Kiffmeister’s #Fintech Daily Digest (02/05/2021)*

Blockchain Service Network – Key to Digital Currency Interoperability?

The IMF’s Sonja Davidovic has posted the first topical piece on our new Global Fintech Intelligencer blog. As central banks advance their work on central bank digital currency (CBDC), they are faced with questions on how to ensure interoperability with other digital assets. To unravel the interoperability conundrum and provide a robust digital ecosystem for the economy, China has launched the Blockchain Service Network (BSN). Although in its early stages, the BSN remains a unique attempt to build a global interoperability network that connects digital assets both across borders and networks. 

Also, the BSN plans to offer blockchain analytics and financial auditing services for Ethereum developers in its network through a new partnership with Big Four auditor Ernst & Young. 

Bitfinex says it has repaid Tether the remaining loan balance of $550 million

Bitfinex has repaid its sister company Tether the remaining loan balance of $550 million. In 2018, Tether opened a credit line worth $900 million for Bitfinex, of which $750 million was used by the exchange. Bitfinex repaid $100 million each in 2019 and 2020. That loan is at the heart of an ongoing legal dispute with New York’s Attorney General. 

Protego Becomes Second Crypto Firm to Win Bank Charter From OCC

Seattle-based Protego Trust Bank received conditional approval for a trust charter from the Office of the Comptroller of the Currency (OCC) to custody digital assets. Protego is the second applicant to receive conditional approval from the OCC, following Anchorage. The newly chartered trust bank will also offer a trading platform for clients, a service for issuing new digital assets and a peer-to-peer lending platform for its clients.

ADA Price Surges to $0.50 as Cardano Inches Closer to DeFi with Mary Hard Fork

Cardano has been gaining huge traction in the crypto sphere as it inches closer to launching smart contracts on its blockchain to properly enter the DeFi space, following the blockchain’s successful Mary hard fork upgrade. The Mary hard fork is a major upgrade that unlocks new opportunities to the Cardano community and the businesses and institutions using the blockchain. This will effectively transform the Cardano testnet into a truly multi-asset network, enabling users to issue and distribute their own tokens on the Cardano blockchain. 

DeFi’s Yearn.Finance Protocol Suffers $2.8 Million Flash Loan Attack

Yearn.Finance DeFi protocol has announced that one of its DAI stablecoin lending pools has been exploited, leading to the loss of $2.8 million. The suspect is said to have used an Aave flash loan to trigger the vault draining, thus getting away with $2.8 million and the vault losing $11 million. Yearn.Finance facilitates “yield farming” in which users lock up cryptocurrencies in the DeFi protocol so as to earn more crypto-assets. However, such protocols have become a nightmare for some crypto users who have been robbed and conned of millions of dollars in valuable digital assets. 

DeFi boom pushes Universal Market Access (UMA), SwissBorg and Siacoin (SC) higher

Universal Market Access (UMA) plans to offer traders an opportunity to trade Bitcoin price volatility in a decentralized way. For that, the protocol plans to launch a uVol-BTC product that will be settled at the end of the month. Traders could use the token to speculate on the increase or decrease in volatility, or hedge their Bitcoin positions they do not want to sell during sharp corrections. If the product turns out to be successful, a uVOL-ETH token is also planned in the future.

How Elon Musk’s Twitter activity moves cryptocurrency markets

The paper looks at six occasions when Elon Musk tweeted about cryptocurrency and attempts to measure the resultant impact on the trading volume and spot price of the coins in question. Of the six tweets, four were related to Dogecoin and two were related to Bitcoin. The paper concludes that all six events had an impact on the trading activity of both cryptocurrencies, specifically their trade volume. Not every tweet sent out by Musk affected the price of Doge or Bitcoin, but two did result in significant “cumulative abnormal returns.”

Central Bank of Nigeria bans banks from servicing crypto exchanges

The Central Bank of Nigeria (CBN) reportedly banned all regulated financial institutions from providing services to crypto exchanges in the country. The CBN warned of stiff penalties to any bank or financial institution that fails to comply with the directive.

RBI MPC meet: ‘Working on digital currency model, decision very soon

Deputy Governor Kanungo reportedly said  that an internal committee within the Reserve Bank of India is taking a close look at the model of the central bank’s digital currency and will come out with its decision “very soon”. 

Venmo to gain crypto, budgeting, bill pay, and Honey integrations this year

In the next few months, Venmo users will gain the ability to buy, hold and sell crypto inside the Venmo mobile app, along with other “investment alternatives.” 

* 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.