Italy’s central bank calls for framework to prevent stablecoin runs

June 29, 2023 Coin Telegraph

Bank of Italy is calling for closer regulator scrutiny of stablecoins, which they say “have not proved stable at all.”

Italy’s top banking authority has called for a “robust, risk-based” regulatory framework for stablecoins, which could help prevent a worst case scenario — a “run” on stablecoins.

The central bank’s recently released Markets, Infrastructures and Payment Systems report for June 2023 has called on regulators to apply the same financial conduct standards to stablecoin issuers in the industry.

#Bankitalia #26June Alessandra #Perrazzelli discussed about the evolving regulatory landscape for #DigitalAssets at @pointzeroforum Panel “State of Global Digital Asset Regulation: Navigating Opportunities in an Evolving Landscape”#PZF2023 #PointZeroForum @sif_sfi @elevandi pic.twitter.com/Jm0OBeifZh
— Banca d'Italia (@bancaditalia) June 26, 2023

The bank said the rise of cryptocurrencies, coupled with several “boom and bust cycles” in a largely unregulated environment has caused “significant consumer harm.”

Regulatory attention on stablecoin issuers in particular should be a priority because of its close connection to DeFi, the bank said:

“A robust, risk-based regulation of stablecoins ensuring the prevention of ‘runs’ on their issuers is a necessary condition to reduce the fragility of the DeFi ecosystem, given the prominent role of this asset class in decentralized finance.”

“It is crucial that policy interventions on stablecoins and DeFi are well synchronized since the diffusion of stablecoins [...] is likely to spur new waves of DeFi innovation and increase the interconnection between traditional and decentralized finance,” it added.

The Italian banking authority also noted that stablecoins “have not proved stable at all” — citing the most notable collapse of Terra’s algorithmic stablecoin TerraClassicUSD (USTC) in May 2022.

The adoption of #DLT solutions, especially if featured by weak organizational structures, could undermine the financial system due to lack of controls, lack of specific rules as mitigation tools, interdependence among regulated and non-regulated entities. The fragmentation is…
— Banca d'Italia (@bancaditalia) June 27, 2023

The bank said the industry also needs to debunk “the decentralization illusion” by acknowledging that most decentralized protocols are operated by core stakeholders who can often “extract ownership benefits.”

“Such projects should be brought back to traditional, accountable business structures as a pre-condition for operating in the regulated financial sector,” the bank added.

The bank however stressed that it isn’t necessary to subject every crypto asset or activity to financial services regulation:

“Not all crypto activities and not all forms of crypto-assets need to be covered or should be covered by financial sector regulation, in particular where their issuance, trading and holding do not serve customers’ financial needs through a payment or investment function.”

Among the non-financial use cases enabled by blockchain are decentralized identification, real estate, supply chain, voting and carbon credits.

Italy’s central bank has also called for countries to cooperate and establish an international regulatory framework because the technology operates irrespective of nation state borders.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Aussie ‘Big 4’ bank mints stablecoin for carbon trading and remittances

January 19, 2023 Coin Telegraph

AUDN

This marks the second "Big 4" bank in Australia to launch an Australian-dollar pegged stablecoin in a bid to boost the digital economy.

National Australia Bank (NAB) is set to become the second “Big 4” Australian bank to launch an Australian dollar-pegged stablecoin on the Ethereum network.

Set to launch sometime in mid-2023, the AUDN stablecoin is aimed at streamlining cross-border remittances and carbon credit trading, according to a Jan. 18 report from the Australian Financial Review (AFR).

NAB’s chief innovation officer Howard Silby said the decision to mint the AUDN stablecoin on Ethereum — which is backed 1:1 by the Australian dollar (AUD) — was based on their belief that blockchain infrastructure will play a key role in the next evolution of finance:

We certainly believe there are elements of blockchain technology that will form part of the future of finance [...] From our point of view, we see [blockchain] has the potential to deliver instantaneous, transparent, inclusive, financial outcomes.”

The implementation of AUDN for real-time, cross-border remittances could become a way for customers to sidestep the slower and more costly SWIFT payment network.

Carbon credit trading and other forms of tokenzied real-world assets will also be a major use case for the AUDN, Silby said. He also added that they’re planning to offer stablecoins in “multiple currencies” where the bank has licenses.

NAB’s announcement of the AUDN comes nine months after rival bank Australia and New Zealand Banking Group (ANZ) launched 30 million tokens of its own stablecoin tickered A$DC in March 2022, which is also used for international remittances and carbon trading.

