Tag: Offline

Kiffmeister’s #Fintech Daily Digest (20230901)*

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SEC delays spot Bitcoin ETF decision for all applicants including BlackRock, Fidelity

The U.S. Securities and Exchange Commission (SEC) has delayed until October making a decision on all of the spot bitcoin exchange-traded fund (ETF) applications filed by applicants including BlackRock, WisdomTree, Invesco Galaxy, Wise Origin, VanEck, Bitwise and Valkyrie Digital Assets earlier this year. The SEC has a total of 240 days from when it first begins its review of the applications to make a final decision to approve or deny. SEC staff have traditionally used every possible comment and review period to delay making final decisions until those 240 days have elapsed. [Read more on the SEC website, making sure to focus on the August 31, 2023 updates]

RBI to add support for NFC to India’s UPI Lite digital wallet service

The Reserve Bank of India (RBI) will add support for near-field communications (NFC) payments to the country’s Unified Payments Interface (UPI) Lite digital wallet, enabling users to conduct transactions on their smartphone when there is no internet or mobile connection. The RBI is adding the option to the stored value wallet, launched in September 2022, to “optimize processing resources for banks, thereby reducing transaction failures”. [Read more at the RBI]

Tether’s stablecoin USDT ‘has a peg stability problem’, claims Kaiko analyst

USDT has a peg stability problem compared to other stablecoins. Its redemption fee and minimum means it’s often rational for USDT holders to sell the token on the market rather than redeem it for USD with Tether. As liquidity has dwindled, the market is no longer able to absorb significant USDT selling. Tether charges a 0.1% fee for fiat withdrawals over $1,000, meaning that USDT is redeemable at $0.99, with the minimum fiat withdrawal or deposit set at $100,000. Another catch is that users have to pay a non-refundable amount of $150 for “verification,” which, according to Tether, “is intended to ensure that only those who are serious about establishing an account apply.” [Read more at Decrypt] 

Enabling offline payment scalability

Lipis Advisors in partnership with Crunchfish released the fifth white paper in the “enabling offline payments in an online world” series. The new paper focuses on scalability, pointing out that the choice of hardware or software-based offline trusted environment can greatly impact the scalability features of offline payment systems. Software-based trusted environments are generally more scalable, because they don’t require the distribution of physical components and may be updated more easily. However, in low-income countries where most potential users can’t afford devices that support software-based trusted environments (i.e., smartphones), some combination of hardware- and software-based trusted environments should be implemented to ensure true scalability. [Read more at Crunchfish]

*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 (20230720)*

~ kiffmeister

Bank of Korea publishes update on its CBDC experiments

The Bank of Korea (BOK) provided updates on its central bank digital currency (CBDC) proof-of-concept work in its 2022 Payment and Settlement Systems Report. This included investigating smart contracts, near-field communications (NFC) based offline payments and cross-border payments. Also, the BOK connected 14 banks with its simulated CBDC system to verify its functioning. It handled 2,000 transactions per second but slowed down as it reached capacity, so further improvements are needed. The bank also tested a zero-knowledge proof (ZKP) protocol to improve privacy, but it slowed the processing speed markedly. [Read more at the BOK]

The FedNow instant payments system is now live

The US Federal Reserve (FRB) announced that its new system for instant payments, the FedNow® Service, is now live. Banks and credit unions can sign up and use this tool to instantly transfer money 24/7 for their customers. To start, 35 early-adopting banks and credit unions, as well as the U.S. Department of the Treasury’s Bureau of the Fiscal Service, are ready with instant payments capabilities via the FedNow Service. In addition, 16 service providers are ready to support payment processing for banks and credit unions. [Read more at the FRB]

China’s digital yuan transactions seeing strong momentum

Transactions using China’s digital yuan hit 1.8 trillion yuan ($250 billion) at end-June, according to People’s Bank of China (PBOC) Governor Yi Gang, marking a jump from over 100 billion yuan as of August last year. However, e-CNY in circulation accounted for only 0.16% of China’s M0 money supply, or cash in circulation, Yi pointed out that, although the balance is small, its transaction velocity is higher and more efficient than cash. [See video on LinkedIn]

