Kiffmeister’s #Fintech Daily Digest (09/12/2021)

I’ve updated my tabulation of retail central bank digital currency (#CBDC) explorers to include Guatemala and Honduras on the “unconfirmed” list. I now count/name 60 central banks. According to the end-2020 Bank for International Settlements (BIS) survey, 56 of the 65 central banks they surveyed are doing some kind of CBDC exploration, although that number includes wholesale CBDC experiments, plus they count every country separately, whereas I lump currency zones countries together (e.g., they count France, Germany, etc., separately, whereas I lump them and other Eurozone countries together). 

Also, a February 2021 survey of International Monetary Fund (IMF) mission chiefs suggested that CBDC are being closely analyzed, piloted, or likely to be issued in 111 member countries, although I believe that also includes wholesale CBDC and multiple counts currency zone countries. 

Another reason why my count might be lower is that I actually list the countries, whereas the BIS and IMF don’t. And I only list countries who’s CBDC explorations I can confirm based on publicly-available information, ideally from the relevant central bank websites. 

September 28-30 CordaCon Conference

At the September 28-30 @inside_r3 #CordaCon2021, I’ll be providing an overview of recent retail #CBDC developments. You can register for the event here:

October 4-6 CBDC Conference

On October 4 I’ll be providing an overview of international work on retail CBDC and evolving thinking on motivations, system design and safeguards at The CBDC Conference. You can register for this and the full three-day (October 4-6) event here:

To get these updates sent to your inbox, please email me at Also, for those interested in intra-day updates and news that didn’t make the Daily Digest cut, please check out my Diigo fintech bookmarks:

Kiffmeister’s #Fintech Daily Digest (10/13/2020)

Bank of Russia Considers Issuing Digital Ruble, Starts Public Consultations

The Bank of Russia is exploring the possibilities of issuing the central bank digital currency (CBDC), a digital ruble. It doesn’t see the digital ruble as a replacement for cash or non-cash rubles, but as a supplement. The central bank said it hasn’t yet decided whether to issue a CBDC but will hold a public consultation period on the matter. The bank said it considers it vital to discuss key aspects, advantages, possible risks, stages and timing of a digital ruble project with the financial sector, the expert community as well as with all stakeholders.  

FSB delivers a roadmap to enhance cross-border payments

The Financial Stability Board (FSB) published a roadmap to enhance cross-border payments. It addresses the key challenges often faced by cross-border payments and the frictions in existing processes that contribute to these challenges. The roadmap provides a high-level plan, which sets ambitious but achievable goals and milestones, and is designed to allow for flexibility and adaptation in the path to get there as the work progresses, while ensuring that the safeguards in terms of secure processing and legal compliance are observed. It encompasses a variety of approaches and time horizons, in order to achieve practical improvements in the shorter term while acknowledging that other initiatives will need to be implemented over longer time periods. 

One of the components (Building Block 19) factors an international dimension into CBDC design that will be led by the Bank for International Settlements (BIS) Innovation Hub (BISIH), Committee for Payments and Market Infrastructure (CPMI), International Monetary Fund (IMF) and World Bank (WB):

  • The CPMI with the BISIH, IMF, and WB is to take stock of provisional domestic CBDC designs and central bank experimentation with multi-CBDC arrangements. (November 2020 – July 2021)
  • The IMF, in cooperation with other relevant stakeholders, will analyse international macro-financial implications of cross-border CBDC use. (November 2020 – July 2021)
  • The CPMI with the BISIH, IMF, and WB to identify and analyse options for access to and interlinking of CBDCs that could improve cross-border payments. (August 2021 – July 2022)
  • The BISIH is to assess practical and technological complexities of implementing multi-CBDC arrangement designs and interoperability types; experiments with arrangements that enable access and interlinking and facilitate efficient cross-currency CBDC payments. (January 2022 – December 2022)
  • The BIS, with the IMF and WB, to organise a conference to share information exchange/encourage collaboration on cross-border payments across (planned) CBDC implementations. (January 2022 – December 2022)
  • The IMF and WB to provide technical assistance to facilitate cross-border use of CBDC if requested. (From July 2022 onwards)

