Many popular crypto exchanges have stopped operating in Russia. However, some platforms continue to serve the region.
Nine months after the conflict between Russia and Ukraine, sanctions against Russia have grown at an aggressive rate. The European Union legislators announced that they would ban all cross-border crypto payments between Russia’s citizens and Russia.
The EU has initiated a ban on all “crypto asset wallets and accounts” in response to Russia’s continued annexes of Ukrainian land, its repeated mobilization of troops in the country, and threats of nuclear escalation.
In previous sanctions, cryptocurrency payments between Russian and EU wallets were limited to 10,000 euros. This new ban will deprive Russia of its military power and limit its industrial components.
Crypto exchanges apply bans on Russian crypto users
A number of popular cryptocurrency exchanges in the region, including LocalBitcoins and Crypto.com, sent emails to customers advising them to withdraw funds immediately to avoid being unable to use their services.
It’s worth noting that in September 2022, LocalBitcoins was responsible for 8% of Russia’s crypto trade volume. This makes them the largest client base on the exchange. Additionally, Russian users were responsible for facilitating 20% of all BTC trading volumes before the ban.
Binance, the largest cryptocurrency exchange in the world, is working to implement the new restrictions. A representative of the firm said that the changes could take time and would not be live until a set date.
Bitfinex, an exchange that had opposed the increasing sanctions being imposed against Russian citizens, has recently changed its mind, saying that it may need to modify its policies if directed by the regulatory authorities.
Another ban faced by Russian citizens comes from Dapper Labs, who banned them from accessing the popular blockchain earlier this month. Users from this side of the globe will not be able to access the popular NFT marketplace, along with several other crypto products.
It’s no surprise to anyone that most Russians can’t rely on their bank accounts anymore, and crypto provides a safe haven to guard their savings or receive money from abroad. The hard fact is that digital assets can be used to help citizens in war zones. And it’s the same with Ukraine, which has received billions in crypto donations.
This last ban will cause pain to some Russian financial institutions and retail outlets. The fact that BTC saw a sharp increase in price during the conflict is something that the EU is much aware of. The European Authorities noticed this loophole in their strategy of suffocating Russia, and it’s also trying to sanction this.
However, these sanctions will be enforced through the EU’s Financial Action Task Force, and they can potentially redefine the region’s crypto landscape in the near future.
What happens to Ruble pairs that are held by these exchanges
The regulators have been strict with exchanges that allow blacklisted citizens to trade on their platforms in the past. This leads to the question: What will large volumes of Rubles trading pairs do when dealing with these assets?
Nobody gave any indication of what exchanges should do, and they will be prudent this time. Now, the exchanges have no choice but to make major losses on their balances. The ban will put decentralized finance (DeFi) back in the spotlight because it provides a censorship-resistant and easily accessible infrastructure to people living in geopolitical turmoil. However, we’re already seeing censorship on the new PoS Ethereum blockchain.
It is unclear if exchanges will have to return funds to Russian users or block access to their accounts. This is something that each exchange will have to resolve on its own.
Despite the ban, many exchanges are still functional
Binance is considering restricting its services to Russian users. However, Binance is operating as usual. The United States-based exchange Kraken, which is based in the United States, has not placed any restrictions on Russian customers, and there are no indications as to whether it will voluntarily comply with EU requirements.
Antigua and Barbuda’s FTX is another popular exchange that has not been subject to any kind of ban. Garantex, a popular Russian cryptocurrency platform, has not been banned. It still offers traders in the region a variety of advanced services like futures and derivatives.
Other popular platforms operating in the region include Seychelles-registered Huobi Global, OKX, KuCoin, and Mexc Global. Bybit, a Singapore-registered cryptocurrency exchange, stated that it would continue to adhere to its ethos and support transparency, freedom and decentralization. It will not impose sanctions on Russian clients. Many of these clients may not agree with the war or the stance of their leaders.
