Month: February 2023

Kiffmeister’s #Fintech Daily Digest (20230215)

~ kiffmeister

Bank of England roadmap for the RTGS service beyond 2024

The Bank of England (BoE) published its roadmap for the real-time gross settlement (RTGS) service beyond 2024 that was informed by public responses to the consultation paper published in April 2022. The objective of modernizing the RTGS service is to offer a more accessible, functional and resilient platform for digital settlement in central bank money. The roadmap pushes back on the idea of putting wholesale payments on distributed ledger technology (DLT) (e.g., via “wholesale central bank digital currency (CBDC)”) rails. It points out that the RTGS Renewal Programme will realize a number of benefits commonly associated with such platforms more quickly than it would be possible to launch an entirely new wholesale settlement platform and achieve scale in its usage. [Read more at the BoE]

I particularly liked the fact that the report debunked the idea that wholesale CBDC is something new:

The Bank has been actively exploring the case for issuing a new form of money in the form of a retail CBDC… Some market participants have called for a wholesale version (wCBDC), which would not be a new form of digital money (at present, the Bank enables digital wholesale settlement through CHAPS and its RTGS service) but instead would represent the application of new technologies to improve wholesale settlement in central bank money…

Reserve Bank of India’s global hackathon targets CBDC, blockchain scalability

The Reserve Bank of India (RBI) launched the HaRBInger 2023 hackathon that includes retail CBDC use cases. These include the disbursal of social benefits, and offline usage where the wallets must be able to independently verify the authenticity of transactions without communicating with the server during the transactions, while mitigating the risk of double spending. Registration runs from February 22, with proposals due by March 24. The first prize is Rupees 4 million ($48,000), with winners to be announced mid-August. [Read more here]

Crypto-assets: a new standard for banks

The European Central Bank (ECB) published a summary of its thinking on the regulatory aspects of commercial bank holdings of crypto-assets.  It supports the recently finalized Basel Committee on Banking Supervision’s (BCBS) standard on the prudential treatment of banks’ crypto-asset exposures as a complement to the forthcoming regulation of the crypto-asset sector through the Markets in Crypto-Asset (MICA) regulation. The next step is for the European Union to transpose the Basel standard into its legislation by the January 1, 2025 deadline. [Read more at the ECB]

European Commission launches European Regulatory Sandbox for Blockchain

The European Commission (EC) launched the European Regulatory Sandbox for Blockchain to provide legal certainty for decentralized technology solutions including blockchain by identifying obstacles to their deployment from a legal and regulatory perspective and providing legal advice, regulatory experience and guidance in a safe and confidential environment. It should also allow regulators and supervisors to enhance their knowledge of cutting-edge blockchain technologies and share best practices through dialogues. [Read more at the EC]

Stablecoins and the financing of the real economy

The Banque de France (BdF) published a paper that examines the impact of stablecoin issuer investment practices on the financing of the real economy. The largest stablecoins manage their peg with the US dollar (USD) by holding short-term safe assets, including USD-denominated commercial paper (CP). The analysis shows that CP issuers catered to the additional demand from stablecoins by issuing more, illustrating the implications of stablecoins for financial stability and the financing of the real economy. [Read more at the BdF]

Upcoming conferences, webinars and speaking engagements:

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]

Kiffmeister’s #Fintech Daily Digest (20230213)

~ kiffmeister

Paxos Will Halt Minting New BUSD Tokens

Paxos Trust will stop minting new Binance USD (BUSD) tokens starting from February 21, 2022 in accordance with directions and coordination with the New York Department of Financial Services (NYDFS). All existing BUSD tokens will remain fully backed and redeemable through Paxos until at least February 2024. Customers will be able to convert their BUSD tokens to Pax Dollar (USDP) another Paxos-issued stablecoin. [Read more at Paxos Trust]

The NYDFS reportedly said that Paxos was unable to administer the token in a “safe and sound” manner and “violated its obligation to conduct tailored, periodic risk assessments and due diligence refreshes of Binance and Paxos-issued BUSD customers to prevent bad actors from using the platform. [Read more at Reuters]

The US Securities and Exchange Commission (SEC) has issued Paxos a Wells Notice for allegedly selling unregistered securities by issuing BUSD. That characterization  typically hinges on the Howey Test, under which an investment contract exists if there is an “investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.” [Read more at Paxos]

