Kiffmeister’s #Fintech Daily Digest (04/14/2021)

Bitcoin set a new all-time high ($64,863) spurred on by the day’s Coinbase direct listing launch. Ethereum hit $2,398, possibly bolstered by the day’s “Berlin” hard fork that will reduce costs for certain transaction types, and introduce a new transaction envelope that will make it easier to package multiple transactions into a single transfer. It also paves the way for the “London” upgrade scheduled for the summer of 2021, that aims to reduce transaction costs (“gas fees”) on the network.

And about that NASDAQ Coinbase direct listing… As I write this we’re still waiting for the market makers to do their thing. Meanwhile the NASDAQ had set an initial reference price for the stock at $250, while a tokenized version on the FTX exchange trades in a $450 to $500 range. Binance will list a tokenized version of Coinbase’s stock to let users buy and sell fractions of a share 24/7. Earlier in the week it launched a tokenized version of Tesla stock. 

Coinbase ‘IPO’ Isn’t an IPO. Here’s Why That’s Important

One important feature of Coinbase’s listing is that it is not an initial public offering (IPO). Instead, Coinbase has chosen to come to market via a direct listing. This Coindesk article looks at the main differences between direct listings and IPOs, and how they may affect the initial price movement as well as the company’s equity strategy going forward. It finds that a direct listing is a better option for a company that wishes to focus more on expanding a business than one interested in initial share prices. 

Report on the public consultation on a digital euro

The European Central Bank (ECB) published in-depth results of their digital euro consultation. The survey, which ran from October 20, 2020 to January 12, 2021 and collected 8,221 responses, asked 18 questions pertaining to the benefits and challenges of issuing a digital euro and on its possible design. It found that privacy is the most demanded feature followed by security and usability. 47% of respondents were from Germany, which is notorious for its continuing high levels of cash usage, and most respondents (33%) come from the tech industry. More than two-thirds of respondents acknowledge the importance of intermediaries providing innovative services that allow access to a digital euro and indicate that it should be integrated into existing banking and payment systems. They would like additional services provided on top of basic digital euro payments.

Mauritius is developing a central bank digital currency

The Bank of Mauritius, with the International Monetary Fund (IMF) technical assistance of the IMF, is currently developing a central bank digital currency (CBDC). It will also soon deploy a digitalised know-your-customer (c-KYC) platform, and will introduce a dedicated licence for digital banks. 

Macau Moves Step Closer to Digital Currency in Threat to Casinos

The government of Macau reportedly plans to amend laws to regulate the issuance of a virtual legal tender, and will work with the People’s Bank of China (PBOC) to study the feasibility of issuing a digital currency. The aim would be to improve effectiveness in reducing money laundering, tax evasion and terrorism financing. 

Ripple executives file to dismiss SEC lawsuit as XRP prices soar

Emboldened by recent wins in its ongoing legal battle with the U.S. Securities and Exchange Commission (SEC), Ripple has filed a motion to dismiss the lawsuit entirely. The SEC sued Ripple late last year, alleging that it sold XRP tokens as unregistered securities.  

SEC commissioner Hester Peirce unveils updated version of ‘safe harbor’ proposal for crypto tokens

U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce unveiled an updated version of her proposed three-year regulatory safe harbor for token sales. The update adds “semi-annual updates to the plan of development disclosure and a block explorer”; an “exit report requirement” that “would include either an analysis by outside counsel explaining why the network is decentralized or functional, or an announcement that the tokens will be registered under the Securities Exchange Act of 1934”; and  that exit report requirement “provides guidance on what outside counsel’s analysis should address when explaining why the network is decentralized.” 

Janet Yellen, Bitcoin And Crypto Fearmongers Get Pushback From Former CIA Director

According to Michael Morell, a former CIA acting director, the broad generalizations about the use of bitcoin in illicit finance are significantly overstated. This flies in the face of the false narratives spun by senior government officials, such as Treasury Secretary Janet Yellen, who issue public warnings about bitcoin’s alleged use by criminals. In a paper commissioned by the newly formed lobbying group Crypto Council for Innovation, Morrell concluded that there was probably less illicit activity in the bitcoin ecosystem than there is in the traditional banking system. Furthermore, he highlighted blockchain analysis as a highly effective crime fighting and intelligence gathering tool.  

Grab to Go Public in Record-Breaking SPAC Merger

Singapore-based Grab Holdings, the ride-hailing, food-delivery and digital-wallet group that operates across much of Southeast Asia, will go public on the Nasdaq Stock Market by merging with a special-purpose acquisition company (SPAC) securing a $39.6 billion valuation. Grab will merge with Altimeter Growth Corp., a SPAC sponsored by California-based Altimeter Capital. 

Is CBDC really a public option?

According to George Selgin, many proponents of central bank digital currency (CBDC) too readily assume that it can be viewed as a “public option,” that is, something costless to a public that doesn’t have to use it if it doesn’t wish to. But the CBDC “option” isn’t a free lunch: it isn’t just an extra menu item consumers can choose, or not, the presence of which can’t possibly make them worse off. It is an option we should consider only with due attention to its potential, non-trivial immediate and long-run costs.