For those interested in following the details of the trials and tribulations around the FTX exchange collapse, I’m collecting my favorite articles here on my Diigo social bookmarking page.
BOJ eyes pilot experiments next year to issue digital yen
The Bank of Japan (BOJ) will reportedly begin preparations to conduct a retail central bank digital currency (CBDC) pilot next Spring (2023) year. According to Nikkei Asia, “after spending two years verifying whether there are any problems with bank account deposits and withdrawals, the BOJ will decide whether to go ahead with a digital yen in 2026.” However, it’s not clear yet whether this is a “pilot” (testing in the “wild” with real live users) or a proof of concept (tested among financial institutions in a “laboratory” setting). [Read more on Reuters]
Let’s Stop Regulating Crypto Exchanges Like Western Union
US-based cryptocurrency exchanges including Coinbase, FTX US, and Binance.US are overseen on a state-by-state basis as money transmitters. MoneyGram, PayPal and Western are regulated as money transmitters, and starting in the 2010s, crypto exchanges were subsumed under it. Money transmitter laws are known for lax security requirements, slim capital requirements, an insufficient “ring fencing” of customer funds in the case of bankruptcy and an overly permissive list of investments to which transmitters can deploy their customers’ funds. Isn’t it about time that crypto exchanges were put under SEC or CFTC oversight? [Read more on Coin Desk]
The Hong Kong Monetary Authority (HKMA) published a paper on volatility spillover from asset-backed stablecoins to money market instruments. Stablecoins bear liquidity mismatch risks similar to money market funds, which may expose them to a fire-sale of reserve assets in times of crypto ecosystem instability and in turn increase the volatility of these reserve assets. It finds that, in extreme circumstances, these fire-sales could have material impacts on the traditional financial system such as the money market. The paper proposes regulations that require stablecoin issuers to provide standardized and regular disclosures of their reserve assets holdings, and possibly imposing restrictions on the composition of reserve assets and requiring well- defined redemption rights. [Read more at the HKMA]
Bank of America To Partner With Ripple for ODL Services After XRP Lawsuit Finishes: Report
Bank of America is reportedly waiting for the end of the U.S. Securities and Exchange Commission (SEC) court case against Ripple to use the firm’s on-demand liquidity (ODL) products. Ripple’s ODL solution uses the XRP to enable faster and cheaper cross-border payments without the need for pre-funded destination accounts. [Read more at the Daily Hodler]
Digital Euro Association Digital Money Academy
I will be discussing global central bank digital currency (CBDC) developments at the Digital Euro Association’s Digital Money Academy on November 29. If you want to get into CBDCs, register for the Academy here!
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]
