Kiffmeister’s #Fintech Daily Digest (20221110)

For those interested in following the trails and tribulations around the FTX exchange collapse, I’m collecting my favorite articles here on my Diigo social bookmarking page. See also below for the impact on the pegs of the two biggest US dollar-pegged stablecoins, Tether’s USDT and Circle’s USDC.

Project Tourbillon explores cyber resiliency, scalability and privacy in a prototype CBDC

The BIS Innovation Hub’s Swiss Centre launched Project Tourbillon to explore how to reconcile central bank digital currency (CBDC) design trade-offs between cyber resiliency, scalability and privacy. For example, higher resiliency against cyber-attacks requires additional cryptography, which can slow down payment processing. Privacy must be weighed against the need to counter money laundering, terrorism financing and other illicit payments. Project Tourbillon aims to reconcile these trade-offs by combining proven technologies such as blind signatures and mix networks with the latest research on cryptography and CBDC design suggested by David Chaum and Thomas Moser in a 2021 Swiss National Bank working paper. The conclusions of this project will be relevant for both wholesale and retail CBDC systems. The goal is to finish the prototype by mid-2023. [Read more at the BIS]

Reserve Bank of Zimbabwe launches a consumer survey on CBDC

As part of its efforts to explore CBDC, the Reserve Bank of Zimbabwe is conducting a consumer survey that closes on December 7. [Read more on Twitter]

G-sec transactions using digital rupee recorded highest volume since inception on November 7

Transactions in Indian government securities in the secondary market using the the Reserve Bank of India’s prototype wholesale CBDC recorded the highest volume on November 7, 2022 since its inception. [Read more at MoneyControl and some statistics on CBDC-related bond trades are available at the Clearing Corporation of India]

Countries to face ‘grey list’ in anti-terror crackdown on crypto

The Financial Action Task Force (FATF) is reportedly preparing to increase the frequency of its checks to ensure countries are enforcing anti-money laundering and terrorist financing rules in relation to digital assets, from every ten-years to annually. This will give non-compliant countries less time to comply, raising the risk that they are added to a grey list of countries subject to increased monitoring, although failure to comply will not automatically result in grey listing. [Read more at Al Jazeera]

Tether and Circle look to allay fears of USDT and USDC exposure to FTX and Alameda

Tether and Circle, the issuers of USDT and USDC, have both moved to allay fears that their US dollar-pegged stablecoins are directly exposed to the fallout from the FTX debacle. CTO Paolo Ardoino said that Tether has no exposure to FTX or Alameda, although Alameda has previously redeemed a lot of USDT, but no credit exposure has matured. CEO Jeremy Allaire said that Circle has never made loans to FTX or Alameda, and has never received FTX’s native token, FTT, as collateral, nor has it ever traded or held a position in FTT. Interestingly, both USDT and USDC became briefly unpegged today (November 10, 2022), with USDT spiking down, and Circle spiking up (see graphs below).

Kiffmeister’s Global Central Bank Digital Currency Monthly Monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So for any of you out there who work for a central bank, ministry of finance or international financial institution who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]