How To Cash Out Your Crypto

Today, in our December article, we look at the world of crypto security, with mixed opinions on the importance of cryptocurrencies for traditional financial markets.

This month, the Financial Stability Board again insists that the stablecoin market, estimated at $133 billion, represents only a niche segment of the global financial market. Stablecoins are cryptocurrencies priced 1:1 against a fiat currency such as the US dollar. The Financial Stability Board is a consortium advisory body that acts on behalf of the G20 and makes recommendations on the financial system. His approach to this "niche" segment of the market suggests that cryptocurrencies still have a long way to go before they truly become mainstream, but there are clear signs that the tide is changing.

If evidence were needed, regulators in the UK and US have just published cryptocurrency guidance for banks and financial institutions. The Sunday Times reported that the Bank of England is looking to more strictly regulate cryptocurrency investments for institutions in 2022. The report concludes that cryptocurrency holdings by banks and other institutions do not currently pose a major threat to investors. traditional markets, but that the current growth rate is not yet high enough for this to occur in the future. This regulation is likely to be good news for the industry as it will help give banks certainty that they are operating within the confines of the Financial Conduct Authority (FCA) when offering trading and custody solutions.

Across the Atlantic, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency ( OCC) released a joint statement detailing how they will clarify the rules and regulations for the safe use and provision of cryptocurrency services for banks and other traditional financial institutions in the coming year. The rules aim to clarify for banks and institutions what is permitted by law, which activities must be regulated and what is strictly prohibited.

Amid increasing regulation, cyber attacks continue to occur. BitMart is the latest in a long list of compromised exchanges. A successful attack and subsequent compromise of the active wallet (private key) resulted in a loss of $196 million for the platform. This type of attack, where an attacker was able to extract the private key and use it to send funds to another wallet, is a very common example of a swap compromise. For more information on how to deal with this type of threat, check out my first article on cryptocurrency:

In another successful attack, BadgerDAO (a decentralized payments platform) provided details on how it was compromised and lost $120 million. The path to compromise began with the compromise of the management portal of Cloudflare, BadgerDAO's content delivery network. After Cloudflare was compromised, attackers were able to inject malicious scripts into the user interface of the Badger web application. This replaced the wallet's actual destination address with that of the attacker. The final phase of the attack involved asking users for approval from a foreign administration. BadgerDAO's transparency into how the attack was orchestrated and ultimately mitigated is something rare in the world of cybersecurity and is expected to be a model that more organizations will be able to adopt because everyone will be able to benefit from the lessons learned.

The bottom line from all this: The broader social impact of institutional investments in cryptocurrencies justifies a lot of more deliberate approaches to cybersecurity. Without this, there is a real risk to existing financial systems.