Amy Castor speculates that the ruling could be based on the Reve’s Test, which says that an instrument is a security if the seller’s motivation is to raise money for a business and the buyer’s motivation is to earn profits, if the instrument is being offered and sold to a broad segment or the general public for investment purposes, or there is the reasonable expectation of the investing public that the securities laws apply to the investment. [Read more at LawCast]

*See also commentary from Frances Coppola and Matt Levine*

UAE Plans to Issue a CBDC to Promote Digital Payments

The Central Bank of the United Arab Emirates (UAE) is planning to issue a central bank digital currency (CBDC) for domestic and cross-border payments in order to help drive innovation for domestic payments, and address the problems and inefficiency of cross-border payments and respectively. The issuance of a digital dirham is one of nine initiatives of the central bank’s Financial Infrastructure Transformation Program. [Read more at the CBUAE]

Upcoming conferences, webinars and speaking engagements:

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]

Kiffmeister’s #Fintech Daily Digest (20230212)

~ kiffmeister

Bank for International Settlements (BIS) Innovation Hub Update

In 2023, the BIS Innovation Hub (BISIH) will increase its focus on improving payments systems and experimenting with central bank digital currencies (CBDC); on shaping the future of financial regulation and supervision; and on greening and securing the financial sector. There are now too many projects to list here, so please go to the BISIH home page for more details. However, a few projects in particular seem to be catching eyes:

  • The Hub’s London Centre Project Pyxtrial aimed at exploring technology solutions enabling the monitoring of liabilities of fiat-backed stablecoins and the assets that back them. Pyxtrial aims to develop a prototype data-analytic pipeline, including data collection, storage, and analytics, to investigate possible asset-liability mismatches. The technology could be used to help supervisors and regulators build policy frameworks based on integrated data.
  • The Hub’s Nordic Centre Project Aurora will investigate the use of advanced technologies, such as privacy-enhancing technologies, machine learning methods, network analysis, and the use of additional data sources and machine-readable typologies (to represent money laundering patterns in a machine-readable format) in a proof of concept that aims to show how information could be shared in a private, secure and compliant way to detect suspicious transactions across financial institutions and borders.
  • The Nordic Hub’s Project Polaris is exploring the provision of offline CBDC payments functionality, which could address requirements for resilience, crisis robustness, financial inclusion, cash resemblance, accessibility and other desiderata. Central banks considering the potential implementation of CBDCs with offline functionality must take into account issues such as security, privacy, risks, the types of solution, their maturity and applicability, and operational factors, among others.

[For the full array of BISIH projects go to the BISIH Hubs directory]

The Pix Story; A Glimpse Into The Future of Instant Payments in the U.S.

Matera published a nice paper on the Banco Central do Brasil’s Pix hyper-successful retail payment system, which is arguably a synthetic CBDC platform. I thought that the paper’s summary of Pix’s success factors have some good lessons for central bank CBDC designers: So how did Pix become such a success?

  • The central bank mandated participation by banks and other payment institutions with more than 500,000 transaction accounts. This created a critical mass of users and kick-started the network effects so that the open-loop payment platform could gain traction. The central bank amplified this mandate by facilitating community among the financial institutions participating in Pix. Prior to launch, they organized in-person meetings periodically to update everyone on key milestones and future plans. They solicited input to key decisions and created working groups to tackle specific issues.
  • Pix is available to any financial and payment institution licensed by the central bank that offers transaction accounts. Open participation was further fostered by allowing an indirect model of integration that significantly reduces the cost (eg connectivity costs associated with a direct integration).
  • A consistent, simple and quick user experience was enforced by the central bank, including a flexible alias directory (based on phone numbers, email addresses or randomly generated string of characters), and standardized API and QR code technology.
  • Pix is significantly cheaper for merchants (Pix charges 0.25% of the transaction amount versus 1-2% for credit cards and 3-4% for credit cards. Also with credit card transactions, the merchant may have to wait up to 30 days for their money.