Regulation, Supervision and Oversight of “Global Stablecoin” Arrangements

The Financial Stability Board (FSB) published a report that sets out ten high-level recommendations for the regulation, supervision and oversight of “global stablecoin” (GSC) arrangements, both at the domestic and international level, that are proportionate to the risks. They support responsible innovation and provide sufficient flexibility for jurisdictions to implement domestic approaches. GSC arrangements are expected to adhere to all applicable regulatory standards and to address risks to financial stability before commencing operation, and to adapt to new regulatory requirements as necessary. Some of the regulatory requirement standard setting is part of Building Block 4 of the FSB’s cross-border payments roadmap discussed above, which stretches out into 2023, which implies that Libra’s launch could be delayed for years.

BSP Unveils Digital Payments Transformation Roadmap

The Bangko Sentral ng Pilipinas’s (BSP’s) Digital Payments Transformation Roadmap 2020-2023 was approved by its Monetary Board. The goal is to convert 50% of the total volume of retail payments into digital form and expand the number of the financially included to 70% of Filipino adults. The second goal is to expand the availability of more innovative digital financial products and services, enabled by the Philippine Identification System, and supported by the availability of a real-time payment and settlement system.

An Advisor to a Cryptocurrency Project Just Won a Nobel Prize

Algorand, the proof-of-stake blockchain platform on which the Marshall Islands SOV will run boasts a team of advisors that includes MIT economics researchers, game theory experts, several Turing Award winners, and now a Nobel Laureate (Paul Milgrom).  

Mobile Internet Connectivity 2020: Sub-Saharan Africa Factsheet 

There are now more than 3.8 billion mobile internet subscribers globally, representing 49% of the world’s population. However, adoption has not been equitable, with mobile internet adoption standing at 26% in Sub-Saharan Africa at the end of 2019. The region accounts for almost half of the global population not covered by a mobile broadband network. 

Kiffmeister’s #Fintech Daily Digest (08/14/2020)

Brainard Says Fed Is Conducting E-Money Tests for Research

The Federal Reserve is conducting in-house experiments with a hypothetical digital dollar for research purposes, though it hasn’t yet committed to issuance that would require a formal policy process involving the government and other stakeholders. A multidisciplinary team, with application developers from the Federal Reserve Banks of Cleveland, Dallas, and New York, is working with a policy team at the Fed to study the implications of digital currencies on the payments ecosystem, monetary policy, financial stability, banking and finance, and consumer protection. 

Boston Fed announces collaboration with MIT to research digital currency

To enhance the Federal’s understanding of digital currencies, the Boston Fed is collaborating with researchers at the Massachusetts Institute of Technology in a multiyear effort to build and test a hypothetical central bank digital currency (CBDC). The first phase of the Boston Fed’s research will involve jointly building and testing a hypothetical CBDC for wide-scale, general purpose use. The objective in this phase will be to determine how to architect a scalable, accessible cryptographic platform to meet the needs of a theoretical U.S. dollar CBDC, including stringent design requirements for speed, security, privacy and resiliency. 

China expands digital yuan trial to several more cities

China’s central bank digital currency (CBDC) pilot will reportedly expand to include Beijing, as well as Hong Kong, Macau, Guangdong province, Tianjin, Hebei, and the Yangtse River Delta. Also the Ministry of Commerce reportedly said that the project design is hoped to be wrapped up by the end of 2020.  

Comparing Means of Payment: What Role for a Central Bank Digital Currency?

This Federal Reserve paper looks at the potential benefit that a central bank digital currency (CBDC) could provide in the context of existing payment mechanisms. A comparison of a general-purpose CBDC with existing means of payments across seven categories reveals how an appropriately designed CBDC could provide value in certain areas. These technological benefits could include a digital form of a bearer instrument, more cost-effective payment services, greater anonymity than current digital transactions, and a catalyst for greater innovation through programmable money. 

BitMEX to Mandate ID Verification for All Traders as Maverick Exchange Ends Wild Ways

BitMEX will impose mandatory identity verification for all users. Registering to trade on BitMEX currently takes “less than 30 seconds,” according to its homepage, where new users outside of restricted jurisdictions are required to enter only an email address, password and pick a country of residence. That will end on August 28 when verification will be mandatory for all users, a process that will include proofs of location, funds, and trading experience. The policy change comes with a six-month “grace period” ending in February 2021 to accommodate unverified users completing the process. 

