Kiffmeister’s #Fintech Daily Digest (06/28/2021)*

MAS Partners IMF, World Bank and others to launch Global Challenge for Retail CBDC Solutions

The Monetary Authority of Singapore (MAS) launched the Global CBDC Challenge, to seek innovative retail central bank digital currency (CBDC) solutions to enhance payment efficiencies and promote financial inclusion. Partners include the International Monetary Fund, World Bank, and the Organisation for Economic Co-operation and Development. Firms around the world are invited to submit innovative solutions that can address 12 problem statements centered on the CBDC instrument, distribution; and infrastructure.  

Up to 15 finalists will be selected to receive mentorship from industry experts and be given access to the APIX Digital Currency Sandbox for rapid prototyping of digital currency solutions. The Sandbox will offer a comprehensive test and development platform that includes core-banking APIs from APIX, payment APIs from Mojaloop, digital currency APIs from Mastercard, Partior and R3, and more than 100 APIs provided via the APIX marketplace. Finalists will pitch their solutions at November’s Singapore FinTech Festival , and up to three winners will be selected, with each receiving $50,000 in prize money. The deadline for application submissions is July 23.

The Regulatory Screws Continue to Tighten on Binance

Binance stopped its services to clients from Ontario, Canada, following the Ontario Securities Commission’s (OSC) notice to Binance and multiple and crypto exchanges for their violation of the local securities laws. Meanwhile, the firm is facing regulatory troubles in multiple other jurisdictions, including a ban from operating in the United Kingdom imposed by the Financial Conduct Authority, and a warning by Japan’s Financial Services Agency for operating in the country without being registered.  

Proposed Bitcoin Capital Requirement For Banks: Too Low And Would Leave Banks Vulnerable

The Basel Committee on Banking Supervision (BCBS) recently proposed Basel III capital requirements for banks holding cryptoassets. According to Caitlin Long, the proposal treats stablecoins prudently, rightly suggesting they can more or less fit into the existing Basel framework. But the proposed treatment of Group 2 crypto-assets — those that have no issuer, such as bitcoin — completely misses the biggest risk: settlement risk for the banks handling the bitcoin. Traditional banks are simply not set up operationally or technologically to hold on-balance sheet assets, such as bitcoin, that settle in minutes with irreversibility. Bitcoin has no operational fault tolerance. 

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