Tag: DeFi

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]

Kiffmeister’s #Fintech Daily Digest (20230510)

~ kiffmeister

Visa uses CBDC for programmable finance prototype for Brazilian farmers

Visa developed a programmable finance platform that allows Brazilian soybean farmers to securely fund and sell their crop harvests on a permissioned version of the Ethereum blockchain. Partnering with Agrotoken, Microsoft, and Sinqia, Visa was one of nine finalists tasked with exploring innovative blockchain-based use cases for Brazil’s real digital central bank-issued digital currency (CBDC) as part of the Banco Central do Brasil’s most recent LIFT Challenge. The CBDC’s programmability allows delivery and payment of assets and currencies to be automatically settled only when certain conditions are met, for more efficient capital usage and reduced counterparty risks. [Read more at Visa]

ECB calls for candidates to participate in the digital euro workstreams

The European Central Bank (ECB) is inviting relevant experts to contribute to two new digital euro scheme rulebook workstreams. The first one is focused on identification and authentication the second on infrastructure-related requirements (e.g., IT security, connectivity, reconciliation, and end-to-end service level requirements, plus key performance indicators). Participation will not be remunerated, although an earlier version of the announcements said that participants will not be reimbursed for travel and subsistence expenses in connection with their attendance at workstream meetings, which have now been specified as all virtual. [Read more at the ECB here and here]

Decentralized or disintermediated finance: what regulatory response?

The Banque de France l’Autorité de Contrôle Prudentiel et de Résolution (ACPR) published a discussion paper on possible regulatory approaches to decentralized finance (DeFi). The paper provides an analysis of the structure and risks of disintermediated finance and its various components before formulating different regulatory framework scenarios, some of which are alternative, others complementary. The purpose of this document is to inform the ACPR’s positions and to contribute to ongoing discussions, particularly at the European level, on the value of and procedures for regulating disintermediated finance. [Read more at the ACPR]

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 (20230504)

~ kiffmeister

Florida and North Carolina legislators approve anti-CBDC legislation

The North Carolina (NC) House of Representatives and the Florida House of Representatives and Senate approved anti-central bank digital currency (CBDC) legislation.  The NC legislation prohibits individuals from using CBDCs for any payments to the state, and bars the Federal Reserve from using NC as a potential CBDC pilot testing ground. The Florida legislation excludes CBDC from the definition of “money” for purposes of the Uniform Commercial Code (UCC). The Cato Institute’s Nicholas Anthony has written a nice explainer on the impact of the UCC on digital currency in general, and the Uniform Law Commission has published a paper that covers the CBDC impact specifically. [Read more at Kitco]

The SEC redefines “exchange”: An act in three parts

The US Securities and Exchange Commission (SEC) has reopened the comment period on proposed amendments to Rule 3b-16 under the Securities Exchange Act of 1934. The amendments could significantly expand the number and type of platforms subject to registration with the SEC as exchanges or broker-dealers, including decentralized finance (DeFi) platforms that trade crypto-asset securities. The reopening requested information and public comment on crypto-asset securities trading on such systems. [Read the SEC press release here and analysis by Morrison Foerster here]

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 (20230423)

~ kiffmeister

Bank of Japan CBDC PoC Phase 2 Results

The Bank of Japan (BoJ) published the results of Phase 2 of its central bank digital currency (CBDC) proof-of-concept (PoC) that was conducted between April 2022 and March 2023. Although it is only available in Japanese, Norbert Gehrke wrote a summary of the report in English. The objective of the PoC Phase 2 was to uncover potential technical issues early as they relate to the basic functions covered in Phase 1. Some desirable peripheral functions not covered in Phase 1 were also added. Then, the technical implementation and processing performance was validated. [Download the report at the BoJ and read Norbert Gehrke’s English language summary on Medium]