*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 lecturing at the Digital Euro Association (DEA) Digital Money Academy on July 27, 2023. [Register here]

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 (20230719)*

~ kiffmeister

Banking on tokens: A primer on tokenized deposits

The Digital Euro Association (DEA) published a paper that dives into the potential impact of tokenized deposits (TDs) on financial stability, monetary policy, anti-money laundering (AML) and know your customer (KYC) processes, and privacy considerations. The paper offers comprehensive primer into the potential of TDs, alongside considerations on how they could complement and co-exist with other forms of digital money. [Read more at the DEA]

Central Bank of Nigeria upgrades eNaira app with NFC chip

The Central Bank of Nigeria will reportedly be piloting the use of near field communication (NFC) stickers that bring enhanced functionality to eNaira featurephone apps. Users will be able to stick them to any phone so they can conveniently make payments to merchants. [Read more at The Sun Nigeria]

Nasdaq halts launch of cryptocurrency custody service

Nasdaq is halting the launch of its own cryptocurrency custody that it previously planned to roll out by the end of the second quarter 2023, because of regulatory risks in the United States.  “Considering the shifting business and regulatory environment in the United States, we have made the decision to halt our launch of the U.S. digital assets custodian business and our related efforts to pursue relevant license.” [Read more at Coin Telegraph]

*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 lecturing at the Digital Euro Association (DEA) Digital Money Academy on July 27, 2023. [Register here]

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 (20230713)*

~ kiffmeister

Sale of XRP on exchanges not investment contracts, US court rules

Ripple’s sale of XRP tokens on exchanges and through algorithms did not constitute investment contracts, but the institutional sale of the tokens did violate federal securities laws, a U.S. federal court has ruled. The court published the conclusions in an order partially granting a motion for summary judgment in the U.S. Securities and Exchange Commission (SEC) lawsuit filed against Ripple in 2020. The court added that it would establish the trial date and related pre-trial schedules at the appropriate time. [Read more at CoinDesk here and the summary judgment here]

Russian parliament passes digital ruble bill

The lower chamber of the Federal Assembly of the Russian Federation, the State Duma, passed the digital ruble bill on July 11, 2023. It sets various legal definitions, as well as the general guidelines for the CBDC ecosystem, including free payments and transfers or individuals and a 0.3% fee for corporate clients. The legislation now moves to the assembly’s upper chamber, the Federation Council, and, if passed, to the president’s desk, after which the Bank of Russia plans to launch pilot testing of the central bank digital currency (CBDC). [Read more at Coin Telegraph]

Bank of China tests SIM card NFC payments for e-CNY

The Bank of China has partnered with China Telecom and China Unicom to test SIM card near-field communication (NFC) payments for the e-CNY on specific Android smartphones in certain regions. The SIM card hardware wallet shares its balance with the main wallet, eliminating the need for separate top-ups. In order to make payments, users are only required to move their mobile phones close to point of sales terminals, even with a switched-off smartphone.  [Read more at the Bank of China]

HKMA advancing with CBDC experiments but not ready to commit

The Hong Kong Monetary Authority (HKMA) has yet to determine if it should issue CBDC, but it continues to experiment. 16 firms are participating in the pilot programs, working on 14 projects on topics including programmable payments, tokenized deposits, settlement of tokenized assets and offline payments. Cross-border payments applications are especially thorny due to the legal challenges of connecting payments across multiple jurisdictions, which requires a lot of political will across multiple jurisdictions. [Read more at OMFIF]

*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 lecturing at the Digital Euro Association (DEA) Digital Money Academy on July 27, 2023. [Register here]

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 (20230317)

