Month: September 2023
Kiffmeister’s #Fintech Daily Digest (20230930)*
Ripple announces the CBDC Innovate Phase I winners
Ripple announced the 15 winners of Phase I of its CBDC Innovate Challenge who will move forward to Phase II, where they will begin building, refining, and developing their applications. The goal of CBDC Innovate 2023 is to build or update a fintech or payments solution utilizing Ripple’s CBDC solutions. In Phase I applicants ideated applications on the public XRP Ledger. In Phase II the 15 finalists, including WhisperCash, will build on Ripple’s Private CBDC Platform. [See the Phase I winners here]
Assessing macrofinancial risks from crypto-assets
The IMF published a paper that introduces a conceptual macrofinancial framework to understand and track systemic risks stemming from crypto-assets. It proposes a country-level Crypto-Risk Assessment Matrix (C-RAM) to summarize the main vulnerabilities, useful indicators, potential triggers and potential policy responses related to the crypto sector. It also discusses how experts and officials can weave in specific vulnerabilities stemming from crypto-asset activity into their assessment of systemic risk, and how they can provide policy advice and take action to help contain systemic risks when needed. [Read more at the IMF]
New evidence on spillovers between crypto-assets and financial markets
The IMF published a paper that analyzes returns and volatility spillovers among a representative set of crypto and financial assets. The magnitude of spillovers increases during periods of heightened turbulence due to negative economic-financial news, crypto market events, or exogenous shocks. There is evidence of increasing spillovers over time, with a peak during the COVID-19 pandemic, implying growing interdependence. Crypto-assets predominantly transmit spillovers to financial markets, though reversals occur during periods of financial stress. The increased correlation during risk-off episodes suggests that crypto-assets could serve as important conduits for financial market shocks, generating financial stability risks. [Read more at the IMF]
*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.
Kiffmeister’s 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 (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 (20230929)*
The National Bank of Georgia is moving ahead with its CBDC project
The National Bank of Georgia (NBG) will launch a “limited access live pilot environment” (sounds like a proof-of-concept phase) to test central bank digital currency (CBDC) system technology capabilities and potential applications. At this stage, the NBG remains technologically agnostic for the Digital GEL project, and has announced a list of nine platform vendors to join the “on field” exploration (AUGENTIC, Bitt, Broxus, Currency Network, DCM Corp, eCurrency Mint, FARI Solutions, Ripple, and Sovereign Wallet (MetaMUI)). NBG will identify one of the vendors to move to the pilot stage to test the CBDC platform in a limited-time run live environment and evaluate practical use cases. [Read more here]
SEC delays decision on spot bitcoin ETF proposals
The U.S. Securities and Exchange Commission (SEC) will delay its decision on several proposals for spot bitcoin exchange-traded funds (ETFs). The affected applicants were BlackRock, Invesco, Bitwise, and Valkyrie. It was originally arranged for October 16-19. The delay may have something to do with the looming threat of a government shutdown in the United States. [Read more at Finance Magnates and Decrypt]
Ripple pulls back from Fortress acquisition 20 days after announcement
Within 20 days of announcing the acquisition of Fortress Trust to allegedly expand its pool of licenses in the United States, Ripple is pulling out of the deal, although Ripple will remain a shareholder in Fortress Trust’s parent company. According to Fortress management the pullout had nothing to do with a security incident involving a third-party analytics vendor that lost the firm between $12 million and $15 million which Ripple jumped in to cover. [Read more at Coin Telegraph]
*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.
