Kiffmeister’s FinTech Daily Digest (06/21/2020) Special Riksbank CBDC Edition

In today’s Digest I break out the chapters in the special edition of the Sveriges Riksbank Economic Review dedicated to central bank digital currency.

The rationale for issuing e-krona in the digital era
This chapter describes the rationale for providing e-krona to the public through a partnership between the Riksbank and supervised payments service providers. This arrangement can foster competition and innovation while ensuring the fundamental security and efficiency of the monetary system. These considerations are increasingly relevant as the use of paper cash falls because commercial institutions may not have sufficient profit incentives to provide an alternative means of payment that is universally accessible. Moreover, in a digitalized economy, Big Tech firms and other multinational enterprises are increasingly likely to issue their own private currencies to facilitate their collection of valuable information about consumer behavior. Therefore, launching an e-krona would help ensure that all Swedish individuals have access to an efficient, convenient, and secure means of payment.

Competitive aspects of an e-krona
This chapter analyzes the competitive impact of introducing CBDC in Sweden, where cash use is falling rapidly. It assumes that strong network externalities characterize payment markets and that, consequently, these markets are at risk of developing into monopolies or tight oligopolies if left unregulated. It provides an overview of policy alternatives that have been used in markets that share some of these market characteristics and discusses existing procompetitive regulation. It then tries to predict the consequences for payment market competition, suggesting that there are at least five possible efficiency reasons for introducing an e-krona.

The Riksbank’s seigniorage and the e-krona
Seigniorage has historically been an important source of profits for the Riksbank. In recent years, the use of cash in Sweden has declined rapidly, and a future possibly cashless society could have important consequences for the Riksbank’s financial independence. This chapter contains a discussion and some numerical examples of how the introduction of an e-krona could affect the Riksbank’s ability to generate profits. Several factors affect the results: whether the e-krona would be regarded as a substitute for cash or bank deposits, how high the demand for the e-krona would be, and the level of the interest rate. As a final part of this article, we address the question of how high the demand for an e-krona would have to be to cover the Riksbank’s current expenses.

Is central bank currency fundamental to the monetary system?
This chapter discusses whether the ability of individuals to convert commercial bank money (i.e., bank deposits) into central bank money is fundamentally important for the monetary system. This is a significant question since the use of cash – the only form of central bank money that the public currently has access to – is declining rapidly in many countries. The question is highly relevant to the discussion around whether central banks need to issue a retail CBDC. It concludes that depositors’ need for control could be a reason why cash or a CBDC is essential, even in countries with strong measures safeguarding commercial bank money.

E-krona design models: pros, cons and trade-offs
This chapter sketches out four different design models for supplying a retail e-krona, discussing  advantages and disadvantages of each using the policy goals identified by the Riksbank for the payment market as our point of departure. The four models are (i) centralized provision without intermediaries, (ii) centralized with intermediaries, (iii) decentralized with intermediaries (iv) a synthetic e-krona. Possible trade-offs involve weighing the advantages of more minimalistic (e.g., synthetic) approaches against performance as regards enhanced competition and resilience, and the amount of decentralization versus control over data and privacy.

Central bank digital currencies, supply of bank loans and liquidity provision by central banks
This chapter suggests that central banks can offset potential adverse effects of CBDC on the supply of bank loans by accepting the loans as collateral. Central banks can also conduct an outright purchase of illiquid assets to stimulate banks’ supply of illiquid loans. As central banks buy illiquid assets from investors, new central bank reserves will be created for banks. Investors who sell their illiquid assets are then likely to rebalance their portfolios, increasing the demand for illiquid assets and reducing the cost of illiquid term funding for banks. 

Kiffmeister’s FinTech Daily Digest (06/19/2020)

Privacy in CBDC technology
This Bank of Canada note outlines what is technologically feasible for privacy in a central bank digital currency (CBDC) system. Privacy in a CBDC goes beyond binary choices of anonymity or full disclosure. System designers have a range of choices around the type of information to keep private and who to keep it private from. Because privacy is not in the sole purview of the Bank, defining it requires consultation with external parties. Our approach in this note is to: develop a framework to evaluate different privacy models, understand the technical tools to enact various privacy models, suggest a design approach for CBDC privacy, and list the key risks and trade-offs.

