Central bank digital currency reference architecture (ITU)

The International Telecommunications Union (ITU), a specialized agency of the United Nations responsible for matters related to information and communication technologies, published a report that I co-wrote on a central bank digital currency (CBDC) reference architecture. Its aim is to work towards standardizing how different CBDCs can be evaluated and compared. The report was derived from the ITU’s earlier work on digital currency ontological work and is organized around the IMF’s “ASAP” model that describes digital asset systems in terms of four functional layers – access, service, asset, and platform. The resulting reference architecture is based on, and informed by, recent CBDC launches, pilots and proofs of concept (i.e., it does not consider prospective future architectures). [Read more at the ITU]

U.S. crypto And digital assets top David Sacks’ first press conference (Forbes)

U.S. President Trump’s crypto and AI czar David Sacks unveiled plans for U.S. leadership in digital assets, emphasizing that keeping innovation onshore is a top priority. To advance this initiative, he announced a joint working group between the House and Senate dedicated to crypto legislation. It will aim to harmonize regulations across different oversight agencies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), and eliminate regulatory uncertainty and provide the crypto industry with clear guidelines on compliance, operations, and legal obligations. [Listen to the Sacks press conference here]

GENIUS stablecoin Bill allows for state regulation, but limits race to bottom (Ledger Insights)

U.S. Senator Hagerty introduced the Bill for the U.S. Stablecoins (GENIUS) Act, in collaboration with co-sponsor Senators Tim Scott, Kirsten Gillibrand (Democrat) and Cynthia Lummis, aimed at regulating stablecoins by establishing clear issuance procedures and designating federal and state regulators based on the issuer’s size. For example, the Bill allows state regulators to supervise payment stablecoins of under $10 billion. Reserve requirements would limit the type of backing collateral to commercial bank deposits, short-term Treasuries, repo and reverse repo involving short-term Treasuries, similar money market funds and central bank reserve deposits. [Read the GENIUS Bill here]

Commissioner Hester Pierce outlines U.S. SEC Crypto Task Force plans (Ledger Insights)

Head of the SEC’s Crypto Task Force Hester Pierce, outlined her crypto plans, including ending the regulator’s practice of regulation by enforcement. She remarked that the SEC’s handling of crypto has been marked by “legal imprecision and commercial impracticality” resulting in “many cases remaining in litigation, many rules remaining in the proposal stage, and many market participants remaining in limbo”. She added that “it took us a long time to get into this mess, and it is going to take us some time to get out of it”. At the same time, the CFTC will reorganize its enforcement division to stop “regulation by enforcement” and refocus on fraud. [Read more at the SEC and the CFTC]

National Bank of Georgia launches tokenized deposit sandbox (NBG)

The National Bank of Georgia (NBG) is inviting supervised entities to participate in its Regulatory Sandbox’s tokenized deposits project, the goal of which is to create a regulatory framework with the involvement of stakeholders. The country’s financial ecosystem does not currently regulate the use and offering of distributed ledger technology (DLT) based deposits and certificates of deposit (CDs). This project will potentially contribute to the creation of new financial products, the diversity of the financial ecosystem, the development of a CD secondary market, greater flexibility and diversification of deposit products, and optimization of product-related costs. [Read more at the NBG]

Deka report shows impact of ECB trials on German tokenization (Ledger Insights)

The Eurosystem’s distributed ledger technology (DLT) settlement trials in digital central bank money was associated with a spike in German tokenization, according to Deka Bank. German digital securities issuance in the second half of 2024 totaled €615 million, compared to a total of €235 million cumulatively in up until then. Cashlink and Smart Registry (Nyala), who tend to use public blockchains (mostly Polygon) , were the most prolific issuers, with almost 90 issues between them in 2024. However, in terms of volume, Deka Bank dominated. Deka Bank hosts its tokenized issuance on the SWIAT platform that uses the permissioned Hyperledger Besu blockchain. [Read more at Deka Investments]

Leverage and stablecoin pegs (SSRN)

The Journal of Financial and Quantitative Analysis will be publishing a paper by Gary Gorton and others on how stablecoins can maintain a constant price even though they face run risk and pay no interest. Stablecoin holders are compensated for stablecoin run risk because they can lend the coins to levered traders. Levered traders are willing to pay a premium to borrow stablecoins when speculative demand is strong. However, when speculative demand falls, stablecoin issuers can keep their debt trading at par only by moving to a safer portfolio or allowing redemptions. Stablecoin issuers will need to make these adjustments quickly to avoid the risk of collapse, which may cause disruptions in the markets they invest in, such as Treasuries, commercial paper, and repos. [Read more at SSRN]

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Upcoming Speaking Engagements:

• The Central Bank Payments Conference (Paris, February 17–19) will explore the latest issues and developments confronting central banks and their evolving role as operators, overseers, and catalysts within the payments landscape. The focus will be on cross-border payments, CBDC and tokenization, open finance, instant payments, and financial inclusion, among other topics. When you register get 15% off by using the Kiffmeister15 code. [register here]
• The Global Payments Summit (Paris, February 19–21), the second half of Currency Research Payments Week, will explore emerging payments trends and innovations, positioning the ecosystem’s commercial players — banks, PSPs, solution providers — at the center of the discussions. When you register get 15% off by using the Kiffmeister15 code. [register here]
• The Crypto Assets Conference (Frankfurt, March 26) will explore the latest innovations and emerging industry trends in DLT, blockchain, and crypto assets, through insightful talks, interactive debates, and presentations by industry thought leaders. [Register here]
• The Digital Euro Conference 2025 (Frankfurt, March 27) will explore the future of money with a focus on CBDCs, stablecoins, tokenized deposits, and the intersection of AI and digital ID. When you register, get 20% off the regular ticket price by using the Kiffmeister20 code! [register here]

And 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 john@kiffmeister.com.