[Download the paper here]

Upcoming conferences, webinars and speaking engagements:

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]

Kiffmeister’s #Fintech Daily Digest (20230211)

~ kiffmeister

Central bank digital currencies and banking: literature review and new questions

The Bank of Canada (BoC) published a paper that reviews the literature on central bank digital currencies (CBDCs), focusing on their potential impacts on private banks. It evaluate these impacts in three areas of traditional banking: payments, lending and liquidity and maturity transformation. For each area, it discusses the lessons learned and identifies gaps in the research yet to be fully explored. It also takes a broader look at CBDCs and highlights two promising directions for future research. One is to study CBDCs through the lens of industrial organization, exploring issues such as platform competition and business models. The second is the crypto space and its new developments such as stablecoins and decentralized finance. [Read more at the BoC]

Estimating digital infrastructure investment needs to achieve universal broadband

The IMF published  a paper that develops a detailed model to evaluate the necessary investment requirements to achieve affordable universal broadband. The results indicate that approximately $418 billion needs to be mobilized to connect all unconnected citizens globally (targeting 40-50 GB/Month per user with 95% reliability). 97% of additional investment is for emerging market economies and low-income developing countries. It also finds that if the data consumption level is lowered to 10-20 GB/Month per user, the total cost decreases by up to about half, whereas raising data consumption to 80-100 GB/Month per user leads to a cost increase of roughly 90% relative to the baseline. Moreover, a 40% cost decrease occurs when varying the peak hour quality of service level from the baseline 95% reliability, to only 50% reliability. The paper concludes that broadband policy assessments should be explicit about the quantity of data and the reliability of service provided to users. Failure to do so will lead to inaccurate estimates and, ultimately, to poor broadband policy decisions. [Read more at the IMF]

Members of the European parliament  approve plans for an EU-wide digital wallet

The European Union (EU) Industry, Research and Energy Committee approved a proposed update to the European Digital Identity Framework that will enable the issuance and usage of the smartphone-based EU’s European Digital Identity Wallet (eID). It would allow holders to identify and authenticate themselves online (via a European digital identity wallet) without having to resort to commercial providers. It would also give users full control of their data and let them decide what information to share and with whom. [Read more at the European Parliament]

PayPal pauses stablecoin work amid regulatory scrutiny of crypto

PayPal is reportedly pausing work on its stablecoin as regulators increase scrutiny of cryptocurrencies and Paxos,  a key partner in the project, faces a probe by the New York State Department of Financial Services. A PayPal official confirmed that the firm is exploring a US dollar backed stablecoin, adding that “if and when we seek to move forward, we will, of course, work closely with relevant regulators.” [Read more at Bloomberg]

Upcoming conferences, webinars and speaking engagements:

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]

Kiffmeister’s #Fintech Daily Digest (20230210)

~ kiffmeister

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:

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]

Kiffmeister’s #Fintech Daily Digest (20230209)

~ kiffmeister

Indonesia launches wholesale CBDC consultation

Bank Indonesia (BI) launched a consultation for the first phase of its three-stage Project Garuda, central bank digital currency (CBDC) initiative. The current consultation is the first of two wholesale CBDC iterations, focused on basic functionality, including integration with the real time gross settlement (RTGS) system, and covers banks and “wholesalers” who will be responsible for distributing a future retail digital rupiah. The digital rupiah will use a permissioned blockchain network. The second phase of the project will include the settlement of tokenized securities, as well as other wholesale use cases. The third phase will focus on retail CBDC. [Read more at the BI]

Policy statement on section 9(13) of the Federal Reserve Act

The US Federal Reserve Board (FRB) issued a policy statement that said that issuing dollar-denominated tokens on open, public, and/or decentralized networks, or similar systems is highly likely to be inconsistent with safe and sound banking practices. The Board believes such tokens raise concerns related to operational, cybersecurity, and run risks, and may also present significant illicit finance risks, because—depending on their design—such tokens could circulate continuously, quickly, pseudonymously, and indefinitely among parties unknown to the issuing bank. Importantly, the Board believes such risks are pronounced where the issuing bank does not have the capability to obtain and verify the identity of all transacting parties, including for those using unhosted wallets. [Read more at the FRB]

Upcoming conferences, webinars and speaking engagements:

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]

Kiffmeister’s #Fintech Daily Digest (20230208)

~ kiffmeister

Brazil central bank reportedly to launch its digital currency in 2024

Banco Central do Brasil (BCB) reportedly aims to launch its central bank digital currency (CBDC) in 2024. It will be designed to encourage banks to tokenize their assets, so it sounds like it’s being designed for niche cases, rather than general purpose usage.The huge popularity of the BCB’s PIX payment system might argue for such an approach. Its use now surpasses transactions with credit and debit cards in the country. [Read more at Reuters] [Sandra Mianda has provided a great PIX explainer and infographic on LinkedIn]

