Coin Metrics reviews crypto’s tumultuous 2020 run. In Q1 crypto markets showed signs of becoming more intertwined with the external world as, for example, the correlation between bitcoin and the S&P 500 shot up to historic highs and crypto prices plummeted. In Q1 crypto markets bounced back as central bank money printing presses went into high gear and bitcoin underwent its third halving. Crypto markets continued to surge higher in Q3 on decentralized finance (DeFi) mania, and then Q4 brought increasing signs of a growing institutional investor base, as bitcoin’s price broke through to new record highs.

Ripple to Face SEC Suit Over XRP Cryptocurrency

The U.S. Securities and Exchange Commission (SEC) intends to sue Ripple over its sale of XRP, with Ripple cofounder Chris Larsen and CEO Garlinghouse also named as defendants alongside the firm. The lawsuit revolves around whether XRP, a digital asset that the company launched in 2012, is actually a security that should have been registered with the SEC. In recent years, the SEC has ruled that Bitcoin and Ethereum are not securities, partly on the grounds they are decentralized with no person or company in control of them. By contrast, 100 billion units of XRP were issued in 2012 for Ripple Labs which has been selling them into the market in scheduled allotments.

In its counter to the SEC lawsuit, Ripple alleges that Bitcoin and Ether are “two Chinese-controlled virtual currencies that the SEC has stated are not securities,” and that “innovation in the cryptocurrency industry will be fully ceded to China” should the potential lawsuit brought by the SEC be successful.

In the past, Ripple Labs has claimed that XRP has nothing to do with Ripple Labs the company, that XRP pre-existed Ripple Labs the company and was gifted to it, and that the protocol that runs XRP is totally decentralized, à la Bitcoin. However, this blog comprehensively shows that this is untrue.

Circle CEO: Treasury’s Crypto Wallet Rule is a Potential Next Level of Financial Surveillance Never Seen Before

The Treasury’s proposed crypto-asset wallet rule takes financial surveillance to a level never seen before in America according to Circle CEO Jeremy Allaire. He says the new reporting requirements that include blockchain addresses, essentially give law enforcement a data feed that includes identity, blockchain addresses and the ability to monitor, in real-time, all of the that customer’s flows, without any consent.

Coinbase Pre-IPO Tokens Pump to $296 After FTX Launch

FTX launched its Coinbase Pre-IPO tokens (CBSE) on December 22 as part of its Tokenized Stocks product line. Coinbase is currently valued at $8 billion, although the company itself has no actual shares on the market yet. The CBSE tokens will convert to the equivalent share prices at the end of Coinbase’s first day of public trading (market capitalization divided by 250 million – the total number of shares).

Huobi Secures Nevada Trust Company License

Huobi Technology’s U.S. subsidiary, Huobi Trust Company, has gained a license from the Financial Institutions Division of the Department of Business and Industry in Nevada. It will enable Huobi to offer crypto-asset services in the United States. The company is expected to launch its custodial services in 2021.

Reimagining identity ecosystems in Sub-Saharan Africa with mobile

This GSMA report explores the digital ID landscape in selected markets in Sub Saharan Africa, key actors, policy challenges and opportunities, and the potential role of mobile-enabled digital IDs in enhancing service delivery in a socially impactful manner.

COVID-19 shows why we must build trust in digital financial services

According to this WEF report the pandemic has proved that digital financial inclusion is crucial – and that it cannot depend on cash-out services. Weak financial infrastructure makes digital transactions difficult – and people often mistrust digital financial services. Governments and financial institutions can earn that trust by building a resilient and inclusive financial system.

Big Tech, Fintech, and the Future of Credit

In places where banks are not doing their jobs in allocating credit and not innovating, bigtechs face a huge opportunity. Their informational and network advantages allow them to make vast numbers of loans that boost access, productivity, and growth. Moreover, with low default rates, they can offer cheap credit and remain profitable. In advanced economies, where banks are producing and using information, as well as integrating new technologies into their businesses, the evolution of financial services providers could be very different. Big tech firms generally are still shying away from obtaining their own banking licenses. Instead, we see them creating partnerships in which banks exploit their expensive compliance systems and knowledge of regulation, while big tech firms provide the data and a flow of customers. Meanwhile, banks are investing in technology to provide additional services, as well as capture and process data.

