Kiffmeister’s #Fintech Daily Digest (20220401)

Small Digital Euro Payments Won’t Need Laundering Checks, ECB Official Says

European Central Bank (ECB) Executive Board member Fabio Panetta said that, although a fully anonymous digital euro is not a viable option from a public policy perspective, “a greater degree of privacy could be considered for lower-value online and offline payments… which are usually low risk in terms of money laundering, terrorism financing and violations of relevant EU law”. The ECB is “therefore exploring an offline functionality whereby holdings, balances and transaction amounts would not be known to anyone but the user [but] these balances and private offline payments would have an upper limit”. [Read more]

SEC Rejects Spot Bitcoin ETF Application From Ark 21Shares

The U.S. Securities and Exchange Commission (SEC) has rejected an application for a spot bitcoin exchange-traded fund (ETF) from Ark 21Shares (filed on behalf of the Cboe BZX Exchange), citing a lack of investor protections. [Hit repeat!] “The Commission concludes that BZX has not… demonstrate[d] that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), and in particular, the requirement that the rules of a national securities exchange be ‘designed to prevent fraudulent and manipulative acts and practices’ and ‘to protect investors and the public interest’.” The SEC has repeatedly rejected spot bitcoin ETF proposals, but showing a clear preference for bitcoin ETF’s that trade bitcoin futures. [Read more]

Companies Must Account for Their Crypto Risks, Says SEC

The U.S. SEC published guidance about how companies should account for the custody of crypto-assets on behalf of clients. Affected companies will have to disclosure the nature and amount of crypto-assets that they hold for their users, with separate disclosure for each significant crypto-asset and any vulnerabilities the business has due to any concentration in its users’ crypto holdings. Also, an estimate of potential liabilities from safeguarding failures may need to be included with the initial recognition of those crypto holdings, as well as later accounting of their fair value. Caitlin Long tweeted that this “brazenly violates ‘same activity/same regulation’ principle” because such treatment isn’t required of securities custodians. [Read more]

Upcoming events I’m affiliated with:

The CBDC Think Tank is hosting several webinars over the next month:

Satoshi Capital Advisors is hosting a virtual workshop on wholesale CBDC, stablecoins and digital capital markets on May 24 (starting at 08:00 EST). [Register here with the passcode: CBDC]