Apollo Fintech Announces Completion of the First Blockchain National Currency Platform

Apollo Fintech launched its blockchain-based central bank digital currency (CBDC) National Payment Platform (NPP). It faciliatates the build out of a multi-tier digital currency ecosystem, from commercial banks and other agents, to merchants and users, enabling to peer to peer transactions using its app, SMS, QR codes, cards, offline codes. Authorized banks can onboard users and merchants for mainstream transactions including currency deposits and withdrawals, currency exchange, money transfers and payments for goods and services.  

Real Estate Tokenization- A Complete Guide

In recent years, blockchain-based tokenization has succeeded in making real estate much efficient, accessible, and affordable to the investors. And many experts believe that tokenization is the key to transform the industry into the next level. If you’re a property owner, or an investor looking for an opportunity to invest in real estate, this article jots down the 3 W’s of tokenization of real estate, i.e what is tokenization? Why should you tokenize? and where to tokenize your real estate? 

Writing Bitcoin Smart Contracts Is About to Get Easier With New Coding Language

Bitcoin smart contracts are a tricky beast to tame, but a new language is making them easier to write, democratizing them in a sense. Minsc, created by Bitcoin developer Nadav Ivgi, is a new programming language that makes it easier for developers to create these kinds of contracts so they can build them into bitcoin wallets and other apps more smoothly. 

UK fintech funding rallied in the first half of 2020 amid the coronavirus pandemic

Despite the global coronavirus pandemic, U.K. fintech funding saw a slight uptick in the first half of 2020 compared to the same period in 2019. Fintech investments were up 3.8% in the first half of 2020 to just over £2bn, up from £1.9bn in the first half of 2019. The slight increase can largely be attributed to a surge in investment across insurtech and payments startups. Investment in insurtech saw the largest increase, increasing by 66% from £97m in 2019 to £161m in 2020 and payments-focused fintechs followed, seeing a 5.3% increase on 2019 to £760m. 

Posted from Diigo:

Kiffmeister’s #Fintech Daily Digest (08/13/2020)

Coinbase to Offer Bitcoin-Backed Loans to US Customers

Coinbase will allow U.S. retail customers to borrow fiat loans against as much as 30% of their bitcoin holdings in the fall. Credit lines will be capped at $20,000 per customer and an interest rate of 8% will be pffered for bitcoin-backed loans with terms that are a year or less. The exchange says it won’t reinvest the collateral elsewhere and will keep the bitcoin at the exchange, unlike some crypto lenders who rehypothecate collateral or invests deposits into perpetual swaps. The new Coinbase product is only available in the following states: Alaska, Arkansas, Connecticut, Florida, Georgia, Illinois, Massachusetts, New Hampshire, New Jersey, North Carolina, Oregon, Texas, Virginia, Nebraska, Utah, Wisconsin and Wyoming. 

Chinese state-run banks start testing PBoC’s ‘e-wallet

China’s largest state-owned banks have reportedly started testing the “electronic wallet” component of the People’s Bank of China’s (PBOC’s) “digital yuan” project. The tests are being conducted in cities including Shenzhen, which borders Hong Kong. The municipal government of Shenzhen said it would cooperate in efforts to test the system for different applications. Banks are testing the e-wallet application to transfer money and make payments using the PBoC’s digital yuan. The e-wallet, which can be downloaded as a mobile application, will be linked to a user’s national ID number or telephone number to enable fund transfers. 

DeFi Meme Coin YAM Succumbs to Fatal ‘Rebase’ Bug, Makes Plans for ‘YAM 2.0

DeFi meme coin YAM has succumbed to a bug within its rebase function, meaning the coin has lost control of its on-chain governance feature. Yam was an elastic supply crypto-asset, where the supply expands and contracts in response to market conditions with the aim of pegging the value of a Yam to the U.S. dollar. 10% of each supply expansion (“rebase”) is used to buy yCRV, a high-yielding basket of USD stablecoins, which is allocated to the Yam treasury which is controlled via community governance. Holders of any of eight eligible tokens, which included Compound and Maker, could stake them into Yam’s front-end and start earning YAM. 

