Month: December 2021

Kiffmeister’s #Fintech Daily Digest (12/31/2021)

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Binance Rebuked by Ontario With Registration Still Pending

Binance was reprimanded by the Ontario Securities Commission (OSC) for telling users of its crypto trading platform that it was allowed to continue operations in Canada when it still lacks a registration to do so. In June Binance had told OSC Staff that no new transactions involving Ontario residents would occur after December 31, 2021. However, on December 29 it told users, without notifying the OSC, that it was rescinding this commitment on the basis of its recent registration with FINTRAC, the Canadian AML-CFT regulator (i.e., not a securities regulator). After saying this move was “unacceptable” the OSC notice warned that “crypto-asset platforms that have or will be applying for registration with securities regulators should be aware that misrepresenting their registration status raises concerns about the fitness of the firm and its principals for registration.” [Read more]

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Kiffmeister’s #Fintech Daily Digest (12/30/2021)

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Mexico Reportedly Rolling Out CBDCs in 2024

The President of Mexico tweeted that El Banco de México will issue a central bank digital currency (#CBDC) by 2024, citing financial inclusion as  one of the motives. There is no mention of it on the central bank website, but new incoming Governor Victoria Rodriguez Ceja reportedly told a Senate Commission in early December that El Banco de México was analyzing CBDC. [Read more]

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Kiffmeister’s #Fintech Daily Digest (12/29/2021)

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The RBI supports “basic” central bank digital currency

From the Reserve Bank of India (RBI) Report on Trend and Progress of Banking in India:

Given its dynamic impact on macroeconomic policy making, it is necessary to adopt basic central bank digital currency (CBDC) models initially, and test comprehensively so that they have minimal impact on monetary policy and the banking system. India’s progress in payment systems will provide a useful backbone to make a state-of-the-art CBDC available to its citizens and financial institutions.

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Kiffmeister’s #Fintech Daily Digest (12/27/2021)

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Thai central bank to delay retail digital currency testing

Thailand’s central bank is delaying pilot testing its retail central bank digital currency (CBDC) until late 2022. It was previously planned for the second quarter of 2022. G+D had been selected to do the proof of concept work back in May 2021. [Read more]

Altcoins Rise, Bitcoin Dominance Sinks below 40%

Bitcoin has seen a sharp decline in its crypto market dominance during December’s correction. Although, it still leads the way in terms of market capitalization ($930 billion on December 26), its dominance has dropped from 70% at the end of December 2020 to below40%. During that period, Bitcoin’s market capitalization went up by 75%, versus total altcoins’ 526%. [Read more]

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Kiffmeister’s #Fintech Daily Digest (12/24/2021)

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USDC Now Backed Only By Cash and Treasury Bills

The fine print in Circle’s end-November attestation report for USDC stablecoins says that it no longer owns non-government cash equivalents (i.e., commercial paper). Only cash and Treasury Bills are being used to back USDC (see below). [H/T JP Koning]

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Kiffmeister’s #Fintech Daily Digest (12/23/2021)

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SETL to take part in asset tokenization pilot with SWIFT and other market participants

London-based SETL will be working with SWIFT, Clearstream, Northern Trust and other market participants to explore the issuance, delivery versus payment (DVP), and redemption processes to support a frictionless and seamless tokenized asset market. The experiments will use both established forms of payment and central bank digital currency (CBDC). SETL had previously been part of an experiment in which shares of a money market fund were subscribed and then redeemed on the IZNES Platform using wholesale CBDC tokens created by the Banque de France. [Read more]

Bakkt President Adam White Announces He Is Leaving

Adam White, a founder and President of the digital assets and rewards platform Bakkt, is moving on from the company. Although he did not state specific reasons for his departure, Bakkt has struggled to carve out a niche for itself even as the broader crypto market has boomed. After more than three years in operation, its offering that consolidates a variety of digital assets into a single wallet, hasn’t gained much traction, and, while the firm’s stock initially traded as high as $50 shortly after going public in October, it has floundered since and was recently trading around $9. [Read more]

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Kiffmeister’s #Fintech Daily Digest (12/22/2021)

