Tag: Regulation

Kiffmeister’s #Fintech Daily Digest (20230531)*

~ kiffmeister ~ Leave a comment

RBI CBDC pilot to be expanded to include more locations and banks

The Reserve Bank of India (RBI) is gradually expanding the scope of its retail central bank digital currency (CBDC) pilot to include more locations and banks. The pilot launched on December 1, 2022 in four cities with four banks. Four more banks were subsequently added, and now four more will be added, along with ten more cities. [Read more at the RBI]

Mooney unveils bill to block US CBDC pilot program

Alex Mooney of West Virginia introduced in the US House of Representatives the Digital Dollar Pilot Prevention Act, to prevent the Federal Reserve from launching a pilot program that would test the operability of a CBDC in the U.S. financial system. According too Mooney, “CBDCs would threaten the liberties of law-abiding Americans and are being used by authoritarian countries right now to crack down on dissent.” [Read more from Alex Mooney]

UAE central bank issues AML/CFT guidance for crypto

The Central Bank of the United Arab Emirates (CBUAE) issued new guidance concerning anti-money laundering (AML) and countering financing of terrorism (CFT) measures for crypto businesses on May 31, 2023. It outlines the risks arising from dealing with virtual asset and virtual asset service providers (VASPs), taking into account the recommendations of the Financial Action Task Force (FATF). The new rules will come into effect in one month. [Read more at the CBUAE]

CFTC warns on expansion of clearing digital assets

The Commodity Futures Trading Commission (CFTC) issued a staff advisory on the risks associated with the expansion of Derivatives Clearing Organization (DCO) clearing of digital assets. Noting the increased cyber and other risks that may be associated with digital assets, the CFTC expects DCOs and applicants to actively identify new, evolving, or unique risks and implement risk mitigation measures tailored to the risks that these products or clearing-structure changes may present. [Read more at the CFTC]

Prudential treatment of crypto-asset exposures

The Bank for International Settlements (BIS) published an executive summary of the Basel Committee on Banking Supervision (BCBS) standard on the prudential treatment of crypto-asset exposures published in December 2022. The standard outlines minimum regulatory, supervisory review and disclosure requirements of banks’ crypto-asset exposures under Pillars 1, 2 and 3 of the Basel Framework. Internationally active banks in BCBS member jurisdictions are expected to adopt the standard by 1 January 2025. [Read more at the BIS]

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

Upcoming conferences, webinars and speaking engagements:

Kiffmeister’s global central bank digital currency monthly monitor

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

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

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

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

Kiffmeister’s #Fintech Daily Digest (20230528)*

~ kiffmeister ~ Leave a comment

Digital euro – Prototype summary and lessons learned

The European Central Bank (ECB) published a summary of the results of its July 2022 to February 2023 prototyping exercise to test how design choices for the digital euro could be technically implemented and integrated into the existing European payments landscape. The tests showed that it is possible to smoothly integrate them, while leaving ample scope for innovative features and technologies. The findings also confirmed that a digital euro could in principle work both offline. [Read more at the ECB]

Digital euro technology market research outcome report

The ECB also reported on its market research on potential technical solution providers for a digital euro. It was aimed at better understanding the level of knowledge in the market and the existing experience in building solutions and identifying suitable technologies to potentially implement a digital euro. [Read more at the ECB]

ESRB publishes report on cryptos and decentralized finance

The European Systemic Risk Board (ESRB) published a report outlining the systemic implications of crypto markets and proposing policy options to address the risks stemming from crypto-assets and decentralized finance (DeFi). It finds that crypto markets have few interlinkages with the traditional financial sector and the real economy, and none of those links are currently significant. However, given the exponential growth and high volatility of cryptos, they need to be closely monitored as they may come to pose systemic risks. [Read more at the ESRB]

An introduction to Web3 with implications for financial services

The Federal Reserve Bank of Atlanta published a paper by the University of California, Berkeley’s Christine Parlour that describes the elements of Web3 including blockchains and tokens. (“Web3” is used to describe the next iteration of the internet in which decentralized services are automated on blockchains.) It describes the largest DeFi protocols and some specific services where blockchain and tokens can be used. The paper concludes with a brief discussion of some regulatory challenges. [Read more at the Atlanta Fed]

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

Upcoming conferences, webinars and speaking engagements:

Kiffmeister’s global central bank digital currency monthly monitor

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

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

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

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

Kiffmeister’s #Fintech Daily Digest (20230523)*

~ kiffmeister ~ Leave a comment

Digital marketplace for Jam-Dex

Jamaica’s Ministry of Industry, Investment, and Commerce has launched a digital marketplace for merchants and residents to interact using the country’s central bank digital currency (CBDC). Its aim is to provide a platform for merchants, who do not have access to debit and credit transaction processing, to use Jam-Dex for payments. The digital marketplace will also facilitate merchants advertising their products. Merchant onboarding has already started and the platform should be operational by the beginning of summer (2023). [Read more at the Jamaican Observer] 

