Kiffmeister’s #Fintech Daily Digest (20230201)

Cross-border cross-currency CBDCs and automated market-making

R3 published a report on the application of automated market makers (AMMs) to cross-border and cross-currency central bank digital currency (CBDC). AMM structures, which are are common in the decentralized finance (DeFi) ecosystem, increase price transparency, work for low liquidity instruments, and bring the process of trading and settlement closer together. Such outcomes could benefit segments of today’s FX market. However, adapting AMM to  spot FX markets will need to answer questions including: who would run it, what formula might be appropriate for larger transactions, and how to incentivize participants. [Read more at R3]

UK Government outlines plans to regulate crypto-asset industry

The UK Government has floated proposals to bring cryptoassets into the same regulatory regime as traditional financial services. The consultation sets out key design features of the regime covering themes such as prudential requirements, data reporting, consumer protection, location policy and operational resilience. The paper also proposes regimes for a range of cross-cutting issues which apply across crypto-asset activities and business models, including market abuse and crypto-asset issuance and disclosures. [Read more at HM Treasury]

Fintech funding drops 46%; banking startups among worst hit

In 2022, fintech companies secured a total of $75.2 billion in funding, a 46% decline from 2021. Deal counts also decreased, falling 8% year-on-year from 5,474 deals in 2021 to 5,048 deals last year. Fintech funding steady declined throughout the year, dropping from $30.4 billion in Q1 to $21.2 billion in Q2, $13 billion in Q3 and $10.7 billion in Q4 – the latter being the lowest level since 2018. Banking startups took the biggest hit, with funding plummeting 63% and deals falling 33% year-over-year. [Read more at FintechNews.ch]

DeFi fans are courting traders in $7.2 trillion currency market

A paper by Uniswap and Circle staff compared the traditional trading and settlement of FX with blockchain-based implementations using payment stablecoins and automated market making protocols. Using public blockchain data, they quantified the liquidity, stability, and transaction costs of on-chain FX transactions in early adoption. Their estimates suggested that on-chain FX can reduce the cost of remittance by as much as 80%. [Read more at SSRN]

Crypto money laundering: four exchange deposit addresses received over $1 billion in illicit funds in 2022

According to Chainalysis, illicit addresses sent nearly $23.8 billion worth of cryptocurrency in 2022, a 68.0% increase over 2021. As is usually the case, mainstream centralized exchanges were the biggest recipient of illicit cryptocurrency, taking in just under half of all funds sent from illicit addresses. More illicit funds were sent to DeFi protocols than ever before, a continuation of a trend that began in 2020. [Read more at Chainalysis]

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 (20230120)

Genesis’ crypto lending businesses file for bankruptcy protection

Digital Currency Group (DCG) owned Genesis Global Holdco LLC filed for Chapter 11 bankruptcy protection. Genesis owes over $3.5 billion to its top 50 creditors, including crypto exchange Gemini. The bankruptcy could have broader implications because DCG also owns digital assets manager Grayscale, which operates the Grayscale Bitcoin Trust (GBTC), which has $10 billion-plus in assets under management. There would be serious crypto market  repercussions if the Genesis bankruptcy somehow leads to the liquidation of 600,000+ bitcoin holdings. [Read more at CoinDesk]

Universal digital payments network for stablecoins, CBDCs launches at Davos

A consortium led by Red Date Technology, the developer of the Chinese state-backed Blockchain Service Network, launched the Universal Digital Payments Network (UDPN) to provide interoperability between regulated stablecoins and central bank digital currencies (CBDCs). Multiple global banks will participate in use case proof of concepts (PoCs) to show how the UDPN will integrate digital currencies into daily businesses, banking and payment. The first two PoCs will involve two banks testing UDPN’s digital currency cross-border transfer and swap capabilities, and how financial institutions can execute anonymous stablecoin transfers through the “travel rule” function. [Read more at UDPN.io]

