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 the vulnerabilities of the DeFi industry that could pose risks to CBDCs built on blockchain and smart contract technologies.
The report highlighted the significance of large-scale attacks on distributed ledger technology (DLT) protocols and smart contracts in the DeFi industry, indicating potential operational and reputational risks. The document cites recent smart contract hacks leading to substantial losses in the DeFi space to illustrate potential security threats that could impact CBDC infrastructures.
The study highlights that the internet, telecommunications networks, and digital devices have caused a constantly evolving and diverse cyber threat landscape. The BIS cautions about possible attacks on various aspects of CBDCs, such as consensus protocols, cross-chain bridges, oracles, smart contracts, and offline components, that may be related to DLT.
The BIS blueprint, revealed on June 29, forms a part of Project Polaris, which is dedicated to creating robust, secure CBDC systems that function online and offline.
Project Polaris aims to provide central banks around the world with a structure for the design, implementation, planning, and operational factors of CBDCs.
To prevent potential threats, the BIS encourages central banks to enhance their existing procedures and create dedicated “security and resilience functional teams.” These teams would participate in all stages of a CBDC project to ensure that necessary measures are implemented to defend against cyber threats.
According to the report, central banks need to be cautious about the complex and constantly changing threats that come with CBDC systems. The BIS recommended that these banks adopt modern technologies to enhance security and resilience as part of a comprehensive approach to protecting digital currencies. This will help to ensure the long-term sustainability of digital currencies.