Last but not least, Exmo, a crypto exchange based in the United Kingdom, has sold its Russian business earlier this year to a local vendor. Its Exmo.me domain still allows the platform to operate in Russia and the neighboring countries of Belarus and Kazakhstan.
As the war between Russia and Ukraine continues, it will be fascinating to see how crypto companies operating in the region adapt and adjust to changing geopolitical realities.
The Ethereum Merge was completed one month ago. Since then, Ethereum centralization has been on the rise. More and more Ethereum nodes have been censoring the network. As of October 2022, 51% of Ethereum blocks were compliant with OFAC standards, which are meant to censor Ethereum’s blockchain.
What is OFAC?
OFAC, or Office of Foreign Assets Control, is a U.S. Treasury Department financial intelligence and enforcement agency. It enforces trade and economic sanctions to support U.S. foreign policy and national security objectives.
In August 2022, the crypto community was first acquainted with this agency when they issued a statement to sanction blockchain activities. It effectively sanctioned Tornado Cash as well as several Ethereum addresses that were associated with it.
Today, the number of nodes that are validating OFAC-compliant blocks is on the rise, and this represents a significant step towards censorship as more blocks are being monitored.
We reached another sad milestone in censorship: 51% This means if the censoring validators would now stop attesting to non-censoring blocks they would eventually form the canonical, 100% censoring chain. pic.twitter.com/JrYUjowLpt
The current state of compliant MEV-boost relays can be verified on mevwatch.info, a free tool built by Labrys.
MEV-Boost relays are centralized entities that act as trusted mediators between block builders and block producers. This allows all Ethereum proof of stake (PoS) validators to outsource their block productions to other builders.
This metric shows how many blocks have been built since the Merge by OFAC-compliant MEVBoost relays. MEV-Boost was able to provide a more representative distribution for block proposers than a small number of miners who are proof-of-work (PoW) after Ethereum upgraded to a PoS consensus.
Ethereum blocks went from 9% OFAC compliant to 51% OFAC compliant in the past month, as mev boost (block outsourcing) takes market share. https://t.co/SYiVHPlTf4
How is the OFAC involved with the Ethereum blockchain?
After “The Merge” upgrade was completed, the Ethereum blockchain started using the proof-of-stake (PoS) consensus mechanism. This made the blockchain more secure and energy efficient. Mining data shows that Ethereum heavily relies on Flashbots, a single server, to build blocks. This raises concerns about a single point of failure for the blockchain.
What is Flashbots? Flashbots is a network that connects mining pools and searchers. It’s not a closed system that uses private contracts or arrangements. Instead, anyone can join. Because it allows for competition, this open system is thought to be more beneficial than having a few dominant private entities. It acts as a relay to deliver Ethereum blocks. Data from mevboost.org indicates there are seven active relays currently delivering at most one block in Ethereum. These include Flashbots, BloXroute Max Profit, BloXroute Ethical, Blocknative, Manifold, Eden and BloXroute Regulated. 80% of MEV-Boost blocks are relayed by Flashbots.
What is Ethereum centralization? How can ETH transactions be censored?
Hard censorship would mean that no matter how long or how expensive you pay, sanctioned transactions will never be included in the blockchain. In a strict censorship scenario, compliant nodes would be required by regulation to discard all blocks with any of these transactions.
However, even with soft censorship, when approved transactions are eventually validated, it would likely lead to long waits, high-priority charges, and a substandard user experience.
Out of the seven major MEV-boost relays currently in operation (Flashbots, BloXroute Max Profit, BloXroute Ethical, Blocknative, Manifold, Eden, BloXroute Regulated), only three do not censor in accordance with OFAC compliance requirements. For instance, OFAC-compliant relays won’t include transactions that interacted with Tornado Cash smart contracts or other sanctioned wallet addresses, as defined by OFAC.
Validators that wish to include all network transactions can do so by not including any censoring relays in their MEV-boost configuration. Current major MEV-boost relays that don’t censor include – BloXroute Max Profit, BloxRoute Ethical, and Manifold.
