Category: Taxation

Kiffmeister’s #Fintech Daily Digest (20241030)

~ kiffmeister

Digital Tenge pilot project streamlines VAT reimbursement for exporters (LinkedIn)

The National Bank of Kazakhstan (NBK) in collaboration with the State Revenue Committee (Tax Authority) of the Ministry of Finance has launched a Digital Tenge pilot project focused on value-added tax (VAT) reimbursement for exporters. This initiative leverages the programmability of central bank digital currency (CBDC) to automatically mark VAT in business-to-business (B2B) transactions. By doing so, the need for manual checks by tax authorities, is eliminated, significantly streamlining the reimbursement process. It reduced the reimbursement time from 70–75 working days to 10–15 days, with the goal of achieving instant reimbursement in the near future. In total, approximately 40 billion worth of Digital Tenge is now in circulation in the various pilot projects. [Read more on LinkedIn]

Circle raises fees for large near-instant USDC redemptions (Bloomberg)

Circle increased the fees it charges for near-instant cash outs of its USDC stablecoin on the Circle Mint platform for the second time in 2024. Circle Mint enables wholesale providers such as exchanges, institutional traders, wallet providers, banks, and large financial institutions to directly redeem USDC 1:1 for USD from Circle. Circle Mint is not available to individuals. All USDC redemptions used to be free and unlimited, but in February 2024 a 0.1% fee on near-instant redemptions above $15 million was imposed on Circle Mint customers. Under the new fee schedule, Circle Mint customers processing more than $2 million net in daily redemptions will incur a fee that starts at 0.03% and increases in tranches to as much as 0.10% for redemptions above $15 million. Basic redemption, which offers a fee-free option, regardless of transaction volume, remains available to all Circle Mint customers as well, but processing can take up to two business days. [Read more at Circle]

BTW Tether charges the greater of $1,000 or 0.10% per USDT redemption transaction, and there is a minimum $100,000 redemption amount. Tether reportedly aims to send the funds to the user’s bank account via wire transfer within 1-3 business days. [Read more at Tether]

Upcoming Speaking Engagements:

  • Digital Euro Conference 2025, Frankfurt, March 27, 2025. The DEC25 conference will explore the future of money with a focus on CBDCs, stablecoins, tokenized deposits, and the intersection of AI and digital ID. When you register, get 20% off the regular ticket price by using the Kiffmeister20 code! [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 (20241007)

~ kiffmeister

Euro WCBDC used to settle ABN AMRO digital commercial paper on DLT (Ledger Insights)

ABN AMRO and Rabobank issued €1.1 million of one-month digital commercial paper tokenized on the Deutsche Börse Clearstream D7 distributed ledger technology (DLT) based platform. The Luxembourg transaction was settled atomically using a wholesale central bank digital currency (CBDC) issued by the Banque de France, as part of the Eurosystem’s DLT trials for wholesale settlement using central bank money. This is Clearstream‘s 5th use case at the European Central Bank (ECB) trials on the D7 platform. [Read more at Ledger Insights]

Apple ‘opens’ NFC: the impact on European digital identity (Medium)

Roberto Garavaglia has explored the implications of the Apple iOS 18.1 update’s opening of access to iPhone secure elements to developers to allow them to offer contactless near field communication (NFC) transactions directly within their apps, outside of the Apple Pay and Apple wallet ecosystem. This will open the use of Apple devices not only for payments, but also for digital access and identification. Developers will be able to integrate a wide range of services, from in-store payments to digital keys for cars, company badges, loyalty cards and government documents. However, challenges remain with regard to Apple’s control and compliance with European standards. [Read more on Medium]

RBA launches Project Acacia WCBDC assessment (RBA)

On September 18, 2024, the Reserve Bank of Australia (RBA) announced the launch of Project Acacia to build on the lessons from the previous year’s CBDC pilot by focusing on opportunities to uplift the efficiency, transparency and resilience of wholesale markets through tokenized money and new settlement infrastructure. Subsequent phases of the project may involve cross-border applications with regional central banks. In October 2024 the RBA and the Digital Finance Cooperative Research Centre, will publish a consultation paper inviting industry engagement. The project is scheduled for completion in the second half of 2025. [Read more at the RBA]

