Kiffmeister’s #Fintech Daily Digest (20230524)*

May 24, 2023May 24, 2023 ~ kiffmeister ~ Leave a comment

Australian stock exchange says software overhaul won’t involve blockchain

Australia’s stock market operator ASX reportedly said it will no longer attempt to rebuild its software platform with blockchain-based technology. In November 2022 it paused its distributed ledger technology (DLT) based rebuild of its all-in-one trading, settlement and clearing software based, after an external review found it had to be largely reworked after seven years of development. Exchange project director Tim Whiteley said ASX was on track to decide a new strategy by year-end. [Read more at Reuters]

Binance commingled customer cash, corporate revenue

Binance routinely commingled customer funds with operating capital, according to the latest Reuters report on alleged malfeasance at the world’s largest digital asset exchange. The report claims that Binance violated U.S. financial rules regarding the strict separation of customer funds from company revenue in 2020 and 2021. This commingling reportedly occurred “almost daily” at accounts Binance held at the since-collapsed crypto-friendly Silvergate Bank in California. The extent of the commingling allegedly “ran into billions of dollars.” [Read more at Reuters]

US : Consumer payment behavior consistent with early pandemic

The U.S. Federal Reserve’s 2023 Findings from the Diary of Consumer Payment Choice show that cash payments declined to 18% of all payments in 2022 from 20% in 2021 (and 30% in 2016). During the same time frame, the credit cards share increased to 31% from 28% (31%). Debit cards have remained roughly stable (29% in 2022). The mobile payments share was less than 1%. Average store-of-value cash holdings of $418 in 2022 were little changed from 2021, but up significantly from the 2016 average of $173. [Read more at the Federal Reserve]National Bank of Georgia approves open banking rules

The National Bank of Georgia has approved the Regulation on Inclusion in Open Banking. The regulation describes the enrollment procedure and ensures the correctness, reliability and security of the services of the entities enrolled. Non-bank institutions, provided that they meet the requirements stipulated by the regulation, are given the opportunity to engage in open banking as providers of both access to account information and payment initiation services. Any entity regulated by the National Bank of Georgia may be included in open banking. [Read more at Finextra]

*For those interested in intra-day updates, check out my searchable Diigo Fintech developments database, which is also a good place to go to query for past developments: https://www.diigo.com/user/kiffmeister/ART.

Upcoming conferences, webinars and speaking engagements:

I’ll be participating in Currency Research’s in-person Central Bank Payments Conference and Global Payments Summit in Cape Town from June 26 to 30. [Register here and here respectively]
I’ll be lecturing at the Digital Euro Association (DEA) Digital Money Academy on July 27, 2023. [Register here]

Kiffmeister’s global central bank digital currency monthly monitor

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

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

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

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

Kiffmeister’s #Fintech Daily Digest (20230521)*

May 21, 2023May 21, 2023 ~ kiffmeister ~ Leave a comment

2nd Bank of Canada and Sveriges Riksbank conference on CBDC economics

The Riksbank will host a joint conference with the Bank of Canada on the “Economics of Central Bank Digital Currency (CBDC)” November 16-17, 2023 in Stockholm. In addition to presentation of academic papers on CBDC and payment innovations, the conference will feature a keynote address by Franklin Allen (Imperial College London), a distinguished policy panel, and a poster session. Participation in the conference is by invitation only. [Download the call for papers at the Riksbank]

Demand for tokenized US Treasury securities soars

Demand for tokenized versions of U.S. Treasury bonds is soaring as rising yields in traditional financial markets attract fresh capital from crypto investors. The combined market capitalization of tokenized money market funds nears $500 million, and has quadrupled in size this year. Franklin Templeton’s Franklin OnChain U.S. Government Money Fund (FOBXX) – which gives a BENJI token on the Stellar blockchain representing one share – grew to $276 million in assets at end-April. Ondo Finance’s OUSG and Matrixdock’s SBTB tokenized short-term Treasury security products , have grown to $132 million and $72 million of funds so far, respectively. [Read more at CoinDesk]