On October 6, a glitch was discovered on the BNB Chain that allowed someone to create $570 million worth of BNB tokens. The BNB Chain was halted for a few hours while a software patch was created. The good news is that the hacker retrieved a smaller amount.
BNB Chain had to stop on Thursday, October 6, as the blockchain that has ties to the largest crypto exchange in the world suffered what it called a ‘potential exploit.’ On-chain evidence indicated that the potential exploit could have been used to target hundreds of millions of crypto dollars.
BNB Chain is made up of BNB Beacon Chain (BSC) and BNB Smart Chain.
“Due to irregular activity we’re temporarily pausing BSC,” BNB Chain tweeted. Later, it confirmed that the activity was a potential exploit that it described as contained.
Due to irregular activity we're temporarily pausing BSC. We apologize for the inconvenience and will provide further updates here.
Initial token movements indicated that 2 million BSC tokens worth approximately $570 million were being targeted by an attacker on Thursday. However, in a tweet, Binance CEO Changpeng Zhao stated that the attacker could only get away with $100 million. BNB Chain also tweeted to say that $7 million was already frozen.
An exploit on a cross-chain bridge, BSC Token Hub, resulted in extra BNB. We have asked all validators to temporarily suspend BSC. The issue is contained now. Your funds are safe. We apologize for the inconvenience and will provide further updates accordingly.
The fact that such a small amount of assets was stolen underlines the benefits of BNB’s choice to stop the chain and not risk any more assets fleeing. Blockchains are supposedly decentralized entities that can operate independently from single entities. It is impossible to flip a switch to turn it on or off.
On a Reddit thread, BSC confirmed it coordinated the shutdown of the chain following issues with the BSC Token Hub protocol. This protocol is the clearing house for crypto transactions between the Binance-linked Blockchain’s interlocking components. The BSC team thanked the validators for their speedy action.
After confirming that the chain was halted, the team thanked the validators for their cooperation.
We want to thank all node service providers for their quick and attentive response.
Since then, the chain has been back online, and BNB Chain stated that it would hold a series of on-chain governance votes to decide whether or not the hacker funds should be frozen. A vote will be held on a bug bounty system that will reward those who prevent future hacks.
BSC’s native BNB token was rocked by the threat of an attack. It dropped to $278 from $293.10, according to CoinMarketCap, which Binance owns.
On-chain data shows two large withdrawals of 1,000,000 BSC tokens by an attacker who seized crypto assets with cross-chains bridges, swaps, and loans. BNB’s Twitter account assured that all funds were safe and promised to “help freeze any transfer.”
Twitter detectives have discovered that Tether, the largest stablecoin provider, has blacklisted the address in question. This suggests that Tether suspects that the tokens were moved as a result of an attack.
BNB Smart Chain has resumed
The official Twitter account of BNB chain has tweeted that the chain is back in business after a software update was issued to prevent hackers from accessing accounts.
📢BNB Smart Chain (BSC) is running ok from 20+ mins ago.
The validators are confirming their status and the community infrastructure are upgrading as well.
BNB Smart Chain (BSC), which was reopened at 06:40 UTC after chain validators had adopted a software upgrade that would close an exploit used by hackers for stealing funds from the chain.
September 2022 brought a lot of interest and new active users to the blockchain games industry. New blockchain games, such as FootballCoin, appear on gamers’ radars.
Many blockchain games registered an increase in user activity in September, as many play-to-earn (P2E) games reported significant increases in their active users.
According to DappRadar data, half of the top ten games have increased in the past 30 days in terms of unique wallet addresses interfacing with DApps smart contracts. All five top games were in the green in that period.
The Web3 gaming platform Gameta and the blockchain-based games Alien Worlds and Solitaire Blitz, Benji Bananas, Splinterlands, and Benji Bananas are the top DApps that have seen growth during September.
Many of these blockchain games are mainly used on mobile devices, and they have a huge potential to bring in new users and familiarize them with the blockchain. The main advantage of all these P2E games is that they allow anyone to earn crypto without any prior investment or knowledge.