Prior to ANZ and NAB’s stablecoin projects, the two banks initially planned on teaming up with the other two “Big 4” Australian banks — Commonwealth Bank of Australia (CBA) and Westpac — to co-launch a nationwide stablecoin backed by the AUD.

However, it failed due to competition concerns and the banks being at different stages in their adoption and strategy, the AFR explained.

*NAB, one of the “Big 4” banks in Australia, is set to roll out its own stablecoin in mid-2023. Source:* *PYMNTS.*

Jonathon Miller, Australia’s managing director of crypto exchange Kraken Australia told Cointelegraph that banks are beginning to acknowledge the technical advantages that blockchain infrastructure offers over traditional legacy systems:

“The persistent adoption of crypto technology by financial institutions like ANZ and now NAB for its potential to create significant efficiencies in the financial system [...] is an explicit recognition of [blockchain’s] competitive advantage over traditional payment systems.”

“We expect this trend to continue, inevitably evolving to include the adoption of various other cryptocurrencies and tokens for increasing use cases in the Australian economy,” he added.

It also remains to be seen how these private bank-issued stablecoins would work in tandem with the Reserve Bank of Australia’s eAUD — a central bank digital currency (CBDC) — which is currently in its pilot phase.

However, NAB is confident the two will be able to operate simultaneously and have their own set of unique use cases.

Putting carbon credits on blockchain won’t solve the problem alone: Davos

January 17, 2023 Coin Telegraph

Blockchain

Cointelegraph’s editor-in-chief Kristina Lucrezia Cornèr moderated a panel discussion in Davos, Switzerland, about pricing carbon credits.

Simply trading carbon credits on the blockchain won’t solve much for the environment. Carbon blockchain executives argue that companies must understand why they’re using them and how to make a real impact.

During a panel session in Davos, Switzerland, moderated by Cointelegraph’s editor-in-chief, Kristina Lucrezia Cornèr on Jan. 16, several executives from carbon blockchain platforms spoke about the increasing interest from companies in carbon trading.

Karen Zapata, the chief operating officer of carbon blockchain platform ClimateTrade, said that sustainability had been a “trending topic” with many companies keen to get involved, but noted that many still don’t understand it.

She recalled talking to a sustainability manager of a “big, big company” who told her he doesn’t know what a carbon credit is or “how it works”, but is being pressured by his marketing team to “move this forward.”

Zapata emphasized that companies won’t be able to communicate what they are doing with carbon credits to their community if they don’t “even understand” what it is.

She added that one should be less concerned about the pricing behind carbon credits and more about the impact. She explained that the price comes second once the positive impact is understood.

Carbon marketplace Tolam Earth CEO Matthew Porter added to the conversation by saying that carbon trading alone “doesn’t solve a lot,” without knowing why they are doing it and creating “incentives and drivers.”

He also added that putting it on the chain only solves a “little bit” of inefficiency.

There has been no shortage of carbon credit developments in the blockchain space in recent times.

Blockchain-based storage network Filecoin launched Filecoin Green, a protocol labs initiative designed to reduce the environmental impact of its native cryptocurrency, Filecoin, in October 2022.

The first project it launched was CO2.Storage — a Web3 data storage solution that aims to provide transparency for carbon offsets and address traditional storage solutions for all digital environmental assets, including renewable energy credits.

WeWork CEO Adam Neumann dived into the carbon crypto space in May 2022, raising $70 million in the first major funding round for his climate tech venture Flowcarbon.

The project was created to make carbon trading more accessible by putting carbon credits on the blockchain.

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ANZ’s stablecoin used to buy tokenized carbon credits

June 27, 2022 Coin Telegraph

A$DC

The latest A$DC transaction saw ANZ’s institutional partner Victor Smorgon use A$DC to purchase Australian Carbon Credit Units from blockchain-based carbon trading platform BetaCarbon.

ANZ’s stablecoin A$DC has been used to buy Australian tokenized carbon credits, marking another critical test of the asset’s use cases in the local economy.

In March, the “Big Four” bank became the first major Australian financial institution to mint its own stablecoin after overseeing a pilot transaction worth 30 million AUD ($20.76 million) between Victor Smorgon Group and digital asset manager Zerocap.

ANZ’s stablecoin is fully collateralized by Australian dollars (AUD) held in the bank's managed reserved account. So far, A$DC transactions have primarily been conducted over the Ethereum blockchain.

According to a June 27 report from the Australian Financial Review (AFR), the latest transaction saw its long-time institutional partner Victor Smorgon use A$DC to purchase Australian Carbon Credit Units (ACCUs).

