Tag: DeFi

Kiffmeister’s #Fintech Daily Digest (20231012)*

~ kiffmeister

JPMorgan debuts blockchain collateral settlement in BlackRock-Barclays trade

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

Esma assesses market developments in DeFi and smart contracts

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

*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.

Kiffmeister’s central bank digital currency monthly monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com

The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20231005)*

~ kiffmeister

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

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

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

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

Hong Kong Stock Exchange launches settlement platform powered by smart contracts

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

Project Atlas: mapping the world of decentralized finance

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

*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.

Kiffmeister’s central bank digital currency monthly monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com

The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20230928)*

~ kiffmeister

Project Mariana: Cross-border exchange of wholesale CBDCs using automated market-makers

The Bank for International Settlements (BIS) published the results of its Project Mariana proof of concept that demonstrated technical feasibility of automated market-makers (AMMs) for cross-border trading and settlement of wholesale central bank digital currencies (wCBDCs). It borrows ideas and concepts from decentralized finance (DeFi) and leverages a public blockchain to design and test a transnational transnational FX interbank market using wCBDCs. Project Mariana is a collaboration between the BIS Innovation Hub, the Bank of France, the Monetary Authority of Singapore and the Swiss National Bank. [Read more at the BIS]

World Federation of Exchanges proposes crypto trading principles

The World Federation of Exchanges (WFE) has put forth six key principles for crypto trading platforms (CTPs) that are serious about meeting the standards expected of credible market operators. These include segregating market infrastructure functions, having in place systems and controls, holding sufficient financial resources to meet expected operational stress events, facilitating compliance with best execution requirements, increases robustness of listing standards, and having appropriate governance and management requirements. [Read more at the WFE]

*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.

Kiffmeister’s central bank digital currency monthly monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com

The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20230925)*

~ kiffmeister

Digital yuan app adds prepaid Mastercard Visa top-ups for tourists

Tourists visiting the People’s Republic of China can now pre-charge their digital yuan wallets using Visa and Mastercard payment options. Inbound tourists are reportedly able to make use of overseas mobile numbers to register and open e-CNY wallets and make use of the recharge wallet feature, which supports Visa and Mastercard payments. They must “top up” with at least 100 yuan (around $14) and if they have any funds left in their wallets when they depart China, they can request a refund, after which funds are automatically transferred back to their credit card accounts. This coincides with the start of the Asian Games.  [Read more at Coin Telegraph and Cryptonews]

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

The Financial Stability Board (FSB) published a stocktake of national and regional data frameworks and identifies frictions that pose challenges to improving the cost, speed, transparency and access of cross-border payments. It highlights fragmentation in data frameworks as a main contributor to increased cost and inability to automate cross-border payments. By early 2024, the FSB will develop recommendations, for public consultation, for promoting alignment and interoperability across data frameworks applicable to cross-border payments. [Read more at the FSB]

Towards a reliable taxonomy and understanding of proof of stake and related services

The European Blockchain Association published a joint industry position paper on staking in a European Union (EU) regulatory context. To date, there is no uniform consensus on how this process and its various manifestations are to be defined in concrete terms, which has led to legal uncertainty, sometimes with considerable consequences. The paper aims to make a clear distinction between staking and lending depending on the actual underlying technical process, and to differentiate between the different types of staking. [Read more at the European Blockchain Association]

*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.

Kiffmeister’s central bank digital currency monthly monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.

The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20230908)*

~ kiffmeister

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

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

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

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

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

IOSCO consults on global DeFi regulation. Targets MEV, developers 

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

The oracle problem and the future of DeFi

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

*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.

Kiffmeister’s central bank digital currency monthly monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.

The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20230801)*

~ kiffmeister

DeFi liquidations: Volatility and liquidity

The OECD published a report that analyzes the connection between decentralized finance (DeFi) protocol liquidations and price volatility in decentralized exchanges (DEXs). The analysis employs transactional data of three of the largest DeFi lending protocols and suggests a positive relation between liquidations and post-liquidations price volatility across the main DEX pools. It also shows a positive correlation among borrowing rates and across different assets, which indicates that the liquidity in DeFi lending pools is connected, and that at extreme events, when investors pursue the same strategy at large numbers, liquidity of a particular asset may dry up in each of the pools across protocols. This implies that the liquidations mechanism might be limited in its ability to restore liquidity, as liquidators themselves rely on the liquidity available in the pools to repay underwater loans. [Read more at the OECD]

