Public crypto networks as financial market infrastructures (SSRN)

Ulrich Bindseil (European Central Bank) and Omid Malekan (Columbia University) posted a paper that discusses the properties of blockchain technology and how they can enable time structures and novel financial products that cannot exist in traditional financial architecture. The specific features described are streaming payments, omni-asset settlement, programmability, and financial architecture flattening (disintermediation). They provide examples of the unique products they enable, some of which might disrupt today’s dominant payment and capital market solutions in the future. The authors also discuss the utility of blockchain technology in private (permissioned) networks, and the risks of public distributed ledger technology (DLT) networks and their mitigants. [Read more at SSRN]

Robinhood says SEC dropped crypto investigation (Ledger Insights)

The U.S. Securities and Exchange Commission (SEC) will not be taking enforcement action against Robinhood Crypto. This follows the SEC issuing a Wells Notice last year warning of impending legal action relating to crypto custody, cryptocurrency listings and platform operations. Under acting SEC Chair Mark Uyeda, several crypto related cases have been dropped or paused. It recently dropped the investigation into NFT platform OpenSea and Coinbase said its SEC court case would end, subject to Commissioner approval. Earlier this month the SEC paused its case against Binance. Plus, it withdrew its appeal in its attempt to expand the definition of brokers to include liquidity providers. [Read more at Ledger Insights]

Reflections on a maturing stablecoin market (FRB)

U.S. Federal Reserve Board (FRB) Governor Christopher J. Waller spoke about the maturing stablecoin market and the potential challenges that could impede it from reaching its full potential. Stablecoins must demonstrate not only clear use cases, but also a clear commercial case to be economically viable. Plus, the public sector needs to set clear and targeted legal and regulatory frameworks and coordinate those frameworks across states and national boundaries to enable private sector innovation at a global scale. [Read more at the FRB]

How censorship resistant are decentralized systems? (FRB)

The Federal Reserve Board (FRB) published an article on crypto-asset censorship resistance, focusing on settlement layer cooperation by block proposers. It found that, although public permissionless blockchains are designed to be censorship resistant, even blockchains with broad user bases are not immune to the potential for certain transactions to be excluded due to external pressure. Further, concrete design features—such as financial incentives, which are intended to permit the expression of views, however controversial—do not appear to be effective in strengthening censorship resistance. However, system censorship resistance seems to be reinforced by the large players who value censorship resistance as a primitive feature. [Read more at the FRB]

Upcoming Speaking Engagements:

• The Crypto Assets Conference (Frankfurt, March 26) will delve into the advancements in digital assets, tokenization, crypto assets, web3, and more, through insightful talks, interactive debates, and presentations by industry experts, founders, investors, and representatives from public institutions. [Register here and get a 10% discount]
• 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.