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Indian Digital Currency Era – A Quick Look

Compared to more conventional forms of money like cash notes or coins, electronic money stored in bank accounts, mobile banking applications, and credit cards is quickly replacing the public's perception of finance.

The popularity of UPI demonstrates the preference for digital money systems. India has been pushing hard to become cashless, starting with the decision to implement demonetization in 2016. That same year also saw the launch of the real-time payments system known as the Unified Payments Interface (UPI). The paradox in the existing system is that although digital transactions are becoming more common, cash is still very popular in India.

In terms of transaction value, UPI executed 7.3 billion transactions in October, totaling Rs. 12.11 lakh crore, a record high. While volumes increased 73.3 percent during the same period, transaction values increased by 56.6 percent year over year.

Cryptocurrencies vs. Digital Rupee

A CBDC, as defined by the RBI, is "a legal tender issued by a central bank in digital form. It can be exchanged one-to-one for fiat money and is equivalent to it. All that has changed is its form. "

However, it is impossible to directly compare a CBDC to a cryptocurrency.

"A CBDC is not a commodity or a claim on a commodity or a digital asset, unlike cryptocurrencies. They are not money definitely not a currency in the sense that the term has historically been used, "according to the RBI's release.

According to the tracker maintained by the Atlantic Council, 98 nations are currently investigating CBDCs. Of these, 11 nations have started CBDCs. In light of this situation, the RBI is acting in a calibrated way to start CBDCs. It is currently looking into the possibility of implementing wholesale CBDCs based on accounts and retail CBDCs based on tokens.

"When something new enters the market, the old need to adapt, and the new need to control the change", says Nikhil Kamath, co-founder of Zerodha. "While many have been critical of #CBDC, we might be overlooking the big picture, remittances, unbanked economy, and minimizing subsidy leakage."

The increasing use of cryptocurrency stablecoins, which tie their value to another currency or asset, has also alarmed a number of central banks. According to a Press Trust of India report, RBI officials informed a parliamentary finance committee in 2022 that the 'dollarization' of a portion of the economy by cryptocurrencies could be detrimental to the nation's interests.

Money transfers via cell phones would be quick and easy, according to Sathvik Vishwanath, co-founder, and CEO of Unocoin, a rival cryptocurrency exchange. The digital rupee will most importantly aid in the eradication of problems with counterfeit money.

According to FIS's Cheema, adoption of the CBDC in the wholesale sector (CBDC-W) has large benefits and substantially fewer dangers than in the more complicated domain of retail CBDC (CBDC-R). In the future, CBDC-R will supplement existing payment structures, not replace them.

The digital rupee will therefore be available for use by all Indian citizens whenever the RBI begins to print it.




FTX Filed for Bankruptcy Protection in US

Facing the digital equivalent of a banking collapse, the financially troubled cryptocurrency exchange FTX filed for US bankruptcy protection on Friday.

Bitcoin fell to a two-year low this week after a week of reports regarding the platform's financial difficulties, and by Friday night, the price of the cryptocurrency was trading at $16,861 (€16,256).

The company revealed that Sam Bankman-Fried, its former CEO, has also left after a remarkable turn of events at the second-largest cryptocurrency exchange in the world. His FTX empire crumbled in a little more than a week, shattering trust in the already unstable cryptocurrency market.

Coindesk and customer reports on social media claim that the unstable platform has finally permitted some users to withdraw money for the first time in days.

Summary of FXT company

According to a tweet from the company, FTX, Alameda Research, a cryptocurrency trading company that is linked with it, and roughly 130 of its other businesses have started voluntary Chapter 11 bankruptcy procedures in Delaware. In the US, a firm can use Chapter 11 to reorganize its debts while still operating under court supervision.

FTX Trading claimed in its bankruptcy filing that the firm has assets worth between $10 billion and $50 billion, liabilities between $10 billion and $50 billion, and more than 100,000 creditors.

Customers left FTX earlier this week because of concern about a lack of capital, leading to an agreement to sell the company to larger rival Binance.

Kingston student Thomas, 22, who has been a customer of FTX for over a year, calls it a 'hub for crypto.'For the £2,000 he claimed to have on the exchange, which he calls a 'fairly large amount of money,' he claims he was able to submit a withdrawal request.

However, he is worried about the number of requests being made by FTX consumers and is unsure if all of them will be fulfilled as the business struggles.

The cryptocurrency community had hoped that Binance, the biggest cryptocurrency exchange in the world, could be able to save FTX and its depositors.

After reviewing FTX's financial records, Binance came to the conclusion that the issues facing the smaller exchange were insurmountable, and it withdrew from the agreement. A business that was once the pride of the cryptocurrency market had a dramatic fall in popularity.

