Kiffmeister’s #Fintech Daily Digest (09/22/2020)

U.S. SEC, OCC Issue First Regulatory Clarifications for Stablecoins

The U.S. Office of the Comptroller of the Currency (OCC) clarified national banks’ and federal savings associations’ authority to hold reserves on behalf of issuers of certain stablecoins. The clarification addresses the use of stablecoins backed by a single fiat currency on a one-to-one basis where the bank verifies at least daily that reserve account balances meet or exceed the number of the issuer’s outstanding stablecoins. It applies only to situations where there is a hosted wallet. 

[On July 22 the OCC had announced that national banks may provide cryptocurrency custody services on behalf of customers, including by holding the unique cryptographic keys associated with cryptocurrency. The OCC also reaffirmed that national banks may provide permissible banking services to any lawful business they choose, including cryptocurrency businesses, so long as they effectively manage the risks and comply with applicable law.]

Also, the U.S. Securities and Exchange Commission (SEC) said certain stablecoins might not be securities under federal law, but advised issuers to work with the agency and legal counsel to ensure this is the case. Whether a particular digital asset is a security under the federal securities laws is inherently a facts and circumstances determination. This determination requires a careful analysis of the nature of the instrument, including the rights it purports to convey, and how it is offered and sold. 

Stablecoin Implications in the Euro Area

This European Central Bank (ECB) paper summarises the outcome of an analysis of stablecoins undertaken by the ECB Crypto-Assets Task Force. At the time of writing, the stablecoin debate lacks a common taxonomy and unambiguous terminology. This paper applies a definition that distinguishes stablecoins from existing forms of currencies – regardless of the technology used – and characterises stablecoin arrangements based on the functions they fulfil. This approach emphasises the role of technology-neutral regulation in preventing arbitrage, as well as comprehensive Eurosystem oversight, irrespective of stablecoins’ regulatory status. Against this background, this paper assesses stablecoins’ implications for the euro area based on three scenarios for the uptake of stablecoins. 

European central bank execs explain why CBDCs don’t need blockchain

Thomas Moser, an alternate member of the governing board at Swiss National Bank, is working on a research paper that proposes a retail CBDC without blockchain. The upcoming CBDC project will preserve transaction privacy — a key feature of cash — by utilizing the technology of blind signatures instead of blockchain. The paper is co-authored with cryptographer and technology expert David Chaum and Christian Grothoff. 

Eastern Caribbean Central Bank official says CBDC is ‘foolproof

The Eastern Caribbean Central Bank is inviting members of the public to register for access to its central bank digital currency (CBDC), in preparation for the second phase of its pilot. Following the first phase of the pilot, the central bank now plans to roll out the CBDC to Antigua and Barbuda, Grenada, Saint Lucia and St Kitts and Nevis. The ECCB is yet to announce the exact date of the launch. 

Fintech and big tech credit: a new database

Information on the size and characteristics of fintech and big tech credit is scarce. This BIS paper assembles and updates available data on fintech and big tech credit volumes for 79 countries around the world over 2013-19. The database is made available as a resource for researchers, policymakers and practitioners. The paper answers the questions: how large are fintech and big tech credit markets, both in absolute terms and relative to overall credit markets? What economic and institutional factors are driving their growth and adoption? How large and important could they become in the future? 

Detour: An altered path to profit for European fintechs

Venture capital funding for European fintech companies is dropping precipitously. This constitutes a significant challenge for fintechs, many of which are still not profitable and have a continuous need for capital as they complete their innovation cycle: attracting new customers, refining propositions and ultimately monetizing their scale to turn a profit. The COVID-19 crisis has in effect shortened the runway for many fintechs, posing an existential threat to the sector. The winners will be those that quickly recognize the changed context and that are most capable of responding with clear decisions and bold actions. 

Posted from Diigo: