Month: June 2022

Kiffmeister’s #Fintech Daily Digest (20220619)

~ kiffmeister

I’ve updated my tabulation of retail central bank digital currency (#CBDC) explorers, including adding Azerbaijan and Bangladesh. Keep in mind that my count (86) is less than the numbers published by the Bank for International Settlements (BIS) because I include only central banks that have publicly confirmed their explorations. And my count is less than those published occasionally by the Atlantic Council (105) because they include wholesale CBDC and I suspect there’s also some double counting in theirs. [See my latest tabulation here]

Bangladesh exploring CBDC as an alternative to ‘risky’ private digital currencies

Bangladesh Bank will be conducting a central bank digital currency (CBDC) feasibility study, according to the country’s Minister of Finance AHM Mustafa Kamal. The main motivation is to “facilitate currency in virtual transactions and to encourage startups and e-commerce businesses. [Read more]

NFT Meltdowns Are Paving The Way For Better Use Cases

Widely popular and promoted by entertainers and influencers of all kinds, including many not normally associated with sound financial advice, the allure of non-fungible tokens (NFTs) has proven hard for investors to ignore. Nearly $40 billion has been invested into the NFT space in 2022 so far, and with current declines in overall crypto-asset prices, a substantial percentage of them are likely underwater, if not nearly worthless. Such dramatic headlines and damage, however, overshadow the very real and tangible use cases that NFTs can – and will – drive moving forward. [Read more]

Upcoming events I’m affiliated with:

The second session of the CBDC Think Tank CBDC Papers Lecture Series will be held on June 24 starting at 7am EST and run for 4 hours. [View list of papers and register here]

The CBDC Think Tank, in partnership with the International Monetary Fund and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC. The sessions are designed as instructional deep dives with full presentations and Q&A components.  [Register here]

Kiffmeister’s #Fintech Daily Digest (20220618)

~ kiffmeister

Philippines, Vietnam conducting CBDC feasibility studies with Soramitsu

“Japanese blockchain firm Soramitsu has reportedly landed feasibility studies for central bank digital currency (CBDC) with both Vietnam and the Philippines. Soramitsu is establishing a considerable footprint in Southeast Asia following its successful implementation of Cambodia’s Bakong project in 2020. Last year it also started working with Laos’ central bank on a CBDC research project.” [Read more]

Bitcoin fell below $19,000

Yesterday crypto traders were talking about how critical Bitcoin’s $19,511 high during its last bull cycle in 2017 as the level at which many hodlers will capitulate and wind-down leverage, and now it’s bouncing around $19,000. In that regard, I’ve collected below some of the best (IMHO) explainers for the current debacle:

Please feel free to leave other links in the comments!

Upcoming events I’m affiliated with:

The second session of the CBDC Think Tank CBDC Papers Lecture Series will be held on June 24 starting at 7am EST and run for 4 hours. [View list of papers and register here]

The CBDC Think Tank, in partnership with the International Monetary Fund and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC. The sessions are designed as instructional deep dives with full presentations and Q&A components.  [Register here]

Kiffmeister’s #Fintech Daily Digest (20220617)

~ kiffmeister

Azerbaijan Central Bank preparing concept of digital manat

The Central Bank of Azerbaijan (CBA) is reportedly studying the possibility of issuing a central bank digital currency (CBDC).  Apparently, so said Rashad Gasimov of the CBA’s National Payment Systems Development Division of the Payment Systems and Settlements Department during the Finance and Technologies Expo held in Baku, on June 16-17. [Read more]

Miners as intermediaries: extractable value and market manipulation in crypto and DeFi

A Bank for International Settlements (BIS) paper explains decentralized finance (DeFi) miner extractable value (MEV) and why it arises, documents the amounts involved, and draws regulatory
implications for cryptocurrencies, DeFi and other blockchain-based applications. Cryptocurrencies and DeFi protocols built on them rely on validators or “miners” as intermediaries to verify transactions and update the ledger. Since these intermediaries can choose which transactions they add to the ledger and in which order, they can engage in activities that would be illegal in traditional markets such as front-running and sandwich trades. The resulting profit, or MEV, is an intrinsic shortcoming of pseudo-anonymous blockchains.  [Read more]

Bitcoin Veterans Know to Keep Their Eyes on $19,511 Level

Bitcoin’s high during its last bull cycle in 2017 $19,511 is widely seen as the level at which many hodlers will capitulate and wind-down leverage (bitcoin is currently hovering above the $20,000 level). According to Arcane Research, throughout its roughly 12-year trading history, bitcoin has never dropped below previous cycle peaks, so a break below it would be momentous. In addition, most of the open interest in bitcoin options is based on the $20,000 strike price, which could contribute to selling pressure in the spot market should the price fall below that level. [Read more]

BIS Innovation Hub announces expanded cyber security experiments

The BIS Innovation is launching a project to examine how the introduction of quantum-resistant cryptography will affect payment system performance, and investigate and test potential cryptographic solutions that can withstand the vastly improved processing power of quantum computers. Given the long-term sensitivity of financial data, this vulnerability must be addressed well in advance of the advent of quantum computing. [Read more]

