What happened this week around blockchain and cryptocurrencies? The most relevant local and international events as well as appealing background reports in a pointed and compact weekly review.
Selected articles of the week:
During the “crypto winter” years of 2019/20, a wide range of new applications emerged on the Ethereum blockchain. The most successful “dApps” all had a common denominator: they replicated traditional financial services on a decentralized basis. Uniswap created a novel marketplace for digital assets, Aave offered decentralized credit markets without intermediaries, and Synthetix pioneered in the derivatives trading space. While the user base of these applications was largely composed of crypto enthusiasts, there is undoubtedly a professionalization of the sector taking place. Even authorities such as the Bank for International Settlements, the Swiss National Bank, and other central banks now recognize the potential of DeFi apps.
With the successful completion of Project Mariana, SNB is nearing a proof of concept for the interaction between DeFi and CBDCs.
The FTX debacle represented a significant setback for crypto service providers. Distrust in centralized providers skyrocketed, and many users reverted to a “not your keys, not your coins” mentality. In crypto jargon, this phrase means that holders of digital assets should rely only on self-custody. According to Marc Taverner, CEO of Swiss crypto service provider XEROF, this approach may make sense for individual investors. Asset managers of all kinds, however, have their core competencies in other areas. So according to him, trustworthy custody infrastructure based on sustainable transparency principles is essential for institutional investors.
The role of digital asset custodians has become increasingly important following the collapse of FTX, an overview of best practices.
Since 2019, the Swiss stock exchange SIX has been operating its own blockchain trading platform. The SIX Digital Exchange (SDX) aims to provide a direct entry point into the digital asset market for financial institutions and offer access to a comprehensive ecosystem for the issuance, trading, clearing, and custody of digital assets. SDX welcomed Hypothekarbank Lenzburg as the sixth member of its central depository this week. Over the past years, the Aargau-based regional bank has gradually approached the sector, and now “Hypi” is taking a bigger step into the industry.
Hypothekarbank Lenzburg becomes the sixth member to join the Central Securities Depository (CSD) of SIX Digital Exchange (SDX).
This week, the crypto industry was hit by another hack in the high millions range. The supposedly decentralized transaction service Mixin Network suffered an attack on its cloud infrastructure, resulting in a loss of customer funds totaling $200 million. Users of the platform may have to write off up to 50% of their balances. This incident once again proves that caution is required with unregulated counterparties. Storing private keys to customer funds in a cloud is considered an absolute security no-go and should not occur on a “decentralized” platform.
Hong Kong transaction network Mixin Network suffered a hacker attack that resulted in the loss of $200 million in customer funds.
In addition: The longtime CEO of Crypto Finance AG has announced his resignation. Brzezek founded the Swiss crypto brokerage firm in 2017 and continued to lead the company as CEO after its sale to the Deutsche Börse Group in 2021. Now, the current CFO Vander Straeten will take the helm. In combination with several other role changes, the company aims to prepare for expansion in Europe and solidify its position as a regulated crypto service provider.
Crypto Finance AG founder Jan Brzezek is stepping down from his position as CEO, handing the role over to former CFO Stijn Vander Straeten.
