Kiffmeister’s #Fintech Daily Digest (20230126)

January 26, 2023January 26, 2023 ~ kiffmeister

Crypto collapse: US banks leave crypto, how Genesis kept Gemini hanging on, FTX, Binance, Nexo

I don’t extensively cover the monkey business and shady activity in crypto markets, but if you’re interested in that (plus a few good laughs) I highly recommend you subscribe to the regular newsletters (about once a week) published by David Gerard and Amy Castor. For their latest update and (free) subscription link head here.

Moody’s Is working on scoring system for stablecoins

Moody’s is reportedly working on a scoring system for stablecoins that will include an analysis of up to 20 stablecoins based on the quality of attestations on the reserves backing them. The project is still in early stages and apparently won’t represent an official credit rating. [Read more at Bloomberg]

ISDA launches standard definitions for digital asset derivatives

The International Swaps and Derivatives Association (ISDA) published new standard digital assets derivatives definitions and documentation, to create an unambiguous contractual framework under the ISDA Master Agreement umbrella. The definitions initially cover non-deliverable forwards and options on Bitcoin and Ether, but could be expanded cover other distributed ledger technology (DLT) based digital assets. The definitions have been drafted to facilitate Common Domain Model integration and automation within smart contracts. [Read more at ISDA]

Navigating bankruptcy in digital asset markets: netting and collateral enforceability

ISDA also published a whitepaper that addresses some of the derivatives-related legal issues raised by the recent bankruptcies of major crypto exchanges and market participants. It focuses on the importance of close-out netting and collateral arrangements for derivatives referencing digital assets and identifies several areas of focus for policymakers and market participants to ensure greater certainty. This includes use of standardized contractual frameworks and further legal clarity from national authorities on the property status of digital assets. [Read more at ISDA]

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 (20221017)

October 17, 2022 ~ kiffmeister

Macau proposes to make digital currencies legal tender

The Executive Council of Macau, a special administrative region (SAR) of greater China, has completed discussing a draft bill proposing to include digital forms of currency as acceptable legal tender. Macau has relatively strong legal tender laws. Anyone who rejects or refuses to accept legal tender in payment will be fined between $123 and $1,237 (1,000 and 10,000 patacas). The bill will now be forwarded to the Legislative Assembly for further deliberations. [Read more on the Macau government website]

ISDA readies contractual standards for crypto derivatives space

The International Swaps and Derivatives Association (ISDA) is collaborating with the digital asset industry to establish contractual standards for crypto derivatives. In a DerivSource Q&A, Mark New, senior counsel, Americas at ISDA, discusses what the forthcoming standards will look like, how they will cope with digital asset-specific events such as forks and airdrops and what to expect next from the trade association. [Read more at DerivSource]

Kiffmeister’s Global Central Bank Digital Currency Monthly Monitor

Kiffmeister’s #Fintech Daily Digest (20220919)

September 19, 2022 ~ kiffmeister

After all this effort, crypto-assets are just tech stocks

Bloomberg’s Joe Weisenthal makes the same point I’ve been making for many months. “Basically [crypto-assets are] just tech stocks. Not only are the coins trading in line with each other still, they’re still basically trading in line with the Nasdaq 100… What does this all mean? One possibility is that the marginal crypto-asset buyers just doesn’t care about any of this stuff. Proof-of-work? Proof-of-stake? The merge? Inflation hedging? The halving? Deflationary monetary policy? What’s all that stuff? In other words, it’s possible that there’s a small coterie of people paying attention to any of this. And that what’s really driving price is just the animal spirits of a much larger group of speculators, who are also moving the price of Zoom or Tesla or Meta or whatever else. [Read more on Twitter]

Are interest rate swaps the next frontier of decentralized finance?

Decentralized finance (DeFi) is expanding into the world of interest rate swaps (IRS), a derivative instrument for exchanging fixed and variable interest rates. DeFi firm Voltz Labs has launched a non-custodial automated market making (AMM) IRS trading platform based on the Aave and Compound DeFi USDT, USDC, DAI and ETH lending markets. However, IRS AMMs are challenged by DeFi markets’ lack of fixed-rate products off which to price swaps. (Traditional markets offer variable- and fixed-rate products off which to arbitrage each other.) [Read more about the Voltz protocol here]

New data on the e-levy in Ghana: unpopular tax on mobile money transfers is hitting the poor hardest

