Kiffmeister’s Fintech Daily Digest 11/16/2019

  • Federal Reserve Board Financial Stability Report on Stablecoin Ecosystems:

    “A global stablecoin network, if poorly designed and unregulated, could pose risks to financial stability. The failure of a stablecoin to operate as expected could disrupt other parts of the financial system. For example, the inability to convert stablecoins into domestic currency on demand or to settle payments on time could create credit and liquidity dislocations in the economy. If a stablecoin’s credit, liquidity, market, and operational risks are managed ineffectively, it could face a loss of confidence. This loss of confidence could lead to a run, where many holders attempt to liquidate their stablecoins at the same time. In an extreme scenario, holders may be unable to do so, with potentially severe consequences for domestic or international economic activity, asset prices, or financial stability.”

    tags: Fintech CryptoAssets Stablecoins

  • “Controllable anonymity”

    The PBOC’s imminent CBDC is going to have a feature called controllable anonymity. None of the news articles have made much of an effort to explain What that means. But we’ve actually known about this feature for quite some time. Back in 2018, the project’s head, Yao Qian, provided a short description of it. It’s not as Orwellian as it seems.

    tags: CryptoAssets Fintech Privacy CBDC

  • Baton Systems and J.P. Morgan Develop Industry Solution to Automate Derivatives Margin Payments

    JPMorgan has developed a new blockchain-based solution for derivatives designed to speed up cash and collateral transfers. The tool was developed in partnership with California-based fintech firm Baton Systems and aims to enable the real-time movement of transfers to multiple clearinghouses.

    tags: Fintech Plumbing Derivatives Blockchain

  • How important is it for a nation to have a payment system?

    A working group at Norges Bank has looked more closely at the purpose and relevant forms of a central bank digital currency. The group finds that a central bank digital currency could function as a back-up solution in the event of a disruption in banks’ payment systems. This contingency aspect may gain importance if banks’ systems become more international. Moreover, a central bank digital currency may help to maintain competition in the payments market and offer the characteristics of legal tender.

    tags: CBDC Fintech CryptoAssets

  • Wyoming’s New Crypto Banking Law Could Defang New York’s BitLicense

    There’s a way cryptocurrency businesses can get around New York’s notoriously hard-to-get BitLicense, and it runs through Wyoming. At least, so say members of the team that drafted the 13 crypto-friendly laws enacted by the Western state this year. One of those laws allows Wyoming to charter Special Purpose Depository Institutions (SPDIs), a new type of fully-reserved fiat bank that can also custody crypto assets. With an SPDI, crypto exchanges and other startups could operate in New York without going through the state’s licensing rigmarole, under the same legal principles that exempt banks from needing state money transmitter licenses, Wyoming advocates said.

    tags: Fintech CryptoAssets Regulation

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