto Dad” for his pro-crypto outlook, Giancarlo is co-founder of the Digital Dollar Project, which focuses on researching the implications of a U.S. CBDC. He elaborated on his concerns about privacy in a March 1 report for policy think tank the American Enterprise Institute that he co-authored with API fellow Jim Harper.
He said the U.S. must advocate for a “freedom coin” — a CBDC that guarantees a high level of privacy.
Giancarlo and Harper argued in the paper that CBDCs offer an opportunity “to reassess contemporary financial surveillance activities” and could possibly enhance constitutional protections.
To achieve this, a CBDC could take advantage of crypto technology, such as “zero-knowledge proofs, homomorphic encryption, and multiparty computation, that enable parties to prove an encrypted proposition is true without revealing the underlying information," they said.
These technologies would make “intelligent enforcement” of crime prevention possible, the authors argued.
First, the U.S. would have to reexamine current financial surveillance policies. The authors took issue specifically with one recent document published by the administration of U.S. President Joe Biden:
“The White House Office of Science and Technology Policy’s (OSTP) recent Technical Evaluation for a U.S. Central Bank Digital Currency System shows that financial surveillance in the West is more like China’s than many would like to admit.”
The OSTP paper showed an “unwillingness to evolve beyond today’s constitutionally suspect financial surveillance system,” they said.
Giancarlo and Harper pointed to the OSTP’s proposed Anti-Money Laundering (AML) and Know Your Customer (KYC) measures as problematic, saying they allowed too much surveillance without probable cause.
If a CBDC's privacy is not guaranteed, there is a risk of it being used as it is in China, they argued.
There, the e-yuan “will allow the Chinese government to link political conformity to individual prosperity and relegate political dissenters to poverty” by making all transactions visible to the People’s Bank of China, they opined.
The authors’ thoughts have much in common with concerns expressed by U.S. Senator Tom Emmer, a vocal opponent of a U.S. CBDC who introduced the CBDC Anti-Surveillance Act in 2022.
Emmer has expressed concern over a CBDC that “tracks transaction level data down to the individual user” and can be programmed “to choke out politically unpopular activity.” Emmer is also co-chair of the U.S. Congressional Blockchain Caucus.
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This Daily Dose was brought to you by Cointelegraph.