Ghana introduced a 1.5% tax (“E-levy”) on mobile money transactions in May 2022, in a country where 40% of the population aged 15 and above use mobile money platforms. It has been justified as a way to reduce aid dependence, and to capture informal economy workers. An International Centre for Tax and Development (ICTD) paper finds that the overall effect of the E-levy is highly regressive with users in the bottom income quintile paying the largest share as a proportion of their income, especially home-based informal workers. However, a 100 cedi/day (equivalent to about $10/day) taxation threshold has provided some relief. [Read more at the ICTD]

Tickets available for CBDC Think Tank masterclass

The CBDC Think Tank, in partnership with the IMF and George Washington University, is hosting a full-day in-person CBDC Masterclass on October 12 in Washington DC for “official sector” staff and academics active in the CBDC / digital currency space only. The sessions are designed as instructional deep dives with full presentations and Q&A components. Tickets are $99. [Register here]

Also, the CBDC Think Tank, in partnership with Georgetown University and the DC FinTech Week, is hosting a FREE (also in-person) Digital Currency Lecture Series, a set of digital currency lightning talks delivered by subject matter experts, on October 14 in Washington DC. [Request an invite here]

Kiffmeister’s Global Central Bank Digital Currency Monthly Monitor

Kiffmeister’s #Fintech Daily Digest (20220322)

March 22, 2022 ~ kiffmeister

BIS Innovation Hub and four central banks develop experimental multi-CBDC platform for cross-border settlements

The Singapore branch of the Bank for International Settlements (BIS) Innovation Hub, the Reserve Bank of Australia, Bank Negara Malaysia, the Monetary Authority of Singapore, and the South African Reserve Bank have completed prototypes for a common cross-border payments platform using multiple central bank digital currencies (mCBDCs). Project Dunbar proved that financial institutions could use CBDCs issued by participating central banks to transact directly with each other on a shared platform. This has the potential to reduce reliance on intermediaries and, correspondingly, the costs and time taken to process cross-border transactions. [Read more]

Euroclear invests in Fnality, blockchain-based synthetic CBDC

Euroclear has invested in Fnality, the blockchain payments consortium formerly known as the Utility Settlement Coin (USC) and owned by 16 major financial institutions. Euroclear operates Central Securities Depositories (CSDs) across Europe, including Belgium, Finland, France, Ireland, the Netherlands, Sweden, and the United Kingdom. In October, Fnality plans to launch its first payment currency with pounds sterling deposited at the Bank of England. That makes it a so-called wholesale synthetic CBDC where the purpose is for institutions to use it for settlement, especially for blockchain-based transactions. [Read more]

Galaxy digital facilitates Goldman Sachs’s first OTC crypto options trade

Galaxy Digital facilitated and executed the first over-the-counter (OTC) crypto-asset transaction with Goldman Sachs in the form of a Bitcoin cash-settled non-deliverable option (NDO), apparently the first such transaction by a major U.S. bank. [Read more]

Kiffmeister’s #Fintech Daily Digest (20220301)

March 1, 2022March 1, 2022 ~ kiffmeister

Cambridge University Launches Crypto Research Project with IMF, BIS

Cambridge University’s Centre for Alternative Finance has announced a collaboration with the International Monetary Fund (IMF), the Bank for International Settlements (BIS) and others to conduct crypto research. The Cambridge Digital Assets Programme, aims to bring further insight into the growing digital asset industry by providing data-driven insights through collaborative research involving public and private sector stakeholders. [Read more]

The research agenda for the Programme will be centered around three workstreams. The first is focused on environmental implications and broader environmental, social and governance (ESG) considerations of digital assets and their associated services. The second will look at the processes and configurations of distributed financial market infrastructure (dFMI), and the third on crypto-assets, stablecoins, central bank digital currency (CBDC), as well as enterprise and consumer tokens. [Read more]

CME Group plans to launch micro-sized Bitcoin and Ether options

The Chicago Mercantile Exchange (CME) announced that it will launch, subject to regulatory review, options trading for its existing micro Bitcoin (BTC) futures and micro Ether (ETH) futures that will be 10% the size of the respective tokens. The futures options, expected to start trading on March 28, will come more than two years after the firm launched a BTC options trading product in January 2020 and more than four years since the group launched the first Bitcoin futures contract in December 2017. [Read more]

Bitcoin jumps after Treasury imposes new sanctions against Russian central bank

The crypto market rose after the Treasury Department imposed new sanctions against Russia’s central bank that will effectively prohibit Americans from doing business with the Russian central bank and freezes assets within the United States. However, the crypto market rally may also be linked to hopes that Fed will be less likely aggressively hike amid the uncertain geopolitical backdrop. [Read more]