According to DappRadar’s report, these games have brought “1.7 million users from Web2 into Web3 gaming”. They believe that users are now convinced that it pays off to invest in crypto during bear markets as it will pay off during the next bull market.
The largest increase in users was seen by Animoca Brands’ Benji Bananas (Polygon), which saw a 151% rise over the last 30 days in terms of users. This game was not available on mobile until March 2018. Animoca introduced play-to-earn (P2E) elements via the Bored Ape Yacht Club affiliate ApeCoin (APE).
Although it’s not clear what caused the increase in Benji Bananas users, hosting a gaming event that featured a number of valuable NFTs for the winners did undoubtedly help.
However, it’s worth noting that some games did experienced decreases over the last 30 days.
NFT games are not dead!
This blockchain game surge comes as a revigorating response to the news that the NFT market registered a 97% drop in trading volumes since January 2022. (source Bloomberg). While some complain that the NFT trend is dead, this new wave of blockchain gamers proves that there is still a lot of interest.
More blockchain games are becoming just as easy to use and enjoy as ordinary games. Some may have been off gamers’ radars but are starting to pick up. Blockchain games such as FootballCoin use daily activities as a hook, ensuring that users find enjoyment once they interact with it, while solid tokenomics encourages everyday use and retention.
It’s true that NFT prices have declined, but many games, which don’t usually make the news, require relatively inexpensive NFTs, and this still attracts new users.
Eduard Banulescu, the brand manager of FootballCoin, a pure P2E blockchain game, pointed out that the fantasy football game has seen a surprising increase in daily active users.
FootballCoin’s representative emphasized the importance of user activity and the number of people who start using Web3, including blockchain games: “We are proud that FootballCoin was one of the very first play-to-earn games. We’re also happy to see a great increase in interest in these types of blockchain games. The platform has been updated consistently over the past five years. We’ve also seen continuous, albeit sometimes slow, growth in terms of our user base. In recent months, however, the number of new FootballCoin users has spiked. “
Just like the top blockchain games mentioned by DappRadar, FootballCoin has also seen a remarkable increase in the number of users and demand for its NFTs. According to Banulescu, FootballCoin registered a 35% increase in new accounts during September 2022.
“Over the past month, we’ve seen a 35% increase in the number of new accounts. Fortunately, many of these accounts have also been active in the game. The prospect of earning crypto rewards and of owning the assets that they purchase in the game seem to have been particular highlights for new users. With the World Cup fast approaching, we are planning to introduce additional rewards and features.”
FootballCoin has many years of experience in this industry. t’s probably one of the few truly independent crypto projects that still exist. Considering the fast evolution of Web3, this might be one of the blockchain games that will evolve during this era of global crypto adoption.
P2E grows and games feature real world events
FootballCoin is a fantasy football game that attracts thousands of new users each month. As the 2023 World Cup is fast approaching, the blockchain game promises to feature the popular competition.
FootballCoin already features the world’s best football leagues, including Premier League, Serie A, and the Champions League. Furthermore, the Brazilian top-tier Série A, highly requested by users of the game, will be added in October 2022. Users will have the opportunity to test their skills as football managers and choose their football team before each stage of the competition.
While the FootballCoin team hasn’t yet disclosed the total prize pool for the World Cup, users will get to play for free, at least for the first stages, where all teams are still involved in the competition.
Bankers in the Caribbean are facing difficult times. Like many other small economies, these 35 countries face dollarization, dependence on foreign trade, and remittances.
De-risking, a common banking practice, is also causing serious problems. It is no surprise that the region is taking more interest than ever in digital currency adoption.
Carmelle Cadet is the founder and CEO at Emtech. She is a native Haitian and has worked with central banks in Ghana and Haiti. Her company is also part of the Digital Dollar Project Technical Sandbox Program, which is exploring aspects of the United States central bank digital currency (CBDC). She believes that establishing a functioning CBDC in the Caribbean is “a difficult task.”