The digital euro: a precautionary device, not a deus-ex-machina

The Leibniz Institute for Financial Research Sustainable Architecture for Finance in Europe (SAFE) published a paper that concludes that the risks and imponderables do not favor the launch of a digital euro if that decision had to be made now. However, there may be future circumstances in which having a CBDC ready for use may be useful. For example, there could be an unexpected collapse in the availability of banknotes or sudden switches in consumer preferences towards payment instruments which current infrastructures cannot easily handle with the available technologies. Or we could experience phases of financial instability requiring the central bank to back up the private sector in order to preserve the functionality of the payment system. Or, there could be strategic security conditions necessitating more state-driven payment infrastructures. All these are unlikely scenarios, but not impossible ones, which would lead to the need for central banks to step in, perhaps in a short time. Therefore, preparing is a good thing, even if the odds of its usefulness in normal conditions are slim. [Read more at SAFE]

Payments are a utility and critical infrastructure

David Birch calls radical rethinking about payment infrastructure , like allowing more direct access to the pipes, provide digital fiat (dollars with an API) as a public good and allow non-credit creating payment banks/ institutions/ utilities to implement the transfers in space as a utility bringing value together (electronic money and digital cash) to put in place robust, inclusive and sustainable pipes for the rest of the economy to use. Let banks focus on creating credit and let them find other ways to stay in the transaction loop. [Read more on David Birch’s blog]

Project Leap: Quantum-proofing the financial system

Earlier this month (May 2023) the Bank for International Settlements (BIS) together with the Banque de France and Deutsche Bundesbank, launched Project Leap to build quantum-resistant IT environments for the financial system. It will test the implementation of post-quantum cryptographic protocols in central bank processes, and help to advance the central banking community’s knowledge of post-quantum cryptography. A concluding report and the accompanying technical architecture will be published. [Read more at the BIS]

Upcoming conferences, webinars and speaking engagements:

I’ll be participating in Currency Research’s in-person Central Bank Payments Conference and Global Payments Summit in Cape Town from June 26 to 30. [Register here and here respectively]
I’ll be lecturing at the Digital Euro Association (DEA) Digital Money Academy on July 27, 2023. [Register here]

Kiffmeister’s global central bank digital currency monthly monitor

Kiffmeister’s #Fintech Daily Digest (20230519)*

May 19, 2023May 19, 2023 ~ kiffmeister ~ Leave a comment

NY Fed, MAS verify CBDC interoperability, payment speeds in latest test

According to a report published by New York Federal Reserve (NY Fed) and Monetary Authority of Singapore (MAS), wholesale central bank digital currency (CBDC) systems operating on different types of networks can be used for cross-border and cross-currency payments. The study, which used simulated CBDCs and hypothetical payments, found that cross-border transactions could be conducted across different distributed ledger (DLT) and hashed timelock contract (HTLC) technology stacks, with near real-time settlement finality. [Read more at the NY Fed]

Ripple improves the capabilities of its CBDC platform

Ripple has enhanced its CBDC Platform launched in March 2022, that is based on the private ledger private version of the public, open-source XRP Ledger. The enhancements enable issuers to manage the full life cycle of their fiat based digital currency, from minting and distribution to redemption and destruction, taking advantage of the XRP Ledger’s built-in multi-signing capabilities. It’s billed as a “full stack” platform in that it manages the full CBDC lifecycle, including the provision of end-user wallets. [Read more at Business Wire]

Upcoming conferences, webinars and speaking engagements:

I’ll be participating in Currency Research’s in-person Central Bank Payments Conference and Global Payments Summit in Cape Town from June 26 to 30. [Register here and here respectively]
I’ll be lecturing at the Digital Euro Association (DEA) Digital Money Academy on July 27, 2023. [Register here]

Kiffmeister’s global central bank digital currency monthly monitor

Kiffmeister’s #Fintech Daily Digest (20230511)