UAE exempts crypto transactions from value added tax (CoinDesk)

The United Arab Emirates (UAE) has exempted crypto transactions from paying value-added tax (VAT) effective November 15, 2024 and applied retroactively to transactions since January 1, 2018. The UAE has essentially classified virtual assets in the same bucket as traditional financial services – several of which are already exempt from VAT. [Read more at the UAE Federal Tax Authority]

Upcoming Speaking Engagements:

  • Digital Euro Conference 2025, Frankfurt, March 27, 2025. The DEC25 conference will explore the future of money with a focus on CBDCs, stablecoins, tokenized deposits, and the intersection of AI and digital ID. When you register, get 20% off the regular ticket price by using the Kiffmeister20 code! [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 (20230706)*

~ kiffmeister

Central bank digital currencies and democratic values

The OECD published a paper, with contributions from Satoshi Capital Advisors, that explores how the design and implementation of central bank digital currencies (CBDCs) can help countries mitigate threats to individual liberties and human rights, as well as promote the equitable treatment of citizens, the protection of privacy, and citizens’ trust in central banks. The sound governance architecture of CBDC systems can further support these objectives. [Read more at the OECD]

India negotiates cross-border CBDC payments with global central banks

The Reserve Bank of India (RBI) is reportedly in dialogue with its counterparts from at least 18 other countries on the possibility of cross-border payments in the digital rupee. Central banks from these countries have already opened rupee vostro accounts since July 2022. India is eager to promote CBDC as a payment method for importing Indian goods for countries that are struggling with the U.S. dollar supply. [Read more at the Economic Times]

Digital euro and privacy: Analysis of the EC regulatory proposal

On June 28, the European Commission published a regulatory proposal for the digital euro, on which the it suggested a way to design a digital euro and how to integrate it into EU laws. Jonas Gross reviewed the proposal with a focus on its privacy aspects, including how it can be ensured that major design elements, such as related to privacy, will not be changed over time. It will need clear rules on governance and democratic political procedures for changes in the design. Further, it should be seriously considered to make (part of) the code open source, e.g., around the exact data that is recorded. [Read more on Jonas’s blog]

Taxing cryptocurrencies

The IMF published a paper on crypto-asset taxation. The greatest challenges are for implementation: crypto’s quasi-anonymity is an inherent obstacle to third-party reporting. Design problems arise from crypto’ dual nature as investment assets and means of payment: more straightforward is a compelling case for corrective taxation of carbon-intensive mining. Ownership is highly concentrated at the top, but many crypto investors have only moderate incomes. The capital gains tax revenue at stake worldwide may be in the tens of billions of dollars, but the more profound risks may ultimately be for VAT/sales taxes. [Read more at the IMF]

*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.

Upcoming conferences, webinars and speaking engagements:

  • I’ll be lecturing at the Digital Euro Association (DEA) Digital Money Academy on July 27, 2023. [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 (20230526)*

~ kiffmeister

Circle takes Euro Coin multi-chain with launch on Avalanche

Circle launched its Euro Coin on Avalanche, the first in a series of expected multi-chain launches, following the initial launch on Ethereum last year (2022). Circle currently maintains two fiat-based stablecoins, USD Coin (with a market capitalization of about $29 billion), and Euro Coin ($48 million). [Read more on PR Newswire]

Etonec and Mina Foundation to Create ZK-Powered Compliance Tool

Etonec and Mina Foundation will roll out a new zero-knowledge (ZK) proof-powered regulatory compliance tool for the decentralized finance (DeFi) and Web3 space. It will address gaps within the privacy and compliance space by providing know-your-customer (KYC) and anti-money-laundering (AML) services on the Lumina DEX when it goes live later this year. The prototype is powered by zkApps, which enables private and compliant transactions. [Read more at Etonec]

The potential of CBDC for transforming public finance: a focus on VAT systems

The Japan Ministry of Finance’s Michi Kakebayashi distributed a paper that explores the potential benefits of retail central bank digital currency (CBDC) for value added tax (VAT) systems. These benefits include streamlining and automating transaction, record-keeping, filing, tax payment, refund processes, and auditing reducing compliance and administration costs. While e-invoicing and e-payment may also achieve similar outcomes, the success of such alternatives would depend heavily on the financial institutions. The paper concludes that CBDC can address challenges faced by the VAT system while preserving simplicity, fairness, and effectiveness. [Read more at SSRN]

Taxing Stablecoins

The IMF published a paper that considers stablecoin tax treatment and associated challenges, and the challenges of achieving neutrality. Without greater tax certainty and tax neutrality than what is currently available, stablecoins will not be able to properly fulfill their promise as an alternative means of payment. Gaps and mismatches in tax treatment between tax jurisdictions may create distortions and opportunities for abuse. [Read more at the IMF]

*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.