Banks in the Caribbean: The Risks
The Financial Action Task Force (FATF) lists countries under special surveillance for money laundering and other illegal activities. The so-called grey list was only four, but it seems that the entire region is affected. It is important to do extra research when large international banks offer services like settlement to small local banks in these countries, a process known as correspondent relationships.
International banks are more expensive to do business with if they have done additional due diligence. Banks will often cut ties with banks located in gray-listed countries to avoid paying a higher cost. This is known as de-risking. Many Caribbean countries lost half of their correspondent relationships. This has severe consequences for their economies as well as their societies.
On September 14th, the United States House of Representatives Financial Services Committee held a hearing entitled “When Banks Leave: The Effects of De-Risking in the Caribbean and Strategies for Ensuring Financial Access.” The hearings were attended by Mia Amor Mottley, Prime Minister of Barbados, and Keith Rowley, Prime Minister of Trinidad and Tobago.
According to prime minister Mottley, the regional banking services are accessed with difficulty: “We spend weeks, and businesses that come into our region spend weeks and months, just to open a bank account.”
On Sept. 24, Bahamian Prime Minster Philip Davis raised the topic of de-risking before United Nations General Assembly ten days after the Congressional hearings. He asked, “Why are all the countries being targeted small and vulnerable and former colonies of European states?”
The Bahamas is not currently on the gray list.
Are CBDCs the solution?
The Atlantic Council CBDC tracker shows that three CBDCs were launched within the Caribbean region: Bahamas’ Sand Dollar; Jamaica’s JamDex; and the Eastern Caribbean Central Bank DCash. These CBDCs are located in seven of eight member countries.
The council has listed Haiti’s Digital Gourde under development. Cadet stated that Emtech and HaitiPay presented a proof of concept for a CBDC to the Haitian Embassy in Washington, Washington, on May 5.
Cadet was born in Haiti and immigrated to America in her youth. She was an executive at the IBM Blockchain division when the Bahamas requested proposals for the Sand Dollar. In 2019, as Haiti was going through a roadshow to develop its CBDC, Cadet stated, “If the Bahamas can do that, why not Haiti?” Carmelle Cadet quit IBM to start Emtech.
After the Haiti earthquake, the first financial technology companies were established in Haiti. In 2010, technologies that relied on mobile wallets gained the lead. Jean Baden Dubois, governor of the Haitian Central Bank, stated that mobile phone penetration was 60% in 2008 and is likely to rise in 2021.
Emtech proposed that the CBDC would work online, using mobile phone data. Cadet stated that the rollout of a Haitian CBDC would include device distribution through a partnership with a charity organization. She said that emerging economies are known for using telecommunications to support CBDC functions rather than data networks.
Dubois stated that the Haitian Central Bank saw the CBDC as a way to improve policy efficiency and transparency. This would allow the FATF gray-listed country to meet Anti-Money Laundering/Combating the Financing Of Terrorism standards.
Cadet stated that “dollarization undermines central bank mission of stability.” But by using CBDCs to make cross-border payments, the liquidity and visibility of the reserve would be improved.
But not all CBDC emerging markets are the same
Cadet stated that there are many ways in which CBDC designs are different for emerging markets from those for developed markets. As they strive to settle in real-time, developed markets can afford to slow down, while emerging markets have a greater need for CBDCs.
She said that emerging markets have less baggage, which allows fintech to thrive. While commercial banking is easier in developed markets, the CBDC has more legacy systems that can be integrated.
It is unclear, however, how successful CBDCs are in the Caribbean.
The Sand Dollar, which was widely considered to be the first CBDC, launched in 2020. In July 2022, there were 30,000 digital wallets and about 845 merchants who accepted them. It is promoted by the Bahamian government regularly.
DCash was introduced in April 2021 but crashed in January, and it was down for almost two months. A spokesperson for Grenada-based conglomerate Geo. F. Huggins & Co., the first company to accept a DCash payment, said during the outage that the CBDC represented a “minimal” portion of its sales.
