Month: April 2021

Kiffmeister’s #Fintech Daily Digest (04/20/2021)

~ kiffmeister

PayPal’s Venmo now allows users to buy and sell crypto

Venmo’s “Crypto on Venmo” starts to roll out today and will be available to its 70 million customers directly in the Venmo app within the next few weeks. The service will let its users buy, hold and sell crypto-assets (BTC, ETH, LTC and BCH) within its mobile app, using funds from their balance with Venmo, or a linked bank account or debit card. Similar to its parent company’s (PayPal) app, Crypto on Venmo is enabled through a partnership with Paxos, which facilitates the transactions behind the scene.  

Deutsche Telekom Invests in Celo’s Crypto Network

Deutsche Telekom is purchasing Celo tokens in “significant” size, and investing in infrastructure to support the Celo network, which is working to build a decentralized version of Venmo-style peer-to-peer payment platforms. Celo maps user mobile phone numbers to the public key for a blockchain wallet, which simplifies access to crypto. Deutsche Telekom sees a variety of opportunities using Celo, including remittances. 

WeWork Starts Utilizing Cryptocurrency As Form of Payment

WeWork has partnered with BitPay to accept crypto-assets (BTC, ETH, USDC,PAX and several others) in payment for its workspaces. WeWork will also hold the crypto-assets on its balance sheet, and pay landlords and third party partners in crypto-assets where applicable through Coinbase, a WeWork member. In addition, Coinbase will be the first WeWork member to use crypto-assets to pay for its WeWork membership. 

TIME Offers Cryptocurrency as a Form of Payment for Digital Subscriptions

TIME will begin accepting crypto-assets as a form of payment for digital subscriptions through a new partnership with Crypto.com, only in the U.S. and Canada for now, with global access to roll out in the next several months.  

Circle Selects Signature Bank for USDC Integration and Reserve Balances

Circle has partnered with Signature Bank to hold billions of dollars in reserve deposits related to USD Coin. The two companies also committed to a long term roadmap that will start with the integration of Circle into Signet, the Bank’s blockchain-based digital payments platform. 

Dogecoin Beats Tether, DOGE Enters Top 5 Cryptocurrencies

Dogecoin (DOGE) became the 5th most valuable crypto-asset today after the total market cap of DOGE crossed $50 billion. DOGE received substantial support on social media from different celebrities, including Tesla CEO Elon Musk and rapper Snoop Dogg. Dogecoin became a trend on Twitter yesterday amid massive support from retail traders. 

Kiffmeister’s #Fintech Daily Digest (04/19/2021)

~ kiffmeister ~ 5 Comments

The New Money Review published a nice summary of a podcast that we recorded last week on central bank digital currencies and the benefits and risks of new digital economy. 

Bank of England and UK Treasury Launch CBDC Taskforce

The Bank of England and the U.K. Treasury announced the creation of a Central Bank Digital Currency (CBDC) Taskforce that will (i) coordinate exploration of CBDC objectives, use cases, opportunities and risks, (ii) guide evaluation of the design features, and (iii) support a rigorous, coherent and comprehensive assessment of the overall use case. Also, the Bank of England established a CBDC Unit, and created a CBDC Engagement Forum to engage senior stakeholders and gather strategic input on all non-technology aspects of CBDC, and a CBDC Technology Forum to gather input on all technology aspects of CBDC. 

China may test its digital currency with foreign visitors at the 2022 Beijing Winter Olympics

The People’s Bank of China (PBOC) will reportedly try to make it possible for foreign athletes and visitors to use its e-CNY CBDC during the Beijing Winter Olympics in 2022. Deputy governor Li Bo also reportedly said the aim of the e-CNY is not to replace the U.S. dollar’s dominance on the international stage, although in the long term the PBOC hopes to have a cross border solution as well. 

Bank of England publishes policy for omnibus accounts in RTGS

The Bank of England unveiled a new type of omnibus account as part of its real-time gross settlement (RTGS) service. Under the new model, an operator of a payment system can hold funds in the omnibus account to fund their participants’ balances with central bank money. An omnibus account co-mingles funds from different entities for the purposes of wholesale settlement. The new type of account is not limited to wholesale transactions such as buying gilts, but can be used to settle transactions on behalf of customers, such as a small business paying a supplier. 