Kiffmeister’s 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 (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 (20230928)*
Project Mariana: Cross-border exchange of wholesale CBDCs using automated market-makers
The Bank for International Settlements (BIS) published the results of its Project Mariana proof of concept that demonstrated technical feasibility of automated market-makers (AMMs) for cross-border trading and settlement of wholesale central bank digital currencies (wCBDCs). It borrows ideas and concepts from decentralized finance (DeFi) and leverages a public blockchain to design and test a transnational transnational FX interbank market using wCBDCs. Project Mariana is a collaboration between the BIS Innovation Hub, the Bank of France, the Monetary Authority of Singapore and the Swiss National Bank. [Read more at the BIS]
World Federation of Exchanges proposes crypto trading principles
The World Federation of Exchanges (WFE) has put forth six key principles for crypto trading platforms (CTPs) that are serious about meeting the standards expected of credible market operators. These include segregating market infrastructure functions, having in place systems and controls, holding sufficient financial resources to meet expected operational stress events, facilitating compliance with best execution requirements, increases robustness of listing standards, and having appropriate governance and management requirements. [Read more at the WFE]
*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.
Kiffmeister’s 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 (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 (20230927)*
Towards a legal framework for central bank digital currencies
Agustín Carstens, General Manager of the Bank for International Settlements (BIS), gave a speech focused on the need for central bank digital currency (CBDC) legal frameworks to advance if CBDC is to deliver on its potential. Unfortunately, in many jurisdictions, outdated legal frameworks could hinder their deployment, and work to address these issues needs to begin in earnest. A CBDC also needs to function within a framework of clearly defined rights and obligations. At least three core elements must be preserved: the privacy of CBDC users and the protection of their data; the integrity of the financial system; and the ability of users to choose between CBDC and other forms of money. These are fundamental issues and the legal framework for CBDC must get them right. [Read more at the BIS]
Runs and flights to safety: Are stablecoins the new money market funds?
NY Fed staff investigated similarities and differences between stablecoins and money market funds (MMFs), comparing investor behavior during the stablecoin runs of 2022 and 2023 to investor behavior during the MMF runs of 2008 and 2020. They found that, similarly to MMF investors, stablecoin investors engage in flight to safety, with net flows from riskier to safer stablecoins during run periods. However, whereas in MMFs, run risk has historically materialized only in prime funds, with stablecoins, runs occurred in different stablecoin types across the 2022 and 2023 episodes. The analysis also shows that, similarly to intrafamily flows in MMFs, stablecoin flows tend to be within blockchains. A discrete “break-the-buck” threshold of $0.99 was identified, below which redemptions accelerate. [Read more at SSRN]
*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.
Kiffmeister’s 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 (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 (20230926)*
Binance exploring stablecoin issuance on MUFG Progmat Coin platform
Binance is exploring issuing stablecoins on the “Progmat Coin” tokenization platform founded by Mitsubishi UFJ Trust and Banking Corporation (MUFG). The Progmat Coin platform allows for transfers and exchanges of stablecoins on various blockchains, including public permissionless blockchains such as Ethereum, in accordance with Japan’s revised Payments Services Act enforced in June 2023. For such stablecoins, issuers and intermediaries are required to take measures to prevent a transfer of such stablecoins to customers whose identity has not been verified, even though I assume they’re not responsible for off-platform transfers between customers. [Read more at PR Newswire]
More specifically, stablecoins that can be redeemable in fiat currencies are regulated as electronic payment instruments (EPIs). Direct-to-Japanese-resident issuers are limited to banks, funds transfer services providers, trust banks or trust companies that are licensed in Japan. Only licensed EPI business providers (EPIBPs) can sell or purchases EPIs, act as an intermediary for EPI issuance, sales and purchases, or provide EPI custody services. EPIBPs are subject to AML/CFT regulations, including a travel rule. In other words, EPIBPs are required to provide the customer’s identification information when transferring EPIs to any other EPIBPs. [Read more at Mondaq]
(Am I correct in assuming that in other G20 countries, banks are not permitted to issue stablecoins on unpermissioned networks?)
mBridge CBDC project preparing for new members, launch of minimum viable product
According to the Hong Kong Monetary Authority (HKMA) the latest Project mBridge proof-of-concept (PoC) test has demonstrated that the wholesale central bank digital currency (CBDC) platform can speed up cross-border payments at reduced cost and with better transparency. Project mBridge is a collaboration between the Bank for International Settlements (BIS), HKMA, and the central banks of China, Thailand, and United Arab Emirates, and commercial banks from each of those jurisdictions. More central banks are slated to join the platform, and a minimum viable product, with the aim of paving the way for the gradual commercialization will soon be launched. [Read more at the BIS]
*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.
