Kiffmeister’s #Fintech Daily Digest (01/19/2021)*

Criminal Activity in Crypto Transactions Fell Sharply in 2020, Says Chainalysis

Chainalysis reported that criminal activity represented 0.34% of all 2020 crypto-asset transaction volume (versus 2.1% in 2019). One of the reasons for the decline is due to overall economic activity nearly tripling between 2019 and 2020. Scams made up the majority of such flows at 54% of funds received for illicit activity, followed by darknet markets (35%). Although ransomware accounted for only 7% of all funds received by criminal addresses, it was up 311% from 2019. 

Grayscale Purchases $600 Million Bitcoin in 24 Hours

Grayscale accumulated 16,244 Bitcoin (BTC) worth more than $600 million on January 18, 18 times more than miners added to the supply that day. According to data, Grayscale’s total crypto assets under management exceeds $27 billion when BTC crossed $37,000. In Q4 2020 institutional investors accounted for 93% of capital inflows, or $3.0 billion. Grayscale is also slowly accumulating other digital assets including Bitcoin Cash and Litecoin. 

So far in January, Grayscale bought 26,150 BTC, during which time only 16,200 BTC were mined, at a rate of 900 BTC per day. This means, in the first half of January, Grayscale’s Bitcoin Trust purchased 161% of all the Bitcoin that was mined.

Canadian Retail Central Bank Digital Currency Considerations

Payments Canada has published Central Bank Digital Currency (CBDC): Retail Considerations, the latest in a series of educational papers on CBDC. This paper explores the design considerations for implementation of a retail CBDC in the Canadian payments environment. A retail CBDC is aimed to take on traditional attributes of physical cash and would be used by consumers and businesses (relative to wholesale CBDC, which would be used by financial institutions). 

Banque de France continues wholesale central bank digital currency experiments

The Bank of France continued its securities settlement experiments with wholesale central bank digital currency (CBDC). In December it successfully settled EUR2 million of simulated equity shares with French investment firm IZNES on a distributed ledger technology CBDC platform provided by U.K.-based SETL.  

* 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.