Kiffmeister’s #Fintech Daily Digest (20230204)

Kazakhstan’s digital currency in PoC stage, per Binance, National Bank joint report

The National Bank of Kazakhstan (NBK) will be conducting central bank digital currency (CBDC) proof-of-concept (PoC) work in 2023. This is according to a report published jointly by the central bank and Binance on digital asset regulation, the digital asset industry and decentralized finance (DeFi) in Central Asia. However, it mentioned that in 2023, the NBK is planning to build several PoC scenarios of integration between the experimental Digital Tenge platform and BnB chain in 2023 to explore opportunities of DeFi and TradFi industry players’ cooperation under central bank supervision. [Read more at Binance and download the report here]

Update on Zimbabwe’s central bank digital currency (CBDC) project

The [Reserve Bank of Zimbabwe’s (RBZ’s)] CBDC Project continued to progress steadily in line with the envisaged CBDC Road Map. In this regard, in November 2022, the Bank rolled out a consumer survey that intends to solicit opinions on the design and nature of the CBDC and its overall acceptance/acceptability by stakeholders. As at January 23, 2023, the survey had received 2,286 responses. [Read more at the RBZ]

Tornado Cash and Blockchain Privacy: A Primer for Economists and Policymakers

The St. Louis Fed published an article that explores non-custodial crypto asset mixers such as Tornado Cash. It analyzes what types of mixers exist and how they work, and discusses opportunities and risks and offer an approach, based on voluntary disclosure, that would allow financial market regulators to combat money laundering and illicit activities, while allowing honest users to interact with privacy-enhancing protocols. The article explains how crypto asset mixers play an important role on public blockchains and that privacy may be difficult to attain without them. [Read more at the St. Louis Fed]

Euro stablecoin launched in Finland, claims to be first approved in the EU

Finland-based Membrane Finance has released a fully-reserved stablecoin backed by the euro. The company is licensed by the Finnish Financial Supervisory Authority (Fin-FSA) and claims that the new ”EUROe” coin is “the first and only … crypto stablecoin.regulated by an EU-based financial authority. [Read more at Membrane]

Accounting for Digital Currencies

A Research in International Business and Finance paper has found that current accounting standards do not precisely cover the treatment of digital currencies. It identifies a need for an accounting standard to provide guidance on the identification, classification, measurement, and presentation of digital currencies, but in the interim, existing standards can be amended to incorporate them to avoid inconsistent global accounting approaches. [Read the paper here]

Upcoming conferences, webinars and speaking engagements:

Kiffmeister’s global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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 (20230131)

DC³ Conference – From Cryptocurrencies to CBDCs

For those of you who missed the offline central bank digital currency (CBDC) panels that I moderated at last week’s International Telecommunication Union (ITU) DC³ conference, they have been recorded and posted on the conference agenda, along with all the other sessions. [Watch them at the ITU]

Iran’s CBDC: CryptoRial reportedly ready for launch

The Central Bank of Iran will reportedly make its CryptoRial CBDC available to the public on February 7, 2023, following its pilot phase, of which little is known. Bank Melli, Bank Mellat and Bank Tejarat were involved in the experimental stages of the project, and Bank Melli and Bank Mellat conducted the pilot. If anyone out there knows more about the pilot, or upcoming launch, please let me know! [Read more at the Financial Tribune]

Digital payments make gains but cash remains

The Committee on Payments and Market Infrastructures (CPMI) published a brief that documents the acceleration of consumers’ and businesses’ migration away from cash and checks towards electronic payments, and a growing use of contactless and fast payments. The Covid-19 pandemic was likely responsible for the surge but at the same time, public demand for cash remains steady,  both as a means of payment and as a safe haven. [Read more at the Bank for International Settlements]

HKMA issues consultation conclusion to the discussion paper on crypto-assets and stablecoins

The Hong Kong Monetary Authority (HKMA) issued the consultation conclusion to the discussion paper on crypto-assets and stablecoins. Respondents were supportive of regulating stablecoins with a risk-based and agile approach. The respondents also broadly supported the need to take into account the latest market developments and draw reference from the discussion of international regulatory bodies when developing the relevant regulatory regime. he HKMA will announce the regulatory arrangements and next steps in due course. [Read more at the HKMA]

Upcoming conferences, webinars and speaking engagements:

  • I’ll be speaking at SettleMint’s “central banks leading the way in the decentralized world” webinar on February 1 at 17:00 GST. [Register here]
  • I’ll be moderating a panel on “what happens when the lights go out…different schemes for offline functionality” at the in-person Digital Currency Conference (DCC) in Mexico City on May 18. [Register here]

Kiffmeister’s global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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 (20230128)

Are there tech solutions to the privacy and compliance trade-offs for CBDCs?