~ kiffmeister

A practical guide to offline payment security

Lipis Advisors in partnership with Crunchfish published a paper that outlines the key security aspects relating to offline digital currency payments. Unlike other offline payment platforms that operate in various devices’ secure elements, Crunchfish advocates a software-based approach that operates in a virtual secure elements on smartphones . The need for hardware-based digital cash (e.g., on cards, wearables and feature phones) is acknowledged, but as peripheral bearers that need to be able to exchange digital cash with the smartphone as the main bearer, even in full offline-mode. [Read more at Crunchfish and watch related videos and webinars here]

Wholesale central bank digital currency – the safe way to debt capital market efficiency

The European Stability Mechanism (ESM) published a paper that analyzes the usefulness of digital currencies for wholesale financial transactions in Europe. It identifies the risks impede broad adoption of distributed ledger technology (DLT), despite potential widespread debt capital market efficiency gains from DLT-based smart contracts. A wholesale central bank digital currency (CBDC) on a private permissioned blockchain could overcome these risks and impediments and lead to significant efficiency gains in the financial system. [Read more at the ESM]

Digital Africa: Technological transformation for jobs

The World Bank published a report that provides evidence that demonstrates that internet availability increases jobs and reduces poverty in African countries. To fully realize their potential, digital technologies need to become more affordable and easier to use. Governments should prioritize policies and investments that increase internet coverage, foster productive internet use, and enhance skills, jobs, and earnings. [Read more at the World Bank]

The world of open banking

Konsentus updated its open banking infographic/map (H/T Lauren Jones). It shows that nearly 40% of the globe has an active open banking program, and there is a key trend towards regulatory driven initiatives, although the depth and breadth of that regulation is market dependent. Also, Latin America and the Middle East are seeing an increased number of legislative frameworks. [Download the map at Konsentus]

Upcoming conferences, webinars and speaking engagements:

  • I’ll be on a “public finance and the digital future” panel at the March 23-25 Willamette College of Law “Our Money, Our Future” (Hybrid) Conference in Salem, Oregon on March 24. [Register here]
  • I’ll be moderating the “CBDCs, Stablecoins, Commercial Bank Money Tokens – What is the Future of Money?” panel discussion at the Digital Euro Association (DEA) Digital Euro Conference on March 31 in Frankfurt. [Register with this link and the DECKIFFMEISTER20 code and get a 20% discount]
  • 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 (20230308)

~ kiffmeister

ANZ to trial offline CBDC payments via smart cards

Australia’s ANZ is partnering with two universities to trial offline central bank digital currency (CBDC) payments via smart cards that can be loaded with funds and used like physical cash. Students will install secure apps on their smartphones to view their CBDC balances and use NFC functionality to load CBDC onto their smart cards. Students will use them to make purchases at on-campus merchants and make instant peer-to-peer payments in offline environments when unconnected to existing banking infrastructures. [Read more at the DFCRC]

The CBN consults Convexity on eNaira adoption

The Central Bank of Nigeria (CBN) has reportedly partnered with Nigerian-based blockchain development firm Convexity to speed up the adoption of eNaira. Barbados-based Bitt is the CBN’s current eNaira platform provider, although rumors were flying in February 2023 that the CBN was looking for a new platform provider. From the headlines, one might suppose that Convexity’s role here is to replace Bitt’s, but a Techpoint article makes it seem like Convexity’s role is focused mainly on building use cases for the eNaira. [Read more at Techpoint]

Privacy enhancing technologies: payments and financial services in a digital society

The Bank of Japan (BoJ) published a paper on privacy-enhancing CBDC technologies, comparing methods for privacy-preservation, such as homomorphic encryption and zero-knowledge proofs (ZKPs), and discusses how important other central banks rank privacy within their CBDC projects. As part of its CBDC research, the BoJ will continue to research and study privacy protection related to digital currencies with a wide range of stakeholders. [Read more at the BoJ]

Upcoming conferences, webinars and speaking engagements:

  • I’ll be on a “public finance and the digital future” panel at the March 23-25 Willamette College of Law “Our Money, Our Future” (Hybrid) Conference in Salem, Oregon on March 24. [Register here]
  • I’ll be moderating the “CBDCs, Stablecoins, Commercial Bank Money Tokens – What is the Future of Money?” panel discussion 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 (20230225)