BIS Innovation Hub unveils new stablecoin, DeFi, CBDC projects

The BIS Innovation Hub (BISIH) has unveiled its 2023 work program. This includes previously unannounced projects on stablecoins, DeFi and CBDC, including Project Pyxtrial at the London Centre that will monitor stablecoins to ensure that the backing assets at least match the stablecoin issuance. And “going into its fourth year of life, the BIS Innovation Hub is reaching a cruising altitude, with 21 ongoing and five concluded projects. The Hub will increase the integration of its global network with additional cross-centre projects such as Mariana, which connects the Singapore, Swiss and upcoming Eurosystem centres, and others.” [Read more at the BISIH]

Is the Bitcoin Lightning Network the Future of Payments?

etonec has published a Bitcoin Lightning network explainer. Although Bitcoin enables global transactions without intermediaries, settling all payments via the Bitcoin blockchain has limitations. Lightning can significantly increase payment throughput. Also the possibility to send other assets, such as stablecoins, via the Lightning network, might positively impact its development. [Read more at etonec]

Dubai releases crypto regulations for virtual asset service providers

Dubai’s Virtual Asset Regulatory Authority (VARA) has issued new guidelines for virtual asset service providers (VASPs) operating within the emirate. VARA’s “Full Market Product Regulations” include four compulsory rulebooks and activity-specific rulebooks that lay down the rules for operating VASPs. The rules excluding those operating under the Dubai International Financial Centre (DIFC), a free zone with its own regulator. [Read more at VARA]

Upcoming conferences, webinars and speaking engagements:

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]

Kiffmeister’s #Fintech Daily Digest (20230207)

~ kiffmeister

The digital pound: A new form of money for households and businesses?

The Bank of England (BoE) and HM Treasury launched a digital pound central bank digital currency (CBDC) consultation. Both want to ensure the public have access to safe money that is convenient to use as everyday lives become more digital, while supporting private sector innovation, choice and efficiency in digital payments. At this stage, they judge it likely that the digital pound will be needed, but a decision to go ahead  won’t be taken until around the middle of the decade, and it wouldn’t be launched until the second half of the decade. Alongside the consultation paper, the BoE published a technology working paper on its CBDC technology thinking. [Read more at the BoE]

According to Governor Jon Cunliffe, the Bank of England would provide the digital pound and the central infrastructure, including the ‘core ledger’. Private sector firms – which could be banks or approved non-bank firms – would provide the interface between the Bank’s central infrastructure and users by offering wallets and payment services. These private companies would be able to integrate the digital pound, as the settlement asset, into the services they would offer to wallet holders. The wallets would be operated on a ‘pass-through’ basis. That is to say, they would not constitute a claim on the wallet provider in the way that a bank account is a claim on a bank. Nor would they represent a custody arrangement. Rather, the wallets would hold all of the customer related information and ‘pass-through’ the customers instructions to the Bank’s infrastructure. All of the digital pounds would be held on the Bank’s central ledger.

The Bank is proposing a limit of between £10,000 and £20,000 per individual as the appropriate balance between managing risks and supporting wide usability of the digital pound. The Technology Working Paper accompanying the Consultation Paper sets out an illustrative and complementary conceptual model consisting of a core ledger, API layer, analytics and alias service. The core ledger operated by the Bank might be centralised, running as a traditional database, or it might use Distributed Ledger Technology (whether a blockchain or another form of the technology).

Laos to launch CBDC proof of concept with Soramitsu

Japanese software developer Soramitsu said the Bank of the Lao is launching a Digital Lao Kip (DLak) CBDC proof of concept. Soramitsu was responsible for developing the Bank of Cambodia’s Project Bakong blockchain-based payment system that has been incorrectly referred to as a CBDC system. This Bank of the Lao project looks like a CBDC platform (see figure below). [Read more at Soramitsu]

Cash or cashless? How people pay

European Central Bank (ECB) blog post by Ulrich Bindseil and Doris Schneeberger discusses findings from a recent ECB consumer survey and what they mean for the future of cash and digital means of payment. “Despite the preference for cashless payments, 60% of euro area consumers state that they value having the option to pay in cash. This shows that people appreciate having a choice when it comes to how they pay. Their decision may then depend on the particular situation or purchase.” The post made it clear that “as cash remains widely used and valued, [the ECB is] committed to maintaining euro cash and will continue to make sure it is available. [Read more at the ECB]