Users will likely demand cash-like privacy protections for central bank digital currency (CBDC), which may be thwarted by regulations. However, in an article for CoinDesk, Jonas Gross and I outline new technology solutions that may enable high degrees of privacy while complying with regulations. [Read more at CoinDesk]

Banks will dominate stablecoins, and two other predictions about the future of money

My SODA colleague Chris Ostrowski and Chris Hayes, in another CoinDesk article, make three predictions on the landscape for CBDCs and stablecoins in Europe and in the U.S. based on the trends they’ve seen through engagement with central bankers and policymakers. [Read more at CoinDesk]

DC³ conference – from cryptocurrencies to CBDCs​​

I moderated a couple of sessions on offline central bank digital currency (CBDC) at the International Telecommunication Union (ITU) DC³ “From Cryptocurrencies to CBDCs”​​ conference on January 27, 2023. The first session was on the importance of offline payments for CBDCs and financial inclusion at which cases were presented by Lars Hupel (G+D), Razvan Dragomirescu (WhisperCash), Joachim Samuelsson (Crunchfish) and Jerome Ajdenbaum (IDEMIA). The second session was a deep dive into offline CBDC implementaion and risk management presented by Lauren Del Giudice (IDEMIA) and Stuart Smith (VISA). [Both sessions were recorded and are available at the ITU]

Kansas City Fed rejects Custodia’s master account application

The Federal Reserve Bank of Kansas City has denied Custodia Bank’s application for a master account, according to a U.S. district court filing. The Kansas City Fed disclosed the rejection in a motion to dismiss filed with the U.S. District Court of Wyoming on Friday afternoon. Custodia is suing both the Kansas City Fed and the Fed Board of Governors over its long-delayed application for a master account, which grants access to the Fed’s various financial services, including its payment system. In its filing, the Kansas City Fed and the Board of Governors argue that the ruling should render Custodia’s lawsuit moot. The bank had sought to pressure the Fed to make a decision about its two-year-old application, arguing that it had been subject to an unreasonable delay. Nathan Miller, a spokesman for Custodia, said the bank plans to continue its litigation against the Fed, noting that the bank intends to challenge whether the bank has congressional authority to pick and choose which institutions can have master accounts. Custodia and others argue that any state chartered depository is entitled to master account access. [Read more at the American Banker

Federal Reserve Board issues policy statement to promote a level playing field for all banks with a federal supervisor, regardless of deposit insurance status

The Federal Reserve Board (FRB) issued a policy statement to promote a level playing field for all banks with a federal supervisor, regardless of deposit insurance status. The statement makes clear that uninsured and insured banks supervised by the Board will be subject to the same limitations on activities, including novel banking activities, such as crypto-asset-related activities. The statement also makes clear that uninsured and insured banks supervised by the Board would be subject to the limitations on certain activities imposed on national banks, which are overseen by the Office of the Comptroller of the Currency. The equal treatment will promote a level playing field and limit regulatory arbitrage… The Board generally believes that issuing dollar- denominated tokens (dollar tokens) using distributed ledger technology or similar technologies on open, public, and/or decentralized networks, or similar systems is highly likely to be inconsistent with safe and sound banking practices. The Board believes such tokens raise concerns related to operational, cybersecurity, and run risks, and may also present significant illicit finance risks, because—depending on their design—such tokens could circulate continuously, quickly, pseudonymously, and indefinitely among parties unknown to the issuing bank. Importantly, the Board believes such risks are pronounced where the issuing bank does not have the capability to obtain and verify the identity of all transacting parties, including for those using unhosted wallets. [Read more at the FRB]

White House calls on congress to ‘step up its efforts’ on crypto regulation

The Biden administration published a statement urging Congress to “step up its efforts” with respect to regulating the cryptocurrency market. Other suggestions included strengthening transparency and disclosure requirements for crypto companies, strengthening penalties for violations of illicit-finance rules, and working more closely with international law enforcement partners. The officials also made suggestions about what Congress should not do in terms of crafting new crypto regulation, including “greenlight[ing] mainstream institutions, like pension funds, to dive headlong into cryptocurrency markets.” [Read more at the White House