Should the U.S. Government Create a Token-Based Digital Dollar?
Larry White is not a big fan of CBDC! “[Although the Digital Dollar Project’s] FedCoin retail payment system is likely to be less inefficient than a FedAccount system, it still requires the Fed to step outside its expertise, and into the realm of private enterprise, to launch and maintain a retail digital wallet system. However, the Project’s [underspecified] “champion model” provides a useful framework for further discussion of the standards necessary to ensure that a CBDC system does not make the money-using public worse off. So long as its use is entirely voluntary, there is not much to object to other than the likely waste of taxpayer money to subsidize the costs of creating and operating it.”

Central Bank Digital Currencies and Asymmetric Disintermediation
Some CBDC designs could fundamentally alter the commercial banking system we know today. This Institute of International Finance paper highlights the need for effective ways to limit the potential for crowding out bank deposits, both structurally and in crisis situations. This may mean considering the particular roles that commercial banks might play in a CBDC ecosystem, and whether there is merit in a combination of bank-provided wallets and deposit insurance. There is still much to do in exploring and examining optimal designs and potential solutions for CBDCs, to ensure such innovations can help reinforce (and not undermine) system stability and economic growth.

Deribit prepares for historic $1 billion options expiry next week
Next week will be historic for the crypto-asset derivatives market with a record $1 billion worth of bitcoin and ethereum options expiring on Deribit. Bitcoin options expiring in June make up the biggest portion of Deribit’s open interest with 69% of such contracts set to expire during the course of the month, according to data pulled from Skew on Tuesday. On June 26, more than 70,000 contracts will expire. More than 290,000 ethereum options are set to expire on the same day.

Rwanda Reinstates Charges On Cashless Transactions
The National Bank of Rwanda has reinstated charges on all cashless transactions after the three months period with zero charges introduced in March this year, as part of the measures to encourage digital transactions due to the New Coronavirus outbreak, elapsed.

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Kiffmeister’s FinTech Daily Digest (06/18/2020)

Bank of Thailand to Develop CBDC Prototype
The Bank of Thailand (BOT) will develop a prototype of a CBDC-based payment system for businesses, which will build upon knowledge from Project Inthanon. The feasibility study will integrate CBDC with the procurement and financial management systems of the Siam Cement Public Company and its suppliers to increase fund transfer flexibility, and deliver faster and more agile payments between suppliers. It will begin in July 2020 and run to the end of the year. Also, the BOT, the Hong Kong Monetary Authority and the participating financial institutions will continue to their Project Inthanon CBDC collaboration and experimentation for cross-border transfer use cases.

Bitcoin Is Not a New Type of Money
According to this NY Fed blog, Bitcoin is not a new class of money, it is a new type of exchange mechanism, and this type of exchange mechanism can support a variety of forms of money as well as other types of assets. Why should we care? History provides lessons about what makes a good money as well as what makes a good transfer mechanism. These lessons could help cryptocurrencies evolve in a way that makes them more useful. But to know which lessons are relevant, it is important to be clear about what is new about Bitcoin.

Leading digital asset platforms make their move into prime brokerage
Genesis, Coinbase and BitGo, three of the largest digital asset platforms, have moved into the crypto prime brokerage space, as the importance of the function to attract institutional investors becomes abundantly clear. The combination of lending, custody, trading services and settlement agency services – among others – is crucial for institutional investors who do not want to deal with the current complexities of the digital asset market in its current form.

PieDAO releases USD++ for better stablecoin holdings
PieDAO, the decentralized organization building diversified token pools on the Balancer protocol, announced the mainnet release of its USD++ pool on Tuesday. The pool combines several of the top USD-pegged stablecoins into one tradable token. It’s another example of a creative use case of the rapidly growing Balancer protocol—and of the expanding universe of ideas DAOs are working to address. The USD++ pool will contain Maker DAI, Synthetix sUSD, Tether TUSD, and Coinbase USDC.

14 Singapore digital bank applicants eligible for next stage of assessment
The Monetary Authority of Singapore announced that 14 of the 21 digital bank applications have met the eligibility criteria required for the application to be considered. These eligible applicants, comprising five digital full bank applicants and nine digital wholesale bank applicants, will progress to the next stage of assessment, in which applicants will be short listed based on proposals they will present via virtual meetings.

