Kiffmeister’s #Fintech Daily Digest (12/15/2020)

Solutions for a digital euro and the future of payments

Blockchain for Europe published a roadmap for the future of payments in a Distributed Ledger Technology (DLT) oriented European economy. The paper provides an analytical framework dividing the digital payments value chain into three pillars: the contract execution system, the digital payment infrastructure, and the monetary unit. Based on this framework, the authors compare technology platforms, public and private sector payment solutions, including a bridge solution, e-money tokens, and central bank digital currency (CBDC) including “synthetic” CBDC. It concludes that the optimal payment solution for Europe would be a DLT-based euro CBDC but it is unlikely that it will be implemented in the short term, and unclear if it will address all the challenges and needs of the European economy and its consumers. 

Chartering the FinTech Future

A paper written by U.S. Office of the Comptroller of the Currency (OCC) Chief Economist Charles Calomiris argues that the chartering of fintech shadow banks as national banks is a desirable development. In the near term, this will occur in the form of unbundled, novel providers of payments or lending services. Some of their business models entail borrowing deposits, but some do not. All of them are banks. They and their consumers stand to benefit greatly from coming out of the shadows and becoming chartered banks. For many shadow banks, the advantages of greater geographic reach and enhanced market credibility from OCC examination will outweigh the new costs of regulations they will bear. That is especially so if they are able to avoid unnecessary regulatory burdens on their organizations. However, he emphasizes that fintech banks should not be required to obtain national charters, because this would impose regulatory burdens on all fintech banks, some of which would be less able to meet customer needs as a consequence.  

In a companion piece, he provides an evolutionary history overview of the political philosophy governing the chartering of banks explored through a sequence of questions and answers. The overview traces changes from the early history of bank chartering to the establishment of the federal banking system, and its subsequent evolution.

Pornhub: Now Accepting Crypto Only

After Visa and Mastercard gave it the boot, PornHub is now accepting only crypto for its premium service in most countries. In at least some EU countries, for instance Amsterdam, Germany, Finland, users appear to be able to use Lastschrift (direct bank debit) or SEPA (the euro zone the bank transfer system). Pornhub’s five largest traffic sources come from the U.S. with 23.76%, followed by Japan, Germany, France, and the U.K. So does that make Bitcoin a medium of exchange, at least in the U.S.?  

SatoshiPay to Become First User of German Bank’s Euro Stablecoin

SatoshiPay investor Blue Star Capital, the payments firm plans to integrate the regulatory complaint EURB euro-backed stablecoin into its DTransfer cross border money transfer service. German Bankhaus von der Heydt (BDVH) in partnership with Bitbond, has introduced EURB on the Stellar network. Bitbond was responsible for the development and integration of EURB, and BDVH provides its banking infrastructure and regulatory framework. EURB is the first fiat asset directly backed by a banking institution on Stellar and will allow instant money transfer on blockchain. 

MtGoX Trustee Files Draft Plan to Return $2.6 Billion in Bitcoin

A Mt. Gox trustee has filed a draft rehabilitation plan for review by the Tokyo District Court. The plan promises to return over $2.6 billion worth of Bitcoin to former Mt. Gox users. A total of nearly 140,000 Bitcoin is set to be returned to former Mt. Gox users. By today’s prices, that amount of Bitcoin is valued at approximately $2.6 billion. 

Entry into force of Swiss DLT bill

On 11 December 2020, the Swiss Federal Council decided that parts of the Federal Act on the Adaption of Federal Law to Developments in Distributed Ledger Technology (DLT Bill) adopted by the Swiss Parliament in September 2020, will enter into force on February 1, 2021. The implemented elements will enable the introduction of ledger-based securities (Registerwertrechte). The remaining provisions of the DLT Bill are expected to enter into force as originally planned on August 1, 2021. 

Bitcoin As A Hedge Against Inflation

Bitcoin’s predictable and transparent monterey policy is ultimately what makes it a good potential hedge against inflation. While the US dollar, and many other fiat currencies, face increased uncertainty about inflation expectations over the upcoming years, Bitcoin’s inflation expectations are predefined. Due to its regular halvings and maximum supply cap, Bitcoin’s inflation rate will decrease in the future, while fiat inflation rates may increase. 

EMTECH Debuts Tech To Streamline Central Banking

EMTECH is rolling out its new Modern Central Bank Sandbox, which will help to streamline regulatory reviews and test central bank digital currencies (CBDCs). The platform will also help central banks that want to collaborate with innovators on new technology, and enabling them to innovate safely with effective oversight and quicker time to market. EMTECH also aims to provide central banks with an infrastructure for digital cash. For example, EMTECH is currently working with the Central Bank of the Bahamas on its Digital Sand Dollar Currency.