The Most Unworkable State Law

The cryptocurrency industry has recently criticised a bill that was recently proposed in the Illinois Senate due to its “unworkable” intentions to compel blockchain miners and validators to perform “impossible things.” One example of this would be undoing transactions if a state court ordered them to do so.

The Senate Bill was surreptitiously submitted into the Illinois senate on February 9 by Illinois Senator Robert Peters. However, it does not seem that the community was aware of it until February 19, when Florida-based attorney Drew Hinkes mentioned it in a tweet.

The bill, which would give the courts the authority to alter or rescind a blockchain transaction that was carried out through the use of a smart contract, would be given the title “Digital Property Protection and Law Enforcement Act,” and it would give the courts this authority in response to a valid request from the attorney general or a state’s attorney that is made in accordance with the laws of Illinois.

Any “blockchain network that executes a blockchain transaction originating in the State” would be subject to the act if it were to become law.

When it comes to blockchain technology and cryptocurrencies, Hinkes referred to the proposed legislation as “the most impractical state law” he has ever seen.

“This is a shocking about-face for a state that was previously supportive of innovation. Instead, he tweeted that the state had enacted “probably the most impractical state legislation relating to cryptocurrency and blockchain I have ever seen.”

According to the provisions of the law, miners and validators on the blockchain might be subject to fines ranging from $5,000 to $10,000 for each day that they disobey the instructions of the court.

Hinkes said that it would be “difficult” for miners and validators to comply with the measure suggested by Senator Peters, despite the fact that he acknowledged the need of passing legislation that would increase consumer protection.

Hinkes was also surprised to learn that miners and validators who worked on a blockchain network that “has not adopted reasonably available processes” to comply with the court orders would have “no defense” open to them.

The law also seems to dictate that “any person utilizing a smart contract to supply goods and services” must include code in the smart contract that may be used to comply with court orders. This code can be used to ensure that the terms of the smart contract are followed.

“Any person utilizing a smart contract to supply goods or services in this State should incorporate smart contract code capable of implementing court orders respecting the smart contract,” is the full text of the law.

Other members of the bitcoin community have replied with derision of the measure in a manner similar to what was previously said.

On February 19, the crypto analyst “foobar” remarked to the 120,800 people who follow him on Twitter that court-ordered transactions would need to be changed “without having the private key” of the participants, which he found to be “hilarious.”


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Reversing Censorship on Ethereum

Since October 11, the proportion of Ethereum blocks that are compliant with orders made by the United States Office of Foreign Asset Control (OFAC) has decreased to its current level of 47%, which is the lowest level since that date.

The most recent achievement in the fight against censorship comes about two and a half months and one day after the proportion of OFAC-compliant blocks reached its all-time high of 79% on November 21.

OFAC-compliant blocks are ones that do not include any transactions that involve parties who have been blacklisted by the Office of Foreign Assets Control within the United States Treasury Department.

Those individuals who are opposed to censorship inside the Ethereum ecosystem may see a decrease in the number of compliant blocks as a victory.

According to a statement released by the blockchain consulting company Labrys, the originator of MEV Watch, the decline may be linked to more validators choosing to utilize MEV-boost relays that do not filter transactions in compliance with OFAC standards.

The majority of the shift in market share has been taken up by the BloXroute Max Profit relay, the Ultrasound Money relay, and the Agnostic Boost relay in particular.

MEV-boost relays play the role of trustworthy middlemen between block producers and block builders, which paves the way for Ethereum validators to delegate the construction of their blocks to third-party block builders.

The Chief Executive Officer of Labrys, Lachlan Feeney, issued a statement on February 14 in which he expressed his satisfaction with the manner in which the Ethereum community has reacted to the censorship problem ever since it first appeared during the Merge event.

He pointed out that the recent decline of censorship-compliant blocks was especially noteworthy since it was accomplished without the involvement of a user-activated soft fork (UASF). He made the observation that “many individuals” of the Ethereum community had requested the soft fork prior to the Merge in order to resist censorship.

