Month: May 2022
Kiffmeister’s #Fintech Daily Digest (20220530)
US SEC Rejects One River Spot Bitcoin ETF Application
The U.S. Securities and Exchange Commission (SEC) has rejected the One River Carbon Neutral Bitcoin Trust spot Bitcoin Exchange Traded Fund (ETF) application filed by One River Asset Management for listing on the New York Stock Exchange Arca. According to the SEC, the application did not address the core concerns bordering on price manipulation noting that the company utilized the same standard used in its rejections of previous proposals to list bitcoin-based commodity trusts. [Read more]
Upcoming events I’m affiliated with:
The CBDC Think Tank is hosting a CBDC Papers Lecture Series on June 17 and 24 starting at 7am EST and running for 4 hours each day. [View list of papers and register here]
Kiffmeister’s #Fintech Daily Digest (20220527)
India’s Central Bank Digital Currency to be Introduced in Phased Manner
The Reserve Bank of India (RBI) is continuing its work on central bank digital currency (CBDC). According to its latest annual report “the design of CBDC needs to be in conformity with the stated objectives of monetary policy, financial stability and efficient operations of currency and payment systems… The RBI proposes to adopt a graded approach to introduction of CBDC, going step by step through stages of a proof of concept (PoC), pilots and the launch. [Read more (see page 12)]
Bank of Japan CBDC Experiments: Results and Findings from PoC Phase 1
The Bank of Japan published an English version of the April 13 paper on the results and findings of the first phase of its CBDC PoC work. [Download here]
JPMorgan Finds New Use for Blockchain in Trading and Lending
“JPMorgan Chase & Co is using blockchain for collateral settlements. The bank’s first such transaction came on May 20, when two of its entities transferred the token representation of BlackRock money market fund shares as collateral on its private blockchain. The effort will allow investors to pledge a wider range of assets as collateral and use them outside of market operating hours… In the coming months, the bank plans to expand tokenized collaterals to include equities, fixed income and other asset types.” [Read more]
Apple Pay iPhone-to-iPhone Tap to Pay Launches at Apple Stores
“Apple will reportedly begin rolling out its new Tap to Pay feature for the public. The feature was unveiled in February and lets iPhones that were compatible take payments through Apple Pay, contactless credit and debit, or other digital wallets. The feature will let small businesses and merchants take contactless payments via supported iOS apps. The merchant at checkout will prompt the customer to hold their device, either an iPhone, Apple Watch or contactless credit or debit card, near the merchant’s iPhone, and the payment will be completed.” [Read more]
Crypto is changing how humanitarian agencies deliver aid and services
“The primary use case for cryptocurrency in most wealthy countries is acquiring it and holding it, trading it, or using it in various other ways to make more money. In the developing world, where access to financial and banking systems is limited or nonexistent, innovative humanitarian organizations are piloting micro-blockchain ecosystems.” [Read more]
Upcoming events I’m affiliated with:
The CBDC Think Tank is hosting a CBDC Papers Lecture Series on June 17 and 24 starting at 7am EST and running for 4 hours each day. [View list of papers and register here]
Kiffmeister’s #Fintech Daily Digest (20220526)
In testimony before the U.S. House Financial Services Committee, Fed Vice Chair Lael Brainard said that no decision has been made about whether the Fed will issue central bank digital currency (CBDC). However, she said that it is important to undertake the necessary work to inform any such decision and to be ready to move forward should the need arise. For example, a digital dollar could help ensure financial system stability if crypto-assets and CBDCs issued by other countries become increasingly popular. [Read more][Watch the webcast of the hearing]
Tether Launches MXN₮ Tether Tokens Pegged to the Mexican Peso
Tether is launching a stablecoin pegged to the Mexican Peso (MXN₮) with initial blockchain support to include Ethereum, Tron, and Polygon. MXN₮ will join three other fiat-currency pegged tokens Tether has in the market: the U.S. dollar-pegged USD₮, the Euro-pegged EUR₮, and the offshore Chinese Yuan-pegged CNH₮. This marks Tether’s entrance into Latin America that will provide a testing ground for onboarding new users in the Latin American market and will pave the way for future fiat-pegged currencies in the region to be launched. [Read more]
Upcoming events I’m affiliated with:
The CBDC Think Tank is hosting a CBDC Papers Lecture Series on June 17 and 24 starting at 7am EST and running for 4 hours each day. [View list of papers and register here]
Kiffmeister’s #Fintech Daily Digest (20220524)
China’s state-backed BSN pushes new public blockchain network
China’s Blockchain-Based Service Network (BSN) reportedly expects to launch a beta version of its open source Spartan Network for international markets on August 31, 2022. Launched in 2020, BSN’s mission is to develop a global public infrastructure to deploy and operate all types of distributed ledger technology (DLT) applications. Spartan Network moves BSN another step closer to becoming a one-stop platform for developers of DLT applications. The network is designed only for international markets because so-called open blockchains are not allowed in mainland China. On the mainland, BSN operates BSN-DDC. [Read more]
ISDA: Crypto-Asset Risks And Hedging Analysis
The International Swaps and Derivatives Association (ISDA) published the results of a study that demonstrates that hedging the most liquid crypto assets for which there is a two-way market, so-called Group 2a crypto assets (Bitcoin and Ether), with their respective futures or exchange-traded funds (ETFs), is effective. The paper also shows that the basis risk profile of Group 2a crypto-asset futures is comparable with that of existing financial assets. The capital treatment should therefore allow for offsetting for Group 2a crypto-assets and their futures and ETFs. [Read more]
Upcoming events I’m affiliated with:
The CBDC Think Tank is hosting a CBDC Papers Lecture Series on June 17 and 24 starting at 7am EST and running for 4 hours each day. [View list of papers and register here]
Kiffmeister’s #Fintech Daily Digest (20220523)
No news worth reporting today, except for the updated G7 story from yesterday (correcting the link to the leaders’ statement).
