Deutsche Bundesbank joins Singapore’s Project Guardian

Energy Theft Results in Crypto Mining Operation Shutdown in BorneoAuthorities in Miri, a city on the island of Borneo in Malaysia, swiftly responded to a tip-off from the public, leading to the successful shutdown of an illegal cryptocurrency mining operation.According to local news source, The Borneo Post, during a well-executed raid, 34 mining servers were confiscated, all of which were illicitly drawing power through cable tapping.Photo by Muhammad Faiz Zulkeflee on UnsplashEnergy thieves turn to miningWhile Borneo offers some of the lowest energy prices in Malaysia, it continues to struggle with the problem of energy theft. That issue has been highlighted via a recent utility announcement. Sarawak Energy, the local energy provider, estimated that the criminal operation caused losses of approximately 6,000 Malaysian ringgits ($1,300) worth of stolen electricity each month.The rise of the Bitcoin mining industry in 2023 has brought about record-high network hash rates and network difficulty. While the growth of miners generally signifies the robustness of the Bitcoin network, smaller operators without the economies of scale enjoyed by larger corporations face challenges.One such challenge is energy generation to power their mining servers. In pursuit of higher profit potential with lower electricity rates, illegal mining operators are drawn to stealing electricity from the grid. By eliminating energy expenses, these illicit miners can accumulate profits and offset equipment costs.Fourth recent instanceThe recent incident marks the fourth major operation in Senadin, where Miri is located, where authorities have cracked down on power theft cases related to cryptocurrency mining in 2023. So far, over 137 Bitcoin mining servers have been seized during these operations.On the other side of the spectrum, legitimate crypto mining companies are actively securing funding to support their mining projects. Riot Platforms, for instance, invested a substantial $162.9 million to acquire 33,280 state-of-the-art equipment from MicroBT, a leading producer of mining machinery.In another example, Coinbase extended a $50 million credit line to Canadian cryptocurrency firm Hut 8 Mining, facilitating its operations. Furthermore, Volcano Energy, a public-private partnership in El Salvador, secured an initial funding of $250 million for its ambitious Bitcoin mining venture.Appropriate mining activityThe spate of recent instances of illegal mining in Borneo acts as a reminder of the importance of regulatory compliance and adherence to the law within the cryptocurrency industry. While the allure of lucrative profits may tempt some to engage in illegal activities, the consequences can be severe. Mining can be a positive societal force when applied within appropriate circumstances.A move by the President of Kyrgyzstan last week to harness crypto mining in order to utilize energy that is otherwise being wasted at the central Asian country’s Kambar-Ata-2 hydropower plant serves as a recent example of a positive use case for the activity.In Texas in the United States, crypto miners are collaborating with those that manage the local energy grid, turning off miners at times when the state is on the brink of suffering blackouts.As the crypto mining landscape continues to evolve, it is essential for both authorities and legitimate operators to work together in finding sustainable solutions that ensure the industry’s growth while maintaining the integrity of the energy infrastructure.