“I am incredibly proud of the Ethereum community for the progress we have made with this issue,” said Feeney, adding: “When we released the MevWatch tool drawing attention to a flaw within Ethereum, the community did not stick its head in the sand but instead rose to the occasion and made significant progress addressing the issue.” “When we released the MevWatch tool drawing attention to a flaw within Ethereum, the community did not stick its head in the sand but instead rose to the occasion and made significant progress

However, as Feeney emphasized, “there is still a great deal more work to be done.”

On August 8, OFAC sanctioned wallet addresses that transact using the Ethereum-based privacy mixing technology Tornado Cash. These wallet addresses are associated with Ether (ETH) and USD Coin (USDC).

On September 16, during the first 24 hours of Ethereum’s new proof-of-stake consensus mechanism, just 9% of blocks were filtered by OFAC.

Nevertheless, this number shot up dramatically over the subsequent two months, reaching its highest point of 79% on November 21.

After then, the proportion of OFAC-compliant blocks stayed anywhere between 68 and 75% until the 29th of January, when it dropped to 66%. Since then, in spite of a few brief increases, it has been consistently going down.


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Alameda Research’s FTX Tokens worth millions transferred

On February 7, wallets associated with the defunct Alameda Research company started sending and receiving FTX Tokens, totaling millions of dollars’ value (FTT). The activity in the Alameda wallets after the bankruptcy filing by FTX has been a major source of worry for the cryptocurrency community, with many members of this community calling into doubt the legitimacy of law enforcement authorities and the means by which these wallets are being accessed.

Brokenfish.eth, which is the address of an Alameda wallet, was used to receive over $2 million worth of FTT tokens from the BentoBox smart contract that was hosted on SushiSwap. The relevant smart contract operates as the ecosystem-wide vault for the whole Sushi decentralized payment system. Sam Bankman-Fried, who served as the previous chief executive officer of FTX, has a relationship with SushiSwap that goes back to the year 2020, when he succeeded Chef Nomi as the protocol’s top developer.

Within the range of $1.86 and $1.87, the “Alameda Research 4” wallet purchased more than one million FTT, which is equivalent to around $2.3 million. A loan position was also formed on Abracadabra using the wallet, and the loan is presently secured by 73,000 FTT and $31,000.

Many others saw the connection between the transfer of cash and the current bankruptcy proceedings and concluded that the court-appointed CEO of FTX, John Ray III, had authorized the transfer of funds. Ray III has not been coy about the fact that he wants to take control of the assets of the exchange as well as those of its subsidiaries in order to pay off the exchange’s obligations. The findings of FTX’s investigations led to the discovery of approximately $5.5 billion in liquid assets, of which more than $3 billion was owing to its top 50 creditors as of the 17th of January, when the company made the announcement.

This was not the first time in February that monies were transferred between wallets connected to the Alameda blockchain. The blockchain security company PeckShield issued a warning on February 2 indicating that “Alameda Consolidation” had acquired crypto funds worth a total of $13 million from three separate wallets.

The first one is a cryptocurrency exchange that goes by the name Bitfinex. It is estimated that 1,545 Ether (ETH) and around 6 million Tether (USDT) were transmitted, for a total of approximately $8.5 million. The remaining anonymous people sent roughly six million United States Dollars Coins (USDC) to the location associated with the Alameda Consolidation.


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Digital Asset Investments Surge to $117 Million

The European cryptocurrency investment firm CoinShares published its “Digital Asset Fund Flows Report” on January 30. The report revealed that investments in digital assets experienced a surge in inflows last week, reaching $117 million, the highest amount since July 2022. CoinShares is a European investment firm that specialises in cryptocurrencies.

According to a research by CoinShares, the total assets under management for the sector increased to $28 billion, representing a 43% gain from its lows in November 2022. The rise in the volume of investment products exchanged during the week was obvious, totaling $1.3 billion, which represents a 17% increase in comparison to the average for the first 10 months of the year. During this time, weekly trading volumes on the market for digital assets have increased by an average of 11%.