From Decrypt: In the 24 hours following the August 11 launch, the total-value-locked (TVL) into the Yam Finance system peaked at around $600 million. However, soon after that, the developers found a bug in the smart contract code that would have minted too much reserve instead of rebalancing supply. A Yam proposal called for locking up 160,000 YAM in a smart contract to save the network, one that would have rewarded farmers and benefactors with more YAM if the target was met; which it was. But the network then discovered a further flaw: the smart contract would still not work as intended, regardless of the 160,000 YAM locked up earlier.

While no assets staked in Yam were lost, Yam’s market capitalization dropped to zero as the price crashed and holders withdrew. See also: YAMpocalypse Now: How hubris and speculation smashed the latest DeFi Token.

Brazil unveils nitty-gritty of instant payment tool

Banco Central do Brasil unveiled the general framework and updated rules for the country’s instant payment system PIX, which will be launched gradually from November 16. From October 5, those interested in joining the system will be able to register the so-called PIX Keys, which will identify the payer and payee. To use the central bank’s platform, users will need an email address, phone number or taxpayer ID. There will be three ways to complete the transfer: by entering the recipient’s data, by using a QR code or by using a payment link. The central bank will both regulate and provide the payment settlement infrastructure, including the database with data on the accounts of recipients. Participating financial institutions will pay 0.01 reais per transaction to use PIX, versus an average of 0.07 in the current TED system. The minimum capital required is 1 million reais.  

New Bill in Germany Proposes to Digitize Securities With Blockchain

Germany’s Federal Ministry of Finance (BMF) and the Federal Ministry of Justice and Consumer Protection (BMJV) introduced a draft bill on blockchain-based digital securities. It would allow securities to be secured using blockchain technology, as opposed to paper certificates, as current legislation requires, thereby enhancing liquidity and compliance. The proposed draft bill make the Federal Financial Supervisory Authority (BaFin) responsible for monitoring the issuance of digitized securities and the maintenance of decentralized ledgers in accordance with the German Banking Act.  

With $16bn in cryptocurrency, Ripple attempts a reset

Ripple can lay claim to having created one of the most valuable crypto-assets. Its XRP digital tokens have a total value of almost $30bn, behind only bitcoin and Ether. But, eight years after launch, Ripple is still trying to find compelling uses for the blockchain technology underpinning its currency that would justify such a high figure. Now, in an effort to draw more users, it has struck out in a new direction: to try to become the Amazon of the crypto-asset world, using its platform to support activities far beyond the original cross-border payments system it hoped to build. 

Posted from Diigo:

Kiffmeister’s #Fintech Daily Digest (08/12/2020)

Token- or Account-Based? A Digital Currency Can Be Both

Classifications can be a powerful tool to organize and communicate ideas. The main allure of distinguishing between account-based and token-based is to highlight a defining feature of certain new, emerging forms of digital currency. But if a digital currency can be both token-based and account-based, then the classification loses its power to meaningfully distinguish between new and existing methods of digital payments. Furthermore, it may slow down progress in understanding intrinsic differences between the growing set of digital payment options and technologies. Future classifications could modify the definitions of the terms account-based and token-based to more clearly distinguish them. In the meantime, perhaps these terms should be retired to avoid further confusion. 

Kiffmeister’s #Fintech Daily Digest (08/11/2020)

Following OCC Letter, Some US Banks Appear Open to Providing Crypto Services

Multiple US national banks responded to the Office of the Comptroller of the Currency’s (OCC’s) June “Advance Notice of Proposed Rulemaking” (ANPR), which asked the general public to weigh in before Augist 3. on how crypto-assets and other fintech tools might be used in the financial sector. Several banks, including U.S. Bank and PNC, indicated they might be interested in actually providing crypto custody and other services to customers.   

Filling the Gap: Digital Credit and Financial Inclusion

This IMF paper focuses on marketplace lending using data for 109 countries from 2015 to 2017 to study the relationship between fintech credit to businesses and consumers and various aspects of financial development. Marketplace lending to consumers grows in countries where financial depth declines highlighting the role of fintech credit in filling the credit gap by traditional lenders. This result is particularly strong in low-income countries. In the business segment, marketplace lending expands where financial efficiency declines. The paper’s findings show that low-income countries take advantage of the fintech credit opportunity in the consumer segment but face important challenges in the business segment. 

