Category: DeFi

Kiffmeister’s #Fintech Daily Digest (20240503)

~ kiffmeister

Bank of Namibia launches instant payment project

Bank of Namibia (BON) launched its Instant Payment Project, with a targeted launch year of 2025. It will focus on enhancing financial services in rural areas and the informal sector, thereby reducing cash dependency, and increasing transactional efficiency. Designed for inclusivity, the platform will be accessible on any device, including non-smartphones, ensuring that everyone can use it effortlessly. According to Finextra, BON will partner with National Payments Corporation of India (NPCI), the firm behind India’s Unified Payments Interface (UPI). [Read more at BON]

Why DeFi lending? Evidence from Aave V2

The Bank for International Settlements (BIS) published a paper that uses granular, transaction-level data from Aave, a leading player in the distributed finance (DeFi) lending market, to study investor motivations. The theoretical and empirical findings reveal that the search for yield predominantly drives liquidity provision in DeFi lending pools, whereas borrowing activity is mainly influenced by speculative and, to some extent, governance motives. Both retail- and large investors seek potential high returns through market movements and price speculation, however the latter engage in DeFi borrowing relatively more than the former also to influence protocol decisions and accrue more significant governance rights. [Read more at the BIS]

Upcoming Speaking Engagements:

  • CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here]
  • Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and 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.

Kiffmeister’s #Fintech Daily Digest (20240428)

~ kiffmeister

Evidence of concentrated DeFi liquidity from DEXs and AMMs

The OECD published a paper that provides evidence of increased concentration of decentralized finance (DeFi) liquidity provision in decentralized exchanges (DEXs) and automated market makers (AMMs). A low trade count is observed in liquidity pools where DeFi liquidity provision is concentrated, with 20% of the pools of some of the DEXs examined accounting for more than 90% of the trading volume of these DEXs. Also, a small number of liquidity providers participating in the examined pools represent a significant part of the trading activity. This could exacerbate DeFi vulnerabilities, with possible impact on market functioning, price discovery, and competitive dynamics. [Read more at the OECD]

Custodia to file appeal over denied access to Fed master account

Custodia Bank will appeal the US District Court ruling in Wyoming that supported the decision of the Federal Reserve Bank of Kansas City to deny Custodia a master account. This move is part of Custodia’s continued efforts to secure direct access to the Kansas City Fed’s payment systems, which it deems crucial for the growth of its operations. The appeal marks the latest development in a prolonged legal battle that goes back to 2022. The March 29, 2024 ruling highlighted the Fed’s discretionary power in granting or denying master accounts, the judge stating that “Federal laws do not require the Federal Reserve to give every eligible institution a master account.” [Read more at Bitcoinist]

FYI I’ll be speaking at the Digital Currency Conference in London on September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]

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 john@kiffmeister.com.

Kiffmeister’s #Fintech Daily Digest (20240412)

~ kiffmeister

On DeFi and on-chain CeFi: How (not) to regulate decentralized finance (DeFi)

The Journal of Financial Regulation (JoFR) published a paper that offers a framework to assess the factual decentralization of blockchain-based decentralized finance (DeFi) financial infrastructures, which is crucial for regulatory assessments. It explores various potential sources of centralized control, either endogenous or through inherited dependencies on other projects (“centralization vectors”). It finds that many DeFi projects are subject to such vectors that are likely critical, and taking them into account substantially reduces the number of DeFi projects that are genuinely decentralized. The paper argues that if a project has significant centralization vectors it can and likely should be regulated. On the other hand, for truly decentralized projects, the regulatory focus should remain on the on- / off-ramps to / from the spheres of on-chain centralized finance (CeFi) and (traditional) CeFi. [Read more at the JoFR].