After Germany, Canada, the United States of America, and Switzerland, which each got $30 million, $26 million, and $23 million correspondingly, the country that had the biggest inflows over the last week was Germany, which accounted for 40% of the total ($46 million). The majority of the inflows, totaling $116 million, were invested in Bitcoin (BTC) products, whilst just $4.4 million was invested in short-Bitcoin products, demonstrating that investors had conflicting opinions about the cryptocurrency.

In addition, the report disclosed that multi-asset investment products had seen withdrawals of funds for the ninth week in a row, with the total amount reaching $6.4 million. This seems to indicate, according to James Butterfill, who is in charge of research at CoinShares, that investors are choosing to put their money into more specialised projects. Altcoins such as Solana (SOL), Cardano (ADA), and Polygon (MATIC) witnessed inflows as a result of this trend. On the other hand, Bitcoin Cash (BCH), Stellar (XLM), and Uniswap (UNI) suffered slight outflows.

In addition, investors shown interest in blockchain equities, contributing a total of $2.4 million in new capital. On the other hand, a more in-depth investigation finds that opinions continue to vary depending on the supplier.

The market for digital assets as a whole saw substantial growth over the course of the last week, with investment products witnessing record inflows and better volumes.

The overall trend indicates that investors are becoming more choosy in their investments, with mixed feelings concerning blockchain stocks, despite the fact that this attitude is consistent with the trend.


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Binance Informs Customers of Upcoming Service Disruption

It has been brought to the attention of the retail customer base of the cryptocurrency exchange Binance that there is a possibility that they may be unable to access their accounts at some point in the not-too-distant future due to the fact that the exchange may go out of business. In the event that anything comparable occurs, there is a possibility that on-ramp and off-ramp bank money transfers will no longer be possible.

Users who wish to buy or sell cryptocurrencies for an amount that is less than one hundred thousand dollars and want to use the SWIFT payment method will be affected by the disruption in service that is currently taking place. After the temporary disruption in operation, customers will only have access to the SWIFT payment method to the extent that their bank accounts are denominated in United States dollars. This is the rationale for the aforementioned limitation.

The day that will mark the beginning of the day is going to be February 1, which is when the implementation period for the new rule is planned to begin. This day will also mark the beginning of the day.

Binance sent an email to its customers, also known as “Binancians,” on the 21st of January to inform them of the news and emphasise that the company is “actively seeking” a new SWIFT (USD) partner in order to prevent service interruptions for upcoming bank payment transfers. Binance customers are also referred to as “Binancians.” People who trade cryptocurrencies on the Binance market are referred to as “Binancians.” In the marketing materials distributed by Binance, customers are referred to not just as “Binancians,” but also as “Binancians.” Residents of Binance are sometimes referred to as “Binancians” when referring to themselves collectively in common vernacular. Binancians are users of the Binance platform who engage in cryptocurrency trading. Binancians are referred to by this platform’s name. The year 2017 marks the beginning of Binance’s operations.


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EU Parliament Approves Tough Rules to Ban Anonymous Crypto Transactions

According to media outlets, European Union lawmakers on Thursday voted in favour of new proposals that seek to outlaw anonymous crypto transactions.

Two parliamentary committees – the EU Committees on Economic and Monetary Affairs (ECON) and Civil Liberties, Justice and Home Affairs (LIBE) – yesterday voted to extend the anti-money laundering requirements that currently apply to traditional fiat payments over EUR 1,000 ($1,115) to the crypto sector.

However, the new rules scrap one of the fundamentals of crypto payments, so payers and recipients of even the smallest cryptocurrency transactions would need to be identified. The legislation also cracks down on transactions with unhosted or self-hosted wallets (wallets whose private keys are held by the funds’ owner, popularly referred to as self-hosted or self-custody wallets). Furthermore, the new rules require cryptocurrency companies to identify the parties involved in transacting cryptocurrency beyond their customers. The measures could see unregulated cryptocurrency exchanges cut off from the conventional financial system.

The proposals are set to proceed to the trialogue stage, which will see the rules debated by the EU parliament, Commission, and Council.

