Kiffmeister’s #Fintech Daily Digest (01/26/2021)*

I’ve updated my retail central bank digital currency (CBDC) tabulation with the latest from the Reserve Bank of India, and some tidying up of links here and there. 

Signal Is Experimenting With Stellar-Based Cryptocurrency

Messaging app Signal, which now has around 40 million users, is reportedly exploring the addition of payments into the app. Significant engineering resources have reportedly been devoted to integrating privacy-focused Stellar blockchain-based payment platform MobileCoin into Signal. Adding credence to this story is that Signal CEO Moxie Marlinspike serves as a technical adviser to MobileCoin, although he played it down, saying that the company had only done some “design explorations” around the idea.

FinCEN Further Extends Comment Period for Unhosted Wallet Crypto Rules

The U.S. Financial Crimes Enforcement Network (FinCEN) is extending the comment period for its recent proposed rulemaking regarding certain crypto-asset transactions. The proposed rule would impose new know-your-customer requirements on crypto-asset transfers to personal (“unhosted”) wallets. Users would have to provide detailed personal information for transactions greater than $3,000, and exchanges would be required to report either individual or groups of transactions that add up to more than $10,000 during a day to FinCEN. The deadline has now been extended to 60 days. 

Crypto Hedge Funds Underperformed Bitcoin During Rally Last Year

Actively managed cryptocurrency hedge-funds underperformed Bitcoin during the largest digital asset’s bull run last year, according to Crypto Fund Research. The funds’ average rate of return was 166%, compared with a more than 300% increase in Bitcoin. While the funds as a whole significantly underperformed, a few breakout managers that made long bets and invested in decentralized-finance projects exceeded the average. 

Bahrain Issues First Shariah-Compliant Crypto Exchange License to CoinMENA

CoinMENA, a Bahrain-based soon-to-launch cryptocurrency exchange, reportedly acquired a crypto-assets services company license from the Central Bank of Bahrain. The exchange is certified by the Shariyah Review Bureau.  

Filipino Central Bank Mandates Crypto Company Licensing

The Bangko Sentral ng Pilipinas (BSP) released new guidelines for the virtual asset service providers (VASPs) operating in the country, imposing many new restrictions and mandating licenses for operations. The new framework aims to curb money laundering and terror financing using digital currencies. The document highlighted that the regulations are in line with the recommendations of the Financial Action Task Force (FATF).  

Why Polkadot is the Future of DeFi

The sudden growth of DeFi on Ethereum has pushed the blockchain to its limits, leading to transaction delays and inordinately high fees — making many Ethereum DeFi platforms simply unusable to regular users. As a result, many developers are opting to build their DeFi applications on other Platforms such as Polkadot. Polkadot is highly interoperable other blockchains (including Ethereum). Also, Polkadot has a block time of just six seconds and most transactions are considered final after less than a minute, and it can currently handle more than 1,000 transactions per second (tps). 

* 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.