Kiffmeister’s 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 (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 (20230925)*
Digital yuan app adds prepaid Mastercard Visa top-ups for tourists
Tourists visiting the People’s Republic of China can now pre-charge their digital yuan wallets using Visa and Mastercard payment options. Inbound tourists are reportedly able to make use of overseas mobile numbers to register and open e-CNY wallets and make use of the recharge wallet feature, which supports Visa and Mastercard payments. They must “top up” with at least 100 yuan (around $14) and if they have any funds left in their wallets when they depart China, they can request a refund, after which funds are automatically transferred back to their credit card accounts. This coincides with the start of the Asian Games. [Read more at Coin Telegraph and Cryptonews]
The Financial Stability Board (FSB) published a stocktake of national and regional data frameworks and identifies frictions that pose challenges to improving the cost, speed, transparency and access of cross-border payments. It highlights fragmentation in data frameworks as a main contributor to increased cost and inability to automate cross-border payments. By early 2024, the FSB will develop recommendations, for public consultation, for promoting alignment and interoperability across data frameworks applicable to cross-border payments. [Read more at the FSB]
Towards a reliable taxonomy and understanding of proof of stake and related services
The European Blockchain Association published a joint industry position paper on staking in a European Union (EU) regulatory context. To date, there is no uniform consensus on how this process and its various manifestations are to be defined in concrete terms, which has led to legal uncertainty, sometimes with considerable consequences. The paper aims to make a clear distinction between staking and lending depending on the actual underlying technical process, and to differentiate between the different types of staking. [Read more at the European Blockchain Association]
*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.
Kiffmeister’s 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 (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 (20230924)*
CBDC’s role in promoting financial inclusion
The IMF published a paper on a step-by-step framework to help assess central bank digital currency’s (CBDC’s) value proposition for improving financial inclusion. The impact of CBDC for improving financial inclusion is currently speculative, where further evidence and experience are needed to fully understand benefits and limitations. That said, it provides an opportunity that could be actively explored alongside other solutions for improving financial inclusion. Moreover, CBDC could be considered as one component of a broader set of measures to improve financial inclusion. [Read more at the IMF]
Unlocking interoperability: Overcoming regulatory frictions in cross-border payments
The World Economic Forum (WEF) published a paper that identifies the main regulatory frictions hindering efficient and inclusive cross-border payments, including diverging regulatory frameworks, anti-money laundering compliance complexities, restrictive data regulations and inadequate access for non-bank players. It proposes recommendations to advance regulatory interoperability through enhanced cross-border collaborations, modernized frameworks, strengthened cooperation and public-private partnerships. Achieving interoperability will require the public and private sectors to come together in shaping a transparent, efficient and inclusive cross-border payments ecosystem. [Read more at the WEF]
*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.
Kiffmeister’s 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 (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 (20230922)*
Tether resumes USDT loans, insists it maintains excess reserves
Tether has resumed USDT lending to clients, nearly a year after the company had announced that it would discontinue offering collateralized loans in 2023. As of June 30, 2023, the latest quarterly attestation showed assets that included $5.5 billion in loans, up from $5.3 billion in the previous quarter. A Tether spokesperson said the company’s aim is to prevent any significant depletion of its customers’ liquidity or the need for them to sell their collateral at potentially unfavorable prices, which could result in fire sale losses. [Read more at Decrypt and Bloomberg]
Tokenization: Overview and financial stability implications
The U.S. Federal Reserve published a paper that discusses the potential benefits and financial stability implications of tokenization. Among the benefits of tokenization, are lowering barriers to entry into otherwise inaccessible markets and improving the liquidity of such markets. However, it concludes that tokenization creates interconnections between the digital asset ecosystem and the traditional financial system. At sufficient scale, tokenized assets could transmit volatility from crypto-asset markets to the markets for the tokens’ reference assets. [Read more at the the Fed]
*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.