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 (20220919)

~ kiffmeister

After all this effort, crypto-assets are just tech stocks

Bloomberg’s Joe Weisenthal makes the same point I’ve been making for many months. “Basically [crypto-assets are] just tech stocks. Not only are the coins trading in line with each other still, they’re still basically trading in line with the Nasdaq 100… What does this all mean? One possibility is that the marginal crypto-asset buyers just doesn’t care about any of this stuff. Proof-of-work? Proof-of-stake? The merge? Inflation hedging? The halving? Deflationary monetary policy? What’s all that stuff? In other words, it’s possible that there’s a small coterie of people paying attention to any of this. And that what’s really driving price is just the animal spirits of a much larger group of speculators, who are also moving the price of Zoom or Tesla or Meta or whatever else. [Read more on Twitter]

Are interest rate swaps the next frontier of decentralized finance?

Decentralized finance (DeFi) is expanding into the world of interest rate swaps (IRS), a derivative instrument for exchanging fixed and variable interest rates. DeFi firm Voltz Labs has launched a non-custodial automated market making (AMM) IRS trading platform based on the Aave and Compound DeFi USDT, USDC, DAI and ETH lending markets. However, IRS AMMs are challenged by DeFi markets’ lack of fixed-rate products off which to price swaps. (Traditional markets offer variable- and fixed-rate products off which to arbitrage each other.)  [Read more about the Voltz protocol here]

New data on the e-levy in Ghana: unpopular tax on mobile money transfers is hitting the poor hardest

Ghana introduced a 1.5% tax (“E-levy”) on mobile money transactions in May 2022, in a country where 40% of the population aged 15 and above use mobile money platforms. It has been justified as a way to reduce aid dependence, and to capture informal economy workers. An International Centre for Tax and Development (ICTD) paper finds that the overall effect of the E-levy is highly regressive with users in the bottom income quintile paying the largest share as a proportion of their income, especially home-based informal workers. However, a 100 cedi/day (equivalent to about $10/day) taxation threshold has provided some relief. [Read more at the ICTD]

 

Tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff and academics active in the CBDC / digital currency space only. The sessions are designed as instructional deep dives with full presentations and Q&A components.  Tickets are $99. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite 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.

Kiffmeister’s #Fintech Daily Digest (11/16/2021)

~ kiffmeister

Biden signs new crypto reporting measures into law with infrastructure bill

The $1 trillion bipartisan infrastructure bill signed into law by President Biden on November 15, included provisions relating to cryptocurrency know-your-customer (KYC) and tax reporting requirements. It takes a broad definition for broker, that includes any party facilitating the transfer of digital assets, which could include network validators, which is impossible, as validators are not in a position to collect KYC details. Another provision in the bill would require any recipient of more than $1,000 to verify the sender’s personal information, including Social Security number, and report the transaction to the government within 15 days. [Read more]

Meanwhile, Senator Cynthia Lummis, a Wyoming Republican, and Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat, introduced a bill that would limit the definition of the term “broker”, while Texas Republican Senator Ted Cruz introduced legislation that would eliminate the term altogether. 

Philippines central bank eyeing central bank digital currency use in near future

The Bangko Sentral ng Pilipinas (BSP) is reportedly eyeing the use of wholesale central bank digital currency (CBDC) in the near future. Meanwhile, instead of looking at retail CBDC, the BSP is working on its other digital retail offerings, including InstaPay and PESONet electronic fund transfers, under its National Retail Payment System. [Read more]

To get these updates sent to your inbox, please sign up here. 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: https://www.diigo.com/user/kiffmeister/Fintech.