Kiffmeister’s #Fintech Daily Digest (01/16/2021)*

Uganda orders internet blackout until further notice – MTN

I wonder how the Uganda internet shutdown affects digital payment rails? It surely shuts down crypto trading but what about mobile banking and payment rails? Perhaps another reason to favor pure offline P2P digital currency (eg CBDC)? 

Bitcoin Fee Wars Erupt as Upstart Targets Grayscale’s Billions

The Osprey Bitcoin Trust will launch in the over-the-counter markets with a 0.49% management fee, versus the 2% that Grayscale Bitcoin Trust charges. Fidelity Digital Assets will provide custody services. Accredited investors face a $25,000 minimum to buy directly into the trust, and shares have a lock-up period of one year before they can be sold in the secondary market. In the absence of a Bitcoin exchange-traded fund (ETF) — which U.S. regulators have yet to approve — these are seen as one of the easiest and safest ways for investors to get Bitcoin exposure.  

Return of the DEX: Trading Volumes Poised to Set New Record

Decentralized exchanges (DEX) are on track to surpass previous all-time high volumes. They have already transferred more than $27 billion in transaction volume so far in January, the second-highest total since September 2020’s $29 billion. DEX use smart contracts on blockchain networks like Ethereum to let users swap between digital assets without transferring tokens to an exchange wallet or verifying their identity. Uniswap is the most popular DEX, responsible for more than 45% of volume in the last week, with Sushiswap accounting for more than 22%. 

Ant Financial quietly conducted a digital yuan test in Shanghai via AliPay

Ant Financial has reportedly quietly conducted a small-scale limited-time test of digital yuan via its AliPay mobile payment app in two tea stores at a shopping mall next to its Shanghai headquarters. This is the first known instance where China’s digital yuan was tested inside a mobile app that’s developed by a non-state-owned entity. 

Ant Group kicks off the overhaul of its fintech operations

Ant Group has set up a working group to rectify its business practices under the close watch of Peoples’ Bank of China and other financial regulators. The regulators will tell Ant Group which parts of its fintech platform need to be regulated as financial institutions, and the portions of the business that need new operating licences. The licenced financial services businesses will then be moved into a holding company and subjected to regulatory scrutiny. China’s State Council has laid out guidelines for establishing a financial holding and said companies must apply to the PBOC to do so by November 1, 2021. 

Anchorage’s OCC Charter Won’t Change Wyoming Plans for Kraken, Avanti

Avanti CEO Caitlin Long said that Wyoming special purpose depository institutions (SPDIs) rank above OCC trust charter companies in the US banking “pecking order” because OCC trust companies can’t take customer deposits. Special purpose depository institutions can.  

3iQ’s Canadian Bitcoin Fund Hits C$1B in Market Cap

The bitcoin fund from Canada’s 3iq Corp (QBTC), listed on the Toronto Stock Exchange, has reached over C$1 billion in market capitalization. 

* 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.