The carbon credits were tokenized and provided by BetaCarbon, a blockchain-based carbon trading platform that issues digital security assets dubbed “BCAUs,” which represent one kilogram of carbon offsets per credit.

The transaction also saw participation from Zerocap again, who provided market-making services and liquidity by exchanging the A$DC sent from Victor Smorgon into USD Coin (USDC) so that BetaCarbon could accept the deal. The value of the transaction has not been specified, however.

In terms of the bank’s outlook on the crypto/blockchain sector, ANZ’s banking services portfolio lead Nigel Dobson told the AFR that the firm is looking at blockchain tech as a means of “pursuing the transition of financial market infrastructure” and is not necessarily interested in speculative crypto assets themselves.

“We see this is evolving from being internet-protocol based to one of ‘tokenized’ protocols. We think the underlying infrastructure – efficient, secure, public blockchains – will facilitate transactions, both ones we understand today and new ones that will be more efficient.”

Dobson echoed similar sentiments at the Chainalysis Links event in Sydney on June 21, noting that ANZ promptly “banned the word crypto immediately in all of our internal communications and narrative” when it started exploring blockchain tech a few years ago.

He went on to add that the bank has explored multiple use cases for blockchain tech, such as supply chain tracking and providing on-ramps via stablecoins for institutions to invest in digital assets. However, Dobson suggested that tokenized carbon credits were a key area that the bank has been gearing up for:

"Another area where we have a strong position in terms of sustainability is where we feel the tokenization of carbon credits and marketplaces driven by tokenized assets and tokenized value exchange will be really efficient."

At the start of this month, ANZ ruled out offering any crypto exposure to retail investors due to their lack of financial literacy.

Maile Carnegie, an executive for retail banking, noted at the Australian Financial Review Banking Summit that “the vast majority of them don’t understand really basic financial well-being concepts.”

ESG Study Shows Bitcoin Mining’s Potential to Eliminate 0.15% of Global Warming by 2045, Claims No Other Technology Can Do Better

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North Dakota hopes to double the $3B of clean crypto mining in the state

April 14, 2022 Coin Telegraph

North Dakota hopes to double the B of clean crypto mining in the state

Carbon Credits

North Dakota officials are luring in crypto mining companies to set up in the state. With $3B already invested, and with $3B said to be on the way, they're doing well so far.

North Dakota government officials rocked up to the Bitcoin 2022 conference in Miami to lure cryptocurrency miners into their greener pastures. They came with the promise of the “cleanest crypto on the planet.”

The North Dakota Commerce Department dropped $35,000 on the trip, saying it expected a return of 20,000% or more from its presence at the conference.

The department announced that the state has already secured $3 billion of crypto investment and is close to attracting another $3 billion worth of projects.

North Dakota hopes to end its reliance on agriculture and oil by enticing crypto mining companies to set up in the Upper Midwest state. There are no tax breaks or funding as the state is relying on its natural assets.

It’s known for cold, dry weather which can help chill out overheating mining rigs. Add into the mix cheap electricity, and promises of the cleanest energy in the world, and it’s attractive to some mining companies to relocate.

North Dakota’s selling point

Every year across the gas and oil fields of the U.S., huge volumes of excess natural gas that is uneconomical to pipe anywhere is burned off, wasting energy and churning out greenhouse gases.

Increasingly miners are starting to set up rigs to make use of this by-product of the oil industry. It’s not just good for the environment, but financially too as they get block rewards and can sell the associated carbon credits.

ND Commerce Commissioner James Leiman said on local radio’s Chris Berg Show that he wanted to position North Dakota as having the cleanest crypto on the planet.

“We've already figured out a way to take carbon — which is considered a global liability for whatever reason — and we've been able to monetize it six ways.” Companies and governments are willing to pay a premium for these carbon credits.

“We can take other people's liability or trash, if you will, and make it our treasure. That's why North Dakota is a highly specialized location for some of these crypto miners. Plus, there’s a low price of electrons compared to the rest of the country. There’s also access to abundant gas reserves. The sky's the limit in my opinion for the crypto industry.”

Smaller crypto mining operations have already established themselves in the Bakken oil fields, in north-central North Dakota. They are powered by leftover natural gas that would have otherwise been burned into the atmosphere. While using a byproduct to power miners is a good thing, there are other countries using renewables to power their mining industry.

Norway’s Bitcoin mining credentials seem world-class with the small Scandinavian country hosting 0.77% of Bitcoin’s hash rate using 100% green, renewable energy.

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Carbon Credits

North Dakota’s selling point

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