~ kiffmeister

A central bank digital currency for offline payments

The Bank of Canada (BoC) published an article that considers the pros and cons  of offline central bank digital currency (CBDC). An offline CBDC would allows users to transact while none of them are connected to the internet and could complement bank notes. A balance must be struck between compliance, security requirements and user needs, for example, by limits on holdings, transaction amounts and the duration of offline functionality. The article mentions that, while some central banks have deployed offline devices as part of pilots, no commercial, turn-key solutions are available to implement lengthy and indeterminate (“extended”) offline functionality. I don’t know what is meant by “commercial turnkey solutions” but a number of production-ready solutions offer extended offline functionality, such as those of Crunchfish, G+D, IDEMIA and WhisperCash. Also, those firms would disagree with the article’s assertion that “adopting a security posture in terms of limits, controls and functionality, where risks are sufficiently mitigated, is still a challenge for technology available today”! But otherwise it’s good to see a G20 central bank advocating for offline CBDC functionality, which I view as essential to successful CBDC take-up in many countries. [Read more at the BoC]

FATF agrees on action plan to drive implementation of global crypto norms

The Financial Action Task Force (FATF) has agreed on an action plan to drive the “timely implementation” of its global standards for crypto. The FATF noted that many countries have failed to implement its norms, including the “travel rule,” which requires virtual asset services providers (VASPs) to collect and share information of crypto transactions. FATF published its updated standards for crypto in 2019, but last June, it said only 11 of 98 surveyed jurisdictions were enforcing the travel rule and urged them to act faster. In that regard the FATF’s plenary agreed to a road map to strengthen implementation of FATF standards on virtual assets and VASPs, which will include a stocktaking of global current levels of implementation to e published in the first half of 2024. [Read more at the FATF]

Coinbase launches layer 2 blockchain Base to provide on-ramp for Ethereum, Solana and others

Coinbase launched Base, a layer 2 network built using Optimism’s OP Stack, to attract millions of new crypto users in the coming years. Coinbase is joining Optimism as a core developer on the open-source OP Stack, a developer toolkit for the Optimism network, the firm said. However, Base will not be limited to Ethereum, it will also provide easy and secure access to layer 2 networks such as Optimism, as well as other blockchains ecosystems like Solana. [Read Noel Acheson’s “Crypto is Macro” for why this may be important]

Classifying digital assets with a new framework

Morgan Stanley Capital International (MSCI) collaborated with Coin Metrics and Goldman Sachs to develop the framework, which classifies digital assets according to what they are primarily used for. It is hierarchical with three levels of classifications: classes, sectors, and subsectors. [Read more at the Visual Capitalist]

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 (20230128)

~ kiffmeister

Are there tech solutions to the privacy and compliance trade-offs for CBDCs?

Users will likely demand cash-like privacy protections for central bank digital currency (CBDC), which may be thwarted by regulations. However, in an article for CoinDesk, Jonas Gross and I outline new technology solutions that may enable high degrees of privacy while complying with regulations. [Read more at CoinDesk]

Banks will dominate stablecoins, and two other predictions about the future of money

My SODA colleague Chris Ostrowski and Chris Hayes, in another CoinDesk article, make three predictions on the landscape for CBDCs and stablecoins in Europe and in the U.S. based on the trends they’ve seen through engagement with central bankers and policymakers. [Read more at CoinDesk]

DC³ conference – from cryptocurrencies to CBDCs​​

I moderated a couple of sessions on offline central bank digital currency (CBDC) at the International Telecommunication Union (ITU) DC³ “From Cryptocurrencies to CBDCs”​​ conference on January 27, 2023. The first session was on the importance of offline payments for CBDCs and financial inclusion at which cases were presented by Lars Hupel (G+D), Razvan Dragomirescu (WhisperCash), Joachim Samuelsson (Crunchfish) and Jerome Ajdenbaum (IDEMIA). The second session was a deep dive into offline CBDC implementaion and risk management presented by Lauren Del Giudice (IDEMIA) and Stuart Smith (VISA). [Both sessions were recorded and are available at the ITU]