Ripple ruling rebuke complicates Coinbase’s defense against the SEC

In denying stablecoin issuer Terraform Labs’ motion to dismiss a U.S. Securities and Exchange Commission (SEC) lawsuit, Judge Jed Rakoff, of the U.S. District Court for the Southern District of New York rejected the use of a ruling from fellow Judge Analisa Torres, who recently ruled that Ripple Labs – another defendant against the SEC – did not violate securities law in making XRP available on secondary platforms for retail investors to purchase. Rakoff rejected Torres’ distinction between institutional sales and sales to retail investors on crypto exchanges, which he characterized as a misinterpretation of the Howey test used to determine if an asset is a security. [Read more at CoinDesk]

Namibia unveils new legal framework for digital asset providers

Namibia’s President Hage Geingob officially signed into law the Namibia Virtual Assets Act 2023 which covers the regulation of digital assets, cryptocurrencies and virtual asset service providers (VASPs) in the country. It establishes a framework for licensing and regulating VASPs, and appoints a regulatory authority responsible for supervising these providers and their activities. The Finance Ministry will determine the operative date for the law. [Read more on the Namibian government website]

*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.

Kiffmeister’s central bank digital currency monthly monitor

Just a reminder that I produce a monthly digest of central bank digital currency (CBDC) developments exclusively for the official sector. So (only) if you work at a central bank, ministry of finance or international financial institution (e.g., the BIS, IMF, OECD, World Bank) and who would like to receive it by email on the first business day of every month, please DM me on LinkedIn or email me at chronicles@kiffmeister.com.

The Sovereign Official Digital Association (SODA) is a technology-agnostic firm offering advisory services at the intersection of central banking, digital finance and the web3 industry, aiming to make public digital money a reality. SODA believes institutions in the existing financial ecosystem should have access to the tools and resources they need to move from discussion to action. SODA offers ‘real life’ use cases to help test digital money and drive adoption as central banks and other public institutions explore the future of a more financially inclusive world powered by interoperable blockchain-based networks. SODA would love you to join us on this journey – please get in touch (chris@sodapublicmoney.org).

Satoshi Capital Advisors is a New York-based, global advisory firm that works with central banks, governments, and the private sector to architect, implement, and operate varying initiatives. Satoshi Capital Advisors’ central bank work revolves around CBDC architecture and implementation, providing advisory services from research phase through to growth phase. Utilizing a product-market fit and technology agnostic approach to CBDC architecture and implementation enables Satoshi Capital Advisors to build tailored solutions, bespoke to local financial system nuances. Satoshi Capital Advisors welcomes requests from central bank officials for virtual and in-person CBDC workshops. [Click here for more information]

WhisperCash offers the first fully offline digital currency platform that has the same properties as physical cash. It can perform secure consecutive offline payments without compromising on security, privacy or accessibility. WhisperCash allows direct person to person offline payments without any server infrastructure or internet connectivity. It comes in various form factors including the self-contained credit card-sized “Pro” that sports an eInk screen and capacitive keyboard, and lasts for two weeks between recharges assuming a few transactions per day. [Click here for more information]

Kiffmeister’s #Fintech Daily Digest (20230707)*

~ kiffmeister

CBDCTracker.org June 2023 global CBDC developments update

Atakan Kavuklu published a summary of key central bank digital currency (CBDC) developments reflected in the end-June CBDCTracker.org database update. [Read more at Medium]

NY Fed completes PoC for regulated digital asset settlement

The Federal Reserve Bank of New York’s New York Innovation Center (NYIC), in collaboration with members of the U.S. financial services sector, published the findings of a proof of concept (PoC) that explored the feasibility of an interoperable network for wholesale payments operating on a shared multi-entity distributed ledger. The research project, undertaken jointly with private sector organizations, experimented with the concept of a regulated liability network (RLN), a theoretical payment infrastructure designed to support the exchange and settlement of regulated digital assets. The experiment successfully simulated both the domestic and cross-border scenarios, identifying shared ledger technology as a potential solution to support payment innovation. [Read more at the NY Fed NYIC]

