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The U.S. Government Accountability Office (GAO) has developed four policy proposals to help enhance the potential benefits and mitigate the challenges of blockchain technology. The GAO found that blockchain is useful for some applications but limited or even problematic for others. For example, because of its tamper resistance, it may be useful for applications involving many participants who do not necessarily trust each other. But it may be overly complex for a few trusted users, where traditional spreadsheets and databases may be more helpful. Blockchain may also present security and privacy challenges and can be energy-intensive.

"The following policy principles reflect Circle's real-world experience operating the world's leading regulated dollar digital currency, USD Coin (USDC), which stands at more than $54 billion in circulation. USDC has safely powered more than $5 trillion in on-chain transactions and is available through a global network of thousands of digital wallets, exchanges and other products and services in more than 190 countries, lowering the fundamental cost of payments and financial services and establishing dollar payments utility as a native feature of the internet.

The U.S. Commodity Futures Trading Commission (CFTC) sued crypto exchange Binance and founder Changpeng Zhao on allegations the company knowingly offered unregistered crypto derivatives products in the U.S. against federal law. Zhao replied to the complaint and classified them as "unexpected" and "disappointing." The executive claims that the company has worked with the U.S. regulator since 2021. Zhao said: "upon an initial review, the complaint appears to contain an incomplete recitation of facts, and we do not agree with the characterization of many of the issues alleged in the complaint."

The Digital Euro Association (DEA) published a summary of the key takeaways from its Digital Euro Conference held on March 31, 2023, that brought together experts, policymakers, and industry leaders in a hybrid format. Both on-site and remote participants engaged in insightful discussions, presentations, and panel sessions centered around central bank digital currencies (CBDCs), stablecoins, and tokenized commercial bank deposits.

Visa published a paper that outlines how to write a smart contract application for a self-custodial wallet that could allow a user to setup a programmable payment instruction that can push funds automatically from one self-custodial wallet account to another at recurring intervals, without requiring the user's active participation each time.  This solution taps into a concept known as "Account Abstraction", a developer proposal currently being explored within the Ethereum ecosystem. The idea behind Account Abstraction is to make user accounts on Ethereum function more like smart contracts by allowing a user to have programmable features embedded into their wallets.

"All told, this is one of the most actively misleading quantum computing papers I've seen in 25 years, and I've seen … many. Having said that, this actually isn't the first time I've encountered the strange idea that the exponential quantum speedup for factoring integers, which we know about from Shor's algorithm, should somehow "rub off" onto quantum optimization heuristics that embody none of the actual insights of Shor's algorithm, as if by sympathetic magic. Since this idea needs a name, I'd hereby like to propose Cargo Cult Quantum Factoring."

A group of Chinese researchers have just published a paper claiming that they can-although they have not yet done so-break 2048-bit RSA. This is something to take seriously. It might not be correct, but it's not obviously wrong. One of the issues with the algorithm is that it relies on a recent factoring paper by Peter Schnorr. It's a controversial paper; and despite the "this destroys the RSA cryptosystem" claim in the abstract, it does nothing of the sort. Schnorr's algorithm works well with smaller moduli-around the same order as ones the Chinese group has tested-but falls apart at larger sizes. At this point, nobody understands why. If that's true, the techniques in this Chinese paper won't scale either.

"Although FedNow is not a CBDC, that's not to say there is no reason to object to it. Faster payments are needed in the United States, but FedNow is not the only option. FedNow was announced in 2019, but that was two years after the Clearing House (TCH) introduced the Real‐​Time Payments (RTP) Network. In fact, while not offering instant payments, even just expanding the operating hours of Fedwire and the National Settlement Service (NSS) to run 24x7x365 would have improved the U.S. financial system. Yet, the Federal Reserve seems to have chosen to ignore the simpler option and walk over the private sector. Both choices are grounds for fair and longstanding objections to FedNow."

