The U.S. Securities and Exchange Commission (SEC) has reportedly introduced updated staff guidance aimed at providing accounting clarity for stablecoins. It is expanding its initial crypto accounting rules, allowing certain U.S. dollar-pegged stablecoins to be treated as cash equivalents if they come with a guaranteed redemption right. This move is part of the SEC’s broader efforts, under Chair Paul Atkins, to relax previous restrictive policies and encourage traditional lenders to enter the crypto market, while the commission develops more comprehensive regulations for crypto securities. However, I can’t find any new staff guidance on this topic on the SEC website. [Read more at Bloomberg]
Upcoming Speaking Engagements:
The CB+DC Conference (Nassau, Bahamas, September 9-11) is a premier gathering centered on CBDCs, tokenized assets, and stablecoins. It provides a forum for central bankers, commercial bankers, technology innovators, policymakers, and academics to explore the latest advancements in digital currency, engage with experts and peers, and discuss the future of digital currency. [Register here but before you do, email me at john@kiffmeister.com for a 15% discount]
I produce a monthly digest of digital fiat currency (DFC) developments exclusively for the official sector (e.g., central banks, ministries of finance and international financial institution (e.g., the BIS, IMF, OECD, World Bank)) plus academics and firms that are active in the DFC space (commercial banks, technology providers, consultants, etc.). (DFCs include central bank digital currency (CBDC), stablecoins and tokenized deposits.) It goes out via email on the first business day of every month, and if you’re interested in being on the mailing list, please email me at john@kiffmeister.com.
The concept of “digital fiat currency” (DFC) has started to catch on as a catch-all for digital currencies that are based on fiat currencies, including central bank digital currency (CBDC), stablecoins, tokenized deposits, and various other forms of electronic money. The term “DFC” goes back to a series of reports by the International Telecommunications Union (ITU) between 2017 and 2019, the meaning of which was best articulated in a 2019 technical report:
Digital fiat currency (DFC) is a tokenized, digital representation of a sovereign currency issued by an authorized public or private entity. When issued and distributed by a central bank or other monetary authority, it is a central bank digital currency (CBDC). If it is issued by a private entity, it may be e-money or another form of digital commercial bank money/private digital tokens/stablecoins, even if backed by central bank money.
The IMF now recognizes crypto-assets in its Balance of Payments and International Investment Position Manual. It divides cryptos into fungible and non-fungible tokens. Cryptos without backing liabilities are treated as non-produced nonfinancial assets under the capital account, which means cross-border transactions involving them will be tracked as acquisitions or disposals of non-produced assets. Stablecoins and other cryptos backed by liabilities are considered financial instruments. Platform-based cryptos, such as Ethereum and Solana, may be classified as equity-like instruments, reflecting ownership rights similar to traditional equities. The manual also addresses staking and crypto yield activities, which are to be treated as sources of income akin to dividends, depending on the holder’s intent and scale of holdings. Additionally, services related to crypto mining and staking are now recognized as exportable computer services, aligning with broader trends in the digital economy. [Read more at the IMF]
Upcoming Speaking Engagements:
The Crypto Assets Conference (Frankfurt, March 26) will delve into the advancements in digital assets, tokenization, crypto assets, web3, and more, through insightful talks, interactive debates, and presentations by industry experts, founders, investors, and representatives from public institutions. [Register here and get a 10% discount]
The Digital Euro Conference 2025 (Frankfurt, March 27) will explore the future of money with a focus on CBDCs, stablecoins, tokenized deposits, and the intersection of AI and digital ID. When you register, get 20% off the regular ticket price by using the Kiffmeister20 code! [Register here]
And just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only)if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at john@kiffmeister.com.
The Qatar Central Bank (QCB) has completed the development of the infrastructure for its wholesale central bank digital currency (CBDC) project. In the next phase which will extend to October 2024, the central bank will test and develop selected applications of distributed ledger technology (DLT) based wholesale CBDC to settle large payments with a group of local and international banks in a trial environment. The project will focus on applications that increase access to capital markets for operating banks in the country, enhance domestic settlement, and improve the efficiency of securities transactions. [Read more on the QCB’s X account]
CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]
And just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only)if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at john@kiffmeister.com.
