Kiffmeister’s #Fintech Daily Digest (09/15/2020)

U.S. State Regulators Roll Out One Company, One Exam for Nationwide Payments Firms

The U.S Conference of State Bank Supervisors (CSBS) has set out parameters for state licensing that will involve a single exam administered by examiners from across the country in 2021. Nationwide payments firms, meaning those operating as money transmitters in 40 or more states, will be able to get a single license to operate throughout the U.S. It includes crypto-asset firms. 

Big European states call for cryptocurrency curbs to protect consumers

The finance ministers of the five European Union member states said in a joint statement that stablecoins should not be allowed to operate in the 27-member bloc until legal, regulatory and oversight challenges had been addressed. The five countries want all stablecoins to be pledged at a ratio of 1:1 with fiat currency, with reserve assets denominated in the euro or other currencies of EU members states, and deposited in an EU-approved institution. All entities operating as part of a stablecoin scheme should be registered in the EU, they said. Such a move would likely impact the Geneva-based Libra Association, which plans to issue and govern Libra. 

Lessons learned from the worlds first CBDC

The Avant smart card system created by the Bank of Finland in the 1990’s can be considered the world’s first CBDC and the only one so far that has gone into production. Avant cards were based on smart card technology similar to that used in debit and credit cards today. Even though the system was initiated, developed, and for the first few years operated by the central bank, it was eventually spun off and sold to commercial banks. Once debit cards became less expensive and were upgraded to use smart card technology, Avant became obsolete and was shut down. 

Coinbase And Circle Adds Algorand Blockchain To Fast-Growing Digital Dollar ‘Stablecoin’ Market

US Dollar Coin (USDC) received a blockchain upgrade to support faster transactions on Algorand. Algorand brings over 1,000 transactions per second (versus Ethereum’s 15) and transaction fees of 1/20th of a cent to the USDC ecosystem, and soon to be released innovations offer the potential of scaling throughput by 8-10x on Layer 1, accompanied by new secure smart contracts that complement standard tokens such as USDC. 

India Plans to Introduce Law to Ban Cryptocurrency Trading

India reportedly plans to introduce a new law banning trade in cryptocurrencies, placing it out of step with other Asian economies which have chosen to regulate the fledgling market. The bill is expected to be discussed shortly by the federal cabinet before it is sent to parliament. The Indian central bank had in 2018 banned crypto transactions after a string of frauds in the months following Prime Minister Narendra Mod’s sudden decision to ban 80% of the nation’s currency. Cryptocurrency exchanges responded with a lawsuit in the Supreme Court in September and won respite in March 2020. 

Measuring Bitcoin’s Decentralization

Bitcoin’s decentralization can be quantified in terms of supply dispersion, hashpower distribution, and exchange consolidation, among other metrics. Key metrics like the number of active addresses and the network’s hashrate continue to rise. Bitcoin’s supply is becoming more evenly dispersed, and the mining and exchange markets remain competitive. However, this analysis of Bitcoin’s decentralization is far from comprehensive, and various other metrics, such as node count and hardware manufacturer market share, should also be considered in assessing network’s health. On the whole, however, the network’s performance in these key verticals gives reason for cautious optimism. 

Klarna valued at $11bn after fresh investment for fintech

Klarna is looking to “wreak havoc” on the payments and banking industries after the Swedish “buy-now, pay-later” group was valued at $11bn ahead of a likely stock market listing by the most valuable private fintech in Europe. However, sceptics worry about Klarna’s rising credit losses — which almost doubled in the first half of 2020 compared with a year earlier, leading to operating losses to increase nine-fold — and whether it preys on vulnerable consumers. 

Nigeria regulators recognize digital assets in stunning new statement

The Securities and Exchange Commission of Nigeria has officially defined digital assets under its regulatory umbrella. Crypto assets will be deemed securities, unless proven otherwise, with the burden of proving that the crypto-assets proposed to be offered are not securities and therefore not under the jurisdiction of the SEC, placed on the issuer or sponsor of the assets.  

A Primitive Smart Contract-Embedded Physical Currency

From 1942 to 1944, the US issued what collectors call Hawaiian Overprints. As can be seen in the image, certain notes had “Hawaii” overprinted on their faces and backs. The notes were $1 Silver Certificates and $5, $10, and $20 Federal Reserve Notes. They were issued only in Hawaii with some circulating in US military theaters in the far East. The notes were issued after the start of World War II in the Pacific. And, the smart contract part of the notes was the “Hawaii” overprint. If the notes ever fell into enemy hands they would become worthless, not being recognized as legitimate US currency. Thus, like a smart contract, when certain conditions were met, the value of the note changed. In this case, it went to zero. 

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