May 11, 2023May 11, 2023 ~ kiffmeister ~ Leave a comment

BIS publishes handbook for offline payments with CBDC

The BIS Innovation Hub published a handbook on offline central bank digital currency (CBDC). It covers the complex matrix of issues including security, privacy, likely risks, the types of solution, their maturity and applicability, and operational factors, as well as objectives for resilience, inclusion, cash resemblance, accessibility and other desired attributes. The degree to which CBDCs will be provided or used offline will vary significantly by country, region, demographics and specific contexts, which will also influence the solutions chosen. [Read more at the BIS]

Enabling offline payments in an online world: privacy considerations

Lipis Advisors published a paper that explores potential enhanced privacy benefits of offline payment functionality. One key takeaway is that it is important that payment system operators consider how other facets of the system design (e.g., security, interoperability) interact with privacy and how these different aspects should be prioritized. [Download the paper at Lipis Advisors]

IMF cautions Zimbabwe against plan for gold-backed digital currency

The IMF has reportedly called on the Reserve Bank of Zimbabwe to carefully consider the benefits of issuing a gold-backed digital currency versus the potential macroeconomic, financial stability, governance, legal and operational risks, plus the cost of forgone FX reserves. The IMF urged country authorities to rather use conventional measures to address economic challenges, such as maintaining a tight monetary-policy stance and accelerating the liberalization of the foreign-currency market. [Read more at Bloomberg]

Hungarian central bank sees no imminent need for e-forint

Hungary reportedly sees no urgent need for a widely available retail CBDC but it is exploring possibilities via a series of pilots, and would like to remain in the forefront of CBDC research. [CoinDesk] For example, Magyar Nemzeti Bank has collaborated with the Sovereign Official Digital Association (SODA) to issue non-fungible tokens (NFTs) on a private blockchain. [Read more at OMFIF]

China launches national blockchain center to train half a million specialists

China’s National Blockchain Technology Innovation Center officially started its work, collaborating with local universities, think tanks and blockchain businesses to develop blockchain technology in China. It will reportedly train more than 500,000 specialists in distributed ledger technology (DLT). The center’s mission is to connect various blockchain use cases in the country into a single cohesive network. [Read more at Coin Telegraph]

Tether Boosts T-Bill Holdings, Cuts Banks Exposure

Tether, the issuer of the USDT stablecoin, cut its exposure to cash and bank deposits in Q1 2023, shifting into US Treasury Bills and leveraging the reverse repo market. As of March 31, 2023, Tether held $81.8 billion assets (versus $79.4 billion USDT issued) of which $68.8 billion (84% of assets) was held in the form of US Treasury Bills, reverse repo agreements, and money market funds. The remaining $13.0 billion was held in the form of secured loans to unaffiliated entities ($5.4 billion), gold ($3.4 billion), Bitcoin ($1.5 billion) and commercial bank deposits ($0.5 billion), and “other” investments ($2.2 billion). [Read more at Tether]

Upcoming conferences, webinars and speaking engagements:

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]
I’ll be participating in Currency Research’s in-person Central Bank Payments Conference and Global Payments Summit in Cape Town from June 26 to 30. [Register here and here respectively]

Kiffmeister’s global central bank digital currency monthly monitor

Kiffmeister’s #Fintech Daily Digest (20230505)

May 5, 2023May 5, 2023 ~ kiffmeister ~ Leave a comment

Hungary takes a novel approach to blockchain testing

Magyar Nemzeti Bank has collaborated with the Sovereign Official Digital Association (SODA) to issue non-fungible tokens (NFTs) on a private blockchain. By successfully participating in financial literacy quizzes, Hungarian coin collectors and NFT enthusiasts are being awarded central bank-issued tokens and then swapping and trading them on the Money Museum mobile application. This is part of a contest to win a set of limited edition commemorative coins. As any member of the public can use the blockchain to collect, swap and register their ownership of the coins, this type of activity – though gamified – this is arguably a central bank digital currency (CBDC) pilot. [Read more at OMFIF]

