Kiffmeister’s #Fintech Daily Digest (20230120)

Genesis’ crypto lending businesses file for bankruptcy protection

Digital Currency Group (DCG) owned Genesis Global Holdco LLC filed for Chapter 11 bankruptcy protection. Genesis owes over $3.5 billion to its top 50 creditors, including crypto exchange Gemini. The bankruptcy could have broader implications because DCG also owns digital assets manager Grayscale, which operates the Grayscale Bitcoin Trust (GBTC), which has $10 billion-plus in assets under management. There would be serious crypto market  repercussions if the Genesis bankruptcy somehow leads to the liquidation of 600,000+ bitcoin holdings. [Read more at CoinDesk]

Universal digital payments network for stablecoins, CBDCs launches at Davos

A consortium led by Red Date Technology, the developer of the Chinese state-backed Blockchain Service Network, launched the Universal Digital Payments Network (UDPN) to provide interoperability between regulated stablecoins and central bank digital currencies (CBDCs). Multiple global banks will participate in use case proof of concepts (PoCs) to show how the UDPN will integrate digital currencies into daily businesses, banking and payment. The first two PoCs will involve two banks testing UDPN’s digital currency cross-border transfer and swap capabilities, and how financial institutions can execute anonymous stablecoin transfers through the “travel rule” function. [Read more at UDPN.io]

Project Rosalind Phase 2 TechSprint – Invitation for expressions of interest

The BIS Innovation Hub London Centre has launched the Project Rosalind TechSprint, inviting expressions of interest to come up with retail central bank digital currency (CBDC) use cases. Participants will be required to develop feasible prototypes by using the set of application programming interfaces (APIs) developed in phase one of Project Rosalind. It aims to develop prototypes of an API platform for the distribution of retail CBDC. The purely experimental setup is based on a two-tier distribution model, comprising a central bank at the foundation of the retail CBDC system and with customer-facing activities carried out by the private sector payment interface providers (PIPs). [Read more at the BIS]

The technology of decentralized finance (DeFi)

The BIS published a paper that provides a deep dive into the architecture, technical primitives, and financial functionalities of decentralized finance (DeFi) protocols. It analyzes and explains the individual components and how they interact through the lens of a DeFi stack reference model featuring three layers: settlement, applications and interfaces. Then, it describes the financial services for the most relevant DeFi categories, i.e., decentralized exchanges, lending protocols, derivatives protocols and aggregators. It discusses how composability allows complex financial products to be assembled, which could have applications in the traditional financial industry. [Read more at the BIS]

A couple of papers of interest to central bank digital currency (CBDC) aficionados were published this week:

  • The Digital Dollar Project published an updated version of its white paper “Exploring a U.S. CBDC,” offering a global perspective on rapidly accelerating CBDC developments. [Download at the DDP]
  • The Digital Euro Association (DEA) published a paper on CBDC Privacy, examining the importance of privacy and how it impacts successful CBDC adoption, usage, and implementation. It also examines privacy-preserving technologies and provides recommendations for ensuring CBDC privacy and security. [Download at the DEA]

2nd Edition of DC³ Conference – From Cryptocurrencies to Central Bank Digital Currencies (CBDCs)

The International Telecommunication Union (ITU) will hold (virtually) the second edition of its DC3 Conference – From Cryptocurrencies to Central Bank Digital Currencies (CBDCs)​ from January 24 to 27 2023. On January 27 I will be moderating two panels on offline central bank digital currency (CBDC). Also, on January 24, Jacques Francouer and I will be providing an update to our ITU Digital Currency Global Initiative digital currency ontology work. [For more event detail go to the ITU DC3 conference site]

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.

The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).

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]