Kiffmeister’s #Fintech Daily Digest (03/17/2021)*

I’ve updated my central bank digital currency (CBDC) tabulation to include the latest developments at the Bank of Japan and the Eastern Caribbean Central Bank (see below). 

ECCB Governor Announces DCash Public Launch

The Eastern Caribbean Central Bank (ECCB) will roll-out DCash, the ECCB’s digital currency, on March 31, 2021. Consumers can sign up to use DCash either through a participating financial institution or via an authorised DCash agent. The ECCB will roll out DCash initially in Antigua and Barbuda, Grenada, Saint Kitts and Nevis and Saint Lucia as part of the ECCB’s Digital Currency Pilot.

Morgan Stanley becomes the first big U.S. bank to offer its wealthy clients access to bitcoin funds

Morgan Stanley has told its financial advisors that the bank is launching access to three funds that enable ownership of bitcoin. Two of the funds on offer are from Galaxy Digital, while the third is a joint effort from asset manager FS Investments and bitcoin company NYDIG. Morgan Stanley considers it suitable only for people with “an aggressive risk tolerance” who have at least $2 million in assets held by the firm. Investment firms need at least $5 million at the bank to qualify for the new stakes. 

Spac boom eclipses 2020 fundraising record in single quarter

Blank-check companies have already surpassed last year’s fundraising record in the first quarter of 2021, reflecting the insatiable appetite for special purpose acquisition companies both on Wall Street and main street. Spacs have raised $79.4bn globally since the start of the year, eclipsing the $79.3bn that flooded into vehicles in 2020, according to data provider Refinitiv, as of Tuesday night. So far in 2021, 264 new Spacs have been launched, overtaking last year’s record 256. 

European Parliament draft report on proposal for regulation on DLT pilot regime

The Committee on Economic and Monetary Affairs (ECON) of the European Parliament has published a draft report on on the proposal for a regulation on a pilot regime for market infrastructures based on distributed ledger technology (DLT). The proposed regulation is intended to provide a mechanism for allowing market infrastructures to experiment with certain restricted uses of DLT. The report indicates overall support for the proposed regulation, but presents a number of amendments aimed at ensuring the final proposal delivers the stated objectives of the pilot programme. 

European Commission roadmap on instant payments

The European Commission has published a roadmap, in the form of an inception impact assessment, on instant payments. The impact assessment to follow will investigate whether (i) new legislation is needed in this field, (ii) non-legislative measures would be appropriate, or (ii) other policy options are suitable. 

Canadian securities regulators outline disclosure expectations for reporting issuers dealing in crypto assets

The Canadian Securities Administrators (CSA) today published guidance to improve the quality of disclosures provided by issuers that engage materially with crypto assets (crypto asset reporting issuers). The notice outlines the disclosure expectations of CSA staff in key areas such as safeguarding crypto assets, the use of crypto asset trading platforms, risk factors, material changes and promotional activities. The notice also provides guidance to crypto asset issuers on navigating certain complex accounting and disclosure issues. 

Big techs in finance: regulatory approaches and policy options

A Bank for International Settlements brief discusses the risks connected with big tech activities in finance that may not be fully captured by current regulatory approaches. Current approaches are geared towards individual entities or specific activities, and not the risks that are created by substantive interlinkages within big tech groups and their role as critical service providers for financial institutions. An effective oversight of big tech activities in finance calls for going beyond a piecemeal policy framework and considering recalibrating the mix of entity-based and activity-based rules, in favour of the former in certain policy areas. A step further would be to assess the possibility of introducing a bespoke approach for big techs encompassing a comprehensive public policy framework. In any case, there is a need for enhancing cross-sectoral and cross-border cooperative arrangements. 

* 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.