Zimbabwe central bank sets price to sell gold-backed digital tokens

The Reserve Bank of Zimbabwe (RBZ) will start selling its gold-backed digital currency on May 8, 2023. Applications must be for a minimum of US$10 and US$5,000 for individuals and corporates and other entities, respectively, in U.S. dollars and local currency. The US dollar price will be “informed or guided” by the international gold price as determined by the London Bullion Market Association PM fix. Payment in local currency will be at a 20% margin above the willing-buyer willing-seller interbank mid-rate. Applications will close on May 10, 2023. [Read more at the RBZ]

Brazil’s central bank releases the directives of the digital real technical testing

The Banco Central do Brasil (BCB) published the details of its digital real central bank digital currency (CBDC) technical testing. It will involve no real transactions (so it isn’t a pilot). Its aim is to validate the use of a DLT solution on the Hyperledger Besu platform, evaluating programmability and the ability to comply with legal and regulatory requirements, mainly related to privacy, as well as its technological viability. The details include the criteria for selecting the ten participating institutions. [Read more at the BCB]

Reserve Bank of India and Bank for International Settlements launch G20 TechSprint 2023

The Reserve Bank of India (RBI) and the Bank for International Settlements Innovation Hub (BISIH) have launched the fourth edition of the G20 TechSprint, a global technology competition to promote innovative solutions aimed at improving cross-border payments. Developers from around the world should submit application from May 04, 2023 to June 04, 2023 and the TechSprint will conclude around August/ September 2023. The 2023 TechSprint will focus on AML/CFT/Sanctions technology solutions to reduce illicit finance risk, FX and liquidity technology solutions to enable settlement in emerging market and developing economy (EMDE) currencies, and technology solutions for multilateral cross-border CBDC platforms. [Read more and apply at the RBI]

Navigating Bankruptcy in Digital Asset Markets

The International Swaps and Derivatives Association (ISDA) published the second of two papers that examines how digital assets may be held by customers through intermediaries and considers how those assets can be protected following an insolvency of the intermediary, with a specific focus on English and US law.

The first paper focused on the enforceability of netting arrangements, finding that it depends on the counterparty’s local insolvency law, which may exclude or omit digital assets from its scope of application. On collateral posting, it is likely that most (if not all) developed jurisdictions will recognize digital assets as property that is protected under local law. However, the precise nature and extent of any rights associated with that property interest, the strength of legal certainty and certain technical issues, will vary based on the applicable jurisdiction(s). [Read more at ISDA]

The second paper, concluded that traditional and fundamental protections of clear legal terms and segregation of assets can be adapted to the world of digital assets. It recommended that rules governing the ownership of customer digital assets following insolvency of an intermediary should be made as clear as possible. Achieving greater clarity in the application of these rules will ensure that customers are given equivalent rights and protections to what they would expect for traditional assets or financial products. [Read more at ISDA]

Nearly half of Americans think their money isn’t safe in a bank

According to a poll released on May 4, 2023 by Gallup, 48% of U.S. adults are concerned with their money, broken down into 19% who are “very” worried and 29% who are “moderately” worried, despite the fact that the Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 per borrower, per bank. On the other hand, 30% selected “not too worried” and 20% are “not worried at all.” The poll was conducted between April 3 and April 25 following the collapse of Silicon Valley Bank in March. [Read more at Fast Company]

Upcoming conferences, webinars and speaking engagements:

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]
I’ll be participating in Currency Research’s in-person Central Bank Payments Conference and Global Payments Summit in Cape Town from June 26 to 30. [Register here and here respectively]

Kiffmeister’s global central bank digital currency monthly monitor

Kiffmeister’s #Fintech Daily Digest (20230424)

April 24, 2023April 24, 2023 ~ kiffmeister

ECB report on the digital euro and possible features of a digital wallet

The European Central Bank (ECB) published the 3rd progress report on the digital euro, as well as the findings of focus groups on people’s views on the features of a potential digital wallet. The digital euro will be potentially available initially to euro area residents, merchants and governments, it could be made available via existing banking apps and a Eurosystem app, and offline and person-to-person payments were seen as highly valued. [Read more at the ECB]