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December 21, 2020 ~ kiffmeister

Database containing personal information of over 270,000 Ledger customers released on RaidForums

A database containing the personal information of over 270,000 Ledger customers has been published on RaidForums, a marketplace for buying, selling, and sharing hacked information. The database contains the emails, physical addresses, and phone numbers of Ledger hardware wallet buyers. The leak is the result of a data breach Ledger suffered in June and also contains the emails of over 1 million Ledger customers.

Stability, Elasticity, and Reflexivity: A Deep Dive into Algorithmic Stablecoins

Can an algorithmic stablecoin truly achieve long-term viability? Will algorithmic stablecoins always be subject to extreme expansionary and contractionary cycles? Which vision of an algorithmic stablecoin is more compelling: a simple rebasing model or a multi-token “seigniorage” system (or something else entirely)? This article seeks to explore some of these fundamental issues, both from first principles reasoning and by drawing on some empirical data from recent months.

Deribit users can bet on BTC reaching $100,000 via options contracts that expire on Sept. 24, 2021.

Kiffmeister’s #Fintech Daily Digest (12/20/2020)

December 20, 2020 ~ kiffmeister

FTX Seeks to Launch Coinbase Futures Market Ahead of Public Listing

Crypto-asset exchange FTX is working with CM-Equity on a pre-listing futures market for the Coinbase initial public offering (IPO). FTX first partnered with CM-Equity when launching its tokenized stock spot and futures markets in October 2020. FTX also launched a pre-IPO market for Airbnb the day before the firm’s December 10 stock trading debut. However, FTX prohibits U.S.-based traders from accessing Coinbase futures.

Flare Network Has Worked Out How Much Free Crypto it Will Give to XRP Holders

Flare Networks has determined how many free Spark (FLR) tokens it shall issue to XRP holders that held funds in the cryptocurrency exchanges or wallets that participated in its airdrop in early December 2020.

Kiffmeister’s #Fintech Daily Digest (12/19/2020)

December 19, 2020 ~ kiffmeister

FinCEN Proposes Rule Aimed at Closing Crypto-Asset AML Regulatory Gaps

U.S. crypto-asset users hoping to transfer their holdings from an exchange to their own personal (“unhosted”) wallets may need to comply with new know-your-customer (KYC) requirements under a rule proposed by the U.S. Treasury. Under it, when such transactions exceed $3,000 the exchange would be required to collect and keep records of the customer’s detailed personal information. Also, exchanges would be required to report either individual or groups of transactions that add up to more than $10,000 during a day to the Financial Crimes Enforcement Network (FinCEN). The Treasury has given stakeholders 15 days to respond with comments.

According to the accompanying FAQ the proposed rules are similar to existing FinCEN Currency Transaction Report (CTR) rules that require the establishment of recordkeeping requirements for wire transfers over $3,000 and reporting of cash withdraws over $10,000.

Crypto FOMO Makes Even a 350% Premium on Bitcoin Look Appealing

As Bitcoin rocketed above $23,000 for the first time this week, the mania pushed the price of the Bitwise 10 Crypto Index Fund as much as 650% above the value of its holdings and is currently trading near 350%, according to data compiled by Bloomberg. Meanwhile, the premium on the Grayscale Bitcoin Trust swelled to 34% amid the rally. For those investors looking for access to Bitcoin but who are reluctant or unsure how to get direct exposure, the ease of buying products like BITW or GBTC through a brokerage platform trumps the extra cost.

