National Bank of Georgia advances digital lari project and is looking for technology partners
The National Bank of Georgia (NBG) is inviting fintech companies to express interest in participating in its digital lari central bank digital currency (CBDC). In April 2021, NBG launched the first stage of the project and invited interested financial technology providers to participate. Now the NBG will select a technological partner based on information provided by the companies, including the CBDC system, technical capabilities, security, and technological proposal for the pilot project. The deadline for submissions is February 15, 2023. [Read more at the NBG]
Central Bank of Brazil to test security and transaction privacy levels of the digital real
Banco Central do Brasil will reportedly focus its first digital real tests on determining the levels of privacy and security that can be achieved with the proposed central bank digital currency (CBDC) infrastructure. The tests will be conducted later this year and will set up a simplified operation to transact with a still-to-be-determined tokenized asset. The tests would start after the current laboratory phase of the digital real, which is currently being conducted as a part of the open LIFT challenge project that is testing nine different proposals. [Read more at E-Investidor]
Kraken to shut US crypto-staking service, pay $30M fine in SEC settlement
Crypto exchange Kraken will “immediately” end its crypto staking-as-a-service platform for U.S. customers and pay $30 million to settle Securities and Exchange Commission (SEC) charges it offered unregistered securities. Staking is a process in which investors lock up their crypto tokens with a blockchain validator with the goal of being rewarded with new tokens when their staked crypto tokens become part of the process for validating data for the blockchain. The SEC alleged that Kraken was offering investment contracts in exchange for investors’ tokens, without providing the proper disclosures and safeguards required by US securities laws. [Read more at the SEC]
SEC commissioner and “crypto mom” rebukes own agency over Kraken action
US SEC Commissioner Hester Pierce publicly rebuked her own agency over the shutdown of crypto exchange Kraken’s crypto staking program in the United States, arguing that regulation by enforcement “is not an efficient or fair way of regulating” an emerging industry. “Using enforcement actions to tell people what the law is in an emerging industry is not an efficient or fair way of regulating. Moreover, staking services are not uniform, so one-off enforcement actions and cookie-cutter analysis does not cut it.” [Read more at the SEC]
Stablecoin issuer Paxos is being investigated by New York regulator
The New York Department of Financial Services (NYDFS) is reportedly investigating stablecoin issuer Paxos. The full scope of the investigation is unclear. Paxos’ stablecoins include the Pax dollar (USDP) and Binance USD (BUSD). Paxos has been in the news recently over rumors the U.S. Office of the Comptroller of the Currency – a federal bank regulator – may ask it to withdraw its application for a full banking charter. Paxos has denied these rumors. Paxos also holds a virtual currency license (BitLicenses) issued by NYDFS. [Read more at CoinDesk]
Tether records surprise $700 million profit on USDT reserves
Tether said in a new USDT attestation report that it made a $700 million net profit in Q4 2022. The company says it has added the money to its USDT reserves. Tether said its latest quarterly results were buoyed by interest rate hikes by the U.S. Federal Reserve, which have resulted in higher yields on government debt. Tether makes money from various fees, including a $1,000 withdrawal fee (with a minimum withdrawal requirement of $100,000), as well as investments in digital tokens and precious metals as well as issuing loans to other institutions. [Read more at CNBC]
JP Morgan touts bank-issued deposit tokens
A new report from JP Morgan and Oliver Wyman touts the benefits (versus stablecoins) of blockchain-based deposit tokens issued by licensed depository institutions which evidence a deposit claim against the issuer. However, it points out that while deposit tokens that run on public unpermissioned networks offer the greatest degree of interoperability and benefits, private permissioned ledgers introduce fewer challenges for regulated institutions, and would require appropriate alternative controls to create a trusted environment for funds transfers. [Read more at Oliver Wyman]
Upcoming conferences, webinars and speaking engagements:
- I’ll be moderating a panel on “what happens when the lights go out…different schemes for offline functionality” at the in-person Digital Currency Conference (DCC) in Mexico City on May 18. [Register 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.
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]