The Bitcoin Market Is Totally Dominated By A Tiny Number Of Pro Traders
Analysis by Chainalysis reveals that professional traders are firmly in control of bitcoin market liquidity, accounting for 85% of all the U.S. dollar value of bitcoin sent to exchanges. This dominance of the bitcoin market means professional traders are the most significant contributors to large market movements, such as those seen during bitcoin’s dramatic price decline in March. The analysis also found that roughly 80% of bitcoin ever mined is held by entities that hardly ever trade it.

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Kiffmeister’s FinTech Daily Digest (06/17/2020)

Venezuela Is a Testing Ground for Digital Dollarization (and Zelle Doesn’t Like It)
Venezuelans are digitally dollarizing using  Zelle, a U.S.-based payments network that allows anyone with a U.S. bank account to instantly transfer funds to another U.S. bank account for free. Although Zelle is meant for U.S. usage only, Venezuelans have repurposed the network as a way to make dollar payments among each other. Large Venezuelan supermarket chains have enabled Zelle as a form of payment, and cafes, restaurants and taxis accept it. But business and commercial use infringes on Zelle’s terms of service, which specifies that its network is intended only for personal use. Wells Fargo has notified many Venezeulan account holders their connection to Zelle will be terminated, so the game may soon be over.

Central Bank Digital Currencies and the New World of Money and Payment Systems
This paper considers the policy issues and choices associated with cryptocurrencies, stablecoins and sovereign (central bank) digital currencies. It argues that, in the COVID-19 crisis, most central banks should focus not on rolling out novel new forms of blockchain-based money but rather on transforming their payment systems: this is where the real benefits will lie both in the crisis and beyond. Looking forward, neither the extreme private nor public model is likely to prevail. Rather, we expect the reshaping of domestic money and payment systems to involve public central banks cooperating with (new and old) private entities which together will provide the potential to build better monetary and payment systems at the domestic and international level.

Deloitte’s 2020 Global Blockchain Survey
Deloitte’s 2020 Global Blockchain Survey revealed increased sentiment, investments, and more strategic talent sourcing and requirements for blockchain initiatives. 39% of global respondents have already incorporated blockchain into production (versus 23% in 2019) and 55%
view blockchain as a top strategic priority (versus 53%). 82% are hiring staff with blockchain expertise or plan to do so within the next 12 months (versus 73%). The results are based on a poll 1,488 senior executives and practitioners in 14 countries and territories.

Cryptocurrencies and US securities laws: beyond bitcoin and ether
According to ex-CFTC Commissioner Christopher Giancarlo, under a fair application of the Howey test and the U.S. SEC’s expanding analysis, XRP should not be regulated as a security, but instead considered a currency or a medium of exchange. The increased adoption of XRP as a medium of exchange and a form of payment in recent years, both by consumers and in the business-to-business setting, further underscores the utility of XRP as a bona fide fiat substitute.

Amazon joins Mastercard tokenization initiative
Amazon customers in 12 countries will have their stored MasterCard card credentials tokenized. By replacing a consumer’s physical card number with a token, payment information is unique to each individual transaction and can be used only by the merchant that requested it.  The Mastercard Digital Enablement Service (MDES) tokenization technology keeps cards seamlessly up to date, because network tokens do not expire. When consumers receive a new physical card from their bank, their credentials are automatically updated.

Silvergate, Visa-Baked Anchorage Partner on Crypto Leverage Trading
Silvergate Bank, a crypto-friendly lender that counts major crypto exchanges like Coinbase and Kraken as clients, is expanding its SEN Leverage service. The product, which was first launched in 2017, allows the bank’s customers to obtain US dollar loans collateralized by their bitcoin holdings at some crypto exchanges that Silvergate is currently serving. To do so, Silvergate partnering with the digital asset custodian Anchorage, which recently raised $40 million in a Visa co-led series B fundraising.

The Mauritius FSC issues Guidance Notes with respect to Security Token Trading Systems
The Mauritius Financial Services Commission (FSC) issued guidance notes providing for the implementation of a common set of standards for the licensing of security token trading systems. They highlight financial integrity and data protection laws and codes, and the implementation of good market practice for an efficient, transparent and integrated financial market. The FSC is is expecting to receive several applications for these specific licenses in the upcoming months.

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Kiffmeister’s FinTech Daily Digest (06/16/2020)

Bank of Canada is Looking for a CBDC Project Manager
The Bank of Canada has posted an opening for a CBDC Project Manager, saying that is “embarking on a program to design a contingent system for a CBDC… It will take into consideration a wide variety of factors, including policy considerations, diverse stakeholder needs, difficult technical challenges and the development of a technical architecture to realize a CBDC pilot system. 