Hong Kong still cautious about introducing a retail CBDC

Hong Kong Monetary Authority (HKMA) CEO Eddie Yue remains skeptical about the benefits of a retail central bank digital currency (CBDC). He started by listing some of the potential benefits, including serving as a fundamental layer to facilitate interoperability and interlinking between various future digital economy participants. Also, it could act as a bridge between different types of privately-issued digital money, and ensure all private money to be exchangeable with a public money on demand and at par. He also envisioned that a retail CBDC could be a potential “backbone” and anchor, bridging a legal tender and digital assets, offering price stability and confidence needed to empower more innovations, and developing a vibrant sector and ecosystem for digital assets in Hong Kong. Nevertheless, Mr. Yue said that more research is needed on whether its benefits outweigh the risks, particularly “given the generally efficient and competitive retail payment ecosystem in Hong Kong” [and the HKMA] will continue to take a use-case driven approach in thinking about whether and when to introduce a retail CBDC.” [Read the full speech at the HKMA]

Atlantic Council calls for global interoperability standards for CBDC

The Atlantic Council published an updated version of their “Standards And Interoperability: The Future Of The Global Financial System” white paper calling for calling for global CBDC interoperability standards. It sets some common definitions and understanding of the current state of international standards for those seeking to understand the current state of international standards and existing gaps and areas for improvement. It also notes that, standards ensuring consistency and seamless functionality are not static; they must be flexible enough to accommodate advancements in digital currency technology, shifts in economic priorities, and changing societal perspectives on digital assets. [Read more at the Atlantic Council]

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.

Kiffmeister’s #Fintech Daily Digest (20240402)

~ kiffmeister

ECB looking for consultant to support digital euro offline functionality

The European Central Bank (ECB) is looking for a senior payments industry expert to provide consultancy services on a 40% part-time basis to support the project team designing and developing the digital euro’s offline functionality. The successful candidate will support the team in (i) defining the deployment of the digital euro’s offline functionality in end users’ devices in line with the requirements set in the draft legislative proposal; (ii) designing and implementing an optimal user experience for offline contactless payments via smartphones; (iii) assessing how an offline digital euro can be integrated within the existing terminal landscape at the point of sale; (iv) supporting the drafting of detailed requirements for the digital euro’s offline functionality. [Read more at the ECB]

Bank of China launches e-CNY offline payments for Qingdao Rail Transit

The Qingdao branch of the Bank of China (BOC) has rolled out a new payment option for Qingdao Rail Transit through digital yuan hardware wallets for payments without network and electricity. This “deferred payment” system allows travelers to use the public transit service first and pay later with the hardware wallet featured enabled on users’ smartphones. This functionality requires the use of an Android-based smartphone running a “Super SIM” card that stores digital yuan account information for use when there’s no network or electricity, introduced by China Mobile, China Telecom, and China Unicom in 2023. [Read more at Dazhong]

Japan’s first deposit-backed stablecoin “Tochika” has been launched

Hokkoku Bank together with the City of Suzu and Kono Shinkin Bank, has launched the “Suzu Tochika” deposit-backed blockchain-based stablecoin in Suzu City, Ishikawa Prefecture. In the summer of 2023, the consortium launched the “Suzu Tochituka” digital payment service for Suzu City-issued “Suzu Tochipo” points used for payments at participating stores. A Tochika account can be opened by registering a bank deposit account for charging the Tochituka app, with 1 tochika equating to 1 yen, and later redeemed at the same rate. Tochika is accepted at Tochituka member stores. Merchants pay a 0.5% settlement fee on Tochika transactions. [Read more on Norbert Gehrke’s Medium blog]

Decentralized finance (DeFi) leverage

The Bank for International Settlements (BIS) published a paper that examines decentralized finance (DeFi) leverage – ie the asset-to-equity ratio at the wallet level in major lending platforms. The overall leverage typically ranges between 1.4 and 1.9, while the largest and most active users consistently exhibit higher leverage than the rest. Leverage is mainly driven by loan-to-value requirements and borrowing costs, as well as crypto market price movements and sentiments. Higher wallet leverage generally undermines lending resilience, particularly increasing the share of outstanding debt close to being liquidated. Borrowers with high leverage are more likely to tilt towards volatile collateral when their debt positions are about to be liquidated. [Read more at the BIS]

Making sense of decentralized finance (DeFi)

The Philadelphia Fed published a paper that finds that DeFi has not decentralized decision-making power to users in the way its proponents had hoped. Decision-making power in DeFi remains highly concentrated in a few hands; insiders such as the founding team and venture capital funders often retain a substantial fraction of a platform’s tokens as compensation. Also, most small-scale users have little incentive to participate in votes on platform policies, since their votes are unlikely to influence the outcome. There may also be formal or informal barriers to small users’ participation. The paper concludes that future progress in DeFi will require not only technical advances in smart contract and distributed ledger design but also economic solutions to the governance problems faced by these platforms. [Read more at the Philly Fed]