Upcoming conferences, webinars and speaking engagements:

  • I’ll be speaking at SettleMint’s “central banks leading the way in the decentralized world” webinar on February 1 at 17:00 GST. [Register here]
  • I’ll be moderating a panel on “what happens when the lights go out…different schemes for offline functionality” at the in-person Digital Currency Conference (DCC) in Mexico City on May 18. [Register here]

Kiffmeister’s global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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 (20230126)

Crypto collapse: US banks leave crypto, how Genesis kept Gemini hanging on, FTX, Binance, Nexo

I don’t extensively cover the monkey business and shady activity in crypto markets, but if you’re interested in that (plus a few good laughs) I highly recommend you subscribe to the regular newsletters (about once a week) published by David Gerard and Amy Castor. For their latest update and (free) subscription link head here.

Moody’s Is working on scoring system for stablecoins

Moody’s is reportedly working on a scoring system for stablecoins that will include an analysis of up to 20 stablecoins based on the quality of attestations on the reserves backing them. The project is still in early stages and apparently won’t represent an official credit rating. [Read more at Bloomberg]

ISDA launches standard definitions for digital asset derivatives

The International Swaps and Derivatives Association (ISDA) published new standard digital assets derivatives definitions and documentation, to create an unambiguous contractual framework under the ISDA Master Agreement umbrella. The definitions initially cover non-deliverable forwards and options on Bitcoin and Ether, but could be expanded cover other distributed ledger technology (DLT) based digital assets. The definitions have been drafted to facilitate Common Domain Model integration and automation within smart contracts. [Read more at ISDA]

Navigating bankruptcy in digital asset markets: netting and collateral enforceability

ISDA also published a whitepaper that addresses some of the derivatives-related legal issues raised by the recent bankruptcies of major crypto exchanges and market participants. It focuses on the importance of close-out netting and collateral arrangements for derivatives referencing digital assets and identifies several areas of focus for policymakers and market participants to ensure greater certainty. This includes use of standardized contractual frameworks and further legal clarity from national authorities on the property status of digital assets. [Read more at ISDA]

Kiffmeister’s global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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 (20230119)

US authorities dismantle ransomware-friendly Bitzlato exchange, arrest co-founder

The U.S. Attorney for the Eastern District of New York (EDNY) charged Anatoly Legkodymov, co-founder of the Bitzlato digital asset exchange, with conducting a money transmitting business that transported and transmitted illicit funds and that failed to meet U.S. regulatory safeguards, including anti-money laundering (AML) requirements. The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) alleged that Bitzlato facilitated “illicit transactions for ransomware actors operating in Russia, including Conti, a Ransomware-as-a-Service group that has links to the Government of Russia.” Also it said that Binance was among the biggest counterparties that received Bitcoin from Bitzlato between May 2018 and September 2022. [Read more at CoinGeek]

Digital Currency Group halts dividends as Genesis preps bankruptcy filing

Genesis Global Capital, the crypto lending unit of Digital Currency Group (DCG), is reportedly laying the groundwork for a bankruptcy filing. It has been in confidential negotiations with various creditor groups amid a liquidity crunch, and has warned that it may need to file for bankruptcy if it fails to raise cash. Genesis suspended withdrawals in November, soon after crypto exchange FTX — where Genesis held some of its funds — filed for bankruptcy. Meanwhile, DCG has informed its shareholders the firm is suspending dividends until further notice, and CoinDesk has reportedly hired Lazard to advise it on a sale that would carve it out from DCG. [Read more at CoinGeek]

National Australia Bank Becomes Second Australian Bank to Build Stablecoin

The National Australia Bank (NAB) aims to launch an Australian dollar-pegged stablecoin (AUDN) in the middle of 2023. Its purpose would be to allow its customers to settle transactions in real-time using Australian dollars, and several other purposes including “carbon credit trading, overseas money transfers and repurchase agreements.” The stablecoin will launch on the Ethereum and Algorand blockchains. NAB is the second major Australian bank to be involved in the creation of a stablecoin. Earlier, Australia and New Zealand Banking Group (ANZ) teamed up with crypto custodian Fireblocks to mint a stablecoin pegged to the Australian dollar. [Read more at CoinDesk]

Thailand Issues New Regulations on Custodied Cryptocurrencies

Thailand’s Securities and Exchange Commission (SEC) issued new regulations on custodied crypto-assets. Companies offering crypto custody services are now required to “establish a digital wallet management system to accommodate efficient custody of digital assets and keys and ensure safety of clients’ assets.” [Read more at the SEC]