Thailand’s government to issue savings bonds to the public via blockchain
Thailand’s public debt management office (PDMO) is reportedly set to issue savings bonds to the general public via blockchain. PDMO will use state-owned Krung Thai Bank’s (KTB) blockchain platform and e-wallet to distribute bonds. It will enable people and investors to buy the bonds without coming down to the banks’ branch offices or using ATM machines. All they will need are a KTB account and credit in their e-wallet.

Researcher Refutes ‘Blackmail’ Theory Behind Mysterious Ether Transactions
Last week, the crypto community spotted transaction fees of up to $2.6 million featured in several transactions on the Ether (ETH) network. Vitalik Buterin has since suggested that the abnormous fees “may actually be blackmail,” but some researchers have now challenged that claim. Alex Manuskin, blockchain researcher at Tel Aviv-based cryptocurrency wallet company ZenGo, said the blackmail theory “takes some very peculiar circumstances for it to be possible”.

Stellar to vote on protocol upgrade
The Stellar project released the 13th version of its core protocol on June 13th. Network validators will vote on whether to upgrade the network on June 18th. Like XRP, Stellar does not use Proof-of-work or Proof-of-Stake but uses its own unique approach to solve the Byzantine generals problem called the Federated Byzantine Agreement. The protocol changes focus on three key Core Advancement Protocols, Fee bumps, Fine-grained control of asset authorization, and First-class multiplexed accounts.

Atari’s gaming token will be used for sports and esports betting
Atari has partnered with Unikrn, an online betting platform that lets users wager on professional sports and esports matches, as well as on their own performance in select head-to-head online video games. Atari Token holders will be able to use the cryptocurrency on the Unikrn platform, which also sells things like loot boxes and game keys. The Atari Token is a crypto-asset built using the Ethereum protocol (ERC20).

Digital Transformation: Only 40% of U.S. Consumers Expect to Visit Physical Bank Branches After COVID-19
The number of new U.S. mobile banking registrations month increased 200% in April 2020, and mobile banking traffic increased by 85%, according to data from Fidelity National Information Services. Only around 40% of people noted that they plan or expect to return to physical bank branches after the pandemic has passed according to a recent survey conducted by Novantas . This suggests that the ongoing and increasing shift towards digital or online banking platforms could be permanent for many consumers.

SafeCharge and Visa introduce new digital payment options for small U.K. businesses
U.K.-based SafeCharge launched a new solution offering small businesses alternative ways to accept digital payments in response to the COVID-19 crisis. SafeCharge Local, supported by Visa, enables consumers to make payments online and over the phone whilst also providing a better consumer experience in store by reducing queues and limiting the need for close customer contact at the point of sale. At the heart of SafeCharge Local is a digital payment solution called Paylink, which enables businesses to receive payments through the use of QR codes and secure payment links without the need for a physical point of sale terminal or an online shop.

Bank of England on payments after the Covid crisis – emerging issues and challenges
Changes in the way we pay and the challenges we’ve seen over the past several months pose two important and interrelated questions for central banks and regulators. First, how do we ensure that we have legislative and supervisory frameworks in place to support development of safe private sector innovation that could respond to these challenges? Here, it is clear that we need to ensure that new ways to pay and new forms of electronic money are offer equivalent protections to existing ones. And second, what is the right role for central banks in provision of the money we use to transact? I’m looking forward to the discussion.

Mobile money-enabled remittances: Building resilience in times of crisis
Mobile money remains the cheapest method of sending international remittances; the average cost of sending $200 using mobile money is well below the UN’s SDG 10.c target. With over a billion registered mobile money accounts globally and close to $2 billion in daily transactions, the mobile money industry will continue to play its vital role in increasing digitisation and building resilience of those for whom remittances are a crucial financial lifeline during a crisis and enabling migrants and their families to attain their own Sustainable Development Goals (SDGs).

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Kiffmeister’s FinTech Daily Digest (06/15/2020)

South Korea to Review Legal Issues Surrounding Potential CBDC Launch
The Bank of Korea (BOK) has formed a legal advisory group to evaluate issues surrounding a potential central bank-issued digital currency launch. The group includes six experts; three professors, two lawyers and one BOK official. The panel will reportedly operate until May 2021, although the BOK’s CBDC plans are not set in stone.

