Tag: DeFi

Kiffmeister’s #Fintech Daily Digest (20230411)

~ kiffmeister

Misleading news alert: The Digital Currency Monetary Authority (DCMA) launches an international CBDC

The Digital Currency Monetary Authority (DCMA) announced their official launch of an international central bank digital currency (CBDC) at the 2023 International Monetary Fund (IMF) Spring Meetings. The press release implies that their Universal Monetary Unit (UMU) algorithmic stablecoin has the IMF’s blessing, including quoting IMF Financial Counselor Tobias Adrian from a November 2022 speech that implies nothing about DCMA engagement. Also,  the following quote from the DCMA’s legal counsel appears designed to mislead:  “although the IMF has not officially endorsed UMU, in reviewing the DCMA’s whitepaper and in weekly team discussions, the IMF has yet to state any objections to UMU’s FX premium rates and its monetary sovereignty approach.” [Read more at PR Newswire]

Update: I have double checked that the IMF made no official comments about the DCMA UMA stablecoin, and I checked with the IMF staff that would, and they hadn’t even heard of it. Maybe some lower-level staffers were given the white paper to read, and the DCMA used that to imply IMF blessing, when they didn’t get back with comments. @Krippenreiter did some detailed historical analysis on the DCNA and its staff, and it his/her conclusion was that “I’ve rarely come across something that is so dubious and appears to be a fraud while… [while making unsubstantiated claims] to have collaborated with the United Nations and World Economic Forum on a Project Yetta… [Read more on Twitter]

Central Bank of Montenegro developing a digital currency strategy and pilot

The Central Bank of Montenegro (CBCG) is working with Ripple to develop a strategy and pilot program to launch a national stablecoin, in a follow-up to Prime Minister Dritan Abazovic’s related Tweet in January. The CBCG will work with Montenegro’s government and academia to create a practical digital currency or secure currency solution to test blockchain functionality and potential. Montenegro uses the EUR, despite not being a member of the Eurozone, although it is a candidate country for European Union (EU) membership.  [Read more at the CBCG]

Stablecoins versus tokenized deposits: implications for the singleness of money

The Bank for International Settlements (BIS) published a paper that compares the key characteristics of stablecoins (“private tokenized monies that circulate as bearer instruments”) and tokenized commercial bank deposits. It claims that stablecoins violate the “singleness of money” principle because their relative exchange values can and do depart from parity. The problem could be solved by the introduction of clearing houses to support par exchange for the stablecoins issued by its members. However, according to the paper, this is a step backwards because the problem has already been solved by the existing two-tier monetary system. Also, tokenized deposit functionality can be expanded to allow for programmable ledgers, contingent execution and composability of transactions. [Read more at the BIS]

DeFi could be forced to incorporate and certify, French central bank says

The Banque de France (BdF) published a consultative paper on potential regulatory responses to decentralized finance (DeFi). “The regulation of disintermediated finance cannot simply replicate the systems that currently govern traditional finance… [as one option] players exercising effective control over sensitive services could be required to incorporate, becoming subject to supervision.” The paper also floated the idea  of strengthening the security of smart contracts using a certification mechanism covering code security and governance. In addition, it proposed rules should also stop intermediaries selling highly leveraged products to retail investors. [Read more at the BdF]

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 (20230407)

~ kiffmeister

How can the public access digital central bank money?

Sweden’s Riksbank published an update on its technical work aimed at examining how an e-krona could work if a decision is taken in the future to issue central bank digital currency (CBDC). The focus during Phase 3 has been to examine how the Riksbank could interact with other actors in the payment market to give the general public access to, and the possibility to pay with, an e-krona, how conditional payments can be made and whether a digital central bank currency can simplify cross-border payments. [Read more at the Riksbank]

The Digital Euro Conference 2023: A Recap

The Digital Euro Association (DEA) published a summary of the key takeaways from its Digital Euro Conference held on March 31, 2023, that brought together experts, policymakers, and industry leaders in a hybrid format. Both on-site and remote participants engaged in insightful discussions, presentations, and panel sessions on CBDC, stablecoins, and tokenized commercial bank deposits. [Read at the DEA]

