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While no decision has been made to pursue the issuance of a central bank digital currency (CBDC), this paper explores the technological approach to constructing a CBDC system for contingency planning purposes. Any design needs to be determined by policy choices about the attributes of the CBDC (e.g., privacy, resilience); the business model (considering, e.g., partners, end-user channels and the cost model); and the qualities the system supports (e.g., user experience, security). This note explores these options and describes the potential limits that the underlying technology may impose on the mix of policy objectives.
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Wide adoption of a digital currency denominated in a different unit of account, such as Libra, presents a significant threat to monetary sovereignty and financial stability. Issuing a CBDC could potentially counter this threat. Making central bank money more user-friendly would increase its attractiveness as a means of payment in general and as an alternative to Libra in particular.
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Regulatory sandboxes, modeled after what Kenyan regulators effectively did in the early stages of M-PESA, would provide an excellent opportunity for regulators to experiment with removing barriers to entry to nontraditional financial service providers and relaxed KYC-AML laws. It’s difficult to predict with any confidence what innovations will emerge in this environment and achieve the most success. But if Africa’s incredible success with mobile money is any indicator, the benefits of this enabling approach make it well worth the try.tags: Fintech PaymentSystems
Month: February 2020
Kiffmeister’s Fintech Daily Digest 02/28/2020
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For all its talk about imminently disrupting cross-border payments, Ripple Labs, the cryptocurrency-startup that likes to make-out it’s in with the mainstream banking boys, has had very little to show for its efforts in terms of real-world applications or relationships.
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“Bitfinex is pleased to announce that on Friday, February 28, 2020, it repaid $100,000,000 of the outstanding loan facility to Tether. Bitfinex made this payment in fiat wired to Tether’s bank account. This payment is all on account of principal. Interest on all amounts due under the facility agreement has been prepaid up to March 2020.”
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South Korea’s central bank is testing a platform for bond transactions based on distributed ledger technology, a local media source reports. The Bank of Korea (BoK) is investigating whether a blockchain-powered system could speed up transactions in the Korean bond markets.
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A subscription-only digital bank promising to use AI to help customers maximise their money, has launched in Belgium. Called Aion, the new venture is the latest iteration of Banca Monte Paschi Belgio, which private equity giant Warburg Pincus bought from Italy’s Banca Monte dei Paschi last year.tags: Fintech VirtualBanking
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Avanti, a new crypto-asset bank to be based in US frontier state Wyoming, will take advantage of the state’s potentially revolutionary new legal framework for the custody of clients’ crypto assets. In contrast to hundreds of years of established practice in the global markets for banking and securities custody, Wyoming’s laws emphasise that clients’ assets cannot be reused without their consent.
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A preponderance of crypto debit card options now exist that allow cryptocurrency to be exchanged for spendable fiat currency at the touch of a button. Let’s take a look at a baker’s dozen of them.
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Unchain provided KLM Royal Dutch Airlines with a strategic finance application based on blockchain technology developed by major global enterprise software firm R3. The solution intends to simplify KLM’s accounting process and settlements by implementing R3’s Corda.
Kiffmeister’s Fintech Daily Digest 02/27/2020
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The U.S. Securities and Exchange Commission disapproved the last proposal for a Bitcoin exchange-traded fund, likely destroying any remnants of hope from digital currency fans that a fund would get the green light this year.
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In her dissenting statement, Peirce stated that “the Commission once again disapproved a proposed rule change that would give American investors access to bitcoin through a product listed and traded on a national securities exchange subject to the Commission’s regulatory framework.”
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According to TechCrunch, Tagomi is set to formally announce its intention to join the association later this week. It joins ecommerce platform Shopify, which announced it would join the group last week, joining a host of other crypto platforms, tech startups, non-profits and venture funds.
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Azimo has launched its first service using Ripple’s On-Demand Liquidity solution (ODL) to send faster and cheaper cross-border payments to the Philippines, with plans to expand to more markets in 2020. The Philippines is one of the top remittance destinations globally, receiving $34 billion in 2018
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According to the data analytics provider Skew on Feb. 26, over $150 million worth of Bitcoin was liquidated on the trading exchange BitMEX, the most seen since the new year began. Millions of dollars of long and short positions caused the value of the cryptocurrency to fall to $8,580, a decrease of more than 6%.
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In the ever evolving financial world, cash is becoming used increasingly less often by customers. This is especially true in the service industry. Cards are becoming king when paying and this includes tipping. Pre-paid cards can be a great way to pay out tips to service industry workers in real time and for immediate access.
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The Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) enacted various amendments to the FSRA’s regulations and rules concerning the authorisation and supervision of virtual asset related activities within ADGM.
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Hong Kong will consider incorporating virtual asset service providers and dealers into its AML/CTF regulatory framework. It plans to consult the public on detailed proposals later this year.
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A federal judge in Oakland, California, on Wednesday somewhat narrowed the claims against Ripple but left largely intact a complaint by investors accusing the company of selling unregistered securities.