Sanches (202006) Central Bank Digital Currency: Is It a Good Idea?
The Philadelphia Fed’s Daniel Sanches discusses how the merits of central bank digital currency have led economists to rethink the central bank’s role in the provision of liquidity and intermediation services. Based on a review of the CBDC literature, he finds that there are many aspects of the CBDC impact on the monetary system that require additional research, such as the impact on the framework for the implementation of interest-rate policy for business-cycle adjustments.

Facebook’s WhatsApp brings digital payment to users in Brazil
Facebook’s WhatsApp messaging service rolled out a system across Brazil on that will allow users to send money to individuals or local businesses within a chat. WhatsApp is working with Cielo, Brazil’s largest credit and debit card operator, to process the payments. The company has over 120 million individual users in Brazil, its second-largest market behind India, where WhatsApp has been testing a similar system since 2018.

Visa Partners to Launch Payments on WhatsApp in Brazil
Facebook is also working with Visa to power the new payments feature on WhatsApp in Brazil. Payments on WhatsApp are made possible by Visa Direct, Visa’s real-time push payments technology, and newly launched Visa Cloud Tokenization, that protects and removes sensitive payment information by converting the data to tokens and storing them securely.

CCAF, World Bank and the World Economic Forum investigate Covid-19’s impact on global fintech
The University of Cambridge Centre for Alternative Finance is partnering with the World Bank Group and the World Economic Forum to launch a Global Covid-19 FinTech Market Rapid Assessment Survey. The empirical data collected will be used to understand Covid-19’s impact on the FinTech markets, how the global FinTech industry has responded and some of the immediate regulatory and policy implications.

Why a small town in Washington is printing its own currency during the pandemic
In a bid to lessen the blow of COVID-19, the town of Tenino has started issuing its own wooden dollars that can only be spent at local businesses. Tenino is setting aside $10,000 to give out to low-income residents hurt by the pandemic. But instead of using federal dollars, they are printing the money on thin sheets of wood designed exclusively for use in Tenino, using a 130-year-old newspaper printer from a local museum.

Bitcoin Transaction Fees Fall 91%, Back to Pre-Halving Levels
The average fee for a transaction on the Bitcoin network has fallen roughly 91% from $6.56 on May 20th to just $0.56 on June 14th, reaching back below $1. Bitcoin transaction fees typically increase when the network is experiencing periods of heavy usage; because the Bitcoin network can only process between 3.3 and 7 transactions per second, a backlog of transactions can easily form during periods of high trading volume.

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Kiffmeister’s FinTech Daily Digest (06/14/2020)

The Reserve Stablecoin Project
The Reserve project is going through the initial testing stage for its Reserve (RSV) decentralized governance stablecoin. The first phase of its development is centralized, where it will be fiat-collateralized and pegged to the US dollar. To get rid of this dependence, RSV will have to make a contrary step towards decentralization and utilize a “basket of assets,” as of now to consist of three collateral tokens: USD Coin, TrueUSD and Paxos, while still keeping the USD peg until it’s finally abandoned. 

Consumer Payment Behaviour in Australia
The Reserve Bank of Australia’s 2019 Consumer Payments Survey provided further evidence that Australian consumers are increasingly preferring to use electronic payment methods. Many people now tap their cards, or sometimes phones, for small purchases rather than paying in cash. Consumers also have an increasing range of options available for making everyday payments. Despite this, cash still accounts for a significant share of lower-value payments and a material proportion of the population continues to make many of their payments in cash.

Paying interest on cash
In this 2018 post JP Koning discusses the idea of paying interest on cash, and explores three ways of doing this. The first way is to use stamping, but this means that banknotes are no longer fungible. The second way is for the central bank to sever the traditional 1:1 peg between deposit money and cash, and have cash slowly appreciate in value relative to deposits, but this imposes a calculational burden on merchants and users. Plus there may be taxation issues. The third way is to run lotteries based on banknote serial numbers, an idea proposed by Hu McCulloch and Charles Goodhart back in 1986, but it introduces the threat of bank runs (the day before the big lottery is set to occur, everyone will withdraw deposits for cash so that they can compete in the draw). JP also discusses Gesell’s “shrinking money” which has recently been proposed in a Celo C-Lab paper.