IOSCO sets standard for global crypto regulation

The International Organization of Securities Commissions ( IOSCO) issued for consultation detailed principles-based and outcomes-focused recommendations as to how to regulate crypto-assets, aimed at the activities performed by crypto-asset service providers (CASPs). It proposes 18 policy recommendations that IOSCO plans to finalize in Q4 2023 to support greater consistency with respect to regulatory frameworks and oversight in its member jurisdictions. The proposed recommendations do not cover decentralized finance (DeFi). [Read more at IOSCO]

From 1% to 30%: the journey of the Philippines towards responsible digital payments

Digital payments volumes in the Philippines have grown from 1% of total payments in 2013 to 30% in 2021. A Better Than Cash Alliance (BTCA) case study  examines this success story by diving into the key decisions made by the government and private sector in accelerating the adoption of responsible digital payments. These included continuous evaluation of progress against transparent targets, proactive policymaking to satisfy evolving needs, and institutionalizing data systems and building internal capacity to collect and analyze data. [Read more at the BTCA]

Indonesia and Malaysia Announce the Commercial Launch of the Cross-Border QR Payment Linkage

Bank Indonesia (BI) and Bank Negara Malaysia (BNM) launched the Indonesia-Malaysia cross-border QR payment linkage on May 8, 2023. This follows from the successful completion of the pilot phase announced on January 27, 2022. The full launch sees the number of participating financial institutions, including non-banks, increase. This will enable more Indonesians and Malaysians to make instant retail payments in either country by scanning Quick Response Code Indonesian Standard or Malaysian DuitNow QR codes at physical stores or online merchants.​ [Read more at the BI]

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

Upcoming conferences, webinars and speaking engagements:

Kiffmeister’s global central bank digital currency monthly monitor

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

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

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

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

Kiffmeister’s #Fintech Daily Digest (20230518)*

~ kiffmeister ~ Leave a comment

A legal framework for the digital euro

The European Parliament published a study that assesses the European Central Bank’s (ECB’s) first three progress reports on the digital euro from a legal perspective. It looks into what key design choices proposed by the ECB reveal in terms of the legal qualification of the digital euro and discusses legal aspects of the infrastructure supporting it. It distinguishes between the object of the digital euro and the infrastructure or “scheme” needed for its distribution and settlement. Overall, the objective of ensuring a strong monetary anchor in the financial system should take centre stage. A simple and cash-like design of the digital euro would not only aid that objective, but also reduce legal risk. [Read more at the European Parliament]

Commencement of new phase of the e-HKD’s research programme

The Hong Kong Monetary Authority (HKMA) today announced the commencement of a new phase of its e-HKD central bank digital currency (CBDC) research program. A total of 16 firms from the financial, payment and technology sectors have been selected to participate. There will be deep dives into potential use cases in six categories, including full-fledged payments, programmable payments, offline payments, tokenised deposits, settlement of Web3 transactions and settlement of tokenised assets. [Read more at the HKMA and the list of projects here]

Note: The HKMA called this new phase a “pilot” but it’s not clear whether it will engage with actual users. If yes, it is a pilot, but if not, it would likely be a proof-of-concept phase.

Ripple to demonstrate tokenization in HKMA e-HKD  program

Ripple is one of the firms participating in this new phase of the HKMA’s e-HKD digital Hong Kong dollar (e-HKD) research program by showcasing a real estate asset tokenization solution. Ripple will partner with Taiwan’s Fubon Bank and others to demonstrate equity release with tokenized assets using a retail version of the e-HKD CBDC. The project will run on the new Ripple CBDC Platform, that uses a new private ledger with XRP Ledger technology and enhanced functionality, including offline transactions and non-smartphone use. It’s the same platform that may be piloted in Bhutan, Montenegro and Palau. [Read more at Coin Telegraph]

Crypto, tokens and DeFi: navigating the regulatory landscape

The Bank for International Settlements (BIS) published a paper that provides an overview of policy measures taken in 19 jurisdictions to address the risks associated with activities that incorporate crypto-assets and distributed ledger technology (DLT) programmability capabilities in financial services. The paper classifies policy measures into three categories and identifies different types of initiatives across jurisdictions, including bans, restrictions, clarifications, bespoke requirements, and initiatives to facilitate innovation. It finds that, for centrally managed issuance activities, current regulatory initiatives focus mainly on issuers of security tokens and stablecoins. Initiatives related to centrally managed infrastructure activities mainly explore the benefits and risks from traditional financial intermediaries’ use of DLTs and their programmability capabilities. Initiatives related to centrally managed service provision activities often extend the regulatory perimeter to new non-bank centralized intermediaries. [Read more at the BIS]

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

Kiffmeister’s global central bank digital currency monthly monitor

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

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

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

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

Kiffmeister’s #Fintech Daily Digest (20230516)*

~ kiffmeister ~ Leave a comment

The digital euro: a solution seeking a problem?