G7 Finance Ministers, Central Bank Governors Issue Statement on CBDCs (Link revised)
G7 Finance Ministers and Central Bank Governors have issued a statement that, among other things, highlighted the opportunities and implications of central bank digital currencies (CBDCs) and their potential role in future payment transactions. “[It encouraged] jurisdictions exploring CBDCs to examine the international dimensions of CBDCs, in particular their cross-border use. CBDCs with cross-border functionality may have the potential to spur innovation and open up new ways to meet users’ demand for more efficient international payments, but continued international cooperation will be important to understanding and minimizing any negative spillovers to the international monetary and financial system.” [Read more]
Upcoming events I’m affiliated with:
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]
The CBDC Think Tank is hosting a CBDC Papers Lecture Series on June 17 and 24 starting at 7am EST and running for 4 hours each day. [View list of papers and register here]
Kiffmeister’s #Fintech Daily Digest (20220522)(Revised)
G7 Finance Ministers, Central Bank Governors Issue Statement on CBDCs (Link revised)
G7 Finance Ministers and Central Bank Governors have issued a statement that, among other things, highlighted the opportunities and implications of central bank digital currencies (CBDCs) and their potential role in future payment transactions. “[It encouraged] jurisdictions exploring CBDCs to examine the international dimensions of CBDCs, in particular their cross-border use. CBDCs with cross-border functionality may have the potential to spur innovation and open up new ways to meet users’ demand for more efficient international payments, but continued international cooperation will be important to understanding and minimizing any negative spillovers to the international monetary and financial system.” [Read more]
Tether’s accountant waves red flag
The language used by Tether’s accountant in the latest quarterly attestation report suggests it’s worried about the future existence of the stablecoin. MHA Cayman used ‘going concern’ language, a form of words that implies a business is stable enough to meet its obligations for the time being, but which suggests the accountant is taking a step back in judging the business as viable. The accountant added other new language to Tether’s attestation, suggesting significant uncertainty with respect to the valuation of Tether’s assets and its exposure to possible counterparty risks (see red parts in the except below). (Read more)
Circle to Issue Weekly USDC Reserve Reports
Circle CEO Jeremy Allaire announced that company will now provide weekly attestations concerning stablecoin USD Coin (USDC) reserves and liquidity. According to the latest week’s figures, all $52.9 billion USDC in circulation are fully backed by cash ($12.8 billion) and short-dated U.S. Treasury securities ($40.2 billion expressed in terms of fair market value) held at U.S. regulated financial institutions on behalf of USDC holders. This weekly reporting is in addition to the the monthly attestation reports which, like Tether’s, are published with long lags. The last one (covering the accounts as of March 31, 2022) was published at the end of April. [Read more]
US Considers Legislation on Mandatory Acceptance of Cash
The U.S. House Financial Services Committee passed the Payment Choice Act that, if enacted, would require applicable retail businesses to accept cash for transactions of less than $2,000 and prohibit them from charging cash-paying customers a higher price relative to customers not paying with cash. Retail businesses would retain flexibility to accept payments through any other means. Exceptions are provided in the event that a retailer temporarily has insufficient cash on hand to make change, or experiences a systems failure that temporarily prevents it from processing cash payments. Enforcement of alleged violations would be by a civil action brought by any injured person in state or federal court. [Read more]
Upcoming events I’m affiliated with:
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]
The CBDC Think Tank is hosting a CBDC Papers Lecture Series on June 17 and 24 starting at 7am EST and running for 4 hours each day. [View list of papers and register here]
Kiffmeister’s #Fintech Daily Digest (20220520)(Revised)
New experiments pave way for international payments using CBDCs
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) published a paper outlining how the financial transaction messaging platform is preparing to interact with the cross-border use of central bank digital currencies (CBDCs). SWIFT is teaming up with Capgemini to test ways to link multiple CBDC networks, as well as CBDC and traditional currency networks, as a proof of concept. [Read more]