Uptake of e-CNY remains disappointing

According to Changchun Mu, director of the People’s Bank of China’s Digital Currency Institute, China’s e-CNY CBDC needs to be made more appealing and user friendly in order to satisfy market needs. He was speaking at the Bank for International Settlements (BIS) Innovation Summit on March 22, 2023 and gave a surprisingly frank assessment of the status of the e-CNY pilot project. [Watch the video at the BIS and check out Rosa Giovanna Barresi’s summary and discussion on LinkedIn]

Fed’s Waller says tokenization shows promise, but risks remain

US Federal Reserve Board (Fed) Governor Christopher Waller spoke about the potential benefits and risks of blockchain-based asset tokenization and the related use of smart contracts. In particular, he pointed to the way that smart contract-enabled atomic settlement can mitigate settlement and counterparty credit risks by ensuring that the buyer will not pay if the seller does not deliver; and conversely, that the seller will not deliver if the buyer does not pay. However, smart contracts can have bugs and potential cyber vulnerabilities; and instantaneous settlement raises its own set of risks. [Read more at the Fed]

The shape of things to come: innovation in payments and money

Bank of England (BoE) Deputy Governor Sir Jon Cunliffe spoke about four areas where the tokenization of money is being explored. The first is stablecoins used for payments, the second is the tokenization of commercial bank deposits, the third is the next stage of the BoE’s work on issuing a digital pound and the last is the Bank’s work to ensure to ensure these new forms of money are robust and uniform. [Read the speech at the BoE and check out a discussion on LinkedIn led by Rosa Giovanna Barresi]

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 (20230421)

~ kiffmeister

Belarus central bank considers launching CBDC

The National Bank of the Republic of Belarus (NBRB) is reportedly considering issuing a central bank digital currency (CBDC) with an official announcement likely by the end of the year. The central bank’s chairman said that a digital ruble proof of concept (PoC) has already been developed. [Read more at Ledger Insights]

An update to Coinbase’s global scale to go broad and deep

Coinbase provided an update on its plan to establish bases of operation in jurisdictions that will let it do what U.S. regulators insist are illegal, like offering crypto derivatives and unregistered securities to the public. The firm is working with several “high-bar” international regulators to establish regulated entities abroad that safely facilitate trading solutions and provide products the crypto community demands. For instance, Coinbase has received a Class F license under the Digital Asset Business Act from the Bermuda Monetary Authority, under which it will shortly launch a derivatives exchange. [Read more at Coinbase, but here’s a juicy quote from the blog post:]

Coinbase chose to become a public company in the US because we believe the US would best be served by embracing this fundamental innovation, but we’re also focused on international markets, many of which are moving forward with strategies to become “crypto hubs.” We would like to see the US take a similar approach, but a regulation by enforcement approach in the US is instead leading to a disappointing trend for crypto development in the US.

P27 Nordic Payments withdraws second clearing application

The future of P27 Nordic Payments (P27), which launched in 2019 with the aim of delievering fast, cross-border, multi-currency account to account payments across the Nordic region, is uncertain, after it withdrew its clearing licence application from the Swedish Financial Supervisory Authority. P27 is owned by Danske Bank, Handelsbanken, Nordea, OP Financial Group, SEB and Swedbank. P27 CEO Paula da Silva said that “it is evident that our vision was too ambitious and complex… [and] we need to reassess our future ambition in the Nordic payments market.” [Read more at Finextra]

Abu Dhabi’s financial free zone proposes legal framework for a decentralized economy

The Registration Authority of the Abu Dhabi Global Market (ADGM) issued a consultation paper to explain the proposed Distributed Ledger Technology Foundations Regulations 2023, and seeking public feedback  on the proposed new legislative framework for foundations that facilitate Distributed Ledger Technology (DLT) and token issuance. The ADGM is an international finance center within the United Arab Emirates (UAE) and has a bespoke licensing regime for virtual asset service providers supervised by its financial regulator. The authority is not the ADGM’s financial watchdog, so the proposal is limited to tackling matters of service type and governance. [Read more at the ADGM]

