The Bank for International Settlements (BIS) has released a plan to protect central bank digital currencies (CBDCs) from cybersecurity threats in the decentralized finance (DeFi) sector.
These guidelines aim to address vulnerabilities in the DeFi industry that could pose risks to central bank currencies built on blockchain and smart contract technologies.
The report highlights the significance of large-scale attacks on distributed ledger technology (DLT) protocols and smart contracts in the DeFi industry, pointing to potential operational and reputational risks. The document cites recent smart contract hacks that have caused massive losses in the DeFi space to illustrate potential security threats that could affect CBD infrastructure.
The study highlights that the Internet, communications networks, and digital devices have caused the landscape of cyber threats to constantly evolve and diversify. BIS warns of possible attacks on various aspects of CBDCs, such as consensus protocols, cross-chain bridges, oracles, smart contracts, and offline components, that may be associated with DLT.
the BIS chartrevealed on June 29, forms part of the Polaris project, which is dedicated to creating robust and secure CBDC systems that operate both online and offline.
The Polaris project aims to provide central banks around the world with a structure for designing, implementing, planning, and operating factors for central bank digital currencies.
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To prevent potential threats, the Bank for International Settlements is encouraging central banks to enhance their existing procedures and create functional teams dedicated to security and resilience. These teams will be involved in all phases of the CBDC project to ensure that measures necessary to defend against cyber threats are implemented.
According to the report, central banks need to be careful about the complex and ever-changing threats that come with central bank currency systems. The Bank for International Settlements recommended that these banks adopt new technologies to enhance security and resilience as part of a comprehensive approach to cryptocurrency protection. This will help ensure the long-term sustainability of digital currencies.