EU’s leaked digital euro bill outlaws interest, large holdings, programmability

A leaked draft of the proposed Digital Euro Bill, to be proposed by the European Commission on June 28, 2023 will ban remuneration, surcharges and programmability, and make offline payments available from the outset. The regulation aims to ensure a level of privacy equal to taking cash from an ATM during offline, face-to-face interactions, and neither the European Central Bank (ECB) nor the payment service providers will have access to personal transaction data. The draft law also allows the ECB to set holding limits to limit disintermediation risk. Much of this is rather consistent with a slide deck published by the ECB on June 15.  [Read more at CoinDesk and the ECB]

Binance under investigation in France for alleged money laundering

The Paris prosecutor’s office is reportedly investigating Binance for allegedly offering its digital asset services illegally. Furthermore, authorities have accused the exchange of engaging in acts of aggravated money laundering, which include competing with investment operations, concealing funds, and converting illicit proceeds. According to the Binance spokesperson, this was rumor was conflated from a routine on-site visit which is a regulatory requirement for financial institutions in France. [Read more at Inside Bitcoins]

Binance to exit the Netherlands after failing to obtain regulatory approval

Binance said it will leave the Netherlands after the company’s application to register under the Dutch crypto authorization regime was rejected. Under the current regulatory regime, Binance can only get approval to operate in an European Union (EU) country by registering under its money laundering prevention rules. The firm has so far received such approvals in France, Italy, Spain, Poland, Sweden and Lithuania. This may change once the EU’s Markets in Crypto Assets (MiCA) regulation comes into force at the end of June 2023. [Read more at CNBC]

Binance and where there’s smoke there’s fire?

I’m beginning to lose track of all the directions Binance is coming under fire from, but here’s more on recent events:

• From Amy Castor and David Gerard here is a two part summary of recent skirmishes between Binance and the US Securities and Exchange Commission: SEC sues Binance, part 1: the complaint, Binance US asset freeze, Tai Chi plan, sock puppet CEOs, weird cash flows and SEC sues Binance, part 2: asset freeze, securities, Coley and Brooks, Gensler’s alleged COI.
• In the wake of the SEC lawsuit against Binance for unregistered securities operations, on June 6, 2023, the SEC filed a motion seeking an emergency temporary restraining order and preliminary injunction (“freeze”) against Binance and its BAM affiliates. However, on June 16 the counterparties announced a deal to ensure that only Binance.US employees can access customer funds in the short term. [Read more at CoinDesk].

And here are some random things I picked up this week, thanks to John Ho and Norbert Gehrke:

• The Organization for Economic Co-operation and Development (OECD) Council has adopted a new set of recommendations on how digital identity should be governed on the proposal of the Public Governance Committee (PGC). [Read more at the OECD and John’s summary here]
• In January 2022, the Asian Development Bank (ADB) launched a project to make cross-border securities transactions more efficient and secure through the use of blockchain technology. Project Tridecagon proved that the deployment of DLT/BC solutions for the settlement of cross-border securities transactions is possible, particularly in a well-governed and functionally well-defined environment. [Read more at the ADB and Norbert’s summary here]
• The ADB published a paper that outlines why regulators urgently to adapt and adopt flexible policies that improve oversight of emerging products and providers. It sketches out the fintech landscape and explains how economies can encourage innovation while increasing international cooperation to insulate against the growing financial, operational, and cybersecurity risks the new technology brings. [Read more at the ADB and Norbert’s summary here]

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*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.

Upcoming conferences, webinars and speaking engagements:

• I’ll be participating in Currency Research’s in-person Central Bank Payments Conference and Global Payments Summit in Cape Town from June 26 to 30. [Register here and here respectively]
• I’ll be lecturing at the Digital Euro Association (DEA) Digital Money Academy on July 27, 2023. [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]