2nd Edition of DC³ Conference – From Cryptocurrencies to Central Bank Digital Currencies (CBDCs)

The International Telecommunication Union (ITU) will hold (virtually) the second edition of its DC3 Conference – From Cryptocurrencies to Central Bank Digital Currencies (CBDCs)​ from January 24 to 27 2023. On January 27 I will be moderating two panels on offline central bank digital currency (CBDC). Also, on January 24, Jacques Francouer and I will be providing an update to our ITU Digital Currency Global Initiative digital currency ontology work. [For more event detail go to the ITU DC3 conference site]

Kiffmeister’s global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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 (20230117)

I’m pleased to announce that I have joined the SODA (Sovereign Official Digital Association) team as its Research Director. SODA works with central banks, international organizations and financial institutions to provide real life use cases for public digital money. Central bank digital currency (CBDC), stablecoins and tokenized digital assets will become part of the financial landscape in the 2020s; SODA offers technology agnostic tools and resources to move from discussion to action and begin to explore the future of a more financially inclusive world. [Learn more about SODA here]

Also, Tokyo Fintech published a video of a presentation I gave on retail CBDC for your viewing enjoyment. [Watch it here]

Eurogroup statement on the digital euro project

The Council of the European Union (Eurogroup) reaffirmed its support for the continued efforts of all European and national institutions involved in the preparatory work for the potential issuance of a digital euro. It asserted that a digital euro should complement, and not replace cash, and should guarantee access to central bank money for euro area users in times of increased digitalization in payments.A risk-based approach could be followed to allow for more privacy in the case of less risky transactions, which could ensure a wider adoption of the digital euro among citizens with a stronger preference for privacy. The Council also supports the exploration of an offline functionality which would serve a wider range of use cases and also contribute to financial inclusion. [Read more at the Eurogroup]

Philippines central bank pushes through with wholesale CBDC plans to improve payments

The Bangko Sentral ng Pilipinas (BSP) has reportedly confirmed that it will not be exploring retail CBDC, instead focusing on wholesale CBDC to improve settlement times between banks. In April 2022 the BSP announced the start of its Project CBDCPh wholesale CBDC pilot program, with several leading financial institutions playing a part. On the retail payments front, the BSP has been focusing on drumming up support for private-sector digital payment rails, like they did with its recent “BSP Piso Caravan” program aimed at encouraging the public to replace their unfit banknotes and coins with digital cash. [Read more at the Philippine Star]

Iran and Russia are reportedly working on gold-backed stablecoin

Iran and Russia are reportedly looking to launch a new gold-backed stablecoin to be used for cross-border transactions in the place of the US dollar, the Iranian rial and the Russian ruble in the Persian Gulf region. The cryptocurrency would also specifically intended as a payment method in the Astrakhan area – an economic zone whose design helped Russia begin to receive cargo shipments from Iran. [Read more at Vedomosti]

2023 Crypto Crime Trends: Illicit Cryptocurrency Volumes Reach All-Time Highs Amid Surge in Sanctions Designations and Hacking

Chainalysis reports that, despite the market downturn, illicit crypto transaction volume rose for the second consecutive year, hitting an all-time high of $20.1 billion, likely a lower bound estimate. The measure of illicit transaction volume is sure to grow over time as new addresses associated with illicit activity are identified, and the figure doesn’t capture proceeds from non-crypto native crime (e.g. conventional drug trafficking involving cryptocurrency as a mode of payment). For example, in 2022 Chainalysis reported $14 billion in illicit activity in 2021, but that figure has now been raised to $18 billion, mostly due to the discovery of new crypto scams. [Read more at Chainalysis]

European Union Postpones MiCA Vote to April

The final vote on the European Union’s (EU’s) Markets in Crypto Assets Regulation (MiCA) legislation has been delayed until April 2023 due to translation issues. EU procedures require legal acts such as MiCA, which was negotiated in English, to be available in all the bloc’s 24 official languages. [Read more at CoinDesk]

ISO 20022 for dummies

SWIFT has published a comprehensive guide to the ISO 20022 messaging standard, outlining everything from the very basics, to why it matters, its impact and the benefits it offers. [Download the guide at SWIFT]

2nd Edition of DC³ Conference – From Cryptocurrencies to Central Bank Digital Currencies (CBDCs)