Bank of England omnibus account ideal for Fnality blockchain settlement tokens

Fnality sees the new Bank of England omnibus accounts as supportive of the opportunity to use tokenized cash assets on next generation payment systems, enabling on-chain wholesale exchange of value. Fnality uses an Ethereum-based permissioned blockchain developed by Clearmatics, that will run on chain payment systems in multiple currencies with a regulated subsidiary in each jurisdiction. When a bank wants to use Fnality tokens to make a payment, it transfers money from its central bank account to the Fnality omnibus account, which then tokenizes it. The bank then uses the tokens to make a payment, and the recipient bank can then opt to convert the received tokens back to central bank money and have it transferred to its own central bank account. Or it could use the tokens for further payments. 

Kiffmeister’s #Fintech Daily Digest (04/18/2021)

~ kiffmeister

Bitcoin fell below $53,000 overnight only four days after hitting its $64,805 all-time high. Some are attributing the soft market to a plummet of the hashing power of top Bitcoin mining pools located in Northwest China, due to a regional blackout to enable safety inspections. Lower hashrates mean less resources are being devoted to process transactions on the blockchain, making the network more resilient to attacks. Also widely followed FXHedge claimed that the “U.S. Treasury was set to charge several financial institutions for money laundering using cryptocurrencies.”

Canada Security Regulator Approves Three Ethereum ETFs

Last week, the Ontario Securities Commission, approved three Ethereum exchange-traded funds (ETFs) that have already or soon will be trading on the Toronto Stock Exchange. CI Global Asset Management, Purpose Investments, and Evolve Fund Group, have received approval to launch Ethereum ETFs. 

Kiffmeister’s #Fintech Daily Digest (04/17/2021)

~ kiffmeister

The Central Bank of Russia releases plans for digitizing national payments by 2023

The Central Bank of Russia (CBR) released a comprehensive strategy for the next three years of payments development in the country. Prominent among the CBR’s strategy is an emphasis on its digital ruble. The CBR is planning for open APIs that will allow the digital ruble to integrate with any other private payment platform, and for the platform to offer offline functionality. It expects an initial prototype to be ready by end-2021, to be followed by initial pilots in 2022, and an implementation roadmap by end-2022. 

Use of distributed ledger technology in post-trade processes

The European Central Bank published a report on the use of distributed ledger technology (DLT) in securities post-trade processes. It categorizes securities issuance and post-trade processes into models depending on how DLT is used in each case, drawing implications for the use of DLT at different stages of the securities life cycle, from issuance to custody and settlement. It recommends that, in order to prevent market fragmentation, the adoption of DLT-based solutions should be based on common practices and standards that enable DLT systems to interact with both each other and conventional systems. 

Kiffmeister’s #Fintech Daily Digest (04/16/2021)

~ kiffmeister

Turkey’s central bank bans the use of cryptocurrencies for payments

Türkiye Cumhuriyet Merkez Bankasi has banned the direct and indirect use of crypto-assets for payments. According to its statement “payment service providers cannot develop business models in a way that crypto assets are used directly or indirectly in the provision of payment services and electronic money issuance, and cannot provide any services related to such business models.” The regulation comes into force on April 30. Turkey ranks 29th out of the 154 countries on the Chainalysis’ Global Crypto Adoption Index, and number one in the Middle East.  

 ‘Unprecedented Demand’ Downs Robinhood Crypto Trading

Beginning overnight, today Robinhood has been experiencing on and off again issues executing users’ crypto-asset trades, blaming it on unprecedented demand for crypto services. At the same time, commission-free Robinhood continues to face headwinds from regulators. For example, the Massachusetts Securities Division published an administrative complaint that Robinhood has “continued a pattern of aggressively inducing and enticing trading among its customers – including Massachusetts customers with little or no investment experience.” Yesterday, Robinhood filed a complaint and motion in the Massachusetts State Court to block the complaint.

Kiffmeister’s #Fintech Daily Digest (04/15/2021)

~ kiffmeister

First Inverse Bitcoin ETF to Debut for Betting on Crypto Plunge

Horizons ETFs Management (Canada) launched an exchange-traded fund (ETF) fund that will allow investors to take short positions on bitcoin futures. The BetaPro Inverse Bitcoin ETF started trading on April 15, 2021 on the Toronto Stock Exchange. It will charge a 1.45% management fee, while a sister product called BetaPro Bitcoin ETF, launched simultaneously, will cost 1.00% and track Bitcoin futures.  

