Tag: DeFi

Kiffmeister’s #Fintech Daily Digest (20220924)

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What’s next for DAOs? Breaking down the CFTC’s latest enforcement action

The Commodity Futures Trading Commission (CFTC) has filed a lawsuit against Ooki DAO in the U.S. District Court for the Northern District of California. The complaint alleged that the Decentralized Autonomous Organization (DAO) was an unincorporated association involved in unlawful activity. This complaint has broad implications for the crypto industry. There are now 2,276 DAOs, which control about $10 billion of crypto in a wide array of blockchain-based financial tools. [Read more at]

PBOC to expand e-CNY trials to four entire provinces

The People’s Bank of China (PBOC) will reportedly expand its e-CNY trials to Guangdong, Jiangsu, Hebei and Sichuan provinces. Deputy Governor Fan Yifei, reportedly said the number of users, merchants and transactions is “steadily growing”, but he did not provide details. [Read more at the South China Morning Post]

Bitcoin was almost named Netcoin by Satoshi Nakamoto

Historical data of domain name purchases suggest that Satoshi Nakamoto, the creator of Bitcoin (BTC), had an alternate naming option in mind that did not make it to the whitepaper. Bitcoin.org, the website domain linked to the original Bitcoin, was created on August 18, 2008, a day after the creation of Netcoin.org using the same registrar. [Read more at CoinTelegraph]

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 (20220923)

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Decentralized Insurance Alternatives: Market Landscape, Opportunities and Challenges

The Society of Actuaries (SOA) published a report on the business models and operating designs of decentralized insurance alternatives. Instead of aggregating risks by centralized insurance entities, these platforms enable cost-effective and scalable peer-to-peer risk sharing with new forms of decentralized business models that leverage global accessibility and transparency, self-executing smart contracts, as well as social media tools like Discord and Twitter to coordinate community decision-making to support operations. [Read more at the SOA]

 

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 (20220919)

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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 (20220917)

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Ether’s New ‘Staking’ Model Could Draw SEC Attention

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]

Some U.S. banks pause crypto custody because of SEC approach to custody accounting

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]

Thai SEC Proposes Banning Crypto Businesses From Staking and Lending Activities

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 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 (20220715)

~ kiffmeister

For those receiving this via email, please excuse the glitches that are occurring this week. I’ve moved servers and I’m still trying to get MailChimp to play nicely with it.

Circle’s Detailed Reserve Report Shows Only Cash, Short-Term Treasurys Back USDC Stablecoin

Circle Internet Financial released a detailed – though unaudited – breakdown of its reserve assets for the firm’s USD coin (USDC) that showed $42.1 billion in short-term U.S. government bonds and $13.6 billion in cash. The breakdown also listed the bonds’ individual CUSIP number identifiers. The cash was comprised of deposits at Bank of New York Mellon, Citizens Trust Bank, Customers Bank, New York Community Bank, Signature Bank, Silicon Valley Bank, Silvergate Bank and US Bancorp. [Read more at CoinDesk]

Saudi Arabia Has Massive Crypto Adoption, Says KuCoin Survey

According to a KuCoin survey in May, around 3 million Saudi Arabians, about 14% of the adult population aged 18 to 60, had become crypto investors. Another 17% of respondents said they are likely to invest in crypto over the next six months. [Read more at Inside Bitcoins]

Celo network back online after almost 24-hour outage

Proof-of-stake- based blockchain Celo suffered from an on-and-off network outage for 24 hours on July 14. It was the network’s first outage since the mainnet launch in April 2020. Celo is an open-source blockchain that enables users with phone numbers to make payments with crypto by using their phone numbers as a proxy for public keys. [Read more at CoinTelegraph]

Crypto collapse: Celsius’ real liabilities and fake assets, Voyager still bankrupt, 3AC owns CryptoDickButt #1462

Another excellent update from Amy Castor and David Gerard on the continuing CeFi/DeFi train wreck. [Read more at the Attack of the 50 Foot Blockchain]

Upcoming events I’m affiliated with:

The CBDC Think Tank, in partnership with the International Monetary Fund and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC. The sessions are designed as instructional deep dives with full presentations and Q&A components.  [Register here]

Kiffmeister’s #Fintech Daily Digest (20220714)

~ kiffmeister

For those receiving this via email, please excuse the glitches that are occurring this week. I’ve moved servers and I’m still trying to get MailChimp to play nicely with it.