Kiffmeister’s Fintech Daily Digest 02/26/2020
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The National Bank of Ukraine presented the results of testing its e-hryvnia CBDC project, concluding so far that it raises significant concerns. It is particularly concerned about the effect on financial stability as well as the possible threat to the traditional banking system.
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Although the Bank of Canada has no plans for issuing a digital currency immediately, the Central Bank is not ruling out the possibility of launching one due to potential mass adoption of private digital currencies — and the possibility of cashless societies.
Kiffmeister’s Fintech Daily Digest 02/25/2020
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“Canadians are well-served by the existing payment ecosystem, so we believe there is no need for the Bank of Canada to issue its own digital currency at this time. But the world can change very quickly, so we need to get ready in case one is needed… The Bank of Canada can imagine scenarios in which we would consider issuing a CBDC so we can continue to provide Canadians with trustworthy methods of payment.”
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The coronavirus outbreak is reportedly delaying progress on China’s central bank digital currency (CBDC) project. However, officials say Beijing is keen to see the pilot test happen before the end of the year.
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Despite considerable testing and research, the prospect of a central bank digital currency (CBDC) still raises significant concerns for central bankers in Ukraine. However, the central bank apparently is still concerned about such a currency’s effect on financial stability as well as the possible threat to the traditional banking system.
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Fidelity spun off its data-aggregation business, Akoya, into its own company, giving financial institutions another tool to securely share customer data with third-party financial apps. Akoya collects data from banks on its network and provides a single entry point for third-party apps and data aggregators, such as Plaid and Yodlee. Akoya will be owned and operated by Fidelity, 11 major banks and The Clearing House. Some industry groups view the spin-off as a threat to competition because the new arrangement gives banks too much control of consumer data.
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Caitlin Long, a former Wall Street executive and blockchain legislation advocate, is taking steps to set up the first crypto-focused bank in the United States. Announced by Long on Twitter, the bank will be named Avanti, meaning “forward” in Italian. She is now preparing to apply for a special purpose depository institution (SPDI) charter with Wyoming’s division of banking.tags: Fintech CryptoAssets
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This note outlines EIOPA’s strategic priorities regarding the European cyber insurance market, as part of EIOPA’s broader mission to promote sound technological progress for the benefit of the European Union economy and its citizens, while safeguarding financial stability, market integrity and investors’ protection. The note puts EIOPA’s cyber underwriting strategy into context, discusses the work undertaken so far by EIOPA and outlines the proposed way forward.
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Supervisory technology (SupTech) is the use of technology by supervisors to deliver innovative and efficient supervisory solutions that will support a more effective, flexible and responsive supervisory system. This note aims to define such a strategy and covers both prudential and conduct of business supervision, policy and interaction with entities, for insurance and occupational pensions sectors.
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Utility Settlement Coin (USC), the blockchain-based payments system involving commercial and central banks, will be working with ConsenSys-backed startup Adhara, CoinDesk has learned. Adhara was behind Project Khokha, which used enterprise blockchain client Quorum to see how zero-knowledge proofs performed with the South African Reserve Bank (SARB).
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Following a summit in the Saudi-Arabian capital Riyadh over the weekend, representatives from G-20 financial institutions pressed countries that have not done so already to align themselves with global cryptocurrency standards from the intergovernmental organization, the Financial Action Task Force (FATF).
Kiffmeister’s Fintech Daily Digest 02/24/2020
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Following a summit in the Saudi-Arabian capital Riyadh over the weekend, representatives from G-20 financial institutions pressed countries that have not done so already to align themselves with global cryptocurrency standards from the intergovernmental organization, the Financial Action Task Force (FATF)..
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The individuals moving, shaking, and shaping cryptocurrencies and blockchain technology right now. But where is the Kiffmeister!?
Kiffmeister’s Fintech Daily Digest 02/23/2020
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JP Morgan published its annual update on the latest developments in the adoption, evolution and performance of blockchain technology and cryptocurrencies. It expands on last year’s report to include analysis of stablecoins and the rise of alternative noncash payments.
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A recent report by JP Morgan Chase suggested that current blockchain developments are lying down the foundation for digital money, but adoption is still years away.
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Because of their relatively low fees and low minimum account balances, robo-advisors can provide financial advice to people who cannot afford it from traditional financial advisors and for whom many financial advisors would not be willing to provide their services.tags: RoboAdvising Fintech
Kiffmeister’s Fintech Daily Digest 02/22/2020
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March 24 at 2:00 PM – The U.S. House Committee on Financial Services Subcommittee on National Security, International Development, and Monetary Policy will convene for a hearing entitled, “A Review of Domestic and International Approaches to Digital Currencies.”
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Lending and borrowing cryptocurrencies is becoming an increasingly important sub-sector of crypto finance, one that may end up shaping how the underlying assets themselves are valued and priced in the markets.
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“A Libra coin uses our Move language, which is agnostic like most mainstream languages. But beyond representing the Libra currency, we also represent things like what signature must be present on a transaction to authenticate it. When building Move, we focused on creating a safe, flexible language that allows us to express concepts that are easily tweakable and easy to analyze for financial use cases.”