Building regional payment areas: the Single Rule Book approach
A Bank for International Settlements working paper analyzes regional payment integration projects across the world to identify key lessons for future cross-border payment enhancements on regional and global level, focusing on the role of technology, law and regulation. It finds that ach border adds to the costs of a cross-border payment if crossing the border means entering into a different technological, regulatory and legal environment, with different systems, regulators, and courts. At the global level, mismatches between the inter-institutional framework on the back-end and the contractual relationship with clients on the front-end represent potential costs for the payment services provider and increase legal risk, prompting costly legal, due diligence manual adjustments in payments processes. The paper concludes that globally coordinated action is needed to develop a comprehensive “single rule book” framework to guide and support regional payment integration. [Read more]
DLT-based enhancement of cross-border payment efficiency – a legal and regulatory perspective
Another BIS working paper published today concludes that financial law traditionally assumes that functions are concentrated in a single entity. Hence, the distribution of functions in distributed ledger technology (DLT) DLT with the need for additional agreements, ongoing coordination across, and governance arrangements among each participant. Further, in a cross-border context, multiple regulators and courts of various countries will be involved. All of these must decide whether for compliance with the law and regulations they look at DLT as a whole (‘ledger perspective’) or each individual DLT participant (‘node perspective’). On that basis the paper analyzes the extent to which the ledger or the node perspective should prevail. [Read more]
Upcoming events I’m affiliated with:
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]
The CBDC Think Tank is hosting a CBDC Papers Lecture Series on June 17 and 24 starting at 7am EST and running for 4 hours each day. [View list of papers and register here]
Kiffmeister’s #Fintech Daily Digest (20220519)
Tether Reassures Users with “Assurance Opinion”
Tether published its March 31, 2022 quarterly assurance opinion showing that assets exceed its USTD liabilities ($82.4 billion versus $82.2 billion) and revealing a 17% decrease in commercial paper holdings (to $20.1 billion). Also, the average rating of commercial paper and certificates of deposits has gone up from A-2 to A-1, and investments in U.S. treasury bills have gone up 14% to $39.2 billion. However, 14% of assets ($11.8 billion) are comprised of secured loans, corporate bonds, funds, precious metals and “other investments (including digital tokens). [Read more]
Upcoming events I’m affiliated with:
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]
The CBDC Think Tank is hosting a CBDC Papers Lecture Series on June 17 and 24 starting at 7am EST and running for 4 hours each day. [View list of papers and register here]
Kiffmeister’s #Fintech Daily Digest (20220518)(Revised)
Nahmii selected to to build Norges Bank CBDC sandbox (Revised)
Norges Bank has chosen Norwegian startup Nahmii to work it on its experimental central bank digital currency (CBDC) sandbox project, following a competitive tender process. Many technologies including so-called layer-2 blockchain protocols, will be considered. Layer 2s allow for the leveraging of public blockchain security, e.g. Ethereum, whilst providing an increased performance and allowing for regulatory compliance. The sandbox trial is expected to include all major Norwegian banks. In another workstream, the central bank will also test out the “Project Hamilton” open source CBDC platform being developed jointly by the Boston Fed and the MIT Digital Currency Initiative. [Read more]
Banking in the shadow of Bitcoin? The institutional adoption of cryptocurrencies
A new Bank for International Settlements (BIS) working paper uses a novel global supervisory database of commercial bank cryptocurrency exposures and a range of complementary data sources for other types of institutions to explore the roles of traditional financial intermediaries in cryptocurrency markets and what drives their engagement. It shows that major banks’ exposures remain at very modest levels. However, substantial activity is concentrated in lightly regulated crypto exchanges, with this “shadow crypto financial system” serving both retail and institutional clients, such as dedicated investment funds. [Download paper here]
Upcoming events I’m affiliated with:
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]
The CBDC Think Tank is hosting a CBDC Papers Lecture Series on June 17 and 24 starting at 7am EST and running for 4 hours each day. [View list of papers and register here]