The report shows that more than 90 lawmakers voted in favour of the proposals, a move that various stakeholders have described would invade privacy and stifle innovation.

Major players in the crypto industry have opposed the proposals. Last night, Brian Armstrong, the CEO of Coinbase crypto exchange, expressed his concerns about the new rules ahead of the vote, calling it an anti-law enforcement, anti-innovation, and anti-privacy proposal. The executive warned that the proposal will create a “new crypto surveillance regime” in Europe.

“Any time you receive 1,000 euros or more in crypto from a self-hosted wallet, Coinbase will be required to report you to the authorities. This applies even if there is no indication of suspicious activity,” Armstrong stated, criticizing the rules for treating crypto customers more harshly than fiat users.

Paolo Ardoino, the Chief Technology Officer at Bitfinex digital asset trading platform, echoed Armstrong’s comments, stating that the rules entail heavy security risks and privacy violations.

Combating Financial Crime

The debate about new rules for using cryptocurrencies has been going around for some time. In June last year, the EU Commission proposed that future transactions of crypto assets must be able to be tracked and assigned to individuals as part of efforts to combat money laundering and terrorist financing.

According to KYC guidelines, businesses that provide crypto services would then have to identify users, such as using ID cards.

A new draft for crypto regulation in the EU is currently causing unrest in Brussels (the administrative centre of the European Union). The new draft states that there should be an identification requirement for crypto-asset transactions in all amounts. The EU Committees on Economic and Monetary Affairs (ECON) and on Civil Liberties, Justice, and Home Affairs (LIBE) have spoken out in favor of the complete anonymity of crypto payments.

Image source: Shutterstock


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Digital yuan transactions beat out Visa at Winter Olympics venue: report

On the day of the opening ceremony of the Beijing 2022 Winter Olympics, there were reportedly more transactions made in China’s central bank digital currency than those through Visa.

In a Wednesday report from the Wall Street Journal, a person familiar with the matter said transactions in digital yuan significantly outnumbered those of Visa on Feb. 4 at the Beijing National Stadium, also known as the Bird’s Nest — the location of the opening ceremony of the 34th Olympic Winter Games. However, many of the retailers allowing purchases with China’s central bank digital currency, the digital yuan — or e-CNY — were outside the Olympics’ quarantine “bubble” for athletes, journalists, and staff.

According to the report, those within the bubble have the option of paying for goods or services with cash, Visa, and digital yuan, and there are many automated machines allowing people to exchange fiat currency for e-CNY. Coupled with the likely intention of reducing contact between individuals in an effort to prevent the spread of COVID-19, it seems the country’s digital currency is pulling ahead of Visa — at least in an environment with limited use cases that includes participation from Chinese consumers.

“Replacing cash with digital yuan for payment can effectively reduce direct contact between people and the risk of the spread of Covid-19,” reportedly said the Beijing Organizing Committee for the 2022 Games.

Though payments using mobile apps like Alipay, WeChat Pay, and others are generally accepted at many retailers in China, these methods aren’t allowed at the Winter Games due to an exclusivity contract with Visa. The credit card company has reportedly not pushed back against the digital yuan payment options, possibly because it is awaiting approval of a domestic license application to operate in China.

CNN reported on Jan. 31 that the first international test run of China’s CBDC is facing hurdles due to the pandemic, with officials limiting the number of people allowed to enter the country. Though China hasn’t released data on the number of digital yuan transactions or athletes using the CBDC, U.S. lawmakers have warned Americans participating in the games of the potential dangers of testing the digital currency, including threatening U.S. interests in cross-border payments.

Related: China’s central bank releases pilot version of digital yuan wallet

At the time of publication, Cointelegraph was unable to find any reports of athletes claiming to have used the digital yuan for food or other essentials. The Wall Street Journal reported both the president of the Dutch Olympic Committee and a former Beijing resident now involved in television coverage of the games implied there was little point in using the digital currency when Visa was available. The Winter Olympics are scheduled to conclude on Feb. 20.