Kansas City Fed rejects Custodia’s master account application

The Federal Reserve Bank of Kansas City has denied Custodia Bank’s application for a master account, according to a U.S. district court filing. The Kansas City Fed disclosed the rejection in a motion to dismiss filed with the U.S. District Court of Wyoming on Friday afternoon. Custodia is suing both the Kansas City Fed and the Fed Board of Governors over its long-delayed application for a master account, which grants access to the Fed’s various financial services, including its payment system. In its filing, the Kansas City Fed and the Board of Governors argue that the ruling should render Custodia’s lawsuit moot. The bank had sought to pressure the Fed to make a decision about its two-year-old application, arguing that it had been subject to an unreasonable delay. Nathan Miller, a spokesman for Custodia, said the bank plans to continue its litigation against the Fed, noting that the bank intends to challenge whether the bank has congressional authority to pick and choose which institutions can have master accounts. Custodia and others argue that any state chartered depository is entitled to master account access. [Read more at the American Banker] 

Federal Reserve Board issues policy statement to promote a level playing field for all banks with a federal supervisor, regardless of deposit insurance status

The Federal Reserve Board (FRB) issued a policy statement to promote a level playing field for all banks with a federal supervisor, regardless of deposit insurance status. The statement makes clear that uninsured and insured banks supervised by the Board will be subject to the same limitations on activities, including novel banking activities, such as crypto-asset-related activities. The statement also makes clear that uninsured and insured banks supervised by the Board would be subject to the limitations on certain activities imposed on national banks, which are overseen by the Office of the Comptroller of the Currency. The equal treatment will promote a level playing field and limit regulatory arbitrage… The Board generally believes that issuing dollar- denominated tokens (dollar tokens) using distributed ledger technology or similar technologies on open, public, and/or decentralized networks, or similar systems is highly likely to be inconsistent with safe and sound banking practices. The Board believes such tokens raise concerns related to operational, cybersecurity, and run risks, and may also present significant illicit finance risks, because—depending on their design—such tokens could circulate continuously, quickly, pseudonymously, and indefinitely among parties unknown to the issuing bank. Importantly, the Board believes such risks are pronounced where the issuing bank does not have the capability to obtain and verify the identity of all transacting parties, including for those using unhosted wallets. [Read more at the FRB]

White House calls on congress to ‘step up its efforts’ on crypto regulation

The Biden administration published a statement urging Congress to “step up its efforts” with respect to regulating the cryptocurrency market. Other suggestions included strengthening transparency and disclosure requirements for crypto companies, strengthening penalties for violations of illicit-finance rules, and working more closely with international law enforcement partners. The officials also made suggestions about what Congress should not do in terms of crafting new crypto regulation, including “greenlight[ing] mainstream institutions, like pension funds, to dive headlong into cryptocurrency markets.” [Read more at the White House] 

Upcoming conferences, webinars and speaking engagements:

  • I’ll be speaking at SettleMint’s “central banks leading the way in the decentralized world” webinar on February 1 at 17:00 GST. [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 (20230127)

~ kiffmeister

To demand or not to demand: on quantifying the future appetite for CBDC

The IMF published a paper by Marco Gross and Elisa Letizia that proposes a structural, stock-flow consistent model of banks, the central bank, and the private sector economic environment. It can be used to examine the impact of introducing a central bank digital currency (CBDC), to estimate its uptake, alongside its impact on bank balance sheets and profitability, monetary policy effectiveness, central bank seigniorage, and various other metrics. A “deposit-like” CBDC remunerated at the policy rate results in an estimated upper bound of CBDC uptake share of 25% of total “money” (cash, bank deposits and CBDC) in the United States and up to 20% in the Eurozone. However, uptakes of unremunerated “cash-like” CBDCs would be well below 5%. The less deposit-like (and the more cash-like) and the lower the remuneration rate, the smaller the CBDC uptake (see figure below). The model codes have been made publicly available, for transparency and to allow applying the model to other countries. [Read more at the IMF]