Kiffmeister’s Fintech Daily Digest 02/21/2020
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The Riksbank CBDC pilot project will focus on developing a test environment where simulated agents can safely use a CBDC. The project will test holding e-krona in a digital wallet, completing payments, and making deposits and withdrawals via a mobile app. Users should also be able to complete payments via both wearable devices such as smart watches, and more traditional means of payments including cards.
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Shopify has joined the Libra Association roughly a month after Vodafone pulled out to focus on its own digital payments system. This is the first new member of the Association since its formation four months ago.
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Cambodian tourists visiting Thailand will now be able to use the mobile payment app to scan QR codes in Thailand, whereas Thai tourists should expect to be able to scan QR codes in Cambodia by the third quarter of 2020.
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A two-phase offering of this kind, whether styled as a SAFT (Simple Agreement for Future Tokens) or otherwise, does not inoculate an ICO or the issuer from the application of the federal securities laws. The SEC examines the facts and circumstances of a token offering at all relevant times, looking to the economic reality of the transaction or transactions, whatever they may be called.
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The paper “Lightning Network: a second path towards centralisation of the Bitcoin economy” (by researchers Jian-Hong Lin, Kevin Primicerio, Tiziano Squartini, Christian Decker and Claudio J. Tessone) concludes that lightning has an “unequal wealth distribution” with a smaller percentage of nodes on the network gradually accumulating a larger proportion of bitcoin (BTC).
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New payment technologies, like China’s digital wallet revolution, are unlikely to catch on in America. Innovations that reduce the inefficiency and expense of our payment system will simply fail to generate enough perks to motivate consumers to ditch their rewarding plastic. The result will be a nation where income inequality is exacerbated every time you buy.tags: Fintech PaymentSystems
Kiffmeister’s Fintech Daily Digest 02/20/2020
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The Riksbank is conducting a pilot project with Accenture aimed at developing a proposal for a technical solution for a digital krona (“e-krona”). The technical solution will be based on Distributed Ledger Technology.
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The judge assured Telegram’s lawyer Alexander Drylewski that he is mindful of the looming April 30 deadline. A clause in the Gram purchase agreements specifies that ICO participants can claim a refund on their investment should Telegram fail to launch the TON before that date. However the date was originally set for October 2019.
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Castel reserved judgment on the preliminary injunction and assured Telegram’s lawyer Drylewski there would be a judgment in the case before April 30, when gram investors expect to see the TON blockchain launched. Telegram consented to prolonging the preliminary injunction after Castel explained that not consenting would mean the court would make a decision immediately.
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Banco Central do Brasil will roll out PIX, an instant, 24/7 payments system enabled via QR codes, in November 2020. It will allow users to send and receive payments instantly via cell phone. The PIX’s centralized and sole settlement infrastructure is the Instant Payment System (SPI)—to be operated and managed by BCB.
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The Paxos Settlement Service has gone live, allowing for the simultaneous exchange of cash and a select number of U.S.-listed securities on Paxos’ own private version of ethereum.
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Fake? “Bet on the coronavirus pandemic by investing on CoronaCoin, the more the virus spreads the more valuable the token becomes. CoronaCoin (NCOV) is a ERC20-compliant token. The total supply is based on the world population (7,604,953,650 NCOV) and the token will be burnt once every 48 hours depending on the number of infected people and fatalities, so the token is deflationary and also non-mintable.tags: Fintech CryptoAssets
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“The high level of market concentration typically observed in BigTech may get carried into financial services, with potentially adverse impacts on consumer prices and financial stability,” the European Securities and Markets Authority, or ESMA, said of Big Tech companies entering finance, as part of its 2020 Trends, Risks and Vulnerabilities report.
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The EU cannot work out exactly what Libra is according to a memo by European Commission executive vice-president, Valdis Dombrovskis. Dombrovskis refers to the “need to ensure clarity” about what Libra is, but that the information provided by Facebook is not sufficient. Libra is descibed as a “moving target” that does not easily within existing EU law.
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“According to data from Skew.com, a leading cryptocurrency data provider for derivatives, over $120 million worth of BitMEX long positions were liquidated in this massive flash crash lower.”
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“We analysed over 5 million (5,190,257) Fintech related posts from 1st Feb 2019 to 31st January 2020. We then identified the top 100 most influential individuals leading the discussion on social media. Below you can see a network map of the online conversation around Fintech, the top influencer Spiros Margaris is at the centre. This map was created using the Onalytica platform. The ranking analyses a variety of personas from industry experts, to social amplifiers and content creators as well as journalists and politicians so there’s quite a mix of influencers that have been identified.”tags: Fintech
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Evading sanctions, internal monitoring and dealing with cash shortages…
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In the enterprise platforms space where the development and the results outcomes usually happen slowly and over a few years, the blockchain ecosystem is moving at a blazing speed. Alongside the other popular segments of the crypto and blockchain space like exchanges, wallets and custodian services, the enterprise blockchain platforms are seeing a lot of investments which will help deliver products and go-to-market rollouts faster. Overall, it’s net positive for the blockchain space as the technology matures and proves itself indispensable in solving real business problems.tags: Blockchain Fintech