Project Rosalind Phase 2 TechSprint – Invitation for expressions of interest

The BIS Innovation Hub London Centre has launched the Project Rosalind TechSprint, inviting expressions of interest to come up with retail central bank digital currency (CBDC) use cases. Participants will be required to develop feasible prototypes by using the set of application programming interfaces (APIs) developed in phase one of Project Rosalind. It aims to develop prototypes of an API platform for the distribution of retail CBDC. The purely experimental setup is based on a two-tier distribution model, comprising a central bank at the foundation of the retail CBDC system and with customer-facing activities carried out by the private sector payment interface providers (PIPs). [Read more at the BIS]

The technology of decentralized finance (DeFi)

The BIS published a paper that provides a deep dive into the architecture, technical primitives, and financial functionalities of decentralized finance (DeFi) protocols. It analyzes and explains the individual components and how they interact through the lens of a DeFi stack reference model featuring three layers: settlement, applications and interfaces. Then, it describes the financial services for the most relevant DeFi categories, i.e., decentralized exchanges, lending protocols, derivatives protocols and aggregators. It discusses how composability allows complex financial products to be assembled, which could have applications in the traditional financial industry. [Read more at the BIS]

A couple of papers of interest to central bank digital currency (CBDC) aficionados were published this week:

  • The Digital Dollar Project published an updated version of its white paper “Exploring a U.S. CBDC,” offering a global perspective on rapidly accelerating CBDC developments. [Download at the DDP]
  • The Digital Euro Association (DEA) published a paper on CBDC Privacy, examining the importance of privacy and how it impacts successful CBDC adoption, usage, and implementation. It also examines privacy-preserving technologies and provides recommendations for ensuring CBDC privacy and security. [Download at the DEA]

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

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

Kiffmeister’s global central bank digital currency monthly monitor

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

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

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

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

Kiffmeister’s #Fintech Daily Digest (20221105)

A Multi-Currency Exchange and Contracting Platform

The IMF published a working paper that presents a vision for a multilateral platform that could improve cross-border payments, as well as related FX transactions, risk sharing, and more generally, financial contracting. It proposes a design that centralizes payments and settlement and that integrates functionality needed for cross-border transactions: streamlining compliance, reducing the cost of FX conversion, and better managing financial risks. The paper also shows how new technologies can be leveraged to better organize payments and associated financial markets. These new technologies are ledgers with unique states, programmability that allows for smart contracts, and encryption which ensures privacy, and can alleviate the underlying obstacles to trade. These technologies allow the design of a multilateral exchange system where participants can truthfully share information with smart contracts but can retain privacy relative to other parties. [Read more at IMF.org]

Payments, money and finance in the digital era (Part 1 and Part 2)

Two recent papers by Christian Pfister examine the state of play and short- to long-term prospects for payments, money and finance in the digital era. The first paper focuses on short- to medium term developments, and two forms of public sector, intervention; regulatory and production-based. He argues that the regulatory approach should be considered against the potential costs, like the creation of barriers to entry and protection of established players, which makes it ambiguous from the point of view of competition. Production-based intervention, such as the introduction of central bank digital currency (CBDC), aiming to provide an alternative to private supply is much stronger than regulation, and has its own ambiguities. Hence, before intervening, the public authority should ensure that private initiatives are unable to meet a clearly expressed need (i.e., there must be a “market failure”), and the benefits outweigh any disadvantages. The second paper, which focuses on longer-term issues, recommends that if a CBDC were to be issued, it should be aimed to stimulate innovation and not lead, even inadvertently, to the marginalization of the private sector.