The International Telecommunication Union (ITU) will hold (virtually) the second edition of its DC3 Conference – From Cryptocurrencies to Central Bank Digital Currencies (CBDCs)​ from January 24 to 27 2023. On January 27 I will be moderating two panels on offline central bank digital currency (CBDC). Also, on January 24, Jacques Francouer and I will be providing an update to our ITU Digital Currency Global Initiative digital currency ontology work. [For more event detail go to the ITU DC3 conference site]

Kiffmeister’s global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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 (20221228)

e-CNY wallet borrows Alipay and WeChat Pay’s electronic red packet feature to woo users

As part of its e-CNY central bank digital currency (CBDC) pilot, the People’s Bank of China (PBOC) has reportedly launched a “hongbao” red packet feature, that allows users to send each other digital yuan-filled red packets. This comes just a month ahead of the Lunar New Year, when the Chinese traditionally give out red envelopes filled with cash to family and friends as a symbol of well wishes. The e-CNY app has been available in limited trials since 2020, but it continues to be an uphill battle to convince the Chinese public to use it. Digital yuan transactions hit $88 billion yuan ($12 billion) at the end of 2021, crossed the $100 billion yuan threshold at the end of August 2022. [Read more at the South China Morning Post]

Leverage and Stablecoin Pegs

The National Bureau of Economic Research (NBER) published a paper that shows how stablecoins can maintain a constant price even though they face run risk and pay no interest. Stablecoin holders are indirectly 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. Therefore, the stablecoin can support a $1 peg even with higher levels of run risk. However, when speculative demand falls, stablecoin issuers can keep their debt trading at par only by moving to a safer portfolio or allowing redemptions. Such reallocation or change in stablecoin supply can cause disruptions in the real economy. Stablecoin issuers will need to adjust quickly if expected returns for cryptocurrencies fall; otherwise, they face the risk of collapse. These adjustments can cause disruptions in the markets they invest in, like the commercial paper market that provides financing to the real economy. [Download the paper at the NBER]

The Financial Inclusion Trilemma

A paper by Adam Levitin argues that financial inclusion presents a policy trilemma. between the three goals of widespread availability of services to low-income consumers; fair terms of service; and profitability of service. It is possible to provide fair and profitable services, but only to a small, cherry-picked population of low-income consumers. Conversely, it is possible to provide profitable service to a large population, but only on exploitative terms. Or it is possible to provide fair services to a large population, but not at a profit. The paper argues for giving more serious consideration to a menu of stronger regulatory interventions: hard service mandates that impose cross-subsidization among consumers; taxpayer subsidies; and public provision of financial services, including the adoption of a mandate for the provision of free or low-cost basic banking services to all qualified applicants. [Read more at SSRN]

2nd Edition of DC³ Conference – From Cryptocurrencies to Central Bank Digital Currencies (CBDCs)

The International Telecommunication Union (ITU) will hold (virtually) the second edition of its DC3 Conference – From Cryptocurrencies to Central Bank Digital Currencies (CBDCs)​ from January 24 to 27 2023. On January 27 I will be moderating two panels on offline central bank digital currency (CBDC). Also, on January 24, Jacques Francouer and I will be providing an update to our ITU Digital Currency Global Initiative digital currency ontology work. [For more event detail go to the ITU DC3 conference site]

Kiffmeister’s global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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.

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 (20221227)

IMF suggests extensive digital currency pilots for Bangko Sentral ng Pilipinas

The International Monetary Fund (IMF) is recommending several phases and “extensive” pilot projects for the Bangko Sentral ng Pilipinas (BSP) wholesale central bank digital currency (CBDC) especially in cybersecurity issues, laws and regulations that will cover implementation. A wholesale CBDC is being considered in the Philippines as a possible means to enhance existing payment and settlement functions. While the BSP charter, amended in 2019, does allow for the issuance of wholesale CBDC, the regulatory framework “may need to be revisited to ensure governance and financial stability risks are addressed.” [Read more at the IMF]

Palau continues to work with Ripple to explore the creation of national stablecoin

President Surangel Whipps Jr. reportedly confirmed that the Republic of Palau continues to work with Ripple on the creation of a government-issued US dollar-backed stablecoin (the US dollar is Palau’s national currency). Last year Ripple announced a partnership with Palau to explore a national digital currency and its use cases based on XRP Ledger, initially focusing on cross-border payments. [Read more at Bizzabo.com]

2nd Edition of DC³ Conference – From Cryptocurrencies to Central Bank Digital Currencies (CBDCs)

The International Telecommunication Union (ITU) will hold (virtually) the second edition of its DC3 Conference – From Cryptocurrencies to Central Bank Digital Currencies (CBDCs)​ from January 24 to 27 2023. On January 27 I will be moderating two panels on offline central bank digital currency (CBDC). Also, on January 24, Jacques Francouer and I will be providing an update to our ITU Digital Currency Global Initiative digital currency ontology work. [For more event detail go to the ITU DC3 conference site]

Kiffmeister’s global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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.