The Hong Kong Monetary Authority (HKMA) and the People’s Bank of China (PBOC) are expanding the scope of the e-CNY pilot in Hong Kong to facilitate the set up and the use of e-CNY wallets by Hong Kong residents, as well as the top-up of e-CNY wallets through the Faster Payment System (FPS). This marks the world’s first linkage of a faster payment system with a central bank digital currency (CBDC) system. Users can now set up e-CNY personal wallets in Hong Kong, which requires only their Hong Kong mobile phone numbers. The e-CNY wallets can then be used for cross-boundary payments to merchants, but not person-to-person (P2P) transfers. [Read more at the HKMA]
The Bank of Ghana (BOG) has reportedly completed the second phase of Project Digital Economy Semi-Fungible Token (DESFT), a joint project with the Monetary Authority of Singapore (MAS) and the United Nations Development Programme (UNDP). The first phase saw the development of the blockchain-based Universal Trusted Credentials (UTC) system that enables micro, small and medium enterprises (MSMEs) to efficiently verify authenticity of key information, such as basic credentials, licenses, certificates, and trade records across borders. In the second phase, a cross-border payment was made using UTCs, the eCedi CBDC and a Singapore dollar stablecoin, using the Purpose-Bound Money (PBM) protocol. [Read more at Ghana Business News]
The Bank of England (BOE) has assessed the technical feasibility of using existing point-of-sale (POS) hardware, as currently used in the UK, to initiate digital pound payments. This involved a proof of concept (POC) that used EMV standards to send payment instructions from smart cards to POS devices, and then to an application programming interface (API). It demonstrated that, while existing POS terminals may not need to be modified to make online digital pound payments, they might need to be modified for offline payments. [Read more at the BoE]
The Basel Committee on Banking Supervision published a report that considers the implications of the ongoing digitalization of finance on banks and supervision, including application programming interfaces (APIs), artificial intelligence and machine learning, distributed ledger technology (DLT) and cloud computing. It also considers the role of big techs, fintechs and third-party service providers, and new business models. [Read more at the Bank for International Settlements]
The U.S. Senate voted for a bipartisan resolution to overturn the Securities and Exchange Commission’s (SEC) SAB 121, the staff accounting bulletin that requires listed firms, including banks to include assets under custody as both an asset and liability on their balance sheets. Usually, as common sense would suggest, these such assets don’t go on the balance sheet because they belong to the client. The House of Representatives has already passed a similar bill, but the White House has said that it will veto the bill. [Read more at Ledger Insights]
CBDC Conference, Istanbul, September 10-12. The conference will offer representatives of central banks, commercial banks, technology providers, policy makers and academics the perfect platform to learn about the latest CBDC developments, exchange ideas with experts and peers. [Find out more and register here][Central bank delegates may be eligible for free registration (email registration@cbdc-conference.com to find out more)]
Digital Currency Conference, London, September 23-24. The conference will bring together policymakers, regulators, and technology and innovation experts to network and discuss all aspects of digital currencies. And enter the KiffmeisterDCC code at registration to get a 20% discount! [Find out more and register here]
And just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only)if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at john@kiffmeister.com.
Coinbase Wallet now allows for the transfer of crypto through a link that can be sent through popular social media sites and messaging apps apps like iMessage, Telegram, WhatsApp, Facebook, Instagram and TikTok. And there are no payment fee when sending USD Coin (USDC). Clicking the link will take the recipient to their device’s app store to download Coinbase Wallet — if not already downloaded — where they can create a wallet in one click. If the funds aren’t claimed within two weeks, they will be returned to the sender. [Read more at Coinbase]
The American Institute of Certified Public Accountants (AICPA) published proposed criteria for stablecoin issuers when they disclose their proof of reserves. It asks for more details than any stablecoin issuers currently provide in their disclosures. For example, the call for issuers to disclose the banks where they hold cash, the amount of redeemable stablecoins on each blockchain, and details about tokens that are not redeemable, either temporarily or permanently (e.g., pre-minted or blacklisted tokens). Plus proof of reserves will need to disclose the conditions required to redeem the stablecoin directly. [Read more at the AICPA]
Coin Metrics published an update on stablecoin market developments, concluding that the expanding supply of stablecoins serves as a clear indicator of rising activity and usage within the digital asset ecosystem, with Tether on Tron leading the charge. Despite challenges in the U.S. regulatory environment and a complex political landscape, stablecoin liquidity has shown impressive resilience. The update attributes this to the wide utility of stablecoins, through avenues such as decentralized finance (DeFi) pools to exchanges and in diverse yield generating products. These trends also evidence the central role stablecoins play in the crypto-economy. [Read more at Coin Metrics]
The Bank for International Settlements (BIS) reviewed buy now, pay later (BNPL) payment schemes. It found that, BNPL is more widespread in countries with greater e-commerce penetration, higher inflation, more inefficient banking systems, and looser financial and consumer protection regulation. Versus traditional consumer credit, BNPL users are typically younger, with less education, more debt, lower credit scores and higher delinquency rates. BNPL schemes are accessible even to consumers without a credit history or stable income and do not typically affect their credit scores. Customers pay interest-free instalments, which are typically not reported to credit bureaus, while merchants pay fees to increase sales and shift credit risk to BNPL platforms. Relying primarily on those fee revenues, BNPL platforms have faced profitability challenges due to high operating costs and rising credit losses. [Read more at the BIS]
Chavanette Advisor’s Hubert Knapp ran through some of the applications of artificial intelligence (AI) to central bank digital currencies (CBDCs). These include liquidity management at the micro and macro level, cross-border payments, and fraud detection. [Read more on LinkedIn]
FYI here are some of my upcoming speaking engagements:
– Digital Euro Conference 2024 (Frankfurt on February 29)[Register here]
*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.