Project Polaris: closing the CBDC cyber threat modelling gaps

The BIS Innovation Hub (BISIH) published a report on Part II of its Project Polaris which focused on the risk and resilience aspects of CBDCs built on distributed ledger technology (DLT) based platforms. It analyses several notable DLT attacks in the decentralized finance (DeFi) domain, revealing that there are gaps in existing threat modelling techniques that may not adequately address the threats and associated security controls to properly protect CBDCs that make use of novel technology (e.g., DLT, smart contracts) from the tactics, techniques and procedures (TTPs) used by threat actors in the DeFi space. Additionally, the “mean time to attack” (based on the DLT attacks studied in this analysis) is around 10 months from the launch of a DeFi implementation and the successful compromise. Hence, CBDC issuers must be positioned to monitor and repel both well understood and novel TTPs. [Read more at the BISIH]

MAS amendments to restrictions on e-money personal payment accounts

Following a public consultation, the Monetary Authority of Singapore (MAS) is going to raise the caps on e-wallets during the second half of 2023. The maximum amount of funds that can be held at any given time (“stock cap”) in each e-wallet, is being raised from $5,000 to $20,000, and the maximum total outflow over a rolling 12-month period (“flow cap”) from each e-wallet, is being raised from $30,000 to $100,000. [Read more at the MAS]

Namibia passed bill to regulate crypto and digital assets

On June 22, Namibia’s lower house of parliament passed legislation to regulate digital assets, cryptocurrencies and virtual asset service providers (VASPs) in the country. It aims to establish a framework for licensing and regulating VASPs, and appoint a regulatory authority responsible for supervising these providers and their activities. The bill is now awaiting official publication before coming into effect. [Read More at CoinTelegraph]

 

Kiffmeister’s #Fintech Daily Digest (20230629)*

~ kiffmeister

Project Mariana: cross-border exchange of wholesale CBDCs using automated market-makers

The Bank for International Settlements (BIS) published an interim report on Project Mariana, which investigates combining FX trading and settlement in cross-border transactions into a single instantaneous step using automated market makers (AMMs) and wholesale central bank digital currencies (CBDCs) to eliminate credit and settlement risk. The project also examined cross-border interoperability using wholesale CBDC based on a uniform technical standard, as a way to future-proof CBDC developments. In addition, Mariana investigated asset mobility between different blockchain-based networks using bridges. [Read more at the BIS]

Central bank digital currency global interoperability principles

The World Economic Forum (WEF) published a report that analyses CBDCs from a regional perspective, identifying unique aspects and areas of alignment among jurisdictions. It highlights key CBDC principles that will facilitate interoperability with various types of payment systems, technical standards, regulatory standards and legacy payment architecture and infrastructure, that will allow participants in different systems to conduct, clear and settle payments or financial transactions across systems without participating in multiple systems. The report calls for public-private cooperation, regulatory consistency, innovation and participation in standards development. [Read more at the WEF]

Making it through the (crypto) winter: facts, figures and policy issues

The Bank of Italy published a paper on the challenges crypto-asset regulation faces, as well as the drivers of the most recent regulatory developments, highlighting remaining open issues. It warns that conventional regulatory approaches that rely on entity-based rules will leave some gaps. For example, they may not fully address decentralized finance (DeFi) activities because of their non-traditional legal entity structures, decentralized governance, smart-contracts, and the anonymity of persons in charge. The report calls for an approach based on the combination of legislation and soft regulation, with the advantages of flexibility, dynamism, and pragmatism. [Read more at the Bank of Italy]

Oxbridge Re raises $2.4m for sidecar via DeltaCat Re tokenized reinsurance securities

Cayman Islands-based Oxbridge Re sold $2.4 million DeltaCat Re tokenized reinsurance securities, representing fractionalized interests in reinsurance contracts written by its Oxbridge Re NS reinsurance sidecar. They are tokenized on the Avalanche blockchain. Sidecars are a limited-life special purpose vehicle funded by capital market participants and sponsored by a reinsurer from which it derives its business or quota share. The sidecar assumes a percentage of the ceding reinsurer’s underwriting risk in exchange for a similar percentage of the associated premiums. [Read more at Artemis] and for more on sidecars and other insurance risk transfer vehicles see my 2020 Pension Research Council paper]

*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 participating in Currency Research’s in-person Global Payments Summit in Cape Town from June 28 to 30. [Register here]
  • 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 (20230626)*