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 (20221221)

ECB publishes second progress report on the digital euro investigation phase

The European Central Bank (ECB) published the second progress report on the investigation phase of a digital euro. It outlines the developments made since the first progress report, which was published in September 2022. The report details a second set of design and distribution options that were recently endorsed by the Governing Council and describes the roles of the Eurosystem and supervised intermediaries in the digital euro ecosystem. In 2023 the ECB will further assess a number of design and distribution options and in the second half of the year present the overall design of a digital euro to the Governing Council. [Read more at the ECB]

Report on results of the second phase of the Digital Tenge Pilot Project

The National Bank of Kazakhstan (NBK) and the Payment and Financial Technology Development Center of the Bank of Kazakhstan published the English version of their report on the second phase of their digital tenge central bank digital currency (CBDC) feasibility study.The second phase was comprised primarily of proof-of-concept work involving select financial institutions, merchants and final users. The report calls it a “pilot” but is silent on who the selected final users were. If they were central bank employees, it is a proof-of-concept by most CBDC exploration workflow taxonomies, but if users were selected from the general public, then it’s a pilot. In any case, the report recommends a phased rollout starting in 2023 with a gradual expansion of its functionality and step-by-step introduction into production scale by the end of 2025. [Download the report at the NBK]

The Bank of England seeking to bring systemic stablecoins into its regulatory remit

The Bank of England published its supervision of financial market infrastructures 2022 Annual Report. It reports that the Financial Services & Markets Bill, published in July 2022 and scheduled to complete in 2023 seeks to bring systemic stablecoins into the Bank’s regulatory remit, and bring the UK regime in line with standards discussed. The Bank is now working on a regulatory framework for systemic stablecoins and plans to consult on this in due course. Alongside regulation, another key component of a stablecoin regime is the potential application of the FMI Special Administrative Regime to systemic stablecoin firms. The Bank, working with His Majesty’s Treasury, will continue to develop this regime to ensure it reflects international CPMI-IOSCO guidance. [Read more at the Bank of England]

What’s Next for Bitcoin Lightning?

In the last part of its series on the Lightning Network, etonec takes a look at the status quo of the network in charts, statistics, and visualizations using publicly available data. What started as an interconnection of a few nodes has evolved from a small network to a global network for value exchange. An increasing number of Lightning Nodes are being put into operation, which are better connected with one-another every day through payment channels. Away from hobbyists and early adopters, the first companies are latching onto the network – whether from the user side or the infrastructure side. [Read more at etonec]

Kiffmeister’s Global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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.

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 (20221219)

The relative benefits and risks of stablecoins as a means of payment

The Bank of Canada published a paper on the utility of stablecoins for retail payments. It finds that certain stablecoin arrangements offer end users greater control of their privacy, facilitate more rapid innovation and have the potential to increase transaction speeds, particularly for cross-border payments. At the same time, stablecoins may provide less consumer protection for fraud, present higher risks to the payment system and to efforts to combat financial crime, and be costlier relative to traditional payment arrangements. The paper’s findings suggest that stablecoin arrangements do not currently serve as substitutes for the suite of traditional payment arrangements but instead address niche use cases or user segments that value their benefits and can accept their risks or costs. [Read more at the Bank of Canada]

The stable in stablecoins

The US Federal Reserve Board (FRB) published a note that describes the general lifecycle of a stablecoin from its issuance to its redemption. It then categorizes various stabilization mechanisms and discuss how they work in practice. A key observation is that, although several stablecoins may peg their value to the same real-world asset, stabilization mechanisms can vary greatly in terms of maintaining stability with the reference asset, and so may have varying susceptibilities to the risk of runs from the stablecoin to the reference asset. [Read more at the FRB]

Kiffmeister’s Global 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 for any of you out there who work for a central bank, ministry of finance or international financial institution 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.

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]