Kiffmeister’s central bank digital currency monthly monitor
Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only)if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com
The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).
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]
The Financial Stability Board (FSB) and the IMF published a report outlining a comprehensive policy and regulatory response to crypto-asset activities to address the risks of crypto-assets to macroeconomic and financial stability. To address macroeconomic risks, it says jurisdictions should safeguard monetary sovereignty and strengthen monetary policy frameworks, guard against excessive capital flow volatility and adopt unambiguous tax treatment of crypto-assets. Some authorities might consider bans but they should not substitute for robust macroeconomic policies, credible institutional and monetary policy frameworks, and comprehensive regulation and oversight. [Read more at the FSB]
The Bangko Sentral ng Pilipinas (BSP) has selected Hyperledger Fabric as the distributed ledger technology (DLT) for its Project Agila (formerly known as Project CBDCPh) wholesale central bank digital currency (CBDC) sandbox tests. Project Agila aims to orient the BSP and participating financial institutions on CBDC technology solutions that have the potential to enhance the country’s large-value payment system. By the end of Project Agila, the participants are expected to have a clearer understanding of CBDC technology and assess the capability of wholesale CBDCs to foster advancements in the large-value payment system. [Read more at the BSP]
Palau is wrapping up the first of its US dollar stablecoin (PSC) proof-of-concept (PoC) experiments on September 8, 2023, just over a month after the launch in July 2023 that was slated to run for three months. Following the distribution halt, PSC will also be frozen after September 15, becoming unavailable for spending by users. The government will send a survey to PoC participants, the results of which will be critical to deciding whether to move forward with the next phase of the stablecoin program. [Read more on X]
The IMF in its Saudi Arabia 2023 Article IV staff report reported on the Saudi Central Bank (SAMA) central bank digital currency (CBDC) explorations. Through Project Aber, SAMA was one of the first central banks to experiment with domestic and cross-border wholesale CBDC. Leveraging the lessons of the experiment, SAMA is continuing to explore wholesale CBDC use cases. SAMA is undertaking a three-phased approach (evaluation, testing, implementation), allowing for ongoing assessment at each stage, against which the future roadmap will continue to evolve. [Read more at the IMF]
The U.S. Financial Accounting Standards Board (FASB) has moved to insist companies use “fair-value” accounting to report their crypto holdings. The accounting rules will be mandatory for all companies for fiscal years beginning after December 15, 2024. However, companies will be allowed to adopt the rules once FASB formally publishes them later in 2023. The crypto assets have to be currently classified as intangible assets, as defined by US accounting rules, and fungible. Stablecoins and wrapped tokens aren’t covered. [Read more at FASB]
*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.
Kiffmeister’s central bank digital currency monthly monitor
Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only)if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.
The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).
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]
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]
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]
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]
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]
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:
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).
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]
U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler reportedly has said that staked crypto-assets may be subject to federal securities regulations, in the wake of Ethereum’s transition from a proof-of-work (PoW) to proof-of-stake (PoS) protocol. He reportedly said that PoS crypto-assets pass the Howey test under which an asset is considered an “investment contract” if investors pledge their money to a common enterprise with an expectation of a profit to be derived from the efforts of others. Adam Levitin runs through the Howey test logic that would deem Ethereum to now be a security for SEC purposes. [Read more at the WSJ]
In April 2022, the U.S. SEC published guidance about how corporations should account for the custody of crypto-assets on behalf of clients. The SEC says these crypto-assets should appear as both an asset and a liability, whereas the custody of conventional assets does not touch a balance sheet. Although the Basel Framework considers custody outside its scope, if banking regulators concur with the SEC’s position, crypto custody could become expensive for banks. In fact, Reuters is now reporting that some U.S. banks are rethinking plans to offer crypto custody services. [Read more at Ledger Insights]
The Thai Securities and Exchange Commission is seeking public comments on a proposal to prohibit businesses from crypto staking and lending activities. More specifically, businesses cannot accept “deposits of digital assets from the customers and lend, invest, stake or employ such digital assets.” Moreover, they are prohibited from “providing support to third parties that undertake crypto saving and lending services, including marketing.” [Read more at Bitcoin.com]
Tickets available for CBDC Think Tank masterclass
The CBDC Think Tank, in partnershipwith 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.