AXA Switzerland Allows Customers to Pay in Bitcoin

French insurer AXA’s Swiss arm announced that its customers are now able to pay their non-life policy premiums in bitcoin. Life insurance products do not carry this option for “regulatory reasons.” AXA will not be holding any bitcoin on its balance sheet. Bitcoin paid goes to broker Bitcoin Suisse, which will convert them into Swiss francs minus a 1.75% fee. 

China’s digital currency is NOT a threat to dollar dominance

Michael Pettis pushes back on widely-held opinions that the introduction of a digital yuan “could be the key that accelerates the decline of the dollar’s dominance as the world’s leading reserve currency… [and] hasten the acceptance of the renminbi as the main rival to the US currency.” According to Pettis, such opinions wrongly assume that what makes a currency a dominant reserve and international trading currency is its low frictional trading costs. But while a low frictional trading cost is a necessary condition, it is not nearly sufficient. 

Is bitcoin now the 5th biggest currency in the world?

Bitcoiners are claiming that bitcoin is now the 5th biggest currency in the world, based on the total monetary base. However, According to Bloomberg’s Joe Weisenthal, if Bitcoiners are going to insist on actually comparing the currency to the big fiats, then they should use proper measures. What is the Bitcoin share of international payments? What is the Bitcoin share of central bank reserves? How much Bitcoin-denominated debt is there? These are the logical type of ways to rank and compare money. By these rankings, Bitcoin is still incredibly tiny. 

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

~ kiffmeister

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. 



Kiffmeister’s #Fintech Daily Digest (04/13/2021)

~ kiffmeister

Crypto-asset prices surged to new all-time highs, possible in anticipation of the April 14 Coinbase listing. Bitcoin spiked to $63,604 and Ethereum hit $2,294, possibly bolstered by the scheduled April 14 “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.

Regulated cryptocurrency exchanges: sign of a maturing market or oxymoron?

This review of 16 leading crypto-asset exchanges, including the seven that contribute prices to the CME Bitcoin Reference Rate, found that just four were found to be subject to a significant level of trading-related regulation (itBit, eToroX, LMAX Digital, and Currency.com). Seven of the remaining exchanges, including Coinbase, operate as licensed Money Service Businesses (MSBs) or equivalent, but their trading activities are effectively unregulated. And three of the top exchanges appear not to be subject to any regulatory scrutiny whatsoever (Bittrex, Luno, and Bitfinex). 

EU’s Investment Bank Poised to Deploy Blockchain for Bond Sale

The European Investment Bank has reportedly hired Goldman Sachs, Banco Santander and Societe Generale to explore a euro-denominated digital bond that would be registered and settled using blockchain. The World Bank, China Construction Bank, JPMorgan Chase and National Bank of Canada have also been experimenting with blockchain-based issuance in the past few years. 

Kiffmeister’s #Fintech Daily Digest (04/12/2021)

~ kiffmeister

I’ve tabulated the key features of the two active central bank digital currency (CBDC) projects in the Caribbean area. The Central Bank of the Bahamas (CBOB) went live with its Sand Dollar on October 21, 2020 after a ten month pilot, and the Eastern Caribbean Central Bank (ECCB) started a twelve month pilot of its DCash on March 31, 2021 on four of the eight island countries under its currency union. The table, and a PDF version that includes the key features of the Central Bank of Uruguay 2017-2018 e-Peso pilot. are posted on the Global Fintech Intelligencer blog.

Ant ordered to restructure by Chinese regulators

The People’s Bank of China (PBOC) has ordered Ant Group to “cut off” the “improper connections” between its payment platform and its financial products. More specifically, told the PBOC told Ant to become a financial holding company that will be regulated more like a bank, eliminate unfair competition in its payments business, end its monopoly on information, improve its corporate governance, and better manage liquidity risks in its major fund products (including downsizing its Yu’ebao money-market fund).  

Features of Central Bank of the Bahamas Sand Dollar and Eastern Caribbean Central Bank DCash

~ kiffmeister

I’ve tabulated the key features of the two active central bank digital currency (CBDC) projects in the Caribbean area. The Central Bank of the Bahamas (CBOB) went live with its Sand Dollar on October 21, 2020 after a ten month pilot, and the Eastern Caribbean Central Bank (ECCB) started a twelve month pilot of its DCash on March 31, 2021 on four of the eight island countries under its currency union. The table, and a PDF version that includes the key features of the Central Bank of Uruguay 2017-2018 e-Peso pilot. are posted on the Global Fintech Intelligencer blog.