Environmental Implications of a Central Bank Digital Currency

The World Bank has published a paper that explores the environmental implications of central bank digital currency (CBDC) and highlights ecological footprint differences between CBDC and other payment methods. As the legitimacy of CBDC is backed by the trust of central banks, it does not need to prove its legitimacy through energy-intensive consensus or mining mechanisms, so its energy consumption is low. CBDC can also be designed to use various systems, such as real time gross settlement systems, distributed ledger technology, or a mixture of both. [Read more at the World Bank]

Celsius Files for Chapter 11 Bankruptcy

Celsius Network, the crypto lender that is facing a liquidity crisis, has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York. It suspended withdrawals on June 12, cut jobs and hired restructuring experts to advise on its financial situation.
Celsius says it has $167 million in cash on hand, enough to “support certain operations during the restructuring process.” [Read more at Celsius Network]

Upcoming events I’m affiliated with:

The CBDC Think Tank, in partnership with the International Monetary Fund and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC. The sessions are designed as instructional deep dives with full presentations and Q&A components.  [Register here]

Kiffmeister’s #Fintech Daily Digest (20220710)

~ kiffmeister

Paxos Becomes First Stablecoin Issuer to Disclose Full Monthly Reserve Holdings Backing

Paxos will now disclose on a monthly basis the specific financial instruments backing its USDP and BUSD stablecoins, in addition to its attestations. These reports will provide the CUSIP numbers of all instruments backing USDP and BUSD, showing that Paxos only backs its stablecoins with cash, overnight loans secured only by US Treasuries, and US Treasuries with a less than 90 day maturity. As a Trust Company chartered by the New York State Department of Financial Services, Paxos is legally required to hold all regulated stablecoin reserves in bankruptcy remote, fully-segregated accounts and in only cash and cash equivalents. [Read more]

The Financial Bubble Era Comes Full Circle

Matt Taibbi asks some tough questions about the sanctity of the reserve assets that back Circles USDC stablecoin, and the issue of bankruptcy remoteness. Circle is unlike some competitors, whose user agreements specifically spell out that reserves are, say, “fully backed by US dollars held by Paxos Trust Company, LLC,” or “custodied pursuant to the Custody Agreement entered into by and between you and Gemini Trust Company, LLC.” Those describe trust agreements, which are truly bankruptcy remote. However, Circle is not a trust, so customers  are guarded only by protections afforded under state money transmission laws. However, Circle is only regulated  as a money transmitter in the states where Circle has licenses, and the firm has obtained licenses only in those states were licenses are required. There are other reasons to be concerned as a USDC hodler, and I recommend reading the whole post. [Read more]

See also this Twitter thread which wonders aloud whether customer funds held by other US “money transmitters” like PayPal, Square and Venmo are truly bankruptcy remote!? [Read more]

Why Stablecoins Fail: An Economist’s Post-Mortem on Terra

This article from the Richmond Fed dives into potential answers to these questions about the failed Terra UST stablecoin. UST was backed by LUNA, but the price of LUNA was backed by its option value of converting to UST. When the confidence of this circular backing is shaken, the liquidity of algorithmic stablecoin becomes flighty. In this case, the algorithm does not fully function because Terra needs to (but can’t always) defend both UST and LUNA. When market liquidity evaporated, UST and LUNA ultimately relied on the issuer’s equity to support the prices, similar to the backing of a more traditional currency as seen in the Asian Financial Crisis. It is the part of economics cannot be replaced by technology. [Read more]

Crypto collapse: 3AC, Voyager, Celsius, and other DeFi casualties: Another great summary of the growing DeFi Dead Pool by Amy Castor and David Gerard. [Read on…]

Upcoming events I’m affiliated with:

The CBDC Think Tank, in partnership with the International Monetary Fund and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC. The sessions are designed as instructional deep dives with full presentations and Q&A components.  [Register here]

Kiffmeister’s #Fintech Daily Digest (20220707)

~ kiffmeister

Binance brings Bitcoin trading fees to zero

Binance will cut Bitcoin (BTC) trading fees to zero worldwide on July 8, to coincide with the exchange’s five-year anniversary. It will remain in place until further notice. Zero-fee trading will cover the following 13 spot trading pairs: BTC/AUD, BTC/BIDR, BTC/BRL, BTC/BUSD, BTC/EUR, BTC/GBP, BTC/RUB, BTC/TRY, BTC/TUSD, BTC/UAH, BTC/USDC, BTC/USDP and BTC/USDT. [Read more]

Disclosure, Dapps and DeFi

A paper by Chris Brummer and Agnes N. Williams highlights, with respect to decentralized finance (DeFi) in a U.S. context, the ambiguities inhabiting legacy disclosure obligations and offers a conceptual roadmap for assisting developers and regulators. Furthermore, it introduces a series of crypto-native tools to modernize disclosure delivery in DeFi systems. [Read more]

The decentralized finance (DeFi) dead pool

Last week I started a list of articles about the DeFi dead and dying and I’ve continued to add more, including some on collateral damage:

Upcoming events I’m affiliated with:

The CBDC Think Tank, in partnership with the International Monetary Fund and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC. The sessions are designed as instructional deep dives with full presentations and Q&A components.  [Register here]

Kiffmeister’s #Fintech Daily Digest (20220705)

~ kiffmeister

FYI I’ve updated my tabulation of retail central bank digital currency (CBDC) explorers. Mostly updated links and some shuffling among categories. https://kiffmeister.com/jurisdictions-where-retail-cbdc-is-being-explored/

ECCB launches DCash in Anguilla

The Eastern Caribbean Central Bank (ECCB) DCash central bank digital currency (CBDC) pilot expanded to Anguilla, and now the digital version of the EC currency is legal tender in all eight ECCB member countries. Liberty Co-operative Credit Union (LCCU) is the first financial institution in Anguilla to join the Pilot and will begin processing DCash applications for both merchant and consumer wallets for their customers. Citizens and residents who are not customers of LCCU may obtain a DCash value-based wallet by signing up through the app.  [Read more]

According to the just-released ECCB Annual Report, As at end-March, the value of DCash in circulation amounted $2.27 million, or 0.16% of the $1,407.14 million currency in circulation. More than 20 of the region’s financial institutions and 11 agencies, both groups being key channels for customer onboarding, are now participating in the pilot. Also there has seen steady increase in the merchant base. The second phase of the pilot will see the introduction of government-to-consumer (G2C) payments and an e-commerce functionality to support wider use of DCash. [Read more]

Big tech interdependencies – a key policy blind spot

A BIS paper assesses the interdependencies inherent in big tech business models based on publicly available information on Alibaba, Amazon, Grab, Jumia, Mercado Libre and Rakuten. Big tech interdependencies come with specific risks, in particular to operational resilience, and may require the development of specific entity-based rules for big tech operations in the financial sector. The paper outlines the regulatory implications of how big techs provide financial services and the tools financial authorities have at their disposal now to address related risks. [Read more]

The decentralized finance (DeFi) dead pool

Last week I started a list of articles about the DeFi dead and dying with a few written by David Gerard (“Attack of the 50 Foot Blockchain“) and Amy Castor (see below). I’ve added a few more from others, including some collateral damage:

Upcoming events I’m affiliated with:

The CBDC Think Tank, in partnership with the International Monetary Fund and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC. The sessions are designed as instructional deep dives with full presentations and Q&A components.  [Register here]

Kiffmeister’s #Fintech Daily Digest (20220617)

~ kiffmeister

Azerbaijan Central Bank preparing concept of digital manat

The Central Bank of Azerbaijan (CBA) is reportedly studying the possibility of issuing a central bank digital currency (CBDC).  Apparently, so said Rashad Gasimov of the CBA’s National Payment Systems Development Division of the Payment Systems and Settlements Department during the Finance and Technologies Expo held in Baku, on June 16-17. [Read more]

Miners as intermediaries: extractable value and market manipulation in crypto and DeFi

A Bank for International Settlements (BIS) paper explains decentralized finance (DeFi) miner extractable value (MEV) and why it arises, documents the amounts involved, and draws regulatory
implications for cryptocurrencies, DeFi and other blockchain-based applications. Cryptocurrencies and DeFi protocols built on them rely on validators or “miners” as intermediaries to verify transactions and update the ledger. Since these intermediaries can choose which transactions they add to the ledger and in which order, they can engage in activities that would be illegal in traditional markets such as front-running and sandwich trades. The resulting profit, or MEV, is an intrinsic shortcoming of pseudo-anonymous blockchains.  [Read more]

Bitcoin Veterans Know to Keep Their Eyes on $19,511 Level

Bitcoin’s high during its last bull cycle in 2017 $19,511 is widely seen as the level at which many hodlers will capitulate and wind-down leverage (bitcoin is currently hovering above the $20,000 level). According to Arcane Research, throughout its roughly 12-year trading history, bitcoin has never dropped below previous cycle peaks, so a break below it would be momentous. In addition, most of the open interest in bitcoin options is based on the $20,000 strike price, which could contribute to selling pressure in the spot market should the price fall below that level. [Read more]

BIS Innovation Hub announces expanded cyber security experiments

The BIS Innovation is launching a project to examine how the introduction of quantum-resistant cryptography will affect payment system performance, and investigate and test potential cryptographic solutions that can withstand the vastly improved processing power of quantum computers. Given the long-term sensitivity of financial data, this vulnerability must be addressed well in advance of the advent of quantum computing. [Read more]

Upcoming events I’m affiliated with:

The second session of the CBDC Think Tank CBDC Papers Lecture Series will be held on June 24 starting at 7am EST and run for 4 hours. [View list of papers and register here]

The CBDC Think Tank, in partnership with the International Monetary Fund and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC. The sessions are designed as instructional deep dives with full presentations and Q&A components.  [Register here]