Treasury says crooks prefer fiat to crypto in DeFi risk report

The U.S. Treasury’s “Illicit Finance Risk Assessment of Decentralized Finance” report said that ransomware crooks, thieves, scammers and other criminals are “using DeFi services in the process of transferring and laundering their illicit proceeds… [However,] money laundering, proliferation financing, and terrorist financing most commonly occur using fiat currency or other traditional assets as opposed to virtual assets.” [Read more at the U.S. Treasury]

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 (20230329)

~ kiffmeister

Russia delays digital ruble launch testing due to lawmaking process

The next phase of the Bank of Russia’s central bank digital currency (CBDC) testing, slated to start on April 1, 2023, has been delayed because relevant legislation has only passed through the first reading in the State Duma — the Federal Assembly’s lower house. However, the legislation may be enacted by early May. Meanwhile, the number of private banks participating in the pilot has also changed from 15 to 13. Some of the banks’ employees would become the test participants for CBDC retail payments, as well as one of the largest insurance companies in the country, Ingosstrakh. Hence, although the April 1 launch was being billed as a “pilot” is appears to be either further proof-of-concept or prototyping work, since none of the general public isn’t involved in the testing. [Read more at TASS]

Opening of the BIS Innovation Hub Eurosystem Centre

The Bank for International Settlements (BIS) Innovation Hub Eurosystem Centre, a joint effort by the BIS and all Eurosystem central banks, opened on March 28, 2023. The Centre will have offices in Frankfurt and in Paris, hosted and supported by the Deutsche Bundesbank and the Banque de France. The European Central Bank will coordinate the interactions of the Eurosystem with the Centre. The Centre’s project focus areas will be decentralized finance (DeFi), wholesale CBDC, cyber security and green finance. Projects include Atlas, which will create an open-source data platform to provide information on DeFi and crypto-asset market capitalization, economic activity and international flows of crypto-assets, and Mariana, which will explore automated market-makers (AMM) for the cross-border exchange of Swiss franc, euro and Singapore dollar wholesale CBDCs. [Read more at the BIS]

EU lawmakers impose €1,000 cap on anonymous crypto, cash transactions

European lawmakers have adopted legislation imposing a €1,000 cap on anonymous cryptocurrency transactions, as part of the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) package. The draft bill also seeks to cap anonymous cash transactions above €7,000 when it is not possible to identify the sender. The bill had an overwhelming majority of 99 votes in favor, eight against and six abstentions. The European parliament will start negotiations on the final text of the AML/CFT package after a plenary session in April. [Read more at the European Parliament]

Oxbridge Re starts selling tokenized securities to back its reinsurance sidecar

Oxbridge Re Ltd., the Cayman Islands based reinsurance firm with a Gulf Coast risk focus, has begun the initial offering of DeltaCat Re tokenized reinsurance securities, that will represent fractionalized interests in reinsurance contracts written by its reinsurance sidecar. “Democratizing reinsurance through tokenization allows investors to participate directly in the reinsurance business, which traditionally has extremely high barriers to entry… and enable the underwriting of higher value reinsurance contracts.” [Read more at Artemis.bm]

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 (20230224)

~ kiffmeister

The IMF on elements of effective policies for crypto-assets

The IMF published a board paper on “Elements of Effective Policies for Crypto Assets” that provides guidance to IMF member countries on key elements of an appropriate policy response to crypto-assets. It sets forth a framework of nine policy actions that can help members develop a comprehensive, consistent, and coordinated policy response. These include developing and enforcing prudential, conduct, and oversight requirements to all crypto market actors, and not granting crypto-assets official currency or legal tender status. [Read more at the IMF]