The second paper concludes with a set of recommendations, including that the central bank should continue to issue banknotes, but in order to discourage their illicit use, gradually withdraw the high-denominations. Also, if retail CBDC is issued, it should allow offline transactions. Also there should be a threshold of anonymity for very small-value transactions to facilitate its substitution for cash without facilitating illicit transactions. Above this threshold, allow transactions under pseudonyms, with the possibility for the judicial authorities to request the lifting of pseudonymity, and limit the collection of personal information to what is necessary for reporting entities to fulfil their regulatory obligations. Christian recommends not limiting individual CBDC holdings, except for a transitional period, and remunerating at an interest rate linked by a fixed spread under the monetary policy rate. In addition, he recommends the issuance of wholesale CBDC on a distributed ledger technology (DLT) platform, and allow, but not force, payment service providers, including regulated issuers of retail stablecoins, to back their issuance with them. [Read Part 1 here and Part 2 here]

HSBC to launch Orion blockchain bond tokenization platform

HSBC is reportedly launching a distributed ledger technology (DLT) based bond tokenization platform. The European Investment Bank is currently exploring the possibility of issuing the market’s first-ever GBP tokenized bond, for registration and issuance under Luxembourg law, using HSBC Orion. [Read more at FFNews.com]

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 CBDC Think Tank is a New York-based technology- and vendor-agnostic digital currency knowledge-sharing hub for staff of central banks, international financial institutions (IFIs) and non-government organizations (NGOs). It runs webinars, workshops, and masterclasses to disseminate knowledge and facilitate communication. It also engages in advisory work, focusing on delivering impact that best aligns with the needs of its clients and the forward progress of human civilization. The CBDC Think Tank welcomes requests from central bank officials for CBDC advisory services.  [click here for more information].

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 (20221103)

Monetary Authority of Singapore launches Ubin+

The Monetary Authority of Singapore (MAS) launched Ubin+, an expanded collaboration with international partners on cross-border foreign exchange (FX) settlement using wholesale central bank digital currency (CBDC).  Ubin+ will develop technical standards and infrastructure to support cross-border connectivity, interoperability and atomic settlement of digital currency transactions across platforms using distributed ledger technology (DLT), and non-DLT based financial market infrastructures. It will also evaluate the efficiency and risk implications of such platforms, and establish the related policy frameworks. (The BIS Innovation Hub led Project Mariana that is investigating the use of decentralized finance (DeFi) protocols and automated market makers (AMMs) to automate FX trading and settlement announced yesterday, is part of Ubin+.) [Read more at the MAS]

Zimbabwe draws on Nigeria lessons in cryptocurrency plans

Reserve Bank of Zimbabwe (RBZ) Deputy Governor Innocent Matshe reportedly said the RBZ will proceed with plans to a CBDC, undeterred By the slow adoption of Nigeria’s eNaira. In addition to sending a team to learn from the Central Bank of Nigeria’s experiences, the RBZ has also reportedly sent teams with a similar mission to countries like China and Ghana. [Read more on Bloomberg]

It’s time to explore institutional decentralized finance (DeFi)

The Oliver Wyman Forum, in partnership with DBS, JP Morgan’s Onyx, and SBI, published a paper that makes the case for “institutional DeFi” , a system that combines the power and efficiency of decentralized finance (DeFi) software protocols with a level of protections and controls that regulators demand and customers expect. These include identity solutions to enable financial institutions to comply with anti-money laundering (AML) and know your customer (KYC) regulations, strong cybersecurity to minimize the threat of hacking incidents, and recourse mechanisms to make investors whole if something goes wrong. [Read more at Oliver Wyman]

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 CBDC Think Tank is a New York-based technology- and vendor-agnostic digital currency knowledge-sharing hub for staff of central banks, international financial institutions (IFIs) and non-government organizations (NGOs). It runs webinars, workshops, and masterclasses to disseminate knowledge and facilitate communication. It also engages in advisory work, focusing on delivering impact that best aligns with the needs of its clients and the forward progress of human civilization. The CBDC Think Tank welcomes requests from central bank officials for CBDC advisory services.  [click here for more information].