Cadet stated that her company was in talks with the Haitian Central Bank “to understand the licensing risk” about a year prior to the proof-of-concept presentation. She has been in contact with the bank ever since. According to her, the company is currently waiting for the central bank to issue a request for proposals for vendors.
The upgrade from a proof-of-work (PoW) to a proof-of-stake (PoS) blockchain is now completed. What does this mean for the first programmable blockchain?
On September 15, 2022, after years of development, Ethereum’s developers completed the Merge – the upgrade from a proof-of-work (PoW) to a proof-of-stake (PoS) blockchain. The PoS network is expected to power a more energy-efficient blockchain while reducing transaction fees and improving scalability.
Potentially, the payoff could be huge. Ethereum should now use 99.9% less energy. According to one estimate, Ethereum’s energy consumption dropped from 77.77 TWh on September 14 to 0.01 TWh on September 16, 2022.
The developers of Ethereum claim that the upgrade will bring the network, which houses many cryptocurrency tokens, to a more scalable and secure state. Ethereum’s TVL (Total Value Locked) is at about $30 billion, considering all its DeFi apps – DEXs, lending protocols, NFT marketplaces, and other apps.
The Ethereum Merge was completed at 7 a.m. UTC. However, the price of Ether (ETH) started to slowly decrease, dropping by 12% on the first day after the Merge. Ether’s price started a downtrend, and many investors are bearish.
PoS Ethereum = no more ETH miners
In 2008, when Bitcoin was created, it introduced the concept of a decentralized ledger – a single immutable record that computers all over the globe could access and trust without intermediaries.
In 2015, Ethereum was introduced. It expanded on the core concepts of Bitcoin’s blockchain by adding smart contracts. These smart contracts are bits of code that use the blockchain to record data onto its network and trigger automated transactions when certain pre-defined conditions are met. This innovation was key to decentralized financing (DeFi) and NFTs, which were the major catalysts for the recent crypto boom.
On Ethereum’s proof-of-work (PoW) network, crypto miners were responsible for verifying transactions and adding new blocks to the blockchain in exchange for rewards paid in ETH. These blockchain operations required miners to invest in expensive hardware equipment that was capable of solving the required cryptographic puzzles – hence the intensive energy consumption of the network.
Ethereum miners were often organized in farms, which were actually huge buildings filled with mining equipment, similar to data centers, which were a huge strain on any energy network.
PoS Ethereum
The new proof-of-stake system for Ethereum, which is a blockchain-based cryptocurrency, completely eliminates mining.
Miners are now replaced by validators. To become an Ethereum Validator, you must stake 32 ETH on the network. This means that maintaining Ethereum’s network security will not rely anymore on an energy-intensive computer network but the value of ETH stakes. It will require a similar level of electricity as any other computer software.
Proof-of-stake is a system where the staked amount of ETH – and not the energy expended – determines who has control of the network. This makes attacks more costly and self-destructive, according to proof-of-stake boosters. Attackers can have their staked Ethereum slashed or reduced as punishment for trying to harm the network.
However, some are skeptical about the proof-of-stake security. There are no indications that Bitcoin, for example, will ever abandon the proof-of-work (PoW) consensus mechanism, as it is still seen as the more secure system.
Now, Ethereum’s security relies on stakers
The upgrade to a PoS blockchain ends the network’s dependence on energy-intensive cryptocurrency mining.
The idea that Ethereum would eventually switch to proof of stake was clear from the beginning. However, the transition was complicated and risky. Many people doubted that it would ever happen.
The complexity of the update was exacerbated by the fact it was one of the most complex open-source software projects in history. It required coordination among dozens of teams as well as volunteers, researchers, and developers.
Tim Beiko, an Ethereum foundation developer, played a crucial role in the coordination of the update. He believed that more investors would become interested in crypto after this monumental milestone in the crypto universe.
Vitalik Buterin, Ethereum’s creator, suggested that there’s still a long way ahead for the network: “This is the first step in Ethereum’s big journey towards being a very mature system, but there are still steps left to go.”