Canadian crypto trading platforms face ‘enhanced’ rules under new regulations

The Canadian Securities Administrators (CSA) published new guidance for the local crypto-asset industry, warning crypto-asset trading platforms (CTPs) that they would have to abide by “enhanced investor protection commitments. These include “enhanced expectations” regarding the custody and segregation of crypto-assets held on behalf of Canadian clients and a prohibition on offering margin, credit, or other forms of leverage to any Canadian client. They will also prohibit CTPs from permitting clients to purchase or deposit stablecoins and proprietary tokens without the prior written consent of the CSA. [Read more at the CSA]

Technology behind crypto can also improve payments, providing a public good

The IMF published a blog post that makes the case for leveraging the technology behind crypto-assets to upgrade payment infrastructures and ensure interoperability, safety, and efficiency in digital finance. It points particularly to tokenization, encryption, and programmability, plus central bank digital currencies (CBDCs) to clear and settle transactions. Payments could be made from one private money to another, through the CBDC ledger or platform. Money could be escrowed on the CBDC platform, then released when certain conditions are met, such as when a tokenized asset is received. And the CBDC platform could offer a basic programming language to ensure smart contracts are trusted and compatible with one another. More detail on these ideas were published in a recent IMF working paper (“A Multi-Currency Exchange and Contracting Platform“). [Read more at the IMF]

Digital euro should prioritize online, P2P payments, ECB says

A digital euro should prioritize online purchases and making person-to-person (P2P) payments, according to a slide deck on the European Central Bank (ECB) website. Other uses such as paying taxes, receiving welfare payments, and making payments in physical stores, should only follow in later tranches of a CBDC rollout. [Read more at the ECB]

Representative Emmer says no to U.S. CBDC

Tom Emmer, a member of the US House of Representatives, has introduced a new bill to prohibit the Federal Reserve from issuing a retail CBDC. “My bill, which prohibits the Fed from issuing a CBDC directly to individual Americans, is a statutory prohibition on a surveillance tool that could be used to kill private sector innovation and deflate the dollar’s dominance.” [Read more on Tom Emmer’s website]

Crypto bank Custodia’s bid for Fed supervision rejected again

The US Federal Reserve Board (FRB), in a unanimous decision, has again rejected Wyoming-chartered Custodia Bank’s bid to become a member of the Federal Reserve System, after previously denying the application in January 2023. The initial rejection said Custodia’s business model “presented significant safety and soundness risks,” and claimed Custodia did not have a sufficient risk management framework in place.” [Read more at the FRB]

FYI yesterday I reported on a mysterious IMF technical note on Jordan’s CBDC exploration, and today the link reappeared here!

Upcoming conferences, webinars and speaking engagements:

  • I’ll be providing a (probably virtual) update on global central bank digital currency (CBDC) developments at the Digital Euro Association Digital Euro Conference on March 31 in Frankfurt. [Register here]
  • I’ll be moderating a panel on “what happens when the lights go out…different schemes for offline functionality” at the in-person Digital Currency Conference (DCC) in Mexico City on May 18. [Register here]

Kiffmeister’s global central bank digital currency monthly monitor

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

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

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 (20230223)

~ kiffmeister

FSB details actions for the next phase of the G20 roadmap for enhancing cross-border payments

The Financial Stability Board (FSB) published a report setting out priority actions for achieving the G20 targets for enhancing cross-border payments. They focus on three interrelated priority themes; (i) payment system interoperability and extension, including the extension of real-time gross settlement (RTGS) operating hours and access policies and improving payment system interoperability, (ii) the promotion of an efficient legal, regulatory and supervisory environment for cross-border payments while maintaining their safety, security and integrity, and (iii) facilitating cross-border data exchange and increasing the use of standardized messaging formats. [Download the report here]

