As Regulators Urge To Tighten Laundering Controls, FSB Report Says Stablecoins Do Promote Financial Inclusion
A lot is happening in the stablecoins community as well as the defi community. Get a quick review of all of these important steps taken by many. Who is Andre Cronje, and the Yearn Finance?
The FSB Report States:
The potential to enhance the efficiency of the provision of financial services is stablecoins as the Financial Stability Board says. It is often seen that these cryptocurrencies that come hybrid, therefore have the potential to bring the efficiencies to payments that include the cross-border payments as well as to promote financial inclusion as the body adds. Whereas when the FSB still argues against that widespread adoption of stablecoins it is claiming they may generate risks to financial stability particularly if they are adopted at a significant scale despite this acknowledgment.
The AML/CFT Argument
Also, it is observed that the FSB says activities have been associated with global stablecoins arrangements that pose risks that can span across banking, payments, and securities /investment regulatory regimes both within jurisdictions and across borders in a report. With the widespread use of stablecoins, predictably the report states that depending on the facts and circumstances, specific money- laundering/ terrorist financing risks may emerge.
Identified cases of laundering through cryptocurrencies remain relatively small compared to cash laundered through traditional methods as however interestingly the Society for Worldwide Interbank Financial Telecommunication (SWIFT) reported. Laundered through cash channels each year, was for instance data from the UN’s Office on Drugs and Crime estimates that between $ 800 billion to $ 2 trillion or the equivalent between 2% to 5% of global GDP.
These include the decentralised nature of stablecoins arrangements meanwhile as the report lists other risks associated with stablecoins. Such arrangements pose governance challenges according to the FSB report. It could pose operational and cyber-security risks whereas the infrastructure and technology are used for recording transactions, and accessing, transferring, and exchanging coins that could pose operational and cyber-security risks.
Stablecoin Supply Insignificant
The supply of stablecoins remains relatively low despite the increasing regulator concern. Henceforth when it came to be the total supply of stablecoins that were thereby expected to exceed that $20 billion mark in October 2020 it was while the market capitalisation of bitcoin stood at $211 billion on October 17 according to data from Coinmetrics.
Moving on, now the FSB is then proceeding to be recommended moreover that GSAs must thereby adhere to most of the applicable regulatory standards and also address risks to the financial stability before commencing the operation that is still based on the identified risks and challenges.
Especially with regard to reserve management, operational resilience, cybersecurity safeguards, and AML/CFT measures as well as fit and proper requirements the report also recommends that authorities must ensure that GSC arrangements have effective risk management frameworks in place.
A Coordinated Global Regulatory Response
Having a total of ten recommendations is the FSB report that comes after the release of the cryptocurrency enforcement framework document by the US government. When Facebook and partners announced plans to launch the Libra stablecoin, in 2019, financial regulators were alarmed. To cite a few, there are countries and regulatory bodies that have been working to establish a framework and that will provide them with the tools to control the stablecoin market although the Libra project appears to be faltering.
Blaming Social Actors For Role In The EMN Token Hack Is The Yearn Finance Founder
Lately, it was observed that Andre Cronje, the Yearn Finance founder was suggesting that he never did mishandle the Eminence (EMN) project’s economic exploit thereafter insisting functions well. Causing rational actors to jump onto the token, he accuses certain social actors of creating a story around EMN. Hereafter Cronje coms with comments following the reports of a group of defi community members hence planning to sue the smart contract builder as they say culpable in the $ 15 million EMN token hack.
Cronje Says He Is Not Infallible
Cronje who has thereby vowed not to use the Twitter account talks of his role as well as the journey where he says has had both failures and successes in a post on Medium. Cronje writes the following in what may seem like an attempt to absolve himself:
In the current scenario, as he has been wrong more times than he has been right, and also he has failed more times than he has succeeded.
He also had those conceptual ideas where he failed in practice. Thereby he did not build to make a number go up. From the main objectives of building useful tools, Cronje appears to lament the involvement of speculators and how this distracts.
Claiming that Defi tokens are not the same as stocks are the Yearn founder. Furthermore, he states that even though people treat them like stocks, in Defi, tokens are a coordination mechanism. Thereafter it is evident that possession of token should signal that one wants to become a contributor and not a bystander as he says.
Speculators Ruining Defi
It should not exist where Cronje also clarifies that the apparent distinction between a team and the community which he says is the source of friction.
Elaborating on who now says he did not create Yearn, was Cronje as there is no separation as they are the same.
Subsequently, the founder of Yearn briefly zeroes in on the botched EMN token with the code he says functioned as designed.
Cronje further explains defending himself that:
It was observed that as the contracts went through the normal testing cycles as they were at stage 5 as on the day alone, he had deployed 2 different versions. Still using it to create a real-world example of how such templates function, LBI is working as intended, it still is.
The Yearn founder blames people that confuse price with functionality instead. Something that a rational actor that understood how the system worked should never have done, he points to LBI as the perfect example where people bought it off Uniswap, inflating the price.
As an unfinished product meant for research purposes, Liquidity Income is Cronje’s latest experiment that was rolled out on October 13.
Users still deposited ETH into this unaudited contract despite the warnings and the fact was that Cronje did not use a Twitter account to announce the latest experiment. In the scenario, he does admit that he was naïve, as it is on this basis that Cronje then attempts to exonerate himself from those actions of irrational actors.
Finally, Balancing Between Developers And Ordinary Users
Appearing to be getting support from others within the defi community was Cronje’s remarks about tokens being different from stocks. Daniel Dabek whose organisation Safex.org launched a token in 2015 which is used to become a member of a decentralised board of trade as one of those concurring with Cronje. Dabek says they evolved over these years into an entire blockchain network from scratch from the small amount initially raised which is $50,000.
Dabek also speaks of the challenges faced when trying to balance between getting people interested and building tools just like Cronje who sees a conflict in the space as:
To be empowered, it is one thing to make the tools, another to put them in people’s hands
Cronje does not directly address reports of the impeding lawsuit meanwhile besides attempting to clear his name. He says he will continue to build instead.