Kiffmeister’s #Fintech Daily Digest (12/14/2021)

Dogecoin Rockets 30% After Elon Musk Says Tesla Will Use for Payments

Elon Musk announced that Tesla will begin accepting Dogecoin as payment for “some” merchandise (swag?) to “see how it goes.”  The Tesla CEO has a long and well-established relationship with meme cryptocurrency Dogecoin. In May of this year—around the same time he reversed course on Bitcoin—Musk said that Dogecoin could beat Bitcoin “hands down.” Since today’s news broke, Dogecoin’s price surged from around $0.16 to over $0.21 at one point. [Read more]

Ukraine Electronic Hryvnia Pilot Launched by TASCOMBANK and Bitt on Stellar

Ukrainian commercial bank TASCOMBANK, and Bitt, the firm behind the Eastern Caribbean Central Bank and Central Bank of Nigeria central bank digital currency pilots, have launched a pilot project to issue an electronic hryvnia on Stellar. The pilot will test the digital currency on the use cases of programmable payroll for public employees at Diia, an IT solutions enterprise, as well as for peer-to-peer payments and merchant payments. The project is being implemented under the supervision of the National Bank of Ukraine and with the support of the Ministry of Digital Transformation. [Read more]

E-Money: Prudential Supervision, Oversight, and User Protection

The IMF published a paper on the evolving prudential frameworks for nonbank issuers of electronic money (e-money). Some jurisdictions take a relatively light-touch approach to regulating e-money issuers (EMIs). Others have sought to apply more stringent requirements to protect e-money users, as the sector has grown in importance. The paper ends with recommendations for policymakers, especially in those emerging market economies and developing countries wherein EMIs have reached a scale at which they could have a significant economic impact if they were to fail. [Read more]

BIS CPMI report highlights rapid development of retail fast payments

The BIS Committee on Payments and Market Infrastructures (CPMI) published a review of recent developments in retail fast payment systems (FPS). It notes that FPS can have significant implications for the operations and services of real-time gross settlement (RTGS) systems, including potential modifications to their access criteria and operating hours. The report also finds that FPS adoption rates are generally low in the early stages of implementation, but some recent ones have seen more rapid take-up. Also, FPS are increasingly settling obligations between banks and, where relevant, non-bank FPS participants on a gross (ie payment-by-payment) basis in real time, and most jurisdictions have either adopted or are moving towards ISO 20022 as the FPS messaging format. [Read more]

Contractual Standards for Digital Asset Derivatives

The International Swaps and Derivatives Association (ISDA) published a paper on the development of common legal standards and definitions for digital asset derivatives. The paper (i) identifies novel technology and market-driven events that could disrupt the operation of a digital asset derivatives transaction and provides a framework for dealing with these events; (ii) explores how digital assets (and the derivatives that reference them) can be valued and what happens when a valuation cannot be obtained; and (iii) analyzes how digital assets might interact with the existing ISDA documentation architecture, including the ISDA Master Agreement and industry standard collateral documentation. ISDA has also produced a supplement to the paper that sets out a granular, technical analysis of different ISDA product definitions and their potential applicability to digital asset derivatives. [Read more]

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