~ kiffmeister

MAS proposes framework for digital asset networks

The Monetary Authority of Singapore (MAS) published a report proposing a framework for designing open, interoperable networks for digital assets (i.e. tokenized real-economy and financial assets ). The report also considers how the CPMI-IOSCO principles for financial market infrastructures (PFMIs) can be applied to evolving models of digital asset networks, based on industry pilots launched under Project Guardian, MAS’s collaborative initiative with the financial industry to test the feasibility of applications in asset tokenization and decentralized finance (DeFi).  The MAS also announced an expansion of Project Guardian to more asset classes. [Read more at the MAS]

Crypto Travel Rule implementation ‘remains relatively poor,’ says FATF

The Financial Action Task Force (FATF) renewed its request for countries to implement the “travel rule”, explaining that “many” member states have failed to implement the rule. The rule requires virtual asset service providers (VASPs) to communicate the personally identifiable information (PII) of senders to the VASPs of recipients and vice versa whenever the amount transacted is above $1,000. FATF claims that the travel rule is a “key requirement to prevent funds being transferred to sanctioned individuals or entities”, and noncompliance “creates significant loopholes for criminals to exploit”. Closing the gaps in global regulation of virtual assets is an urgent priority. [Read more at the FATF]

Belgium regulator orders Binance to stop services in country

Belgium’s Financial Services and Markets Authority (FSMA) ordered Binance to cease all offers of virtual currency services in the country — immediately. “The FSMA has noted that Binance is offering and providing exchange services in Belgium between virtual currencies and legal currencies, as well as custody wallet services, from countries that are not members of the European Economic Area.” FSMA said Binance did not dispute that it offered those services in Belgium. [Read more at the FSMA]

*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 (20230518)*

~ kiffmeister

A legal framework for the digital euro

The European Parliament published a study that assesses the European Central Bank’s (ECB’s) first three progress reports on the digital euro from a legal perspective. It looks into what key design choices proposed by the ECB reveal in terms of the legal qualification of the digital euro and discusses legal aspects of the infrastructure supporting it. It distinguishes between the object of the digital euro and the infrastructure or “scheme” needed for its distribution and settlement. Overall, the objective of ensuring a strong monetary anchor in the financial system should take centre stage. A simple and cash-like design of the digital euro would not only aid that objective, but also reduce legal risk. [Read more at the European Parliament]

Commencement of new phase of the e-HKD’s research programme

The Hong Kong Monetary Authority (HKMA) today announced the commencement of a new phase of its e-HKD central bank digital currency (CBDC) research program. A total of 16 firms from the financial, payment and technology sectors have been selected to participate. There will be deep dives into potential use cases in six categories, including full-fledged payments, programmable payments, offline payments, tokenised deposits, settlement of Web3 transactions and settlement of tokenised assets. [Read more at the HKMA and the list of projects here]

Note: The HKMA called this new phase a “pilot” but it’s not clear whether it will engage with actual users. If yes, it is a pilot, but if not, it would likely be a proof-of-concept phase.

Ripple to demonstrate tokenization in HKMA e-HKD  program

Ripple is one of the firms participating in this new phase of the HKMA’s e-HKD digital Hong Kong dollar (e-HKD) research program by showcasing a real estate asset tokenization solution. Ripple will partner with Taiwan’s Fubon Bank and others to demonstrate equity release with tokenized assets using a retail version of the e-HKD CBDC. The project will run on the new Ripple CBDC Platform, that uses a new private ledger with XRP Ledger technology and enhanced functionality, including offline transactions and non-smartphone use. It’s the same platform that may be piloted in Bhutan, Montenegro and Palau. [Read more at Coin Telegraph]

Crypto, tokens and DeFi: navigating the regulatory landscape

The Bank for International Settlements (BIS) published a paper that provides an overview of policy measures taken in 19 jurisdictions to address the risks associated with activities that incorporate crypto-assets and distributed ledger technology (DLT) programmability capabilities in financial services. The paper classifies policy measures into three categories and identifies different types of initiatives across jurisdictions, including bans, restrictions, clarifications, bespoke requirements, and initiatives to facilitate innovation. It finds that, for centrally managed issuance activities, current regulatory initiatives focus mainly on issuers of security tokens and stablecoins. Initiatives related to centrally managed infrastructure activities mainly explore the benefits and risks from traditional financial intermediaries’ use of DLTs and their programmability capabilities. Initiatives related to centrally managed service provision activities often extend the regulatory perimeter to new non-bank centralized intermediaries. [Read more at the BIS]

*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.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]