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Kiffmeister’s FinTech Daily Digest (06/13/2020)

Steve Forbes: ‘Bitcoin Is a High-Tech Cry for Help
Forbes Inc chairman Steve Forbes described cryptocurrencies as a “high-tech cry for help” borne from “the instability of government-printed money today.” He criticized the volatility of crypto assets, but emphasized the appeal of crypto as a symptom of failed economic policy and not the virtues of Bitcoin as a money commodity.

Ripple set to build XRP payments corridor in Brazil
Ripple Head of Global Banking Marjan Delatinne said that the firm is actively working on developing a payment corridor in Brazil. Ripple’s infrastructure for Brazil would make use of its On-Demand Liquidity technology, which dynamically provides liquidity, rather than using traditional approaches such as the Nostro/Vostro system, and make it easier to process cross-border payments.

Ethereum’s $5.2 Million Fee Scandal Explained: Exchange Held to Ransom by Hackers
According to Ethereum (ETH) co-founder Vitalik Buterin, hackers are holding an unnamed crypto exchange to ransom after an alleged cyber-attack forced the ETH blockchain to facilitate two separate transactions at a cost of $5.2 million in fees. “Hackers captured partial access to exchange key; they can’t withdraw but can send no-effect transactions with any gas price. So they threaten to ‘burn’ all funds via transaction fees unless compensated.”

Bitcoin Post-Halving Report (Q2 2020)
According to CoinTelegraph Markets, the 2020 halving has already had a noticeable impact on Bitcoin much like the halvings before it, both of which preceded considerable appreciation in BTC’s price. The hash rate, mining difficulty and other on-chain metrics have been in flux and adapting to the new economic reality of reduced mining block rewards. Meanwhile, the BTC price has become more correlated with major markets, but this has happened in previous halvings, so it could decouple from stocks in 2020.

3 Things Every Crypto Investor Should Know About Trading Bitcoin Futures
Trading Bitcoin (BTC) futures might seem easy on the surface but there are a number of fees that investors seeking big returns from high leverage trades ignore. In addition to trading fees, investors should also be aware of the variable funding rate that many exchanges levy and even maker and taker fees should be taken into account.

Revolut: A Normal Bank – Unfortunately
U.K.-based digital bank Revolut’s “free-account” customers will face fees on FX transfers starting on August 12. Sending money abroad will cost 1 Swiss franc for Swiss Franc transfers, 4 francs for transactions in dollar and 6 francs in any other currency. Furthermore, the upper limit for free exchange orders will be lowered to 1,250 francs and the percentage charged for orders on weekends increased to 1 percent from 0.5 percent.

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Kiffmeister’s FinTech Daily Digest (06/12/2020)

Stimulus Payments Delivery During A Pandemic Using FedAccounts And Digital Tools
On June 11, 2020 the U.S. House of Representatives held an open hearing of the Task Force On Financial Technology. One of the focuses was on the idea of direct accounts provided by the Fed for citizens (FedAccounts) using post offices as the brick and mortar access points. The second focus was on the blockchain-based central bank digital currency (digital dollar) that would be distributed through a two tier system, similar to cash distribution today. And the Electronic Transaction Association advocated enhancing the current payment rails to solve the problem of the unbanked by the use of no-cost wallets and debit cards. For other coverage:

JPMorgan Says Bitcoin Crash Survival Shows It Has Staying Power
JP Morgan reports that the past few months saw the first real stress test for the cryptocurrency market and the results were mostly positive. However, rather than a store of value, cryptocurrencies have traded more like risky assets like equities — a significant change relative to the prior couple of years. And, rather than a medium of exchange, price action points to their continued use as speculative vehicles. Somewhat surprisingly, liquidity on major Bitcoin exchanges was more resilient in March than traditional macro asset classes like FX, Treasuries, Gold and equities. Stablecoins emerged largely unscathed as well, though their volatility is still high relatively a truly pegged token.

Eastern Caribbean Central Bank charts a digital future
The Eastern Caribbean (EC) Digital Cash six-month pilot will launch late July 2020 in Antigua and Barbuda, Grenada, Saint Lucia and St. Kitts and Nevis. Bitt’s experts are conducting online training of local teams within Licensed Financial Institutions (LFIs), Agencies and Merchants.The ECCU payment system will require a reexamination of the regulatory framework, the engagement framework and the currency framework and a pilot project using the blockchain based digital currency, dubbed DXCD will test and expose the issues that arise from turning the promise inherent in money from paper to bits.

