A new study has found that stablecoin issuances do not push the price of bitcoin or of other cryptocurrencies up, directly contradicting previous studies on the issuance of Tether.

Miners have managed to trick a decentralized stablecoin protocol to turn $11 worth of a Japanese Yen-pegged cryptocurrency into $6.7 million. They ended up burning the funds after failing to liquidate them, and claimed it was a penetration test.

De Nederlandsche Bank, the central bank of the Netherlands, has revealed it’s “ready to play a leading role” in the development of a digital euro.

Top stories in the Crypto Roundup today:

• Stablecoin Issuances Does Not Push Bitcoin’s Price Up, Study Finds
• Miners Trick Stablecoin Protocol to Turn $11 into $6.7 Million
• Dutch Central Bank ‘Ready to Play Leading Role’ in Digital Euro Development

At the time of writing, bitcoin (BTC) is trading at $7,059.76 (1.45%) with a daily Top Tier volume of $2.17 bn. As for ether (ETH), it is trading at $179.55 (2.36%) with a daily Top Tier volume of $1.12 bn. The MVIS CryptoCompare Digital Assets 10 Index is currently tracking at 2,595.66 (-1.03%).

Stablecoin Issuances Does Not Push Bitcoin’s Price Up, Study Finds

Research funded by University of California Berkeley’s Haas Blockchain Initiative found that stablecoin issuances do not push up the price of bitcoin or of other cryptocurrencies.

In a published report Richard Lyons, U.C. Berkley’s chief innovation and entrepreneurship officer, and Garnish Viswanath-Natraj, assistant professor of finance at the Warwick Business School, found revealed they found stablecoins are a tool for investors to react to market movements, and aren’t the drivers of price inflation or collapse.

The analysis conducted during the study went into trading data, and shows flows are consistent with investors using stablecoins as a store of value during risky periods, or when the price of cryptoassets drops. The researchers instead found “strong evidence” of another catalyst for flows from issuer treasuries to secondary markets: arbitrage trading. These flows occur when stablecoins deviate from their pegs.

The study contradicts research published by John Griffins of the University of Texas at Austin and Amin Shams of the Ohio State University, in July 2018, which concluded that stablecoin issuances were “timed following market downturns and result in sizable increases in bitcoin prices.” Lyons and Viswanath-Natraj directly contradicted those conclusions:

"We find no systematic evidence that stablecoin issuance affects cryptocurrency prices. Rather, our evidence supports alternative views; namely, that stablecoin issuance endogenously responds to deviations of the secondary market rate from the pegged rate, and stablecoins consistently perform a safe-haven role in the digital economy."

It’s worth noting stablecoin issuer Tether and crypto exchange Bitfinex, which shares management with it, has been facing a class-action lawsuit alleging the firms “monopolized and conspired to monopolize the bitcoin market” via stablecoin issuance, among other things.

Miners Trick Stablecoin Protocol to Turn $11 into $6.7 Million

A group of four miners who collectively control around 70% of the hashrate of PegNet, a Factor-based stablecoin network, have hit it with a 51% attack that saw them manipulate the price of a stablecoin pegged to the price of the Japanese yen, pJPY, to turn around $11 into $6.7 million.

Using their hashrate, according to a summary of the attack, the miners submitted data by submitting 35 of 50 necessary data entries on the network’s blog at extreme prices, to exchange a wallet containing 1,265.79 pJPY for a 6.7 million pUSD.

The group was then reportedly unable to liquidate the funds, and ended up concluding the roughly 20 minute-long attack by sending the traded stablecoins into a burn address with no known private key over a series of roughly 9,000 transactions. The miners claim the move was a penetration test.

During the attack, no other transactions exploited the high price of pJPY, and commentators claimed that the timing of the transactions indicate they were “malicious in intent.” The miners were mining PegNet for a while ahead of the attack, analysis shows.

Dutch Central Bank ‘Ready to Play Leading Role’ in Digital Euro Development

The central bank of the Netherlands, De Nederlandsche Bank, has revealed it is “ready to play a leading role” in the research and development of its own digital currency, as well as a European digital currency.

In a 45-page report, the country’s central bank revealed it wants to be the proving ground for central bank digital currencies (CBDCs) in the European Union, after saying the use of physical cash is “clearly” declining in the Netherlands. It argued a CBDC should “promote diversity in the payments market” while making cross-border payments more efficient, and fostering trust in the monetary system.

The bank argued that the freedom to exchange commercial bank money for central bank money is essential to help maintain the trust people have in the monetary system. While the report wasn’t targeting the Libra cryptocurrency project itself, it pointed to it as a possible threat to monetary stability, adding it was “the reason why the DNB and other central banks are now considering issuing their own digital currency.”

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