Daily Digest - 1 March 2023

Headlines

▌Bitcoin Developers Are Working on a Vault Feature That Will Stop Malicious Hackers

Bitcoin developer James O'Beirne is developing a Bitcoin vault feature that alerts users when hackers try to steal their Bitcoins, and then stops the theft by transferring funds to a more secure wallet. The feature, similar to a type of bitcoin smart contract or "deed," imposes restrictions on how bitcoin can be spent, with vault users having to transmit two separate transactions in two different blocks before spending bitcoin (BTC), which sends an alert after the first transaction (with a time delay), allowing the user to approve the transaction or sweep tokens to another wallet. "The risks of custodial bitcoin are well known, and this proposal introduces a mechanism that can significantly mitigate the worst-case outcome of key compromise: lost coins," O'Beirne wrote in his draft proposal.

Policies

▌Former Biden adviser: The government is promoting the development of a digital dollar

While the cryptocurrency industry is waiting for the U.S. government to make a decision on whether to issue a central bank digital currency, Daleep Singh, a senior economic adviser to President Biden, told U.S. senators on Tuesday that the government is actively promoting a digital dollar as a means of combating private cryptocurrencies that allow ransomware and sanctions violations to proliferate. A central bank digital currency (CBDC) issued by the Federal Reserve could signal a sea change for the banking and crypto industries, including its potential impact on non-government stablecoins whose role could overlap with a government-backed digital dollar.

Blockchain Application

▌The game engine Unity has added support for blockchain SDK development tools such as MetaMask and Aptos

Unity Technologies, the developer of the Unity game engine, has launched a new set of decentralized technology tools for game developers who want to add decentralized features to their games. Unity says that "decentralization" in the context of gaming refers to "an ownership model within a game that allows players to create, earn, or acquire in-game resources that they can then sell or trade." Essentially, it is now possible to convert in-game assets into NFTs and integrate their games with various blockchain and Web3 ecosystems. The decentralized category on the Unity Assets page includes 13 proven solutions for game developers that allow for different capabilities. Developers can easily integrate NFTs, tokens, and on-chain programs into their Unity-based games using some of these SDKs. Developers of Unity-based games can choose to build on the Ethereum, Solana, Algorand, Tezos, Aptos, and Flow blockchains through the SDK. Additionally, developers can integrate MetaMask into their games, which appears to be the only wallet-based SDK currently available.

Cryptocurrency

▌UBS: Mt.Gox repayment is unlikely to affect the price of Bitcoin

UBS strategist Ivan Kachkovski said that the upcoming Mt. Gox bankruptcy repayment may not cause people to worry about the price of Bitcoin. Ivan Kachkovski said creditors were close to recovering some of their funds after a nearly decade-long process. The current scheme offers creditors a variety of repayment options and timing, “most importantly, first, whether to make a lump sum payment in advance or to wait for further procedures and additional asset recovery, and second, to receive funds in fiat or crypto ". Furthermore, Ivan Kachkovski added that an early one-time payment option with fiat repayments would lead to exchanges selling bitcoin to raise the necessary cash and could bring to reality “the long-held fear that the Mt. Gox redemption would hurt bitcoin prices.” The deadline to select a repayment option is currently set for March 10, with payments likely to begin in September this year.

▌BIS: Global banks have reduced their exposure to certain cryptocurrencies by 43.6% in the past year

The Bank for International Settlements (BIS) said on Tuesday that global banks have reduced their exposure to certain cryptocurrencies by 43.6% over the past year. According to a report by the Basel Committee on Banking Supervision (BCBS), the total exposure to cryptocurrencies (including direct exposure to cryptocurrencies and exposure through derivatives) will drop from 61.7% in 2021 to 15.4% in 2022. The change in banks’ crypto exposure was mainly due to fewer banks responding to the BIS survey, but there were other factors such as market conditions and banks’ reduced exposure could be due to the BCBS’s global crypto banking rules, the report said. The sample of participating banks was reduced from 182 to 126. The BCBS approved rules in December that limit banks' exposure to certain cryptocurrencies by more than 2%. The committee also suggested that cryptocurrency holdings should be capped earlier in the year in June. The deadline to implement the BCBS’s proposed crypto banking rules is 2025, but data suggests banks are already taking action. Total exposure in the Basel III monitor, the share of crypto exposure "reduced to 0.003% and 0.001% of total exposure, respectively," the report said.