Bitcoin and Ether hold up as US stocks fall

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Hello. Here is what happens:

Price: Bitcoin avoids losses on US stocks as strong economic data prompts investors to reconsider expectations that the Federal Reserve will switch to more accommodative monetary policy anytime soon.

Insights: The Central Bank of Indonesia’s white paper on the development of the country’s central bank digital currency (CBDC) envisions a world with a government-sanctioned payment layer.

Prices

CoinDesk Market Index (CMI)

796.34

+3.0 0.4%

Bitcoin (BTC)

$16,817

1.1 0.0%

Ethereum (ETH)

$1,217

+3.6 0.3%

S&P 500 daily close

3,822.39

56.1 1.4%

Gold

$1,801

14.6 0.8%

10-year Treasury yield

3.67%

0.0

BTC/ETH Price by CoinDesk Indices; gold is the COMEX spot price. Prices from around 4 p.m. ET

Bitcoin Dodges Stock Sale

By Bradley Keoun

Bitcoin (BTC) was flat for the past 24 hours, a day when US stocks sold off. Positive economic data rekindled fears that the Federal Reserve may need to continue to tighten monetary policy for longer than expected, a trend that has put downward pressure on risky asset prices all year. (Check out Glenn Williams Jr.’s analysis here.)

The largest cryptocurrency by market volume was trading above $16,800, down just 0.01% over 24 hours. Ether (ETH), the second largest, was trading around $1,223, up 0.82%. CoinDesk market index rose 0.5%

Ryan Selkis of Messari, in a 168-page report on his 2023 forecast, wrote that market direction is “always a matter of macro and regulation.”

“The quiescent market sentiment is that we will have a recession in 2023, with some debate over its potential depth. The market also seems to believe that central banks will continue to tighten until inflation is under control. that against the grain, some investors believe it is more likely that the Fed will pivot once the recession really begins and accept multi-year high inflation instead of a depression or a global crisis reserve currency.”

Knowledge

Web3, DeFi at the center of the Indonesian CBDC

By Glenn Ardi, CoinDesk Indonesia

The story continues

The Central Bank of Indonesia’s white paper on the development of the country’s Central Bank Digital Currency (CBDC) contrasts with China: it envisions a world where the government allows and controls Web3 and DeFi by providing a payment layer sanctioned by the government instead of trying to eliminate it.

The people of Indonesia have fully embraced crypto. Based on data from the Indonesian Commodity Futures Trading Authority (Bappebti), the number of registered crypto accounts reached 16.3 million in September 2022, with a year-on-year growth rate of 81.6%. .

While the Central Bank of Indonesia sees some negative aspects of crypto, such as its ability to function as a “shadow central bank”, it knows it has to work to keep up, but also not to get in the way either. , and with which it is developing a numerical form of the rupiah known as Project Garuda, Indonesian CBDC. At this point, crypto is too big in Indonesia to be banned, so why not work with the industry and provide regulated payment layers, the mainstream logic goes.

[A] The CBDC fills the void left by existing money by acting as the main instrument for central banks to maintain the stability of the monetary and financial system within the digital ecosystem, reads a white paper from the Bank on the CBDC.

The bank envisions a marketplace where crypto exists as part of a larger ecosystem, with on-ramps to and from the CBDC.

(Central Bank of Indonesia)

Activities within the Web 3.0 ecosystem, including crypto-asset transactions, also add to the complexity of monitoring financial systems, both in the context of micro-financial and macro-financial risk mitigation. , indicates the document. Central banks should find a lasting solution to maintain public confidence in the exercise of their mandate in the digital age.

The Indonesian CBDC, according to the whitepaper, will be the method of settlement for the traditional and digital ecosystem, including DeFi, Metaverse, and Web3. Cryptocurrency is fine, mainstream thinking seems fine, provided a digital form of the Rupiah is the dominant means of settlement.

This contrasts with China’s approach. The country has largely banned most types of cryptocurrencies and banned crypto transactions almost entirely. The People’s Bank of China white paper on its CBDC mentions cryptocurrency as a concern, but raises a particular issue with stablecoins, saying they will bring risks and challenges to the global financial system.

But for Indonesia, stablecoins are not a problem. The country already has a handful of rupee-backed stablecoins such as BIDR, IDRT or IDK. A big market for these stablecoins is the large Indonesian diaspora of migrant workers, as overseas remittances are an important source of income for the country.

In theory, a CBDC could be exchanged for a stablecoin and then sent overseas. This method would also have the advantage of allowing authorities to monitor tax compliance.

However, all this is far from being finalized. The current white paper is still high level and theoretical and plans to be implemented, Asih Karnengsih, president of the Indonesia Blockchain Association, told CoinDesk. Implementing CBDC will require the involvement of many stakeholders and the real challenge will be how to invite these stakeholders to join the CBDC system.

But there are security risks

A CBDC means the government would have a lot of information about transactions and users. And Indonesia doesn’t have the best IT security record.

In January 2022, the Central Bank of Indonesia suffered a ransomware attack that leaked 74.82 GB of data. A few months later, the country’s national election commission was hacked and the personal information of 105 million Indonesian citizens was sold on the dark web. It comes two years after the same department was hacked, resulting in the leak of 2.3 million voter records.

Given the poor track record of governments when it comes to IT security, is it really a good idea to give them much more information? A CBDC would have details of every transaction made by a person. What price would that fetch on the dark web?

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