The EU’s new MiCA framework for crypto-assets

Yesterday I reported on the European Parliament’s passage of the Markets in Crypto-Assets Act (MiCA) crypto licensing regime. Here, thanks to Jonas Gross, is a nice infographic on what the regulations cover and how from Patrick Hansen:

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 (20230419)

~ kiffmeister

The BIS and Bank of England successfully test DLT in linking financial settlement systems

The Bank for International Settlements (BIS) and the Bank of England have concluded Project Meridian, a prototype demonstration of how a distributed ledger technology (DLT) network could connect to conventional real-time gross settlement (RTGS) platforms using open-standard application programming interfaces (APIs). The prototype was based on the ISO 20022 message standard and ran on an R3 Corda (permissioned) platform. The project tested scenarios where funds were transferred from buyer to seller only if a corresponding asset on a real estate registry moved simultaneously in the opposite direction. But the prototype can be applied other registries and other assets, including equities and bonds, according to the report. [Read more at the BIS] 

Global mobile money transactions hit a record high in 2022

Mobile money transactions hit a record high of $1.26 trillion in 2022 (versus $1 trillion in 2021), according to a new GSMA report. The number of registered mobile money accounts increased by 13% year-on-year to 1.6 billion, and the volume of mobile money-enabled international remittances increased by 28% to $22 billion. However, there is a wide gender gap, with mobile phone ownership remaining the main cause of this gap, although cultural norms also prevent women from adopting mobile money. “Women in low- and middle-income countries are 28% less likely than men to own a mobile money account,” the report found. [Read more at the GSMA]

Tether’s market share expands to 61%, a two-year high

Tether’s USDT opened the year at a market cap of $66.2 billion, but has grown 22% to $81 billion. Circle’s USDC has moved the opposite way, losing 21% of its market cap. USDT’s share of the stablecoin space is up to 61.5%, its highest mark in two years. The collapse of TerraUSD in May 2022 and shutdown of BinanceUSD (BUSD) in February have increased concentration in the stablecoin market. USDC is struggling amid regulatory concerns in the United States and fallout from banking chaos, when Circle revealed it had 8.25% of its USDC reserves in Silicon Valley Bank. Meanwhile, concerns persist exist around USDT over its underlying reserves. [Read more at Coin Journal] 

Considerations for a US central bank digital currency

U.S. Federal Reserve Board (FRB) Governor Michelle Bowman” gave a speech on her thoughts regarding U.S. central bank digital currency (CBDC). The whole speech is worth a read, but here is her key takeaways” “A potential U.S. CBDC, must be viewed through the lens of whether and how the payment system would be improved beyond what instant payment services will achieve. We should ask what current frictions exist or may emerge in the payment system that only a CBDC can solve, or that a CBDC can solve most efficiently? …There could be some promise for wholesale CBDCs in the future for settlement of certain financial market transactions and processing international payments. When it comes to some of the broader design and policy issues, particularly those around consumer privacy and impacts on the banking system, it is difficult to imagine a world where the tradeoffs between benefits and unintended consequences could justify a direct access CBDC for uses beyond interbank and wholesale transactions.” [Read more at the FRB] 

Financial intermediation and new technology: theoretical and regulatory implications from digital financial markets

Banca D’Italia published a paper that outlines the consequences of technological innovation as regards the financial sector and discusses the possible regulatory implications. The analysis shows that the existing regulatory perimeters could be usefully widened to address the risks stemming from the activities of these new providers of financial services. The availability of tools to monitor these operators and the definition of common rules at the international level in the use of clients’ data increase the possibility to ensure the correct functioning, competition and efficiency of the overall financial system. In the new market context, it takes on greater importance the cooperation also with the competition and data protection authorities at the domestic and global levels. [Read more at the Banca D’Italia] 

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]