In January, FTX collected $400 million from investors, valuing the business at $32 billion.






Dark Web: 31,000 FTSE 100 Logins

 

With unveiling the detection of tens of thousands of business credentials on the dark web, security experts warn the UK's largest companies that they could unintentionally be exposed to significant vulnerability. Outpost24 trawled cybercrime sites for the compromised credentials, discovering 31,135 usernames and passwords related to FTSE 100 companies using its threat monitoring platform Blueliv.

The Financial Times Stock Exchange (FTSE) 100 Index comprises the top 100 companies on the London Stock Exchange in terms of market capitalization. Across several industry verticals, these businesses reflect some of the most powerful and lucrative businesses on the market. 

The following are among the key findings from the study on stolen and leaked credentials: 

  • Around three-quarters (75%) of these credentials were obtained by traditional data breaches, while a quarter was gained through personally targeted malware infections. 
  • The vast majority of FTSE 100 firms (81%) had at least one credential hacked and published on the dark web, and nearly half of FTSE 100 businesses (42%) have more than 500 hacked credentials. 
  • Since last year, there were 31,135 hacked and leaked credentials for FTSE 100 organizations, with 38 of them being exposed on the dark web. 
  • Up to 20% of credentials are lost due to malware infections and identity thieves.
  • 11% disclosed in the last three months (21 in the last six months, and 68% for more than a year) Over 60% of stolen credentials come from three industries: IT/Telecom (23%), Energy & Utility (22%), and Finance (21%). 
  • With the largest total number (7,303) and average stolen credentials per company (730), the IT/Telecoms industry is the most in danger. They are the most afflicted by malware infection and have the most stolen credentials disclosed in the last three months.
  • Healthcare has the biggest amount of stolen credentials per organization (485) due to data breaches, as they have become increasingly targeted by cybercriminals since the pandemic started. 

"Malicious actors could use such logins to get covert network access as part of "big-game hunting" ransomware assault. Once an unauthorized third party or initial access broker obtains user logins and passwords, they can either sell the credentials on the dark web to an aspiring hacker or use them to compromise an organization's network by bypassing security protocols and progressing laterally to steal critical data and cause disruption," Victor Acin, labs manager at Outpost24 company Blueliv, explained.

How Banks Evade Regulators For Cyber Risks

 


As of late, the equilibrium between the banks, regulators, and vendors has taken a hit as critics claim that banks are not doing enough for safeguarding the personally identifiable information of the clients and customers they are entrusted with. As there has been rapid modernization in internet banking and modes of instant payments, it has widened the scope of attack vectors, introducing new flaws and loopholes in the system; consequently, demanding financial institutions to combat the threat more actively than ever. 

In the wake of the tech innovations that have broadened the scope of cybercrime, the RBI has constantly felt the need to put forth reminders for banks to strengthen their cyber security mechanisms; of which they reportedly fell short. As financial frauds relating to electronic money laundering, identity theft, and ATM card frauds surge, banks have increasingly avoided taking the responsibility.  

It's a well-known fact that banks hire top-class vendors to circumvent cyber threats, however, not a lot of people would know that banks have gotten complacent with their reliance on vendors to the point of holding them accountable for security loopholes and cybersecurity mismanagement. Subsequently, regulators fine the third-party entity, essentially the 'vendors' providing diligent cyber security risk management to the banks.  

The question that arises is that are banks on their own doing enough to protect their customers from cyber threats? Banks need to understand monitoring and management tools available to manage cyber security and mitigate risks. Financial institutions have an inherent responsibility of aggressively combating fraud and working on behalf of their customers and clients to stay one step ahead of threats.  

Banks can detect and effectively prevent their customers' privacy and security from being jeopardized. For instance, banks can secure user transactions by proactively monitoring SMS using the corresponding mobile bank app. They can screen phishing links and unauthorized transactions and warn customers if an OTP comes during a call.  

Further, banks are expected to strictly adhere to the timeframe fixed for reporting frauds and ensuring that customer complaints regarding unscrupulous activities are timely registered with police and investigation agencies. Banks must take accountability in respect of reporting fraud cases of their customers by actively tracking the accounts and interrupting vishing/phishing campaigns on behalf of their customers as doing so will allow more stringent monitoring of the source, type, and modus operandi of the attacks. 

“We are getting bank fraud cases from the customers of SBI and Axis Bank also. It is yet to be verified whether the data has been leaked or not. There might be data loss or it could be some social engineering fraud,” Telangana’s Cyberabad Crimecrime police said. 

“Police said that the fraudsters had updated data of the thousands of customers who received new credit cards and it was a bank’s insider who is the architect of this whole fraud,” reads a report pertaining to an aforementioned security incident by The Hindu.  