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Settlement choice DVP model using CBDC for securities settlement

A paper from R3 proposes a new securities settlement model that offers the ability to settle both gross and netted trades instantly using central bank digital currency (CBDC) and digital assets on a blockchain infrastructure. Existing delivery versus payment models exist on a continuum from intraday gross settlement–which minimizes settlement risk while requiring a great deal of liquidity–to delayed batch settlement–which offers netting efficiencies but delays final settlement. Market participants acknowledge the benefits of real time gross settlement but continue to rely on the operational and liquidity advantages of delayed batch settlement. The R3 model purports to be a “best of both worlds” model. [Read more]

Vanguard, State Street use blockchain for forex derivatives margins

State Street Digital was involved in a transaction using Symbiont’s Assembly enterprise blockchain to complete margin calculations for a live over the counter foreign exchange forward contract. This transaction marks its transition from pilot to production. By automating margin assessments, calculations can be made more regularly. If the movement of collateral used to support the margin requirements also happens automatically together, this can significantly reduce counterparty risks. [Read more]

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Kiffmeister’s #Fintech Daily Digest (12/20/2021)

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Terra’s UST Flips DAI to Become Fourth-Largest Stablecoin

Terra’s U.S. dollar-pegged stablecoin UST is now tied with DAI as the #4 stablecoin on the market (both about $9 billion outstanding) but it’s very different from the three that sit above it. Tether’s USDT ($77 billion), USD Coin’s USDC ($42 billion) and Binance’s BUSD ($15 billion) are run and managed by centralized entities, and the assets that back them (reportedly 1:1) are also centralized. However, UST is a decentralized stablecoin backed by other cryptocurrencies. Terra itself is a layer 1 smart contract-enabled network built using the Cosmos software developer kit, and UST is minted by users by “burning” (destroying) LUNA, Terra’s native token responsible for paying transaction fees and participating in governance. DAI is also cryptocurrency backed. [Read more]

US SEC Further Delays Decisions on Bitwise and Grayscale Bitcoin ETFs

The US Securities and Exchange Commission (SEC ) has delayed decisions on physical (spot) Bitcoin exchange-traded fund (ETF) proposals from Bitwise and Grayscale until February 1 and February 6, respectively. The applications were originally filed on October 14 and 19, 2020, respectively. The SEC has been approving Bitcoin futures ETFs (ProShares and Valkyrie’s Bitcoin Strategy ETFs in October, 2020) but it has continued to maintain a hard stance on physical crypto ETFs (it denied the approval of VanEck’s physical Bitcoin ETF in November 2020, and WisdomTree’s in early December). The SEC is concerned that the spot Bitcoin market is prone to fraud, manipulation and abuse, whereas Bitcoin futures trade on highly regulated exchanges. [Read more]

Other Bitcoin ETFs applications that have been repeatedly delayed include Kryptoin (on September 29 was pushed out to December 24),  Valkyrie (on November 11 was pushed out to January 7) and Global X (pushed out on November 18). And VanEck’s application was rejected outright on November 12, and WisdomTree’s on December 1.

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Kiffmeister’s #Fintech Daily Digest (12/19/2021)

~ kiffmeister

RBI Board meet: Digital currency pilot soon

On December 17, 2021 the Central Board of the Reserve Bank of India (RBI) discussed various aspects related to central bank digital currency (CBDC) and cryptocurrencies. RBI officials reportedly informed the Board that they are  working on both wholesale and retail CBDC, and a pilot project will be launched soon. They said that, while a lot of work is already done on wholesale accounts, the retail issue is slightly complicated and the central bank is taking some time on it. [Read more]

Blueprint for CBDC in Post-Trade Settlement

The International Securities Services Association published a paper on the potential application of CBDC and stablecoins in the capital markets post-trade landscape, with a specific focus on securities settlement. It provides an overview of key use cases, opportunities, and considerations for market infrastructures, custodians, intermediaries and service providers to consider. In addition, it outlines the potential impact that CBDC and stablecoins could have on the banking, fintech, and securities industry. [Read more]

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