Cryptocurrencies

Coinbase relies on AI for nearly half of its code

Coinbase CEO Brian Armstrong said AI now generates around 40 per cent of the exchange’s code, expected to surpass 50 per cent by October 2025. He emphasised that human oversight remains essential, as AI cannot be uniformly applied across all areas of the platform.

Armstrong confirmed that engineers were instructed to adopt AI development tools within a week, with those resisting the mandate dismissed. The move places Coinbase ahead of technology giants such as Microsoft and Google, which use AI for roughly 30 per cent of their code.

Security experts have raised concerns about the heavy reliance on AI. Industry figures warn that AI-generated code could contain bugs or miss critical context, posing risks for a platform holding over $420 billion in digital assets.

Larry Lyu called the strategy ‘a giant red flag’ for security-sensitive businesses.

Supporters argue that Coinbase’s approach is measured. Richard Wu of Tensor said AI could generate up to 90 per cent of high-quality code within five years if paired with thorough review and testing, similar to junior engineer errors.

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Perplexity AI teams up with PayPal for fintech expansion

PayPal has partnered with Perplexity AI to provide PayPal and Venmo users in the US and select international markets with a free 12-month Perplexity Pro subscription and early access to the AI-powered Comet browser.

The $200 subscription allows unlimited queries, file uploads and advanced search features, while Comet offers natural language browsing to simplify complex tasks.

Industry analysts see the initiative as a way for PayPal to strengthen its position in fintech by integrating AI into everyday digital payments.

By linking accounts, users gain access to AI tools and cash back incentives and subscription management features, signalling a push toward what some describe as agentic commerce, where AI assistants guide financial and shopping decisions.

The deal also benefits Perplexity AI, a rising search and browser market challenger. Exposure to millions of PayPal customers could accelerate the adoption of its technology and provide valuable data for refining models.

Analysts suggest the partnership reflects a broader trend of payment platforms evolving into service hubs that combine transactions with AI-driven experiences.

While enthusiasm is high among early users, concerns remain about data privacy and regulatory scrutiny over AI integration in finance.

Market reaction has been positive, with PayPal shares edging upward following the announcement. Observers believe such alliances will shape the next phase of digital commerce, where payments, browsing, and AI capabilities converge.

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Stablecoins, tokenisation, and AI to feature at Fed event

The Federal Reserve Board will hold a conference on payments innovation on 21 October, focusing on emerging technologies in US payment systems. Regulators, academics, and industry participants will explore ways to enhance the safety, efficiency, and accessibility of payments.

Panel discussions will cover stablecoins, tokenised assets, AI in payments, and the convergence of traditional and decentralised finance. The event highlights how digital assets are increasingly viewed alongside conventional payment methods, reflecting their growing role in financial systems.

The conference will be livestreamed on the Fed’s website, with further details forthcoming.

Experts emphasise the need for clear, unified rules to enable tokenised credit and liquidity markets to scale without fragmentation. Artificial intelligence is also moving into the core of payments, with applications in fraud detection, credit assessment, and risk management.

The Fed’s event adds to a busy Q4 policy calendar, alongside initiatives from the SEC, CFTC, BIS, and MAS. Officials stress that innovation in payments is a constant, with new technologies complementing existing systems rather than replacing them.

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India and the US lead global crypto adoption

India remains the world leader in cryptocurrency adoption, topping retail, institutional, and DeFi categories, according to Chainalysis. The country’s strong performance reflects growing grassroots engagement and widespread mobile-first financial services.

The United States climbed to second place from fourth last year, boosted by regulatory clarity and increasing institutional participation. Pakistan, Vietnam, Brazil, and Nigeria also rank highly, reflecting crypto’s growing role in remittances, stablecoins, and emerging-market finance.

Asia-Pacific emerged as the fastest-growing region over the past year, posting a 69% increase in on-chain transaction volume to $2.36 trillion. India, Vietnam, and Pakistan contributed heavily to this growth, signalling the region’s increasing influence in global crypto markets.

North America and Europe maintained the largest absolute transaction volumes, with $2.2 trillion and $2.6 trillion respectively. North America’s 49% growth was supported by spot Bitcoin ETFs and regulatory clarity, while Europe recorded a 42% increase from an already high base.

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PayPal expands crypto payments with new settlement tool

PayPal has introduced ‘Pay with Crypto,’ a settlement feature that lets US merchants accept over 100 digital currencies, including Bitcoin, Ether, Solana, and stablecoins. Shoppers pay from wallets like MetaMask or Coinbase, and merchants receive instant payouts in dollars or PYUSD.

The service is designed to eliminate volatility risks by automatically converting crypto into fiat or stablecoins. Merchants benefit from near-instant settlement, lower fees than traditional card payments, and optional yield on PYUSD balances.

Small and medium-sized enterprises are expected to gain the most from global reach, quicker cash flow, and reduced costs.

For consumers, the process mirrors card payments. Buyers simply connect a wallet at checkout and pay in crypto, while merchants receive stable-value settlements.

The system enables non-custodial wallet users to spend crypto directly, turning digital assets into usable currency without relying on exchanges.

PayPal’s long-term goal is to create a global crypto-enabled infrastructure. With partnerships such as Fiserv and its upcoming World Wallet alliance, PayPal plans to integrate stablecoins and enable seamless cross-border payments through Fiserv and its World Wallet alliance.