Upcoming events I’m affiliated with:

The second session of the CBDC Think Tank CBDC Papers Lecture Series will be held on June 24 starting at 7am EST and run for 4 hours. [View list of papers and register here]

The CBDC Think Tank, in partnership with the International Monetary Fund and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC. The sessions are designed as instructional deep dives with full presentations and Q&A components.  [Register here]

Kiffmeister’s #Fintech Daily Digest (20220616)

~ kiffmeister

BIS Innovation Hub, Bank of Israel and Hong Kong Monetary Authority will cooperate to test retail CBDC

The BIS Innovation Hub, the Bank of Israel and the Hong Kong Monetary Authority will join forces to test the feasibility of a cyber secure two-tier retail central bank digital currency (CBDC) in which intermediaries are “exposure-less”. Intermediaries in “Project Sela” will have technological access to the CBDC system, conduct the know your customer (KYC) processes, and provide consumer services, but are not financially exposed, at any point of the processes of obtaining, transferring, or redeeming CBDC. This architecture is assumed to have several benefits: less financial risk for customers, more liquidity, lower costs, increased competition, and wider access, plus  enhanced resilience to sophisticated cyber attacks. [Read more]

Circle’s Euro Coin (EUROC) is coming on June 30th

Circle, the issuer of the USD Coin (USDC) dollar-pegged stablecoin, is launching a EUR-backed stablecoin (EUROC) on June 30. EUROC will be 100% backed by euros held in euro-denominated banking accounts so that it’s always redeemable 1:1 for euros. Businesses will be able to mint EUROC straight from the source by depositing euros into their Circle Account using Silvergate’s Euro SEN network, after which it will be available to non-Circle Account users via digital asset exchanges and DeFi protocols. Additional deposit options are expected to be available later this year. EUROC will be issued as an ERC-20 token on the Ethereum blockchain, with support for additional blockchains expected later this year. [Read more]

Missing Key: The challenge of cybersecurity and central bank digital currency

The Atlantic Council published a report on cybersecurity issues related to CBDC. It analyzes the intertwined questions of policy, design, and security to focus policy makers on how to build secure CBDCs that protect users’ data and maintain financial stability. The analysis shows that privacy-preserving CBDC designs are not only possible, but also come with inherent security advantages, compared to current payment systems, that may reduce the risk of cyberattacks. [Read more]

Seven lessons from the e-Peso pilot plan: The possibility of a central bank digital currency

The Banco Central del Uruguay’s Adolfo Sarmiento writes about seven lessons from the 2017-18 e-Peso CBDC pilot, highlighting that CBDC choices are based not only on technical considerations but also on money use culture. This implies a holistic assessment of the payment environment and a clear understanding of the cultural implications of a change that will be incremental but not reversible. This implies that research on CBDC must concern idiosyncratic aspects: economy organization, historical aspects, and even social implications of money. [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 (20220615)

~ kiffmeister

Brazil’s digital currency implementation pushed to 2024

Banco Central do Brasil is reportedly pushing out its central bank digital currency (CBDC) pilot work from end-2022 to 2023. This is due to a workers’ strike at the central bank, which impacted the original schedule. [Read more]

Deciding on a Digital Dollar: The Necessary Steps for Canada

The Centre for International Governance Innovation (CIGI) published a conference report based on an April 2022 workshop attended by Canadian and international experts (including yours truly). The discussion focused on the international backdrop and what can be learned from global leaders in CBDCs, to determine next steps for Canada and to assess the legal and regulatory changes required to support a Canadian CBDC. [Read more]

Tether Condemns False Rumors About Its Commercial Paper Holdings

Tether pushed back on rumors that the commercial paper held as USDT stablecoin reserves is 85% comprised of paper backed by (mostly shaky) Chinese or Asian firms. As of the most recent attestation report commercial paper made up about 25% of USDT’s backing, and Tether is gradually switching maturing paper into short-maturity U.S. Treasury securities. Also, Tether’s Celsius position has been liquidated with no losses to Tether, and Tether has currently zero exposure to Celsius apart from a small investment made out of Tether equity in the company. [Read more]

DeFi lending: intermediation without information?

A Bank for International Settlements (BIS) paper explores decentralized finance (DeFi) lending platforms, concluding that their current institutional features mostly facilitate speculation in crypto-assets rather than real economy lending. Due to the anonymity of borrowers, over-collateralization is pervasive, which generates procyclicality. Reliance on collateral also limits access to credit to borrowers who are already asset-rich, negating financial inclusion benefits. The paper concludes that for DeFi lending to make inroads into the real economy, it needs to tokenize real assets and rely less on collateral by developing its ability to gather information about borrowers; as such, the system is likely to gravitate towards greater centralization. [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 (20220614)

~ kiffmeister

BlockFi, Coinbase and Crypto.com Announce Job Cuts as Crypto Winter Takes Hold

BlockFi, Crypto.com and Coinbase are the latest crypto exchanges to announce job cuts as crypto’s price slump becomes increasingly entrenched. BlockFi will cut about 20% of its staff – about 170 people, blaming the “dramatic shift in macroeconomic conditions worldwide.” Crypto.com will reduce its workforce by about 5% — 260 people, and Coinbase will layoff around 1,100 employees. Earlier in June Coinbase rescinded about 300 new hire offers, and Gemini laid off 10% of its workforce. Only Binance is bucking the trend and actively hiring. [Read more]

