Kiffmeister’s #Fintech Daily Digest (11/10/2020)

Lebanon to launch digital currency in face of economic and financial turmoil

Banque du Liban Governor Riad Salameh reportedly said that the central bank plans to launch a digital currency(CBDC) in 2021 as part of a broader effort to combat a parallel economic and financial crisis that has engulfed the country. The Governor Salameh added that a CBDC will help implement a cashless financial system to enhance the flow of money locally and abroad.  

China Clampdown on Big Tech Puts More Billionaires on Notice

China’s State Administration of Market Regulation is seeking feedback on regulations that establish a framework for curbing anti-competitive behavior such as colluding on sharing sensitive consumer data, alliances that squeeze out smaller rivals and subsidizing services at below cost to eliminate competitors. They may also require companies that operate a so-called Variable Interest Entity — a vehicle through which virtually every major Chinese internet company attracts foreign investment and lists overseas — to apply for specific operating approval. 

An early stablecoin? The Bank of Amsterdam and the governance of money

A BIS paper draws lessons on the central bank underpinnings of money from the rise and fall of the Bank of Amsterdam (1609-1820). The Bank started out as a “stablecoin”: it issued deposits backed by silver and gold coins, and settled payments by transfers across deposits. Over time, it performed functions of a modern central bank and its deposits took on attributes of fiat money. The economic shocks of the 1780s, large-scale lending and lack of fiscal support led to its failure. Using monthly balance sheet data, we show how confidence in Bank money gave way to a run equilibrium, where the fall of the premium on deposits over coins (“agio”) into negative territory was swift and precipitous. This holds lessons for the governance of digital money. 

Binance has begun to block U.S. users from accessing its exchange platform

Binance has begun blocking U.S. users from accessing its crypto-asset platform, more than a year after first announcing that it would stop serving U.S. residents starting September 2019. Until now, a U.S. resident just had to click “I’m not [American]” to set up an account. Binance is now sending emails to U.S. residents based on their IP addresses in what appears to be a significant step toward enforcing its previously announced blockade of such users. 

MAS Offers $35 Million Grant to Ease Regulatory Reporting for Smaller Financial Institutions

The Monetary Authority of Singapore (MAS) has launched a S$35 million Productivity Solutions Grant (PSG) for the financial services sector to help smaller financial institutions adopt digital solutions for more streamlined data reporting to MAS. The grant is currently applicable to banks and will be subsequently expanded to include insurers and capital market intermediaries. The PSG provides funding support for financial institutions with no more than 200 employees, to adopt regulatory reporting solutions from pre-approved managed service providers. 

OCC Finalizes True Lender Rule, Attempting to End Uncertainty around Bank-Fintech Partnership Models

The US Office of the Comptroller of the Currency (OCC) issued a final rule that creates a bright-line test to determine when a bank makes a loan and is the “true lender,” including in the context of bank-fintech partnerships. The “true lender” question arose in the context of certain lending arrangements between banks and nonbank entities, in which the nonbank entity typically markets the loan, makes the credit decision and directs its bank partner to originate and temporarily hold the loan before purchasing it from the bank.  

SEC Looking at Which Firms Can Take Custody of Crypto

U.S. Securities and Exchange Commission (SEC) staff issued a public statement asking questions about the definition of “qualified custodian.” That term is traditionally applied to banks, brokerages, and futures commission merchants. The statement follows a no-action letter from the Wyoming Division of Banking to a state-chartered public trust company, Two Ocean Trust that judged it to be a “qualified custodian” and therefore eligible to provide custodial services for digital assets under Wyoming law.  In response, the SEC’s statement made clear that the Wyoming letter should not be construed to represent the views of the SEC or any other regulatory agency. And nor will the SEC and its staff be “bound by statements or views expressed by state regulators,” when it comes to taking enforcement actions.

Crypto exchange FTX lists futures on tokenized stocks, with up to 100x leverage

Crypto exchange FTX has listed quarterly futures on tokenized stocks, offering up to 100x leverage. FTX partnered with German custody services firm CM-Equity, and Swiss tokenization solutions provider Digital Assets, for the new 24/7 offering. The underlying tokens, which allow traders to buy fractions of shares, are redeemable for the underlying stocks. As with FTX’s other products, its equity trading offering won’t be available in the United States.