Kiffmeister’s #Fintech Daily Digest (12/16/2020)

Rise of the central bank digital currencies: drivers, approaches and technologies

The Bank for International Settlements (BIS) has updated its database of central bank digital currency (CBDC) technical approaches and policy stances on issuance, based on central bank speeches and technical reports. Based on the previous version, an August 2020 paper found that most projects were found in digitized economies with a high capacity for innovation. Work on retail CBDCs was more advanced where the informal economy is larger. Also, more and more central banks were considering retail CBDC architectures in which the CBDC is a direct cash-like claim on the central bank, but where the private sector handles all customer-facing activity. It concluded with an in-depth description of three distinct CBDC approaches by the central banks of China, Sweden and Canada. 

CME Group to Launch Ether Futures on February 8, 2021

CME Group intends to launch Ether futures starting February 8, 2021, pending regulatory review. The new contract will be cash-settled, based on the CME CF Ether-Dollar Reference Rate, which serves as a once-a-day reference rate of the U.S. dollar price of Ether. Ether futures will be listed on and subject to the rules of CME. They will join CME Group’s Bitcoin futures and options, which have recently seen significant growth in their adoption from a broad array of participants, including institutional investors. 

Kraken Exchange Will Integrate Bitcoin’s Lightning Network in 2021

The Kraken exchange will add support for the Lightning Network in 2021, which adds it to a small (but growing) list of exchanges that support the scaling technology thus far. Kraken is hiring a team to manage the feature, which it anticipates will be open for client use sometime in the first half of 2021. Bitcoin’s Lightning Network allows its users to send bitcoin faster and more cheaply than if they were using Bitcoin’s primary network. These transactions use bitcoin but take place on a “secondary network” with different rules for accounting payments than Bitcoin’s blockchain (these transactions are eventually settled and recorded on Bitcoin’s blockchain when a user is done using the network).  

U.K. FCA establishes Temporary Registration Regime for crypto-asset businesses

The U.K. Financial Conduct Authority (FCA) has established a Temporary Registration Regime to allow existing crypto-asset firms, who have applied to be registered with the FCA, to continue operating until July 2021, pending the FCA’s determination of their application. New businesses that began operating after January 10, 2020 had been required to obtain full registration with the FCA by January 10, 2021. However, the FCA was not able to assess and register all firms that have applied for registration, due to the complexity and standard of the applications received, and the pandemic restricting the FCA’s ability to visit firms as planned. But customers of crypto-asset firms which should have applied to the FCA, but have not done so, must withdraw their crypto-assets or money before January 10, 2021.