Kiffmeister’s 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 (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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 (20230921)*
Emmer’s CBDC Anti-Surveillance State Act passes Financial Services Committee
The US House Financial Services Committee considered Majority Whip Tom Emmer’s CBDC Anti-Surveillance State Act. The bill was passed out of the Committee and reported favorably to the House floor during the markup session, an important step toward passing this legislation through Congress. The Act would prevent the Federal Reserve from issuing a central bank digital currency (CBDC) directly or indirectly to individuals or maintaining accounts on behalf of individuals. It would also prohibit the Secretary of the Treasury from directing the Federal Reserve to issue a CBDC and clarifies that a CBDC can only be issued pursuant to congressional authorization. [Read more on Emmer’s website]
Interestingly, Emmer’s bill does leave the door open for a privacy-preserving digital currency: “this Act and the amendments made by this Act shall not apply to any dollar-denominated currency that is open, permissionless, and private, and fully preserves the privacy protections of United States coins and physical currency.” That could leave the door open for House Representative Stephen Lynch’s ECASH Act that would direct the Secretary of the Treasury (not the Federal Reserve) to develop and pilot digital dollar technologies that replicate the privacy-respecting features of physical cash. [Read the ECASH Act here and the FAQ here]
JP Morgan is part of Regulated Liability Network digital currency project
JP Morgan is participating in the Regulated Liability Network (RLN). Earlier in September 2023, the UK arm of the RLN shared the findings of its latest work without mentioning the participants. The network aims to bring together banks and central banks to support different types of digital currency on the same network. That includes CBDCs, deposit tokens and regulated stablecoins. In July the US RLN published a report involving several other U.S. banks, the New York Federal Reserve’s innovation arm and Mastercard. The premise that underpins the RLN is interoperability so that banks don’t need to use the same type of blockchain to transfer tokens between them. [Read more at Ledger Insights]
R3 lays off a fifth of its employees
R3 has laid off a fifth of its employees as part of cost-cutting drive, blaming tough economic conditions that it says have led the company to shift its focus and business model. According to Bloomberg, the company had laid off just over a fifth of its headcount, affecting the company’s operations globally and across different functions. R3 is based in New York but operates an office in the United Kingdom. While enterprise blockchain technology has gained traction over the years, it remains a slow-moving industry where projects take years. However, these projects have moved slowly while others have been abandoned, leading to lost revenue for R3. [Read more at R3]
PayPal USD (PYUSD) is now available on Venmo
PayPal’s PYUSD dollar-denominated stablecoin is now available on Venmo to select users and will be rolling out fully in the coming weeks. Transfers between PayPal and Venmo users are fast and free, and individuals using compatible external wallets, and merchants accepting payments in PYUSD, will also be able to receive transfers from Venmo users (blockchain network fees apply). Also, PYUSD has been greenlisted by the New York State Department of Financial Services, making it easier for virtual currency entities licensed in New York to support PYUSD. [Read more at PayPal]
BIS and IADB join forces to foster LATAM innovation and financial inclusion
The Bank for International Settlements (BIS) and the Inter-American Development Bank (IDB) are joining forces to explore and develop technology that can help to modernize Latin American and the Caribbean financial systems . The first collaboration will be on Project FuSSE (Fully Scalable Settlement Engine) aiming to design and test backend functionality that can be adapted to multiple types of infrastructures, allowing them to process a growing number of transactions and participants across various types of assets and the number of participants. The technology could support payment systems, security settlement systems or even CBDCs. [Read more at the BIS]
*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.
Kiffmeister’s 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 (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and 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]