Fnality adviser: wholesale CBDCs not in central banks’ DNA
Fnality, formed of a consortium of 14 major banks, is aiming is to create the means of payment on-chain for financial markets by use of its Utility Settlement Coin (USC). The USC is similar to JPMorgan’s JPM Coin, but backed by central bank deposits. Fnality is currently seeking approval for such deposits from several central banks, including the Federal Reserve, the Bank of England and the European Central Bank, with the intentions to receive its first green light in Q3 of 2020.

National Science Foundation Funds Research Into Crypto Dollars
The U.S. National Science Foundation awarded a $225,000 grant to blockchain startup Key Retroactivity Network Consensus (KRNC) to design crypto features for the dollar. The idea is that the digital currency would be distributed free of charge to users in proportion to their existing wealth, and uses a “proof-of-balance” protocol that is based on holders’ wealth. https://www.krnc.io/ https://arxiv.org/abs/1909.07433

Quadriga Downfall Stemmed From Founder’s Fraud, Regulators Find
An Ontario Securities Commission investigation has concluded that the collapse of crypto-exchange QuadrigaCX was the result of fraud by its founder Gerry Cotten. QuadrigaCX shut down in January 2019, weeks after Cotten died unexpected while on his honeymoon in India, leaving behind a mystery of what happened to the Bitcoin and other cryptocurrencies on the platform. The collapse caused at least C$169 million in losses for 76,000 investors in Canada and abroad.

Indian Government Again Proposes Blanket Ban on Cryptocurrencies
India is reportedly looking to introduce a law to ban crypto-assets, as the government sees a legal framework as being more effective than a circular from the Reserve Bank of India (RBI) in this regard. The spur for the draft cabinet note was apparently the March 4 decision of the Supreme Court to quash the April 2018 circular from the RBI that prevented banks from providing services in support of crypto-assets.

Malaysian Government to Encourage Consumers to Use Digital Wallets via RM 750 Million Adoption Plan
Malaysia’s COVID-19 “PEJANA” recovery plan includes an allocation of RM 750 million towards promoting the adoption of digital wallets by local consumers. RM 50 will reportedly be credited into the electronic wallet accounts of around 15 million residents. The RM 50 will also be matched with cashbacks, various discount schemes, and vouchers from digital wallet providers that take part in the program.

Algorand Integrates Tech for Anti-Money Laundering Compliance
Algorand has linked up with Chainalysis to help bake regulatory compliance into their blockchains. Chainalysis will provide a know-your-transaction solution, allowing its foundation to monitor large volumes of on-chain activity for the native ALGO token and report any suspicious transactions to the authorities. It will not provide a comprehensive solution to “travel rule” compliance, but it will help Algorand pick out transactions that trigger the rule, as well as identifying relevant senders and receivers.

Custody Battle Pits Institutional Boomers Against Crypto Upstarts
Crypto custodians are in a race to build the next State Street or BNY Mellon. There are only a handful of these types of large custody banks and most of them have been around for hundreds of years. But crypto is such a striking example of old world meeting new that it offers firms a rare opportunity to break into a market that would simply be impossible under normal circumstances.

Saudi Arabia goes blockchain! … maybe? Who knows
There’s a pile of countries that are really into press releases about “blockchain” — with zero verifiable evidence of anything in particular actually happening, even when you try to look into it. Saudi Arabia seems to be another one. Some crypto news stories speculated that Ripple Labs was involved, and others mentioned Saudi Arabia participating in IBM’s TradeLens supply chain blockchain pilot programme in 2019, both without any verifiable evidence.

InterWork Alliance Launches to Standardize Token-Powered Ecosystems Worldwide
The InterWork Alliance (IWA) today formally launched operations as a platform-neutral, non-profit organization dedicated to creating the standards frameworks needed to increase innovation across token-enabled ecosystems. The InterWork Alliance will set the standards for building distributed applications, including appropriate frameworks for tokenizing items of value, writing contracts over those tokens, and privacy-preserving analytics of multi-party data. It will provide the frameworks needed for businesses to create standardized token definitions and contracts in non-technical, business terms, and then turn them over to developers for coding on any platform of choice. Launch members include Accenture, Digital Asset, DTCC, IBM, ING, Microsoft,  Nasdaq, R3, SIX Digital Exchange, and UBS.

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