Bitcoin and Ethereum Personal Loans Available on Bitfinex Borrow

Bitfinex now allows its customers to borrow Bitcoin (BTC) collateralized by three major fiat currencies (USD, EUR and JPY) and Tether (USDT). They will also be able to borrow Ethereum (ETH) against USD the borrower holds on the platform. Customers will be able to obtain BTC loans of up to 80% of the value of their USD, USDT or EUR holdings, or up to 70% of the value of their JPY holdings. Customers using the platform to borrow ETH will be able to get up to 80% of the value of their USD holdings. At launch, the annual percentage rate on BTC loans was 4.16%, and 1.14% on ETH loans. And speaking of Bitfinex…

The curious case of Tether: a complete timeline of events

Tether follows the I.O.U. model, where virtual coins are supposed to represent actual money and be redeemable at any time. It all sounds well and good, but for one thing: There is no evidence to suggest Tether is fully backed. More troubling, the issuance of tethers correlates with the rapid run up in price of bitcoin from April to December 2017 when bitcoin peaked at nearly $20,000. If authorities were to step in and freeze the bank accounts underlying tether, it is hard to guess what impact that could have on crypto markets at large. See Amy Castor’s timeline of events that reveals a full picture of the controversy surrounding Tether and Bitfinex.

Kiffmeister’s #Fintech Daily Digest (12/18/2020)

December 18, 2020 ~ kiffmeister

An Offline Payment System for Central Bank Digital Currencies

Visa published a technical paper that outlines an approach for offline point-to-point payments between two devices. The protocol allows digital money to be directly downloaded onto a personal device, such as a smartphone or tablet. The money is stored on a secure hardware embedded in that device and managed by a wallet provider (e.g. a bank). CBDC can be transacted from one device to another device directly without any intermediaries such as banks, payment networks, or payment processors. Examples of the underlying technology that can support point-to-point payments include Bluetooth and Near Field Communication (NFC).

Crypto, What Is It Good For? An Overview of Cryptocurrency Use Cases

The World Economic Forum (WEF) Global Future Council on Cryptocurrencies published its inaugural report on digital assets entitled, Crypto, What Is It Good For? An Overview of Cryptocurrency Use Cases. It highlights a non-exhaustive list of companies, protocols and projects that represent the diversity of use cases that cryptocurrencies and the networks which they power can enable. The report highlights a series of “base layer” protocols, second layers, and service providers. It touches upon both financial services applications as well as non Fintech related services.

Empty Set Dollar: An experiment in decentralised, composable, oracle-driven stablecoins

The recently launched Empty Set Dollar (ESD) stablecoin is built to be the reserve currency of decentralised finance. It sidesteps the centralisation risk of USDC, USDT, and TUSD, avoids AMPL and BASED’s death spirals, the 100+ percent collateralisation requirements of sUSD & DAI, and, most importantly, it integrates perfectly with existing DeFi protocols. The ESD protocol expands on the work of Basis.io, which voluntarily shut down before launch due to regulatory pressure on the team.

Coinbase is preparing to go public

Coinbase has filed the necessary paperwork with the U.S. Securities and Exchange Commission (SEC) to officially go public with an initial public offering (IPO).

Legal Guidelines for Smart Derivatives Contracts

ISDA has published a series of legal guidelines for smart derivatives contracts. These guidelines provide high level background, identifying opportunities for the potential application of smart contract technology to derivatives contracts; and highlighting important issues for technology developers to consider when designing technology-enabled solutions for trading and processing derivatives and associated processes. These guidelines also highlight areas where further industry collaboration will be required to identify existing areas of legal and regulatory uncertainty and to develop solutions.

Who has Been Affected by the Huge SolarWinds Cyberattack so Far?

As federal authorities and cybersecurity experts rush to identify the full scope of the SolarWinds compromise, the list of known targets grows. SolarWinds provides IT administrators with tools to manage and update their computer networks. The fallout from the cyberattack appears to be vast, with a slew of powerful U.S. government agencies and businesses seemingly being infected by hackers who are believed to be affiliated with Russia. SolarWinds says it has identified 18,000 customers potentially affected by the incident, which saw the culprits hijack software updates for a widely-used IT monitoring tool called “Orion” to spread malware, seemingly with the intention of espionage.

