Kiffmeister’s #Fintech Daily Digest (07/28/2021)*

Binance Is Making It Harder to Trade Bitcoin Anonymously Amid Regulatory Troubles

Binance is placing more restrictions on customers who haven’t completed all steps of its user verification process, in an effort to better comply with local regulations. New users on the exchange will be limited to daily withdrawals of 0.06 Bitcoin (about $2,000). if they have only completed the platform’s Basic Account Verification. The previous limit was 2 BTC per day ($70,000). The Basic level asks for name, nationality, date of birth, and address. The Intermediate level asks for identification and photos, while Advanced Verification also requires a proof of address in the form of a utility bill or bank statement. 

Digital euro experimentation scope and key learnings

On July 14, the European Central Bank (ECB) announced that they had been joined by experts from the euro area national central banks to conduct experiments aimed at assessing different central bank digital currency (CBDC) design features. More specifically, four experiments were conducted in a multidisciplinary environment and also involving academics and the private sector: 

  • The first workstream focused on an account-based system and tested the issuance, redemption and distribution of a digital euro using a network architecture built on the existing, centrally managed architecture of the TARGET Instant Payment Settlement (TIPS) system, which is operated by the Eurosystem.
  • The second workstream focused on the ability to combine existing systems (conventional centralized ledgers) with newer technologies, such as distributed ledger technology (DLT), in a tiered approach. In this approach, the central bank would issue digital euros and provide them to intermediaries in the first tier, while intermediaries would distribute those digital euros to end-users in the second tier. Technical papers from this workstream have been published by the Banque de France and Banca D’Italia.  
  • The third workstream looked into how a technical solution for a digital euro built on the blockchain technology could perform in terms of the number of payments and money-holders and its energy costs, and how digital identities could be linked and privacy ensured. It showed that the innovative digital euro technology based on the blockchain is highly scalable, meaning that the number of payments made with the digital euro can easily be increased if needed. A technical paper on this workstream was published by Esti Pank (the Estonian central bank).
  • The fourth workstream focused on offline payment solutions (i.e. hardware-based bearer instruments) that could facilitate the use of a digital euro as a bearer instrument. It identified challenges to designing and enforcing time-sensitive rules, such as setting a transaction limit over a certain time frame, as these would require a connection with the online ledger from time to time to ensure that the rules were not breached.

Why is the United States Lagging Behind in Payments?

According to a paper by Diem/Novi’s Christian Catalini and Andrew Lilley, there are at least three ways to remove frictions in payments and rapidly expand the number of individuals and businesses that can access the financial system and cheaply transact in real time. The first is to bring deposits on a single ledger through a central bank digital currency (CBDC), so that transfers between banks are not limited by external liquidity constraints or third-party rails. The second approach is to follow countries such as India and Mexico and increase the throughput of always-on real-time gross settlement (RTGS) systems, the model the US Federal Reserve is pursuing with the introduction of FedNow, targeted for 2023. The third approach is to facilitate the growth of interoperable, stablecoin payment rails by creating the right regulatory framework for these new types of networks to safely increase competition in payments. 

BIS Innovation Hub and MAS publish proposal for enhancing global real-time retail payments network connectivity

The Bank for International Settlements Innovation Hub (BISIH) Singapore Centre and the Monetary Authority of Singapore (MAS) proposed blueprint for enhancing global payments network connectivity via multilateral linkages of countries’ national retail payment systems. Titled Project Nexus, this blueprint outlines how countries can fully integrate their retail payment systems onto a single cross-border network, allowing customers to make cross-border transfers instantly and securely via their mobile phones or internet devices. 

Mastercard Works With Startups to Ease Use of Cryptocurrencies

“Startups focused on crypto and digital assets will now be able to join Mastercard’s Start Path program, which gives fledgling companies access to the network’s executives and technology to help them grow, Mastercard said Tuesday in a statement. Seven crypto-focused startups have joined the program so far, including Uphold and Domain Money, which are building investment platforms for digital assets.” 

*To get these updates sent to your inbox, please email me at Also, for those interested in intra-day updates and news that didn’t make the Daily Digest cut, please check out my Diigo fintech bookmarks: