Kiffmeister’s #Fintech Daily Digest (01/11/2021)*

Bitcoin’s Big Drop Again Coincides With Dollar Bounce in Forex Markets

Bitcoin spiked down to $30,000 after setting a record high of $41,962 on Friday. The crash came alongside a bounce in the Dollar Index (DXY), which tracks the greenback’s value against major currencies. The DXY has jumped to two-week highs near 90.50, after reaching a 33-month low of 89.21 on January 6, according to TradingView.  

Bitcoin’s Wild Weekends Turn Efficient Market Theory Inside Out

Crypto-asset weekend volatility spikes owe to a couple of factors. One is that it’s held by relatively few people — about 2% of accounts control 95% of all available Bitcoin supply. If these whales trade when volumes are thin, price swings will be magnified. Another is its market structure, which consists of hundreds of disconnected exchanges that in effect are their own islands of liquidity. 

Chinese Bank Trials Digital Yuan Services at ATMs: Report

The Agricultural Bank of China has reportedly enabled a number of ATMs around the city of Shenzhen to offer trial services for the digital yuan. 

Tether’s backing could be disclosed later this year

Tether insiders Paolo Ardoino and Stuart Hoegner said they may reveal full details of the reserves backing the controversial digital dollar some time later this year. “We are contemplating providing an update on tether’s asset backing during 2021,” said Hoegner, speaking on the What Bitcoin Did podcast. Hoegner is general counsel for Tether and its affiliated entity, cryptocurrency exchange Bitfinex, while Ardoino is the chief technical officer for both. 

Intercontinental Exchange’s Cryptocurrency Venture to Go Public Through a SPAC

Crypto platform Bakkt is set to merge with Special Purpose Acquisition Company (SPAC) VPC Impact Acquisition Holdings. A SPAC is a shell company whose only purpose is to buy or merge with another company and allow it to be listed on the stock markets without going through lengthy and expensive process of an initial public offering, or IPO. Bakkt is expected to be valued at $2.1 billion after completing the merger. 

Kenya Central Bank Outlining Open Banking Ambitions

The Central Bank of Kenya (CBK) outlined a five-year digitalization plan to modernize the country’s domestic payment landscape. The CBK says it will work to define standards for API development and mandate data portability with hopes that more options and innovative solutions will be made available for users in Kenya to choose from. These standards will include API specifications for identification, verification and authentication; customer account information/data access; transaction initiation; and formats and coding languages for APIs.  

Bangladeshi Bank Executes First Shariah-Based Blockchain Transaction

Saudi Arabia’s International Islamic Trade Finance Corporation (ITFC) partnered with the Bangladesh-based City Bank to execute the world’s first Shariah-compliant cross-border blockchain transaction. A letter of credit was issued on behalf of a Bangladeshi exporter Debonair group to import textile-related accessories from Apparel Link, a trading company based in Hong Kong. Contour, a network build by R3’s Corda blockchain technology, executed the transaction. 

* The views expressed herein are those of the author and should not be attributed to the International Monetary Fund, its Executive Board or its management.