MicroStrategy’s Bitcoin-Backed Loan Risks Margin Call Amid Fall

MicroStrategy may need to post additional collateral for a bitcoin-backed loan as the bitcoin’s price tests a key price level of $21,000 flagged by the company. The software firm controlled by bitcoin advocate Michael Saylor had used its vast bitcoin holdings to secure a $205 million loan in March to buy even more cryptocurrency. [Read more] But as the value of that collateral initially worth around $820 million falls to about half that, the company may need to provide more capital to back the loan. According to Bloomberg, Microstrategy owns about 130,000 bitcoins purchased at an average price of  $30,700. With bitcoin now trading around $22,000, Microstrategy is probably about $1 billion in the hole. [Read more]

El Salvador’s bitcoin holdings down 50% as minister says risk is ‘extremely minimal’

El Salvador’s 2,301 bitcoin stockpile is now worth less than 50% following the latest crypto market crash. The average purchase price was around $45,000, putting unrealized losses at about $50 million at current bitcoin prices. However, the looses pose an “extremely minimal” fiscal risk, representing 0.5% of the government’s national general budget, according to Finance Minister Alejandro Zelaya. [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 (20220613)

~ kiffmeister

Crypto-asset prices continued to crash, continuing to take their lead from equity markets and particularly tech stocks. In the background:

  • On Sunday (June 12, 2020) crypto lending service Celsius paused withdrawals, swaps, and transfers between accounts, citing “extreme market conditions.” It did not provide a timeline for resuming normal operations. New Jersey-based Celsius, which has around $11.8 billion in assets, offers interest-bearing products to customers who deposit cryptocurrencies with its platform. It then lends out cryptocurrencies to earn a return. [Read more]
  • Today (June 13, 2020) Binance resumed bitcoin withdrawals after temporarily pausing them due to a “stuck on-chain transaction.” [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 (20220612)

~ kiffmeister

The Central Bank Digital Currency (CBDC) “Elephant in the Room”

The Centre for European Reform asks why would anyone use a retail CBDC? “Central banks will struggle to rollout CBDCs that will be widely adopted. They may not provide consumers the same benefits as today’s services; privacy is unlikely to be a game-changer; and the private sector still offers scope for innovation. Without widespread adoption, a CBDC will be an expensive failure, and will do little to advance central banks’ goals. For the EU, regulation is a more sensible way to make European payments cheaper, and more diverse, competitive and innovative.” [Read more]

Russian state-owned company builds blockchain-based replacement for SWIFT

Rostec, a state-owned defense conglomerate headquartered in Moscow, announced that it has developed a blockchain platform that can be used for international settlements. Named the CELLS industrial blockchain, it is Russia’s purported replacement for the Society for Worldwide Interbank Financial Telecommunication (SWIFT) messaging system. The platform will allow for settlements in national currencies and allow Russia to circumvent all international sanctions. [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 (20220611)

~ kiffmeister

Central Bank of Nigeria to introduce USSD code to boost eNaira

The Central Bank of Nigeria reportedly plans to introduce the unstructured supplementary service data (USSD) code to its eNaira central bank digital currency (CBDC) platform to ensure people without smartphones, but with basic featurephones and access to mobile data, could still transact on it. [Read more]

MoneyGram Launches Global Crypto-to-Cash Service on the Stellar Network

MoneyGram launched its stablecoin-powered payment channel, giving users the ability to send USD Coin (USDC) payments worldwide that can be withdrawn as cash by recipients. The service is being rolled out across several key remittance markets, including Canada, the United States, Kenya and the Philippines. Global cash-out functionality will be available by the end of June. To encourage adoption, the USDC transfer service will carry zero fees for the first 12 months. The new transfer service was built on the Stellar (XLM) blockchain and allows Stellar wallet users to send USDC to recipients around the world. [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 (20220609)

~ kiffmeister

Kansas City Fed Rescinds Master Account for Payments Firm, GOP Senator Says

The Federal Reserve Bank of Kansas City has reportedly revoked Reserve Trust’s master account that was controversially granted in 2018. Reserve Trust previously highlighted its master account prominently on its website. The Fed is currently reviewing how its regional branches should handle requests for such accounts amid an uptick in interest from banks with “special purpose” charters, particularly those focused on crypto-assets, which would allow them to avoid having to partner with traditional banks for such payment-system access. Meanwhile, Wyoming-based Custodia Bank is suing the Fed for its tardiness in evaluating its master account application. [Read more]

India’s central bank to allow linking credit cards with UPI

The Reserve Bank of India (RBI) is proposing to allow linking of credit cards on the United Payments Interface (UPI) platform beginning with RuPay credit cards. Rupay is India’s homegrown card network, which is promoted by the National Payments Corporation of India, a body of the RBI that also oversees UPI payments. The is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing and merchant payments into one hood. [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]