Upcoming conferences, webinars and speaking engagements:

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]

Kiffmeister’s #Fintech Daily Digest (20230206)

~ kiffmeister

Crypto exchange Binance will suspend U.S. dollar transfers

Binance will temporarily suspend U.S. dollar deposits and withdrawals as of February 8th. However, only 0.01% of the exchange’s monthly active users do US dollar bank transfers, and the move applies only to non-U.S. customers who transfer money to or from bank accounts in dollars. (Binance US, a unit of the company that’s regulated by the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN), is not impacted by the suspension.) The suspension is likely due to issues with its bank partner Signature Bank, which said last month that it would stop processing crypto SWIFT transactions under $100,000. [Read more at CNBC]

Seeking the Ideal Privacy Protection: Strengths and Limitations of Differential Privacy

The Bank of Japan (BoJ) published a paper that explains the theory behind differential privacy and its application, and studies and discusses the desirable privacy protection considering the strengths and limitations of the differential privacy. In particular, mathematical methodologies including ones based on differential privacy cannot solely suffice social demands for privacy protection, especially for the control over personal information about oneself. The paper concludes that desirable privacy protection for resolving the social issue should adopt a comprehensive approach that includes laws, regulations, IT systems management, business practices, as well as mathematical methodologies and information security. [Read more at the BoJ]

What is Differential Privacy?

  • “Differential privacy is a definition used to describe various methods and techniques for analyzing data sets and extrapolating aggregated results, without directly affecting the privacy of any specific individuals contained within the original data sets.” [Read more at ProPrivacy]
  • “Differential privacy makes it possible for tech companies to collect and share aggregate information about user habits, while maintaining the privacy of individual users.” [Read more at the Conversation]

Upcoming conferences, webinars and speaking engagements:

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]

Kiffmeister’s #Fintech Daily Digest (20230204)

~ kiffmeister

Kazakhstan’s digital currency in PoC stage, per Binance, National Bank joint report

The National Bank of Kazakhstan (NBK) will be conducting central bank digital currency (CBDC) proof-of-concept (PoC) work in 2023. This is according to a report published jointly by the central bank and Binance on digital asset regulation, the digital asset industry and decentralized finance (DeFi) in Central Asia. However, it mentioned that in 2023, the NBK is planning to build several PoC scenarios of integration between the experimental Digital Tenge platform and BnB chain in 2023 to explore opportunities of DeFi and TradFi industry players’ cooperation under central bank supervision. [Read more at Binance and download the report here]

Update on Zimbabwe’s central bank digital currency (CBDC) project

The [Reserve Bank of Zimbabwe’s (RBZ’s)] CBDC Project continued to progress steadily in line with the envisaged CBDC Road Map. In this regard, in November 2022, the Bank rolled out a consumer survey that intends to solicit opinions on the design and nature of the CBDC and its overall acceptance/acceptability by stakeholders. As at January 23, 2023, the survey had received 2,286 responses. [Read more at the RBZ]

Tornado Cash and Blockchain Privacy: A Primer for Economists and Policymakers

The St. Louis Fed published an article that explores non-custodial crypto asset mixers such as Tornado Cash. It analyzes what types of mixers exist and how they work, and discusses opportunities and risks and offer an approach, based on voluntary disclosure, that would allow financial market regulators to combat money laundering and illicit activities, while allowing honest users to interact with privacy-enhancing protocols. The article explains how crypto asset mixers play an important role on public blockchains and that privacy may be difficult to attain without them. [Read more at the St. Louis Fed]

Euro stablecoin launched in Finland, claims to be first approved in the EU

Finland-based Membrane Finance has released a fully-reserved stablecoin backed by the euro. The company is licensed by the Finnish Financial Supervisory Authority (Fin-FSA) and claims that the new ”EUROe” coin is “the first and only … crypto stablecoin.regulated by an EU-based financial authority. [Read more at Membrane]

Accounting for Digital Currencies

A Research in International Business and Finance paper has found that current accounting standards do not precisely cover the treatment of digital currencies. It identifies a need for an accounting standard to provide guidance on the identification, classification, measurement, and presentation of digital currencies, but in the interim, existing standards can be amended to incorporate them to avoid inconsistent global accounting approaches. [Read the paper here]

Upcoming conferences, webinars and speaking engagements:

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]