“This is a classic case to explain the poor procedure practised by the network providers while issuing SIM cards, and of course the data security system at the banks,” a senior police officer said. 

In relation to the above stated, banks should assume accountability for their customers’ security and shall review and strengthen the monitoring process, while meticulously following the preventive course of action based on risk categorization like checking at multiple levels, closely monitoring credits and debits, sending SMS alerts, and (wherever required) alerting the customer via a phone call. The objective, essentially, is for banks to direct the focus on aspects of prevention, prompt detection, and timely reporting for the purpose of aggregation and necessary corrective measures by regulators which will inhibit the continuity of crime, in turn reducing the ‘quantum’ of loss.  

Besides, vigorously following up with police and law authorities, financial institutions have many chances to detect ‘early warning signals’ which they can not afford to ignore, banks should rather use those signals as a trigger to instigate detailed pre-investigations. Cyber security is a ‘many-leveled’ thing conception, blaming the misappropriations on vendors not only demonstrates the banks’ tendency to avoid being a defaulter but also impacts the ‘recoverability aspects’ like effective monitoring for the customers to a great degree.

Reserve Bank of India Experiences a Technical Glitch; NEFT and RTGS Go Down for Half a Day!


Electronic money transfer is something that has changed the way people used to transact. It has offered a way more convenient method that goes along the lines of modernity and the need of recent times.

The most widely used and popular mediums of transferring money between bank accounts in India are NEFT and RTGS. While NEFT has neither minimum nor maximum limits, RTGS is designed for heavier sums of money with 2 lac being the minimum amount and 10 lac being the maximum per day.

Per reports, National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS) were disrupted for more than half a day. The signs of this started to show from Monday midnight.

Sources mention that this happened because of a technical glitch in the systems of the Reserve Bank of India. Nevertheless, NEFT and RTGS have been reinstated after inactivity of 12 hours.

Several reports reveal that the main issue allegedly was grappled by the Indian Financial Technology and Allied Services (IFTAS), which is an RBI affiliated branch when the “disaster recovery site” was being moved from locale A to B.

Sources impart that the NEFT transactions have as of now been brought back. The “end-of-day” RTGS transactions of the previous day are being worked on to get them to reach completion but the “start-of-day” for RTGS hasn’t ensued yet. Still, the restoration of RTGS is expected soon.

The setup for NEFT was established and supported by the Institute for Development and Research in Banking Technology. People will now be able to use this medium for online transferring of funds and money 24x7. Meaning that holidays or weekends would never come in the way of money transfers and funds would be transferred any day and at any time at all.

NEFT and RTGS are the most commonly used routes for online transfer of funds.

The former medium facilitates a provision for limitless one-to-one transfer of money from and to individuals and corporates with an account in any bank branch in the country. The latter, however, has the aforementioned limits and is a continuous and real-time settlements of fund transfers.

Bitcoin No More the World's Most Used Cryptocurrency, as Tether Takes Over

If someone were to ask you "what's the world's most used cryptocurrency?” you'd probably say "Bitcoin," which accounts for 70% of the world's market value digital assets. But in reality its Tether, which is now the world's most used cryptocurrency.

Although precise numbers on trading measures are arduous to get in this misty business environment, statistics from CoinMarketCap.com point that the Tether is the highest daily and monthly valued cryptocurrency, even though its market capitalization is 30% less.



In April, Tether's profit outdid Bitcoin for the first time, and since early August, it has steadily exceeded it at the rate of $21 billion per day, says CoinMarketCap.com. With its steadily trading volume nearly 18% greater than Bitcoin, Tether has no doubt become one of the most significant coins in the crypto sector.

It's also the leading cause why governors view cryptocurrencies with skepticism and have set a halt on crypto exchange-traded supplies among distress of business administration.

"Without Tether, we would have suffered a heavy cost of the regular amount -- about $1 billion or higher depending on the information reference, ” says Lex Sokolin, co-head, global financial technology at ConsenSys, which extends blockchain technology services.

"Few concerning possible tappings of dealing in the business may begin to drop off,” says Lex.

The reason being is Tether is the most accepted steady coin around the globe, as it avoids price fluctuations through stocks. Tether is also a road to the crypto market for most of the world's existing businesspeople. 'For instance, in China, a trading giant where cryptocurrency is outlawed, people can comfortably spend for cash with tethers on the tables without any uncertainty or mistrusts,' says Lex 'and furthermore they can swap it for bitcoins and distinct cryptocurrencies.'

Is it safe? 

However, many people don't truly rely on Tether, says Thaddeus Dryja, a research scientist at the Massachusetts Institute of Technology. People think of Tether as some money in their account, without actually realizing that they are using it, he says.

'Some trades unspecified their folios, to send the idea that customers are holding money rather than Tethers,' said Thaddeus.