Financial Intermediation and Technology: What’s Old, What’s New?

This IMF paper studies the effects of technological change on financial intermediation, distinguishing between innovations in information (data collection and processing) and communication (relationships and distribution). Both follow historic trends towards an increased use of hard information and less in-person interaction, which are accelerating rapidly. It points to more recent innovations, such as the combination of data abundance and artificial intelligence, and the rise of digital platforms. It argues that in particular the rise of new communication channels can lead to the vertical and horizontal disintegration of the traditional bank business model. Specialized providers of financial services can chip away activities that do not rely on access to balance sheets, while platforms can interject themselves between banks and customers. 

Posted from Diigo:

Kiffmeister’s #Fintech Daily Digest (08/09/2020)

Cryptocurrency Cards: An Unnecessary Solution That Should Be Stopped

Crypto cards have become a must-have for many crypto services. Hoping to reduce the risk of blocking transactions, companies have been looking again and again for reason why their customers should use “plastic.” But a crypto card is a placebo that does not solve the problems of either users or fintech companies — its only goal is to bring profit to payment systems and intermediaries. All cards are serviced by payment systems that create a closed consumption ecosystem; banks and processor companies pay an annual fee or transaction fees to the credit card companies and payment system operators for the possibility of issuing cards, sellers transfer to banks on average 1%–4% of the transaction amount for acquiring servicing, and various intermediaries, aggregators, API providers, etc. also collect a commission. For crypto-asset transactions the fees are higher, since the traditional financial industry regards these transactions as high-risk. 

Posted from Diigo:

Kiffmeister’s #Fintech Daily Digest (08/08/2020)

 Prosecutors suspect Wirecard was looted before collapse

German prosecutors suspect Wirecard was looted before its collapse in June, with $1bn funnelled to opaque partner companies even as the payments group fought allegations of accounting fraud. The embezzlement is suspected to have taken the form of unsecured loans, which Wirecard claimed were for advance payments to merchants processing card transactions through its partners in Asia. These loans, made to partner companies in Dubai, Singapore and the Philippines, are a focus of the investigation against former chief executive Markus Braun and other senior ex-employees.

Mobile DeFi and the Shift Toward Self-Sovereignty

“Adoption of cryptocurrencies thus far has been in spite of — as opposed to because of — user experience. For example, hardware wallets like Ledger and Trezor were groundbreaking first steps in user custodianship, but they are intended for use with a desktop or laptop computer. In a world becoming rapidly more and more mobile, what good is a USB-like hardware wallet for storing private keys offline if users will be regularly transacting on a mobile device? Hardware wallets should be as simple as a card kept in a pocket, perhaps even resembling a familiar product like a credit card.” 

Decentralized Tech Will Be Ready for Humanity’s Next Crisis

“The global need for scalable, usable decentralized information technologies has never been more acute than right now, mid-pandemic. Forced digitalization is driving most of the world’s population further into the grip of big tech companies. As more of life goes online, more of the world’s data goes into their hands, and a higher percentage of human thoughts and behaviors are guided by their self-serving algorithms. We should have a global, decentralized system for collecting medical, movement, interaction and lifestyle data from everyone on the planet – and methods to analyze it in a secure, anonymous way. Statistical and AI analysis should be guided democratically by everyone contributing data. While policy could be set by sophisticated agent-based modeling leveraging this data, without sacrificing privacy.” 

Posted from Diigo:

Kiffmeister’s #Fintech Daily Digest (08/07/2020)

The Future of Retail Payments in the United States

The U.S. Fed announced the core features of its new FedNow end-to-end 24/7 fast payments service, set to go live in 2023 or 2024. It is seen as “a catalyst for innovation in the market by providing a neutral platform on which the private sector can build to offer safe, efficient instant payment services to users across the country.” It will operate alongside the private-sector Clearing House RTP instant payment service. The Fed will take a phased approach to service implementation, with the first one to provide the following core clearing and settlement features.