Kiffmeister’s #Fintech Daily Digest (12/17/2020)

December 17, 2020 ~ kiffmeister

Robinhood pays $65m to settle SEC claims it mishandled trades

Robinhood has agreed to pay $65m to settle U.S. Securities and Exchange Commission (SEC) charges that it failed to provide its customers with the best prices for trades on its platform. While Robinhood promoted its services as “commission free”, its customers’ orders were processed at prices “inferior” to other brokers. They also failed to disclose payments received from high-speed trading houses that process its orders. The SEC found that Robinhood had deprived customers of $34.1m because of those payments.

Crypto firm Paxos raises $142 million in latest funding round

Paxos raised about $142 million from its series C round of funding from investors including Paypal. The New York-based company, which provides blockchain-based services to financial institutions and operates a cryptocurrency exchange, has raised more than $240 million in funding so far. Paxos has also submitted an application to the U.S. Office of the Comptroller of the Currency to become a federally regulated bank. It already has a trust charter and a number of other regulatory certifications.

The Unintended(?) Consequences of the STABLE Act

The recently introduced STABLE Act aims to ban any stablecoin that is not issued by a federal bank, whether it is issued by a state-regulated trust company, like Gemini Dollars, a consortium of state-licensed money transmitters like USDC, or by an Ethereum-based smart contract like Dai. This article claims that the logical consequence is that if any person is running software that validates Dai or other stablecoin smart contracts (the Ethereum network client) they will, themselves, be violating the law unless they are a chartered bank. Hence, this bill would have the effect of also destroying the larger Ethereum network and any other smart-contract-enabled public blockchain as necessary collateral damage. However, according to Rohan Grey, one of the authors of the bill

It is “quite clear that only *stablecoin issuers* are required to get a banking license. The question about node operator liability came up in the context of a hypothetical open network in which there were no identifiable actors above nodes. My point in that conversation, which was subsequently distorted for sensationalist fundraising purposes, was that *if* such a network existed, then yes, the obvious response would be that the node operators that comprise the network would be liable for the behavior of the network. But in practice, this was vanishingly unlikely because in any actual network there are a range of systemically important actors above the node-layer that can and would be held responsible first. So the veil of decentralization is ultimately just that, a veil.

[Also,] regulators have the capacity to establish a safe-harbor for node operators (with appropriate caveats for the defi network scenario where such liability would be appropriate). Requiring regulators to give ongoing written approval of the scope of allowed activity is not an uncommon regulatory approach and doesn’t necessarily imply all action within that space will be banned forever. There are also clear exemptions for non-commercial activity, which would be a strong prima facie defense for any individual running a raspberry pi at home.

Circle Confirmed Freezing USDC at Law Enforcement’s Requests

In the past, the Centre Consortium has blacklisted USDC addresses in response to law enforcement requests. Centre said it complies with all binding court orders that have appropriate jurisdiction over the organization. USDC runs on the Ethereum network, and a transaction on Etherscan indicates that, in the past, Centre has called “blacklist(address investor)” functions on addresses, essentially freezing all coins on them. When an address is blacklisted, it can no longer receive USDC and all of the USDC controlled by that address is blocked and cannot be transferred on-chain.

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

December 16, 2020 ~ kiffmeister

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.

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

December 15, 2020 ~ kiffmeister

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.

Kiffmeister’s #Fintech Daily Digest (12/14/2020)

December 14, 2020 ~ kiffmeister

Facebook’s Crypto Testnet Averages 6 Transactions Per Second

Facebook’s Diem/Libra testnet has been live for over a month as the Libra Association prepares for the next stage with broader participation among members. The latest update from the blockchain explorer finds the network performing at an average of six transactions per second (TPS), with the highest reported figure of 24 TPS. In comparison, Bitcoin and Ethereum blockchains execute close to four and 13 TPS, respectively. On the other hand, VISA support 1,700 transactions each second.

Data, Collateral, and Implications for the Credit Cycle

A Bank for International Settlements (BIS) working paper suggests that use of massive amounts of data by large technology firms (big techs) to assess firms’ creditworthiness could reduce the need for collateral in credit markets. Using a unique dataset of more than 2 million Chinese firms that received credit from both an important big tech firm (Ant Group) and traditional commercial banks, the paper finds that a greater use of big tech credit, granted on the basis of machine learning and big data, could reduce the importance of collateral and potentially weaken the financial accelerator mechanism.