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Hackers exploit Ethereum smart contracts to spread malware

Cybersecurity researchers have uncovered a new method hackers use to deliver malware, which hides malicious commands inside Ethereum smart contracts. ReversingLabs identified two compromised NPM packages on the popular Node Package Manager repository.

The packages, named ‘colortoolsv2’ and ‘mimelib2,’ were uploaded in July and used blockchain queries to fetch URLs that delivered downloader malware. The contracts hid command and control addresses, letting attackers evade scans by making blockchain traffic look legitimate.

Researchers say the approach marks a shift in tactics. While the Lazarus Group previously leveraged Ethereum smart contracts, the novel element uses them as hosts for malicious URLs. Analysts warn that open-source repositories face increasingly sophisticated evasion techniques.

The malicious packages formed part of a broader deception campaign involving fake GitHub repositories posing as cryptocurrency trading bots. With fabricated commits, fake user accounts, and professional-looking documentation, attackers built convincing projects to trick developers.

Experts note that similar campaigns have also targeted Solana and Bitcoin-related libraries, signalling a broader trend in evolving threats.

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Hong Kong sees surge in stablecoin licensing interest

Bank of China’s Hong Kong-listed shares jumped 6.7% on Monday after reports that the bank’s local branch is preparing to apply for a stablecoin issuer licence. The Hong Kong Economic Journal said the branch has already formed a task force to explore potential issuance.

The move comes after Hong Kong launched its stablecoin licensing regime on 1 August, requiring approval from the Hong Kong Monetary Authority. The framework sets strict rules on reserves, redemptions, fund segregation, anti-money laundering, disclosure and operator checks.

The regime has already drawn interest from major institutions such as Standard Chartered.

Chinese firms JD.com and Ant Financial have also expressed plans to seek licences abroad, potentially in Hong Kong, to support cross-border payments.

Advocates highlight the efficiency of stablecoins, noting that blockchain technology reduces settlement times and cuts intermediary costs. The benefits are particularly pronounced in emerging markets, where stablecoins hedge against currency volatility.

Regulators, however, have urged caution. The SFC and HKMA warned investors about speculation-driven price swings from licensing rumours, highlighting risks of reacting to unverified reports.

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Ukraine’s central bank warns against adding virtual assets to national reserves

Ukraine’s National Bank (NBU) has ruled out adding cryptocurrencies to the country’s foreign currency reserves, calling the proposal premature and high-risk. First Deputy Governor Serhiy Nikolaychuk said crypto volatility could reduce reserves and threaten their security.

The central bank highlighted the lack of a global regulatory framework and unified classification for virtual assets. Including crypto, which could violate IMF rules and impede Ukraine’s EU integration.

The European Central Bank considers it unacceptable for member states to include crypto in their reserves.

A draft law filed with parliament earlier this year would have allowed the NBU to acquire cryptocurrencies if desired. However, lawmakers and central bank officials have expressed caution, citing the high volatility of digital assets and potential risks to national financial stability.

Ukraine has seen rising crypto use since Russia’s 2022 invasion. According to a recent UK think tank report, a lack of comprehensive regulation has led to significant losses from crypto-related crime.

Authorities are continuing to prioritise security and financial prudence over speculative digital holdings.

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US regulators offer clarity on spot crypto products

The US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have announced a joint effort to clarify spot cryptocurrency trading. Regulators confirmed that US and foreign exchanges can list spot crypto products- leveraged and margin ones.

The guidance follows the President’s Working Group on Digital Asset Markets recommendations, which called for rules that keep blockchain innovation within the country.

Regulators said they are ready to review filings, address custody and clearing, and ensure spot markets meet transparency and investor protection standards.

Under the new approach, major venues such as the New York Stock Exchange, Nasdaq, CME Group and Cboe Global Markets could seek to list spot crypto assets. Foreign boards of trade recognised by the CFTC may also be eligible.

The move highlights a policy shift under President Donald Trump’s administration, with Congress and the White House pressing for greater regulatory clarity.

In July, the House of Representatives passed the CLARITY Act, a bill on crypto market structure now before the Senate. The moves and the regulators’ statement mark a key step in aligning US digital assets with established financial rules.

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Bitcoin holdings in El Salvador spread across new addresses

El Salvador, the first country to adopt bitcoin as legal tender, has restructured its national bitcoin holdings to strengthen security against potential future threats. The National Bitcoin Office (ONBTC) announced that the country’s 6,280 BTC, worth around $687 million, has been split across 14 new addresses, each holding no more than 500 BTC. Officials say this change reduces exposure to risks, including those that could arise from advances in quantum computing.

The concern stems from the possibility that quantum computers, once powerful enough, could break cryptographic protections and reveal private keys. While no such machine exists today, bitcoin developers have long debated the timeline of this threat. ONBTC also highlighted that avoiding address reuse improves security and privacy while allowing the government to maintain transparency.

The broader bitcoin community remains divided on the urgency of quantum risks. Some experts argue the issue is exaggerated, while others warn that the industry may have far less time than previously thought. A developer known as Hunter Beast recently cautioned that breakthroughs in IBM’s quantum experiments suggest the worst-case scenario could arrive within three years.

The bitcoin strategy of El Salvador continues to draw criticism from international institutions. The IMF, which approved a $3.5 billion loan to the country, insists that no new bitcoin purchases have been made this year and that the government is merely reshuffling its reserves. The ONBTC disputes this claim, maintaining that fresh purchases are still taking place despite pressure to scale back its cryptocurrency policies.

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