  • Banks will be able proactively to set parameters that limit transaction activity in FedNow Sbased on banks’ knowledge of their own customers. The Fed will also explore other anti-fraud tools, including centralized monitoring by FedNow.
  • The Fed will develop a liquidity management tool that allows a participant with excess funds in its FRB account to transfer funds to another participant who needs the funds on weekends, holidays, and after hours. Moreover, we will make the liquidity management tool available for instant payments broadly, including to banks that choose not to participate in the FedNow Service. Participants in a private-sector instant payments service will be able to use the tool to transfer funds from their Federal Reserve accounts to the joint account at a Reserve Bank that backs settlement in that service.
  • The FedNow Service will be interoperable with the RTP service to accomplish the goal of nationwide reach for instant payments. In part to facilitate interoperability, FedNow Service will use the widely accepted ISO 20022 message standard and other industry best practices. 

After launch the Fed will explore the best ways to support alias-based payments, whereby a payment can be sent to a recipient using an alias, such as an email address or phone number, rather than requiring an account number.

CBInsight’s State of Fintech report reveals some opportunities for crypto companies

Fintech providers have experienced a massive uptick in demand as the coronavirus sparks unprecedented levels of growth in the eCommerce sector, according to CBInsights. It estimates that eCommerce could represent 27% of U.S. retail sales in 2020, two-thirds higher than in 2019. One success story mentioned in the report is that of Shopify, which generated revenue of $714.3m in the second quarter of 2020, 97% higher than the same period in 2019. Over this three-month period, the number of new stores on Shopify rose by 71% as brick-and-mortar retailers aimed to speedily build an online presence. Interestingly, Shopify is one of the few eCommerce platforms that allows merchants to receive crypto payments. 

Singapore, Australia formalize digital economy pact

Singapore and Australia have formally signed off on a digital economy agreement following months of negotiation. It marks the second such pact, following a first with New Zealand and Chile, that the Singapore government has inked covering several areas of cooperation, including cross-border data flow, digital payments, and artificial intelligence (AI). 

Avalanche Consensus 101

Avalanche consensus, like Nakamoto consensus, is a probabilistic protocol. Just as Nakamoto traded off a small chance in probability for performance, Avalanche embraces probability to make the chance of error just as microscopic (and better yet, like all parts of Avalanche, configurable by validators on custom subnets). 

Posted from Diigo:

Kiffmeister’s #Fintech Daily Digest (08/05/2020)

JP Morgan analysts see a divergence between the behaviour of the older cohorts of the US retail investors’ universe, and millennials in their preference for “alternative” currencies. The older cohorts prefer Gold while the younger cohorts prefer Bitcoin. Both Gold and Bitcoin ETFs have been experiencing strong inflows over the past five months, as both cohorts see the case for an “alternative” currency. This simultaneous flow support has caused a change in the correlation pattern between Bitcoin and other asset classes, with a more positive correlation between Bitcoin and Gold but also between Bitcoin and the Dollar as US millennials see Bitcoin as an “alternative” to the dollar. In addition, the simultaneous buying of US equities and Bitcoin by millennials since March has increased the correlation between Bitcoin and S&P 500 since March. 
The bitcoin derivatives market is fragmented and contract terms differ dramatically across exchanges. The quality of documentation in the space varies. Perpetual swaps approximate the price of its underlying asset in close to real time. They are shifting away from bitcoin-margined inverse contracts, which have traditionally been dominant, toward USDT-margined linear contracts. Exchanges also vary in how they calculate indexes and funding payments. Perpetual swap volumes have decreased since the start of the year, but have recently surged in line with bitcoin’s price activity. The lack of standardization in the derivatives market makes it difficult for traders to assess the degree of risk taken on indirectly via a position’s index. Poorly constructed indexes can negatively impact users, especially during market dislocations and periods of volatility. 
Most of the civilized world years ago shifted to requiring computer chips in payment cards that make it far more expensive and difficult for thieves to clone and use them for fraud. One notable exception is the United States, which is still lurching toward this goal. Here’s a look at the havoc that lag has wrought, as seen through the purchasing patterns at one of the underground’s biggest stolen card shops that was hacked last year. 
70% of U.S. consumers say that COVID-19 concerns have not caused them to avoid carrying or storing cash, according to a recent Fed survey. indicates that survey participants more than doubled the amount of cash they store at home and also increased the amount of cash they carry in their wallets.