Chinese city of Changshu plans to pay employees using digital yuan

Changshu city will reportedly start paying civil servants and people who work for public institutions with e-CNY central bank digital currency (CBDC) starting in May 2023. The move marks a major step to promote the use of the digital currency, in the face of many hurdles, including its limited use cases, and the public’s preference for popular digital payment platforms such as WeChat Pay and Alipay. [Read more at the South China Morning Post]

Russia drafts law to use digital assets for cross border payments

Russia’s parliament reportedly published a draft law as part of an experimental regime to support the use of digital assets for cross border payments to help evade sanctions, and reduce the FX risk associated with settling dollar and euro transactions in other currencies. Russia already has a legal framework for tokenized assets for domestic usage, but additional legislation is needed to allow their use for cross border settlements. [Read more at Ledger Insights]

Zimbabwe’s central bank to issue gold-backed digital currency: Report

The Reserve Bank of Zimbabwe (RBZ) is reportedly set to introduce a gold-backed digital currency to serve as legal tender in the country. The move will allow small amounts of Zimbabwean dollars to be exchanged for the digital gold token. RBZ Governor John Mangudya said that this will represent the first steps by the central bank towards using the country’s gold reserves to tame Zimbabwe dollar depreciation. [Read more at the Sunday Mail]

Gemini to open a crypto derivatives platform outside the U.S.

U.S.-based Gemini crypto exchange is planning to open an offshore derivatives platform, joining other U.S. trading platforms like Coinbase in looking abroad, as the U.S. regulatory environment gets tougher. The first product at the new Gemini Foundation division will be a perpetual bitcoin (BTC) contract denominated in Gemini dollars (GUSD), followed by a perpetual ether (ETH) contract also linked to GUSD. [Read more at Gemini]

I tried to pay my US taxes in cash – here’s what happened

As further evidence of how flakey the “legal tender” concept is, this article documents the great difficulties the author had in paying his income tax in cash to the U.S. Internal revenue Service (IRS). It highlights some of the challenges faced by Americans without bank accounts, likely among the poorest taxpayers, who would either have to follow the arduous process followed by the article’s author, or pay fees for various end-arounds. [Read more at Cash Essentials]

Upcoming conferences, webinars and speaking engagements:

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]
I’ll be participating in Currency Research’s in-person Central Bank Payments Conference and Global Payments Summit in Cape Town from June 26 to 30. [Register here and here respectively]

Kiffmeister’s global central bank digital currency monthly monitor

Kiffmeister’s #Fintech Daily Digest (20230421)

April 21, 2023April 21, 2023 ~ kiffmeister

Belarus central bank considers launching CBDC

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

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

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

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

P27 Nordic Payments withdraws second clearing application

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

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

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

The EU’s new MiCA framework for crypto-assets

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

Upcoming conferences, webinars and speaking engagements:

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]
I’ll be participating in Currency Research’s in-person Central Bank Payments Conference and Global Payments Summit in Cape Town from June 26 to 30. [Register here and here respectively]

Kiffmeister’s global central bank digital currency monthly monitor

Kiffmeister’s #Fintech Daily Digest (20230419)

April 19, 2023 ~ kiffmeister

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

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

Global mobile money transactions hit a record high in 2022

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

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

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

Considerations for a US central bank digital currency

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

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

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

Upcoming conferences, webinars and speaking engagements:

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]
I’ll be participating in Currency Research’s in-person Central Bank Payments Conference and Global Payments Summit in Cape Town from June 26 to 30. [Register here and here respectively]

Kiffmeister’s global central bank digital currency monthly monitor

Kiffmeister’s #Fintech Daily Digest (20230418)

April 18, 2023April 18, 2023 ~ kiffmeister

The CBDCTracker.org central bank digital currency (CBDC) database has been updated. Highlights include the the Banco Central do Brasil focusing on privacy and security in its first experiments, WeChat adding the digital yuan to some of its payment services with peer-to-peer CBDC transactions expected to follow, and the National Bank of Denmark (DNB) confirming that they see no need for a retail CBDC in Denmark currently. [See the database at CBDCTracker.org]

