Kiffmeister’s FinTech Daily Digest (06/08/2020)

Digital Currencies and Stable Coins as Crisis Management Tools
The Centre for Economic Policy Research is hosting a Digital Currencies and Stable Coins as Crisis Management Tools webinar on June 11 at 02:00 PM London time. (“Payment systems and money are evolving rapidly. Developments in information technology, digital networks and the increase in internet-based retailing have created the demand and technological space for digital transactions that have the potential to radically change payment and financial intermediation systems. Will Covid-19 accelerate these changes? How radical or similar could this new landscape be? What kinds of design choices and/or regulatory response might make the difference? How might Central Banks support and adapt?”)

Development of the Bank of Lithuania’s digital collector coin has entered its final phase
The world’s first blockchain-based digital collector coin (LBCOIN) created by the Bank of Lithuania should be issued by July 2020. 24,000 digital tokens and 4,000 physical silver collector coins will be issued. The tokens will be divided into 6 categories with 4,000 tokens allotted to each of them. When purchasing the digital coin, buyers will get 6 randomly selected digital tokens and only upon collecting a token from each of the 6 categories they will be able to redeem for a physical silver coin. Collectors will be able to store their tokens in a dedicated wallet at the LBCOIN e-shop, and they will be exchangeable between collectors. They will be transferrable to a public NEM wallet, and later be used to redeem a physical silver coin.

Digital Currency and Economic Crises: Helping States Respond
This paper proposes a way to equip governments and central banks with a mechanism to help ensure the continuity and sustainability of their economies, along with both speed and transparency of payments with their National Digital Value Container (NDVC). The report lays out a gatekeeper type structure where the central bank or government manages the issuance of a new national digital currency through a new category of supervised businesses named Money Service Businesses (MSBs). With Digital Value Containers (DVC), digital claims upon value are guaranteed by a central bank, in the form of CBDC, or under the Government, in the form of Fiscal Digital Currency (FDC). A DVC would allow any asset to be issued, irrespective of whether it is launched by the central bank or the government. DVCs can theoretically be used for any fungible asset and represent a complementary national payments infrastructure.

MAS Launches S$1.75 Million FinTech Innovation Challenge for a Covid-Resilient and Greener Financial Sector
The Monetary Authority of Singapore (MAS) launched a S$1.75 million MAS Global FinTech Innovation Challenge to seek innovative solutions that can help financial institutions respond to COVID-19 and climate change challenges. Proposed solutions will be curated, contextualised, and validated on the API Exchange (APIX), a cloud-based innovation platform. 

SAMA Deploys Blockchain Technology for Money Transfer with Local Banks
The Saudi Arabian Monetary Authority (SAMA) recently used blockchain technology to deposit part of the liquidity that SAMA had previously announced, to be injected into the banking sector, as part of SAMA’s actions aimed at enhancing the sector’s capabilities to continue its role in providing credit facilities. 

RBI announces creation of Payments Infrastructure Development Fund
The Reserve Bank of India (RBI) has created a Payments Infrastructure Development Fund (PIDF) to encourage more merchants to deploy Points of Sale infrastructure. The RBI will make an initial contribution of ₹250 crores to the PIDF covering half the fund and remaining contribution will be from card issuing banks and card networks operating in the country. The PIDF will also receive recurring contributions to cover operational expenses from card issuing banks and card networks. The Reserve Bank will also contribute to yearly shortfalls, if necessary.

Why The Actual Cost Of Mining Bitcoin Can Leave It Vulnerable To A Deep Correction
In early 2020, researchers predicted the cost to mine Bitcoin will be at around $12,000 to $15,000 after the block reward halving in May. But, it is now much cheaper to mine BTC than the initial estimates. The low breakeven price to mine Bitcoin may leave it vulnerable to a correction. Bitcoin has become more affordable to mine in recent weeks due to two main factors: difficulty adjustments and cheaper electricity in Sichuan, China due to the rainy season. A low breakeven price of Bitcoin can raise the probability of a price pullback because miners have more incentive to sell BTC, which may increase selling pressure in the short-term.

Coinbase Exchange Inaccessible Due to 5x Traffic Spike During Bitcoin Surge
Coinbase said its autoscaling was unable to keep up with a huge traffic spike that left many users unable to log in on June 1, when the exchange experienced a 5x traffic spike over four minutes around 16:05 PDT while Bitcoin was approaching $10,000. Coinbase said it redeployed the API at 16:20 to increase the number of machines dealing with this spike in traffic. Another two-minute outage followed “due to instances saturating and being marked unhealthy” before the exchange was back online. The exchange said it was working on improvements in response to the June 1 outage.

Chinese Bank Issues Commercial Paper Worth $16.9 Billion on Blockchain
China Zhe­shang Bank, a national commercial bank, used blockchain technology to issue worth about $17 billion of asset-backed commercial paper. It was issued as a part of the Na­tional As­so­ci­a­tion of Fi­nan­cial Mar­ket In­sti­tu­tional In­vestors’s (NAFMII) pilot project for ABCPs.

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