I just updated my central bank digital currency (CBDC) explorer tabulation to include the latest out of Jamaica (see below).
Jamaican central bank digital currency to be launched by next year
Jamaican Finance Minister Nigel Clarke announced that the Bank of Jamaica will launch a central bank digital currency (CBDC) pilot in 2021 aiming for a full-scale launch in 2022. It will be issued to deposit-taking institutions and authorised payment providers in the same manner that it issues cash. The BoJ Act is to be amended, giving the central bank the sole authority to issue digital currency.
Bank of Russia to start digital ruble trials in 2022
The Bank of Russia will reportedly complete what sounds like a digital ruble proof of concept by the end of 2021. According to the reports, deputy governor Alexey Zabotkin said that the prototype will not support “real transactions” but would rather serve as a starting point to build the ecosystem on. Based on this prototype, including refinement, the central bank will start rolling out trial rounds in 2022.
Grayscale Bitcoin Trust suspends new investments on heels of buyback
Hours after announcing a stock buyback aimed at shoring up its price, Grayscale Bitcoin Trust has suspended all new buy-ins. The digital asset management firm Grayscale Investments announced on March 10 that it plans to buy $250 million of its own GBTC shares, which have traded as much as 15% below the price of the Bitcoins it holds.
New York grants Bakkt a BitLicense
The New York State Department of Financial Services (NYDFS) approved the application of Bakkt Marketplace for virtual currency and money transmitter licenses. First granted to Paxos in 2015, the BitLicense is New York’s program for regulating virtual currency firms. With it, Bakkt will have new access to offer crypto trading in the financial center of the United States. Bakkt has ambitious plans that include enabling a wide ecosystem in which customers can spend Bitcoin in a variety of stores.
South Korea Cracks Down on Crypto Money Laundering
South Korea’s Financial Services Commission (FSC) introduced penalties for crypto-asset exchanges that don’t implement stringent anti-money laundering laws. Crypto exchanges and other companies that facilitate crypto transactions will face fines of between $26,000 to $52,000, or 30% and 60% of the maximum legal penalties. Companies will have to pay fines if they don’t report suspicious transactions, keep data on said transactions and maintain a log of customer transactions. Smaller companies would have to pay smaller fines.
A New ETF Named FOMO Targets Everything From SPACs to Volatility
A filing this week with the U.S. Securities and Exchange Commission seeks to create the FOMO (“fear of missing out”) exchange-traded fund (ETF) that will invest in “securities that reflect current or emerging trends.” The actively managed FOMO will target everything from stocks across both developed and emerging markets to Special Purpose Acquisition Companies (SPACs), other ETFs, derivatives, volatility products and both leveraged and inverse funds.
Fintech promises to spur financial inclusion and close the gender gap in access to financial services. Using novel survey data for 28 countries, this BIS paper finds a large ‘fintech gender gap’: while 29% of men use fintech products and services, only 21% of women do. The gap is present in almost every country in our sample. The survey reveals that digitally active women worry more than men do about their privacy when dealing with companies online, being less willing to share their data with fintechs for better offers and being less willing to use fintechs for better or more innovative products. If the gap is explained by differences in preferences across genders, for example in risk aversion, the paper suggests that there is little role for policy. However, if the gap is explained by gender-based discrimination or by social norms and conditions that disadvantage women, then policy interventions may be necessary to enhance the inclusiveness of fintech services.
And here’s some back filling on the regulatory front, thanks to the Herbert, Smith Freehills Weekly Fintech Notes:
- The Financial Action Task Force (FATF) published guidance for applying a risk-based approach to anti-money laundering (AML) and countering the financing of terrorism (CFT) supervision. The guidance is intended to support supervisors in the transition from rules-based supervision to risk-based supervision. Among other things, it provides high-level guidance on risk-based supervision, which explains how supervisors should assess the risks their supervised sectors face and prioritise their activities.
- The UK Competition and Markets Authority (CMA) published a consultation on the future oversight and governance of its Open Banking remedies. More specifically, it seeks to flesh out the funding and governance of a new body that is proposed to succeed the existing Open Banking Implementation Entity (OBIE). The new body would take over OBIE’s functions, other than compliance monitoring, which the CMA will handle.
- The European Banking Authority (EBA) published its biennial Opinion and accompanying report on the money laundering and terrorist financing (ML/TF) risks affecting the EU’s financial sector. In terms of cross-sectoral risks, the opinion highlights risks around virtual currencies, fintech and crowdfunding platforms.
* 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.