SEC charges Bittrex with unregistered operations, calls 6 tokens securities

The U.S Securities and Exchange Commission (SEC) has charged crypto-asset trading platform Bittrex with operating an unregistered national securities exchange, broker, and clearing agency. The SEC argued in its complaint that the OMG, Dash (DASH), Algorand (ALGO), Monolith (TKN), Naga (NGC) and IHT Real Estate Protocol (IHT) tokens traded on Bittrex are securities. Bittrex was expecting the SEC action and reportedly received a Wells notice warning it of the impending action in March 2023, and had already intended to close down U.S. operations on April 30 due to the regulatory environment. Interestingly, as pointed out by Bloomberg’s Matt Levine, ALGO and DASH are also listed on Coinbase, which was issued a Wells notice in March and may be next in the SEC’s crosshairs. Coinbase CEO Brian Armstrong has said that the firm is now considering relocating from the U.S. [Read more at the SEC]

Buna launches its Instant Payment Service (IPS)

Buna, the cross-border payment system operated by Arab Regional Payments Clearing and Settlement Organization (ARPCSO) owned by The Arab Monetary Fund (AMF), announced the launch of its Instant Payment Service (IPS). This service is now live and ready to onboard participants seeking payments that are instant and available 24/7/365, in a cost-effective way. It accommodates business to business, business to person, or person to person contexts, and is particularly tailored for low-mid value payments that are urgent or time-sensitive. Buna includes the Emirati dirham, Egyptian pound, Saudi riyal, and Jordanian dinar, plus the US dollar and the euro. [Read more at Buna]

Upcoming conferences, webinars and speaking engagements:

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]
I’ll be participating in Currency Research’s in-person Central Bank Payments Conference and Global Payments Summit in Cape Town from June 26 to 30. [Register here and here respectively]

Kiffmeister’s global central bank digital currency monthly monitor

Kiffmeister’s #Fintech Daily Digest (20230414)

April 14, 2023April 14, 2023 ~ kiffmeister

Account-to-account payments set to revolutionize shopping

FIS published its 2023 Global Payments Report that examines how consumers pay today both in-store and online across 40 global markets. In 2022, there were almost 70 real-time payment (RTP) schemes providing high-speed payment rails that helped drive account-to-account (A2A) payments to account for $525 billion in global e-commerce transaction value, versus $463 billion in 2021. A2A payments flow directly – and often instantly – from a consumer’s bank account to a merchant’s account, helping to drive down the cost of acceptance for merchants. The growth of A2A in the U.S. mirrors the global trend, with A2A accounting for 9% of e-commerce transaction value in 2022. This is projected to keep growing, fueled in part by consumer use cases arising from the 2023 launch of the Federal Reserve’s FedNow payments network, and the existing RTP from The Clearing House and Zelle real-time payment networks. [Read more at FIS]

Share of e-payments in Saudi Arabia exceed SAMA’s 2022 target

The Saudi Central Bank (SAMA) announced that the share of retail sector electronic payments reached 62% of total payments, including cash, in 2022, surpassing the 60% target set out by the Financial Sector Development Program (FSDP) launched in 2017. The number of point-of-sale (PoS) transactions executed via the Saudi Payment Network (MADA) reached 7.2 billion transactions during 2022, an increase of 40% compared to 2021. MADA card online transactions grew by 76% in 2022, recording 610 million transactions. There were 1.4 million number of PoS terminals as at the end of 2022, an increase of 42% compared to 2021. [Read more at SAMA]

Upcoming conferences, webinars and speaking engagements:

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]
I’ll be participating in Currency Research’s in-person Central Bank Payments Conference and Global Payments Summit in Cape Town from June 26 to 30. [Register here and here respectively]

Kiffmeister’s global central bank digital currency monthly monitor