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 (20221102)

Project Mariana: CBDCs in automated market makers

The Bank for International Settlements (BIS) Innovation Hub, Banque de France, Monetary Authority of Singapore (MAS) and Swiss National Bank launched Project Mariana, to investigate the use of decentralized finance (DeFi) protocols to automate FX trading and settlement. The project will explore the use of automated market makers (AMMs) for the cross-border exchange of hypothetical CHF, EUR and SGD wholesale central bank digital currency (CBDC). AMMs combine smart contracts with pooled liquidity to price and transfer digital assets automatically. [Read more at the BIS]

MAS Completes Its First Digital Asset Live Trades Under Project Guardian

The MAS’s Project Guardian DeFi-based wholesale funding platform completed its first live trades, with DBS Bank, JP Morgan and SBI Digital Asset Holdings conducting live foreign exchange and government bond transactions against liquidity pools comprising of tokenized Singapore and Japanese government bonds, Japanese Yen (JPY) and Singapore Dollar (SGD). More industry pilots have been launched to test the application of asset tokenization and DeFi across a broader range of use cases in the financial sector. [Read more at the MAS]

Singapore Starts Two New Token Pilots With Standard Chartered, HSBC and Others

The MAS is starting two pilot projects to explore trade finance and wealth management product tokenization. The trade finance project will be led by Standard Chartered, and the wealth management product one involves HSBC, UOB, and Marketnode, a digital asset platform built by the Singapore Exchange and Temasek. [Read more at the MAS]

India’s CBDC makes glitch-free start in the world of real-time trades

India’s wholesale CBDC reportedly made a steady and glitch-free start in the world of real-time trades on its first day (November 1, 2022), with several banks using the virtual money backed by Mint Road to settle nearly 50 government bond transactions cumulatively worth about Rs 275 crore. [Read more at the Economic Times]

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 CBDC Think Tank is a New York-based technology- and vendor-agnostic digital currency knowledge-sharing hub for staff of central banks, international financial institutions (IFIs) and non-government organizations (NGOs). It runs webinars, workshops, and masterclasses to disseminate knowledge and facilitate communication. It also engages in advisory work, focusing on delivering impact that best aligns with the needs of its clients and the forward progress of human civilization. The CBDC Think Tank welcomes requests from central bank officials for CBDC advisory services.  [click here for more information].

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 (20221020)

BoE looking for help with its offline CBDC research and PoC work

The Bank of England is looking for a specialist supplier to help them with their offline central bank digital currency (CBDC) research and proof of concept (PoC) work. The process of applying is a bit wonky because thy’ve delegated it to the UK government’s digital supplier procurement system, and if you or your firm are not already on their supplier list, tough luck. And tough luck for the Bank too, because the “supply” of offline digital currency experts is rather thin, and most probably aren’t already be on the list. [Read the RFP here and the list of suppliers here]

Israeli government to trial blockchain bonds with stock exchange TASE

The Israeli Ministry of Finance and the Tel Aviv Stock Exchange (TASE) announced plans for a proof of concept to issue government bonds using blockchain. Protocol developer VMWare and custody provider Fireblocks will be part of this Project Eden. The blockchain system will be developed by TASE and involve live tests with local and international banks, with settlement using digital currency in an Israeli state e-wallet. [Read more at Ledger Insights]

Nubank launches its own cryptocurrency running on Polygon

Brazil’s Nubank is launching Nucoin, its own cryptocurrency on the Polygon blockchain network in the first half of 2023. It will be distributed free of charge to customers as the basis for the creation of a rewards program in Brazil. Polygon is an Ethereum scaling blockchain that enhances the functionality of Ethereum while retaining the base layer’s security and decentralization. [Read more at Nubank]

UK to introduce legislation conferring legality on digital documents on blockchain

The UK government has introduced has introduced a new bill into Parliament that bestows legal status on paperless documentation used in international trade. Under the Electronic Trade Documents Bill, digital trade documents will be put on the same legal footing as their paper-based equivalents to give UK business more choice and flexibility in how they trade. The Bill will reduce admin costs, make it easier for British firms to buy and sell internationally, and cut processing times for electronic documents to 20 seconds. [Read more on the UK government website]

