Kiffmeister’s FinTech Daily Digest (06/29/2020)

A Survey of Research on Retail Central Bank Digital Currency
This paper examines key considerations around central bank digital currency (CBDC) for use by the general public, based on a comprehensive review of recent research, central bank experiments, and ongoing discussions among stakeholders. It looks at the reasons why central banks are exploring retail CBDC issuance, policy and design considerations; legal, governance and regulatory perspectives; plus cybersecurity and other risk considerations. This paper makes a contribution to the CBDC literature by suggesting a structured framework to organize discussions on whether or not to issue CBDC, with an operational focus and a project management perspective.

Celo Dollar (cUSD) Stablecoin Launches
Celo Dollars (cUSD) stablecoins are now live on the platform’s mainnet, barely two months since the mainnet went live. The project has been making aggressive moves in both development and community growth. With cUSD now accessible, the foundation is optimistic that its vision of an all-inclusive financial ecosystem will be realized. Currently, the 75+ member Alliance’s focus is on remittances and international aid.

FCA says Wirecard making ‘good progress’ as fintechs work overtime on migration plans
Following the U.K. Financial Conduct Authority (FCA) suspension of business at Wirecard Card Solutions (WCS) in the wake of its German parent’s insolvency filing, the FCA reports good progress in meeting conditions for a return to operational activity. Although the freeze was designed to protect consumers and its suddenness presumably to prevent tipping off any fraudsters still employed by Wirecard, customers at all the agent businesses that use WCS to process payments found that payments were blocked and they were unable to access their money. Among U.K. fintech who were likely affected by the freeze were Revolut, Pockit, Soldo, ANNA, Tymit and Curve, although to differing degrees as many including Curve and Revolut had begun migrating away from Wirecard’s services. In fact, Curve was already back to normal operations within a business day, although it advised customers to carry another card with them for the next few days. Forbes is keeping a running list of banking services currently known to be suspended here.

Germany missed chances to put Wirecard on watchlist, source says
German regulators twice looked into tightening the supervision of collapsed payments firm Wirecard and discussed it with the German and European central banks but no action was taken. In 2017, officials from BaFin and the Bundesbank, considered placing Wirecard on a list of financial companies to supervise but decided against it. In the second half of 2019, there were discussions for months, which involved the European Central Bank (ECB), about putting Wirecard on a watchlist to give authorities more power to investigate it. But the talks dragged into 2020 and were still inconclusive when they were “overtaken by events”!

Wirecard… the biggest accounting fraud? Is the customer’s money safe? The end of Banking-as-a-Service?
The Wirecard debacle begs fundamental questions about regulation, audit and more. How can BaFin say the bank is fine and not check the balance sheet of the holding company? How would EY sign off accounts for years, without any checks and balances? And how come no one listened to the FT and, instead, took them to court? Another big issue is that the ecosystem model of Banking-as-a-Service could implode because of Wirecard. When you have a company within a company within a company dealing with financial service, and no one can point at which company actually has the money: that’s a problem.

Square Is Withholding Up To 30% Of Payments Made To Some Merchants
Payments firm Square recently began holding back between 20% and 30% of the money it collects from some customers — claiming that it does so to protect against risky transactions — in a move that has sparked an outcry from small businesses in financial distress during the pandemic. The firm described the withholdings as part of its “rolling reserve”  policy, adding that it had started the practice late last year and expanded it after the pandemic began to “protect buyers.” The company claimed that it applied the reserves policy on more “risky” sellers who sell goods or services more prone to disputes or who take prepayment for a service to be delivered at a future date.

Bitcoin Is Not Dead: Get Yours At Your Local Post Office
On June 24th, Australia Post announced that bitcoin will be available for purchase at all postal service outlets. In partnership with, customers will be able to purchase Bitcoin and other cryptocurrencies at 3,500 locations using the Post Billpay feature. Both cash and credit card payments will be accepted.

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