Coinbase provided an update on its plan to establish bases of operation in jurisdictions that will let it do what U.S. regulators insist are illegal, like offering crypto derivatives and unregistered securities to the public. The firm is working with several "high-bar" international regulators to establish regulated entities abroad that safely facilitate trading solutions and provide products the crypto community demands. For instance, Coinbase has received a Class F license under the Digital Asset Business Act from the Bermuda Monetary Authority, under which it will shortly launch a derivatives exchange.

On February 19, 2024 I reported on the English version of the Türkiye Cumhuriyet Merkez Bankası (CBRT) report on the first phase of its digital Turkish lira testing (originally published in Turkish in December 2023). The report said that "pilot" testing had been done, without providing enough information as to whether the pilots are really pilots. However, thanks to Central Bank Payment News, we now have that clarity to label the CBRT phase one testing as pilot testing. Here's CBRT Deputy Executive Directors Zeynel Abidin Avcı and Bilgehan Kürşad Öz: "The pilot tests involved real users and specific sale-points, such as cafes, restaurants, and giftshops. In total, the two pilot tests ran for close to a month, and more than 2.000 users, who are not central bank employees, made their payments and transfers. By doing so, they have tested the systems and provided valuable feedback."

R3 published a short primer on how Regulated Liability Network (RLN) tokens would work within the structure of the R3 digital currency sandbox. It first describes the proposed technical architecture of the RLN along with where it sits within the existing sandbox. It then look into the specifics of how issuance and payment operations would work were RLN tokens to be issued in a Corda environment.

According to Martin C W Walker, privacy fears may not turn out to be the greatest obstacle to the rollout of retail central bank digital currencies (CBDCs). What if the simple inconvenience of using CBDC is enough to stop widespread adoption? The evidence from Transport for London (TfL), the body that controls London's public transport, suggests that convenience is a very powerful force in retail payments. Having to top up an Oyster pay-as-you-go card is considerably less convenient than paying directly from a bank account (via a debit card) or using a credit card. So who would bother to top up the CBDC wallet to pay for things for which they could already use their credit or debit cards?

Blockchain developer Gluwa is exploring the possibility of building a central bank digital currency (CBDC) for Liberia. The firm's CEO met with the President of Liberia to discuss enhancements to the country's financial infrastructure, but no mention was made of central bank engagement, so the latter's engagement in the project is unclear.

The Cato Institute published an article calling for the Federal Reserve to share more information regarding where it stands with respect to central bank digital currency (CBDC). The article recommends that the Fed come clean on the specific criteria that would influence it to make an official decision on whether it would or would not recommend launching a digital dollar. The article also calls on the Fed to come clean on whether it believes it has the authority to issue an intermediated CBDC, given that the Federal Reserve Act does not authorize direct Fed accounts for individuals, but may allow for an intermediated one. Also, it would be useful to know whether the Fed believes it has the authority to issue a distributed ledger technology (DLT) based wholesale CBDC, given that it already "issues" centralized ledger technology-based wholesale CBDC (e.g., commercial bank reserve accounts).

"If Congress wants to make positive changes for the dollar, it should look to strengthening financial privacy, promoting currency competition, and creating a freer financial system."

"Circle will launch USDC natively on Celo to further everyday adoption of digital currencies and assets. Celo is a carbon-negative, mobile-first, EVM-compatible blockchain built for the real world. USDC is the leading regulated digital dollar powering payments and access to a stable store of value worldwide."

According to Chainalysis, In 2023, illicit addresses sent $22.2 billion worth of cryptocurrency to services, versus the $31.5 billion sent in 2022. Some of this drop may be attributed to an overall decrease in crypto transaction volume. However, the drop in money laundering activity was steeper, at 29.5%, compared to the 14.9% drop in total transaction volume. However, there was a big increase in the volume of funds sent to cross-chain bridges from addresses associated with stolen funds, and a substantial increase in funds sent from ransomware to gambling platforms, and in funds sent to bridges from ransomware wallets.

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