Responses to the Bank of England and HM Treasury digital pound consultation paper
The Bank of England (BOE) and HM Treasury (HMT) published a summary of the responses to their February 2023 digital pound consultation paper. The Bank and HMT received over 50,000 responses, with many respondents raising concerns about access to cash, users’ privacy, and control of their money. In the summary paper, the BOE and HMT said that the they would not have access to personal data. Private-sector payment interface providers (PIPs) would anonymize personal data before transactions are processed and settled by the BOE. Also the BOE and HMT would not pursue government or central bank-initiated programmable functions. However, PIPs could program digital pound payments but only with user consent, and be subject to robust regulatory requirements in this regard .Although commercial bank respondents called for individual holding limits of £3,000 to £5,000, the BOE and HMT are sticking with a £10,000 to £20,000 range for now. The design phase will continue until at least 2025 when a decision is needed on whether to proceed with prototyping and piloting prior to any launch decision. [Read more at the BOE]
The BOE and HMT also published the responses to the digital pound technology working paper also published in February 2023. There was broad support for the six technology design considerations – privacy, security, resilience, performance, extensibility and energy usage. Respondents also suggested additional considerations, such as interoperability, usability, accessibility and scalability. A few respondents suggested models that the BOE judges to not be compatible with the stated policy objectives or design principles, for example models based on anonymous bearer instruments, which will not be taken forward. Most respondents agreed that government or central bank-initiated programmable money should not be pursued, but that user-initiated programmable payments and smart contract functionality would be important for a digital pound system. [Read more at the BOE]
SEC delays decision on BlackRock and Grayscale spot Ethereum ETF applications
The U.S. Securities and Exchange Commission has delayed a decision on BlackRock’s iShares Ethereum Trust spot Ethereum exchange-traded fund (ETF) application. This follows a similar denial to Fidelity in the previous week. Some market observers had assumed that the approval of a spot Ethereum ETF was a foregone conclusion after the recent approval of eleven bitcoin spot ETFs, but apparently not so. [Read more at the SEC]
The SEC also delayed its decision on Grayscale’s Ethereum Trust ETF application for the second time. The first delay was in December 2023. specifically asked whether Ethereum’s proof of stake mechanism and “concentration of control or influence by a few individuals or entities” could bring up unique concerns to make the fund susceptible to fraud and manipulation. [Read more at the SEC]
FYI here are some of my upcoming speaking engagements:
– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here and get a 20% discount with the Kiffmeister20 code]
*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).
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