India’s digital currency transactions have surged, surpassing 1 million daily transactions in December, meeting the Reserve Bank of India’s (RBI) ambitious target set for the end of 2023.Photo by Julian Yu on UnsplashCBDC-based employee paymentsReuters cited three sources familiar with the matter who have revealed that Indian banks played a crucial role in achieving this milestone by disbursing certain employee benefits through the central bank’s digital currency (CBDC), known as the e-rupee. As Indian crypto influencer and YouTuber Sumit Kapoor put it, the transaction level increase “happened because people working in regular banks were encouraged to use digital rupees instead of the normal money for their deposits and benefits.” RPI letter confirms increaseA letter seen by CoinDesk sent by the Governor of the Reserve Bank of India (RBI), Shaktikanta Das, to RBI staff on Dec. 29 confirmed the increased CBDC use, stating that it “exceeded the milestone of 1 million transactions in a day on Dec. 27, 2023.” The e-rupee, developed as a digital counterpart to physical cash, utilizes distributed ledger technology. The RBI initiated the e-rupee pilot in December 2022, initially recording an average of 25,000 daily transactions by the end of October. Despite its integration with the Unified Payments Interface (UPI), a popular framework for mobile app-based peer-to-peer money transfers, the transaction volume saw a substantial increase last month. Union Bank paymentsAccording to India’s Economic Times, the Union Bank of India is working towards transferring claims related to a number of employee benefits to CBDC wallets rather than the accounts of those salaried employees. Union Bank stated: “With an aim to promote CBDC wallet transactions, banks have been advised to encourage all staff members to transact using the digital currency and ensure 100% staff registration on digital rupee app.” Other banks have been playing their part in the current transaction level surge. This has included major private and state-run lenders such as HDFC Bank, Kotak Mahindra Bank, Axis Bank, Canara Bank and IDFC First Bank. These institutions disbursed employee benefits directly into CBDC wallets rather than traditional salary accounts, demonstrating a significant shift in adoption patterns. The RBI anticipates that non-financial firms will follow suit, contributing to a further boost in transaction volumes. The user base for the e-rupee has also witnessed steady growth, reaching approximately 4 million users, up from 3 million in December, according to an executive familiar with the pilot. Globally, several countries, including China, France and Ghana, are in the pilot stages of their central bank digital currency (CBDC) projects. Nigeria has rolled out its digital currency, although success has been limited despite offering incentives such as discounts on auto-rickshaw rides. To incentivize e-rupee transactions, Indian banks are offering rewards, aligning with the RBI’s push to enhance transaction volumes. Sharat Chandra, co-founder of the India Blockchain Forum, commended the move to compensate employees using CBDC and suggested expanding adoption incentives to other areas, such as toll tax collections, to further encourage widespread usage. The positive momentum in India’s digital currency landscape reflects a growing trend toward embracing innovative financial technologies. 

Singapore-regulated Telcoin, a developer of financial applications for mobile users, has successfully restored user balances following an exploit that saw approximately $1.2 million worth of funds transferred from affected accounts.Photo by Martin Sanchez on UnsplashUnauthorized withdrawal of assetsThe incident, which occurred in late December, was attributed to an error in the interaction between Telcoin's digital wallet and a proxy contract on Polygon. In a blog post which was published on Wednesday, the company shared a full post-mortem analysis report which it commissioned Hong Kong-based blockchain security firm BlockSec to carry out, relative to the exploit. The fault in the proxy contract's implementation caused a technical conflict that allowed for the unauthorized withdrawal of assets. Fortunately, no admin keys were compromised, ensuring that the broader Telcoin ecosystem remained unaffected. In response to the security breach, Telcoin took action by immediately freezing the use of its application as a precautionary measure. The team initiated an investigation and committed to releasing updates promptly to address the issue and restore normalcy. The identified address associated with the exploit was 0x35d2775e5f95596509951b140d68fc5b9185ff98. TEL token freefallDespite the initial market turbulence, with the price of the Telcoin (TEL) token plummeting, the cryptocurrency has demonstrated resilience. On Dec. 25, TEL fell from a peak price of $0.00235146 to $0.00122535, representing a 48% decrease. At the time of writing, the price has slightly rebounded, trading at $0.001335. Nevertheless, it's still down 40% over the course of the past month's trading. In a social media direct message to CoinDesk recently, Telcoin's founder and CEO, Paul Neuner, expressed pride in how his team responded to the issue, stating: “Making the decision to preemptively restore affected user wallets from our company treasury was a no-brainer, and I’m proud of the team for making that happen in record time.” Regulatory standingTelcoin's regulatory standing played a crucial role in instilling confidence during this challenging time. Although headquartered in Tokyo, the company is regulated in Singapore as a Major Payment Institution (MPI) by the Monetary Authority of Singapore (MAS). The firm is also registered and regulated in other global markets, including Canada and Australia. Telcoin maintains offices in Singapore, Tokyo, Dubai and Los Angeles. The company had been active in trying to shape regulation in the United States in 2023, with company executives having made repeated visits to Washington D.C. to meet with Financial Services Committee members and staffers on Capitol Hill. In April of last year, the company extended its service offering to the European market, starting out initially in Lithuania.It appears that the restoration of Telcoin's application services led to a significant boost in user confidence. The company reported a 400% increase in deposits compared to the previous month. Users responded favorably to Telcoin's swift resolution of the security breach, with a ratio of $3.60 being deposited for every $1 withdrawn in the first day since the service restoration. Telcoin's measures, collaboration with security experts and the surge in user deposits appear to have resulted in a resilient recovery. The saga highlights the importance of prompt and transparent responses in maintaining trust in the face of crypto security issues.