The U.S. Federal Reserve Board denies Custodia Bank’s Federal Reserve System application

The Federal Reserve Board has denied Custodia Bank’s application to become a member of the Federal Reserve System, saying that it is inconsistent with the required factors under the law. Custodia is a Wyoming-chartered special purpose depository institution, which does not have federal deposit insurance. According to the denial, Custodia is proposing to engage in “novel and untested crypto activities that include issuing a crypto asset on open, public and/or decentralized networks that… present significant safety and soundness risks… The Board has previously made clear that such crypto activities are highly likely to be inconsistent with safe and sound banking practices, and it found that Custodia’s risk management framework was insufficient to address [these] concerns [and] its ability to mitigate money laundering and terrorism financing risks. [Read more at the Federal Reserve Board]

Enabling offline payments in an online world

Crunchfish and Lipis Advisors published a guide to offline payments design, providing insights to how offline payments relate and can interoperate with online payment system. It provides a way of categorizing offline payment solutions by three design choices which provides the payment ecosystem with a better understanding of the nuances of offline payments:

  • Online Payment Rail: (i) distributed ledger technology (DLT) based or (ii) centralized account-based. (The paper incorrectly labels DLT-based as token-based (see the 2020 New York Fed article on this misnomer)).
  • Offline Security Protocol: (i) native (layer-1) or (ii) non-native (layer-2) digital currency security protocol, described in relation to the underlying online payment rail.
  • Offline Trusted Environment: (i) hardware-based or (ii) software-based.

On a layer-1 solution the offline payment solution uses the same native security protocols as the underlying payment service. On a non-native layer-2 security protocol, digital currency is signed out by debiting a locally held offline balance. A non-native layer-2 solution can be integrated with any type of payment rail and general ledger as the offline security protocol can be interoperable with any underlying payment system. [Read more at Crunchfish]

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 (20230113)

~ kiffmeister

E-CNY app adds payment function for when mobiles are offline, out of power

The People’s Bank of China (PBOC) has added a new function to its e-CNY payment app so that select Android-based mobile phones can be still be used to make tap-to-pay payments without internet connection or power. Users need to activate the function in the e-yuan app, and can choose how many times it can be used and how much can be paid after their phone shuts down. To allay security concerns, A verification code must be entered into the device if set payment and transaction limits are exceeded. Additionally, users can suspend the function by logging into the e-yuan app from another device. It apparently uses near-field Communications (NFC) technology, and payment amounts are limited to ten transactions of up to RMB 500 ($75). [Read more at Yicai Global].

Market research on possible technical solutions for a digital euro

As announced in December 2022, the European Central Bank (ECB) is inviting market participants to take part in market research to get an overview of options for the technical design of possible digital euro components and services. Participation is voluntary and will not have any impact on eligibility for future procurement procedures related to a digital euro or any other topic. Nor will it imply any pre-selection for a potential subsequent tender. Submissions are due by February 17, 2023 in a fully anonymous manner, avoiding trade names. [Read more at the ECB]

Addressing the risks in crypto: laying out the options

A Bank of International Settlements (BIS) paper suggests that authorities can take three different approaches when it comes to crypto-assets; targeted regulation, containment (“let crypto burn”), or  a complete ban. Central banks and public authorities could also work to make traditional finance (TradFi) more attractive. A key option is to encourage sound innovation with central bank digital currency (CBDC). [Read more at the BIS]

Mobile money activity rates: Exploring barriers to regular use

The Global System for Mobile Communications (GSMA) is exploring of low mobile money activity rates. Despite high sign-up rates, only 26% of accounts are active on a monthly basis, while 38% are active on a 90-day basis. Findings from the annual GSMA Consumer Survey run in ten countries in 2021 shed light on perceived reasons for low activity. The main barriers were found to be a preference for cash, lacking sufficient funds for mobile money to be useful and not needing mobile money due to alternative electronic financial services. Other important barriers include users having a limited ability in using a phone, and mobile money transaction costs being too high. [Read more at the GSMA]

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]