Central Bank of Oman launches Fintech Regulatory Sandbox

The Central Bank of Oman (CBO) launched a Fintech Regulatory Sandbox (FRS) through which participants can apply to live test their innovative Fintech solutions in a safe environment under the supervision of the CBO. The first phase of the FRS will be open for receiving Fintech applications related to payments solutions.

Kiffmeister’s #Fintech Daily Digest (12/13/2020)

December 13, 2020 ~ kiffmeister

Understanding China’s Central Bank Digital Currency

In this paper, former Peoples Bank of China (PBOC) Governor Zhou Xiaochuan explains what China’s DC/EP is, the respective responsibilities of the central bank and second-tier institutions in the system, and the technological path. Interestingly, he says the idea behind DC/EP is not completely the same with that underlying central bank digital currency (CBDC) because the second-tier institutions actually own the e-CNY and offer guarantee of payment. This arrangement borrowed ideas from the three note-issuing commercial banks in Hong Kong. These banks are required to give the Hong Kong Monetary Authority 1 U.S. dollar for every 7.8 Hong Kong dollars issued, and in exchange receive a 100% reserve certificate. From the balance sheet’s perspective, the banknotes issued by the banks are their liabilities, their assets are reserves, and the liabilities of the central bank are the reserve certificates issued.

Digital Asset Market 2021: The Year of the Institutional Investor?

According to Avanti Financial Group CEO Caitlin Long, three factors will contribute to a meaningful increase in institutional investment in cryptoassets- especially Bitcoin and US dollar stablecoins –in 2021. The first is the post-“halving” Bitcoin bull market, which happens every four years after Bitcoin’s inflation rate is cut in half, according to its pre-set algorithms. Another factor is the continued significant investment in institutional custody infrastructure to digital assets of all types. The industry is ready to service institutional investors that are subject to the strictest fiduciary standards not just those (such as hedge funds and family offices) that can take higher legal and operational risks. The third factor has to do with stablecoins, such as the explosion of velocity of US dollar stablecoins as financial transactions went increasingly digital around the world. The verifiable on-chain velocity of US dollar stablecoins is averaging 109x meaning that each stablecoin trades on its blockchain on average 109 times annually. Reported velocity — including off-blockchain crosses of stablecoins at exchanges — is now at a US$16 trillion rate while B2B payments in the US are US$25 trillion. This trend will continue in 2021 when I believe bank-issued versions will come into the market. When that happens mainstream payment users can start to enjoy the benefits of a programmable US dollar in a better, faster, and cheaper way relative to traditional US dollar payment systems.

Publicly recanted! Luminaries who came to terms with crypto in 2020

Bitcoin may never be a widely used medium of exchange, but it has become a useful store of value, eight notable former critics conceded in 2020…

Crypto Remittances Prove Their Worth in Latin America

According to the World Bank, Latin America’s formal remittance market is around $96 billion. But traditional services like Moneygram or Western Union can come with high commissions, unfavorable exchange rates, limited office hours, long transmission times and daily exchange limits. Crypto remittances are a different story. For example, money can be sent from Venezuela to family members in Colombia and Spain using the peer-to-peer platform LocalBitcoins. These transactions are often faster and cheaper than their traditional finance counterparts, with fewer steps to send money. Crypto remittances organized on messaging platforms like Whatsapp, Telegram and WeChat can be even more competitive.

Central Bank Money: Liability, Asset or Equity of the Nation?

Based on comparisons across a number of legal characteristics of financial instruments, this paper suggests that an appropriate characterization of “central bank money” (CBM) is as ‘social equity’ that confers rights of participation in the economy’s payment system and thereby its economy. This interpretation is important for macroeconomic policy in light of quantitative easing and potential future issuance of central bank digital currency (CBDC). It suggests that in robust economies with credible monetary institutions, and where demand for CBM is sufficiently and sustainably high, large-scale issuance such as under CBDC is not inflationary, and it does not weaken public sector finances.

Month: December 2020

Kiffmeister’s #Fintech Daily Digest (12/22/2020)