Bloomberg reports that in a study released on Monday (June 20), Israel’s central bank said that smart contracts for decentralized finance (DeFi) may need to be watched to prevent “malicious” behavior.
Bank of Israel researchers working on the bank’s first test with a central bank digital currency say that smart contracts on the Ethereum blockchain could be made in a “malicious” way (CBDC).
Bloomberg reported that the study said, “One important question is who makes the smart contract.” It’s possible that letting anyone create a smart contract on the blockchain could pose a huge risk to the whole system.
The central bank looked at the Ethereum blockchain as part of its study of digital wallet transfers, transaction completion, and privacy.
About 100 countries have issued a CBDC or are thinking about it. Jerome Powell, who is in charge of the US Federal Reserve, says that a digital dollar will help make the currency stronger in the long run.
What is Ethereum? This is part of the PYMNTS Blockchain Series. The Blockchain made it possible for cryptocurrency to be used for more than just transactions.
PYMNTS reported last week that a bipartisan bill in the US would treat digital assets like commodities instead of treasuries.
So, the Securities and Exchange Commission (SEC) would no longer be in charge of digital currencies (SEC). Since SEC chairman Gary Gensler has called the cryptocurrency business “the Wild West of finance,” the industry thinks that the CFTC will be less strict than the SEC.