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 (20231220)*

~ kiffmeister

IOSCO Finalizes its Policy Recommendations for Decentralized Finance

The International Organization of Securities Commissions (IOSCO) published nine decentralized finance (DeFi) policy recommendations covering six key areas: (1) understanding DeFi arrangements and structures, (2) achieving common standards of regulatory outcomes, (3) identification and management of key risks (4) clear, accurate and comprehensive disclosures (5) enforcement of applicable laws, and (6) cross-border cooperation. They are meant to be complementary to the crypto and digital assets markets recommendations issued in November 2023. [Read more at IOSCO]

BlackRock, ARK revise Bitcoin ETF plans along SEC’s cash-only model

Blackrock and ARK amended their spot Bitcoin exchange-traded fund (ETF) filings to comply with the cash redemption model demanded by the U.S. Securities and Exchange Commission (SEC). The amendments relate to the cash creation and redemption model for proposed spot Bitcoin ETFs, with BlackRock and ARK accepting the cash redemption system rather than in-kind redemptions, which imply non-monetary payments like Bitcoin. However, both amended filings would permit them to create and redeem shares via in-kind transactions with regulatory approval. [Read more at Coin Telegraph]

FYI here are some of my upcoming speaking engagements:

– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here]

*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 (20231012)*

~ kiffmeister

JPMorgan debuts blockchain collateral settlement in BlackRock-Barclays trade

JPMorgan has debuted its in-house blockchain-based tokenization application, the Tokenized Collateral Network (TCN) as it settled its first trade for BlackRock. The TCN, using blockchain technology, allows investors to transfer collateral ownership without moving assets in underlying ledgers. It was used by BlackRock to turn shares in one of its money market funds into digital tokens, which were then transferred to Barclays as collateral for an over-the-counter derivatives trade between the two institutions. [Read more at Bloomberg]

Esma assesses market developments in DeFi and smart contracts

The European Securities and Markets Authority (ESMA) published two articles on decentralized finance (DeFi), one on developments and risks in the European Union (EU) market and another on a methodology for the categorization of smart contracts. The article on DeFi warns of serious risks to investor protection, because of the highly speculative nature of many arrangements and important operational and security vulnerabilities. DeFi’s unique features have led to new market manipulation issues that need to be addressed. [Read more at Finextra]

*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 (20231005)*

~ kiffmeister

Bank of Canada: Central banks will face unfamiliar challenges to achieve CBDC inclusivity

The Bank of Canada published a paper that explores quantitative and qualitative information about Canadians who face barriers to making digital payments, and implications for a potential central bank digital currency (CBDC). It identified three types of inclusion necessary for a universally accessible payment method: financial inclusion, digital inclusion and practical accessibility. The challenge is in the delivery of services rather than product design, and private financial institutions may not be incentivized to address the needs of those who are underserved. However, overcoming those challenges will require central banks to face problems that would otherwise be considered far from their scope of interest. [Read more at the Bank of Canada]

Project Mandala: shaping the future of cross-border payments compliance

The Bank for International Settlements (BIS) and the central banks of Australia, Korea, Malaysia and Singapore launched Project Mandala, which explores the feasibility of encoding policy and regulatory requirements into a common protocol for cross-border use cases such as foreign direct investment, borrowing and payments. It aims to ease the policy and regulatory compliance burden by automating compliance procedures, providing real-time transaction monitoring and increasing transparency and visibility around country-specific policies. [Read more at the BIS]

Hong Kong Stock Exchange launches settlement platform powered by smart contracts

Hong Kong Exchanges and Clearing Limited (HKEX) is launching “Synapse,” a platform that will utilize smart contracts to streamline post-trade flows and enhance operational efficiencies. It will be deployed on Stock Connect, an HKEX channel that enables international investors to access more than 1,000 mainland Chinese stocks through routing in Hong Kong. HKEX will be linked to Hong Kong’s Depository Trust and Clearing Corporation through its Institutional Trade Processing service, allowing for the central matching of cross-border transactions. Settlement instructions are then automatically generated and sent back to the Synapse platform, thus enhancing the trade confirmation workflow. [Read more at Coin Telegraph]

