Brazil announces CBDC proof-of-concept seeking to leverage financial services

Banco Central dos Brasil (BCB) announced the start of a (wholesale?) central bank digital currency (CBDC) proof-of-concept (PoC) project aimed at providing payment rails executed on distributed ledger technology (DLT) to support the provision of retail financial services, including the purchase and sale of tokenized government bonds, settled through tokenized bank deposits. The PoC is not aimed at leveraging digital payments, as this is already being done on a large scale with Pix, which was launched at the end of 2021 and has been widely adopted. [Read more at the BCB]

Compensation model for the digital euro

The European Central Bank (ECB) published a presentation on the digital euro compensation model. The digital euro is seen as a public good and should be free for basic use by private individuals, but there should be economic incentives for payment service providers (PSPs) to distribute the digital euro in order to generate network effects. PSPs will be allowed to charge merchants, as with cash and other payment methods today, and such fees could be determined by market forces. However, legislation might establish an expectation on merchant pricing considering the current levels for comparable retail payment solutions. [Read more at the ECB]

Alameda Research files suit against Grayscale over ‘self-imposed redemption ban’

Alameda Research, an affiliate debtor of FTX, which filed for bankruptcy in November, has filed suit against Grayscale Investments. The suit seeks to “unlock $9 billion or more in value for shareholders of the Grayscale Bitcoin and Ethereum Trusts and realize over a quarter billion dollars in asset value for the FTX debtors’ customers and creditors. The lawsuit claims that Grayscale charged over $1.3 billion in management fees in violation of trust agreements, and “contrived excuses” to prevent shareholders from redeeming their shares in what the statement described as a “self-imposed redemption ban.” As a result, the statement continued, the Trusts’ shares trade “at approximately a 50% discount to Net Asset Value.” [Read more at CoinTelegraph]

China’s WeChat integrates digital yuan into payment platform

WeChat has reportedly added China’s central bank digital currency (CBDC) to some of its payment services, following rival Alipay in offering support for the digital yuan since December 2022. WeChat Pay now allows digital yuan payments on certain apps, such as ordering food from McDonald’s and paying bills. Direct CBDC transactions between WeChat users are expected to follow. [Read more at Forkast]

Upcoming conferences, webinars and speaking engagements:

• I’ll be on a “public finance and the digital future” panel at the March 23-25 Willamette College of Law “Our Money, Our Future” (Hybrid) Conference in Salem, Oregon on March 24. [Register here]
• I’ll be moderating the “CBDCs, Stablecoins, Commercial Bank Money Tokens – What is the Future of Money?” panel discussion at the Digital Euro Association Digital Euro Conference on March 31 in Frankfurt. [Register here]
• 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]