API standards for data-sharing (account aggregator)

This BIS Consultative Group on Innovation and the Digital Economy (CGIDE) report presents three models for data sharing: centralised, decentralised and trust – and develops the user interactions and their data flows. Additionally, the report presents account aggregator functionality and possible arrangements for implementation in the open finance ecosystem. Finally, it shows the successful implementation of a demo based on a microservices architecture that promotes high availability, scalability and resilience. [Read more at the BIS]

Tornado Cash Is not free speech. It’s a Golem

Henry Farrell and Bruce Schneier argue that tying free speech arguments to the cause of decentralized autonomous organizations (DAOs) like Tornado Cash imperils some of the important free speech victories that were won in the past. But the risks for everyone might be even greater if that argument wins. A world where democratic governments are unable to enforce their laws is not a world where civic spaces or civil liberties will thrive. [Read more at Lawfare]

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 (20221012)

My posts this week may get a bit spotty, as I’ll be in Washington DC for the Georgetown University DC Fintech Week, the CBDC Think Tank Summit, and various activities around the International Monetary Fund / World Bank Annual Meetings.

CBDC Manifesto: Design recommendations for a retail CBDC

The Digital Euro Association (DEA) and the CBDC Think Tank (CBDC TT) announced the CBDC Manifesto at the CBDC Summit 2022 in Washington DC. The document was developed by the DEA, the CBDC TT, and world-leading CBDC experts. The Manifesto proposes five major central bank digital currency (CBDC) design recommendations which can be used as a guide by central banks to devise an optimal CBDC development plan. [Read more at CBDCManifesto.com]

BIS Innovation Hub and Bank Indonesia announce winners of G20 TechSprint

The Bank for International Settlements (BIS) and Bank Indonesia today announced the winners of the G20 TechSprint 2022 challenge. This year’s competition was launched in April to catalyse new technologies that would better enable the development and future use of CBDC. From 21 shortlisted teams the three winners were: [Read more at the BIS]

  • Team Dragonfly Fintech Pte Ltd from Singapore won the “Effective and robust means to issue, distribute and transfer CBDCs” category for their solution End-to-End CBDC Solution, which is a proprietary blockchain ledger with unique in-built features and includes a mobile wallet and digital identity platform.
  • Team Bitt-IDEMIA from the US won the “Enabling Financial Inclusion” category for their solution Secure Offline CBDC Payment Solution, which is a platform that allows monetary authorities to launch interoperable CBDCs while also leveraging on a layer-2 solution to enable offline payments.
  • Team Partior from Singapore won the “Improving interoperability” category for their solution Project Naucratis: Enabling Connectivity & Interoperability for mCBDC, which is a blockchain-based multi-CBDC network that supports both account-based and token based CBDC models.

European Parliament Ratifies MiCA Framework in Landslide Vote

“The long-awaited Markets in Crypto Assets (MiCA) regulation has just scaled through the European Parliament as MPs voted massively in favor of the bill. the bill received a 28:1 vote to scale, completing the tripartite deal needed to push the bill into its next implementation phase.” [Read more at Blockchain News]

Banque de France participates in a new wholesale central bank digital currency experiment with SWIFT

The Banque de France has joined a consortium of 14 banks and market infrastructures launched by SWIFT, to conduct a new central bank digital currency (CBDC) experiment for interbank settlement purposes. The objective of the experiment is to issue cross-border payments in a test environment to study the interoperability between different distributed ledger technologies (DLTs) and existing payment systems. These payments will be made in simulated CBDC issued by the participating central banks. [Read more at the Banque de France]