Project Atlas: mapping the world of decentralized finance

The BIS Innovation Hub, De Nederlandsche Bank and the Deutsche Bundesbank jointly launched Project Atlas, which creates a data platform that sheds light on the macroeconomic relevance of crypto-asset markets and decentralized finance (DeFi). A first proof of concept of Project Atlas was developed focusing on international flows of crypto-assets. The initial findings indicate that, although relatively small compared with total on-chain network traffic, identified flows between crypto exchanges are significant and substantial economically. Attributing geographical areas to exchanges (where possible) lays out the structure of cross-border flows. Thus, Project Atlas provides a starting point for structural analysis across jurisdictions. [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 (20230928)*

~ kiffmeister

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 (20230925)*

~ kiffmeister

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]

FSB identifies frictions from data frameworks that pose challenges to enhancing cross-border payments

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 (20230908)*

~ kiffmeister

Hong Kong expands trial of China’s digital yuan to more banks

Hong Kong is reportedly actively testing China’s digital yuan and has entered the second phase of technical testing to incorporate a predominant local payment system. The Hong Kong Monetary Authority (HKMA) and the People’s Bank of China (PBOC) have completed the initial technical tests for cross-border payments using the digital yuan in Hong Kong. Currently, they are conducting the second phase of the technical trial, involving more Hong Kong banks and testing the digital yuan wallet’s top-up function through the Faster Payment System. [Read more at The Block]

Circle says its USDC stablecoin was as diversified as possible. Is that accurate?

JP Koning published an article that debunks Circle’s claim that the reserves backing its USDC stablecoin were “as diversified as possible” prior to the collapse of Silicon Valley Bank, in which $3.3 billion (8% of reserves) was held in the form of uninsured deposits. Circle blames banking for its woes, which is “extremely difficult” for crypto firms, but Paxos doesn’t seem to be having the same problem with its USDP stablecoin. $185.5 million were spread over thousands of banks using deposit placement networks like IntraFi, and were thus insured by the government. For the remainder, Paxos obtained $72 million worth private insurance. Only $10.9 million in deposits were effectively unprotected, a small 1.3% sliver of USDP’s total assets. JP askes, rather than keeping 8% of its assets lodged at a second tier bank without insurance, why didn’t Circle follow Paxos’s risk reduction strategy? [Read more at Moneyness]

Fortune magazine published a behind-the-scenes account of Circle’s Silicon Valley Bank (SVB) trials and tribultations. Circle’s management “devised a plan A, B, and C. The first failed when Circle’s attempted wire to get out its deposits didn’t go through. [They] remained optimistic that the government would guarantee its deposits—plan B. In case that didn’t work out, the executives spent the weekend negotiating deals with companies who would buy Circle’s SVB holdings for $0.85 on the dollar, which, along with Circle’s own balance sheet, would be enough to restore USDC’s reserves.” [Read more at Fortune]

IOSCO consults on global DeFi regulation. Targets MEV, developers 

The International Organization of Security Commissions (IOSCO) published a report on the regulation of decentralized finance (DeFi). It makes nine recommendations that include analyzing the DeFi protocol, identifying responsible persons and mapping functionality to existing regulated activities. The proposed recommendations are principles-based and outcomes-focused, and aimed at DeFi products, services, arrangements, and activities by applying IOSCO’s widely accepted  global standards for securities markets regulation. [Read more at IOSCO]

The oracle problem and the future of DeFi

The BIS published a paper on the role of oracles to import real-world data into blockchain-based decentralized finance (DeFi) environments for use in smart contracts. Smart contracts in DeFi rely on accurate reporting of real-world events to function correctly. The oracle problem poses a challenge of incorporating reliable real-world information into DeFi applications while maintaining the core principles of decentralization: trustlessness and no single point of failure. It underscores a notable limitation of DeFi, which requires sacrificing trust in intentions (whether individuals or institutions are fair and ethical) that cannot be fully captured by consensus protocols. This restricts the scope of DeFi to communities that are willing to rely solely on trust in competence. [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]