On the fragility of DeFi lending

The Bank of Canada (BoC) published a paper that develops a dynamic model of decentralized finance (DeFi) in which borrowing and lending are backed and overcollateralized by crypto-assets and contract terms are pre-specified and rigid. It identifies a price-liquidity feedback loop in which expectations of future higher lending volumes and prices lead to more lending and higher prices in the current period. This feedback loop and smart contract rigidity leads to multiple self-fulfilling equilibria where DeFi lending and asset prices move with market sentiment. This highlights difficulty of achieving stability and efficiency in a DeFi environment without a liquidity backstop. [Read more at the BoC]

IMF high-level technical assistance report on Jordan’s retail CBDC exploration

A technical report on the Central Bank of Jordan’s (CBJ’s) retail central bank digital currency (CBDC) explorations briefly appeared on the IMF’s web page.. It was taken down before I could download it, but AgenParl news service published the abstract: “The report analyzes the retail payments markets of Jordan to identify pain points that retail CBDC (rCBDC) could address. It finds that retail payment systems in Jordan are highly integrated, enabling customers to make interoperable transactions between banks and non-bank Payment Service Providers. The country’s cross-border remittance market is competitive, but may benefit from the reduced transactions cost associated with rCBDC. Despite generally accessible and appropriate product offerings and an enabling environment, various barriers prevent customers from extensively using digital means of payment. Hence, rCBDC might create an opportunity to overcome these barriers, thus making a cross-border rCBDC worth consideration. However, the CBJ should rigorously evaluate benefits against risks and costs before forging ahead. Meanwhile, the CBJ should develop capacity to address technology, cybersecurity, financial integrity, and legal issues.” [Read more at AgenParl]

Update: the Jordan CBDC report is now available here!

Upcoming conferences, webinars and speaking engagements:

  • I’ll be providing a (probably virtual) update on global central bank digital currency (CBDC) developments at the Digital Euro Association Digital Euro Conference on March 31 in Frankfurt. [Register here]
  • I’ll be moderating a panel on “what happens when the lights go out…different schemes for offline functionality” at the in-person Digital Currency Conference (DCC) in Mexico City on May 18. [Register here]

Kiffmeister’s global central bank digital currency monthly monitor

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

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

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 (20230216)

~ kiffmeister

Ukraine speeds up digital hryvnia project, plans pilot for this year

Ukraine’s Ministry of Digital Transformation and Deputy Prime Minister Mykhailo Fedorov has reportedly instructed the National Bank of Ukraine (NBU) to launch its e-hryvnia central bank digital currency (CBDC) pilot this year, instead of the originally planned 2024. The NBU published an e-hryvnia concept note in November 2022, and in January 2023 Tascombank carried out CBDC tests on the Stellar network. [Read more at Bitcoin.com]

The FSB stepping up its work on financial stability risks of decentralized finance

The Financial Stability Board (FSB) is stepping up its investigation into decentralized finance (Defi) on concerns over potential for spill-over risks to traditional finance (Tradfi). The FSB will also analyze the asset tokenization and how it could increase linkages between crypto-asset markets/DeFi, Tradfi and the real economy. In addition, the FSB will explore approaches to fill data gaps to measure and monitor interconnectedness of Defi. [Read more at the FSB]

Crunchfish digital cash pilot in India is scaling up

Crunchfish in partnership with HDFC Bank and another Indian bank are piloting offline (P2B only?) payments in a project monitored by the Reserve Bank of India (RBI) in their Regulatory Sandbox program. First phase of the pilot started during Christmas 2022, with a small-scale test during Christmas 2022. The pilot is scheduled to run for a period of four months, followed by a one-month evaluation by RBI. [Read more at Crunchfish]

Central bank digital currencies in Africa: catching up

SUERF published an abbreviated version of the 2022 BIS paper on African CBDC developments.  Like their peers, a key motivation for African central banks is achieving greater payment system efficiency, but they place more emphasis on financial inclusion and potential benefits for monetary policy. But Africans are more worried than other regions about cyber risks and cross-border spillovers and are also concerned about high operational costs. [Read more at SUERF]

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 (20230201)

~ kiffmeister

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)

~ kiffmeister

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)

~ kiffmeister

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)

~ kiffmeister

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]