SEC Rejects WisdomTree Bitcoin Spot ETF Application—Again

The U.S. Securities and Exchange Commission (SEC) rejected Cboe BZX Exchange’s latest application for a spot Bitcoin exchange traded fund (ETF) launch, on grounds similar to those cited in multiple applications before it. The decision follows two previous delays on the company’s application decision, and the denial of a former application from WisdomTree in December on the exact same grounds. [Read more at Decrypt]

Grasping De(centralized) Fi(nance) Through the Lens of Economic Theory

The Bank of Canada published a paper that uses a simple stylized model of collateralized lending to analyze the value proposition and limitations of decentralized finance (DeFi). DeFi uses a decentralized ledger to run smart contracts that automatically enforce the terms of a lending contract and safeguard the collateral. DeFi can lower the costs associated with intermediated lending and improve financial inclusion. Limitations are the volatility of the crypto collateral and stablecoins used for settlement, the possible incompleteness of smart contracts and the lack of a reliable oracle. A proper infrastructure reducing such limitations could improve the value of DeFi. [Read more at the Bank of Canada]

US Treasury Fines Bittrex Exchange $29m for Multi-Year Sanctions Violation

U.S.-based cryptocurrency trading platform, Bittrex Has been fined $29 million by the U.S. Treasury Department through the Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN). According to the OFAC announcement, the trading platform “failed to prevent persons apparently located in the Crimea region of Ukraine, Cuba, Iran, Sudan, and Syria from using its platform to engage in approximately $263,451,600.13 worth of virtual currency-related transactions between March 2014 and December 2017.” [Read more at Blockchain News]

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 (20221010)

My posts this week may get a bit spotty, as I’ll be in Washington DC for the Georgetown University DC Fintech Week, the CBDC Think Tank Summit, and various activities around the International Monetary Fund / World Bank Annual Meetings.

FSB outlines next steps for enhancing cross-border payments

The Financial Stability Board (FSB) published the priority themes for the next phase of work under the G20 Roadmap for Enhancing Cross-Border Payments. The FSB also published a report on the progress made during the second year of the Roadmap. Three priority themes have been identified to focus on in the next phase; (i) payment system interoperability and extension, (ii) legal, regulatory and supervisory frameworks, and (iii) cross-border data exchange and message standards. The plan includes steps to strengthen external engagement during this next phase. [Read more at the FSB]

Here are some specifics of the next steps from the progress report:

  • The Bank for International Settlements (BIS) in collaboration with International Monetary Fund (IMF) and World Bank will organize a conference to share information and encourage collaboration on cross-border payments across (planned) CBDC implementations by March 2023. Additionally, the IMF and World Bank will provide technical assistance on how to facilitate cross-border use of CBDC if requested.
  • The Committee for Payments and Markets Infrastructure (CPMI) will consider whether and how the use of well-designed and risk-managed stablecoin arrangements could enhance cross-border payments by addressing existing frictions, what opportunities and challenges this would entail, and how this could impact central banks’ core functions.

ECB seeks scheme rulebook manager for the digital euro

The European Central Bank (ECB) Directorate General Market Infrastructure and Payments is looking for a senior expert from the payments industry to coordinate the group that will draft a potential digital euro scheme rulebook, i.e. a set of rules for payment transactions with a digital euro. [Read more at the ECB]

EU tenders for blockchain data and DeFi project

The European Commission has reportedly put out a tender for a study on embedded supervision of decentralised finance. The study will entail a six month pilot project to develop, deploy and test a technological solution that would enable regulatory bodies to automatically monitor compliance by reading public blockchain data. [Read more at FinExtra]

First Digital Securities Issuances Go Live in Germany

Clearstream created the first digital instrument on D7, Deutsche Börse’s digital post-trade platform. The first automated issuances were performed by LBBW and Vontobel. D7 is fully integrated within Clearstream’s global infrastructure and works as a connector between established networks and digital capabilities. This will provide a fully digital alternative to conventional physical issuance for about 80% of German securities. [Read more at MarketsMedia]

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 (20220924)

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)

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.