A Financial Times (FT) article documented rising public opposition to a digital euro, as the European Central Bank (ECB) struggles to communicate convincing arguments for the central bank digital currency (CBDC) project. The ECB says a digital euro would modernize European payments by giving people an electronic alternative to cash that is riskless and universally accepted. However, detractors don’t see any big market failures that require the public sector to step in, and given that the eurozone’s payment options are already reliable and innovative. There has also been CBDC pushback in other jurisdictions, most notably in the United States, where it has become a political issue on account of potential threats to privacy and self control. [Read more at the FT]

EU’s MiCA gets unanimous nod from European Council

The European Union’s Markets in Crypto Assets (MiCA) legal framework received unanimous approval from the European Council (comprised of the finance ministers from all 27 EU member states) on May 16, 2023. It will require crypto-asset firms to seek a license to operate across the bloc, and for stablecoin issuers to hold suitable reserves. Although it does not encompass every aspect of digital assets, leaving out areas like non-fungible tokens (NFTs) and decentralized finance (DeFi), they are expected to be included in subsequent versions of the law. [Read more at the European Council]

Coinbase hasn’t proven SEC needs to create crypto-specific rules, regulator says

The U.S. Securities and Exchange Commission (SEC) told an appeals court that crypto exchange Coinbase hadn’t proven the regulator needs to create a new regulatory framework for the digital asset industry. The federal regulator asked the court to reject a Coinbase petition asking for additional regulatory guidance specifically tailored to the digital asset industry. SEC Chair Gary Gensler has argued (got to about the 25:00 mark in the video) that most crypto-assets, apart from Bitcoin, fall under the SEC’s definition of “securities” and the SEC has well established rules and regulations for securities firms. [Read the SEC filing here]

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

Kiffmeister’s global central bank digital currency monthly monitor

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

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

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

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

Kiffmeister’s #Fintech Daily Digest (20230515)*

~ kiffmeister ~ Leave a comment

G-7 finance ministers discuss crypto regulation and retail CBDC norms

The Group of Seven (G-7) has signaled its commitment to the forthcoming Financial Stability Board (FSB) crypto-asset regulatory norms and IMF central bank digital currency (CBDC) recommendations. The FSB is expected to finalize its high-level crypto-asset recommendations by July 2023. The first installments of the IMF  “Retail CBDC Handbook”, to be produced in close cooperation with and drawing from the inputs of experts and stakeholders including other international organizations, standard setters and national authorities, will be published by the October 2023 IMF/World Bank Annual Meetings. [Read more at the European Council]

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

Kiffmeister’s global central bank digital currency monthly monitor

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

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

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

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

Kiffmeister’s #Fintech Daily Digest (20230513)

~ kiffmeister ~ Leave a comment

Binance to withdraw from Canadian market due to regulatory climate

Binance is withdrawing from the Canadian market, citing regulatory guidance. “New guidance related to stablecoins and investor limits provided to crypto exchanges makes the Canada market no longer tenable for Binance at this time. We put off this decision as long as we could to explore other reasonable avenues to protect our Canadian users, but it has become apparent that there are none… We are confident that we will someday return to the market when Canadian users once again have the freedom to access a broader suite of digital assets.” [Read more at Binance]

CBDC and business cycle dynamics in a New Monetarist New Keynesian model

The European Central Bank (ECB) published a paper on the impact of an interest-bearing central bank digital currency (CBDC) on the economy. It integrates a New Monetarist-type decentralized market that accounts for the means-of-exchange function of bank deposits and CBDC into a New Keynesian model with financial frictions. It concludes that the introduction of an interest-bearing CBDC does not impair monetary policy transmission. Also it stabilizes the liquidity premium, thereby affecting bank funding conditions and the opportunity costs of money, which dampens and smooths the reaction of investment and consumption to macroeconomic shocks. [Read more at the ECB]

Upcoming conferences, webinars and speaking engagements:

Kiffmeister’s global central bank digital currency monthly monitor

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

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

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

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

Kiffmeister’s #Fintech Daily Digest (20230506)

~ kiffmeister ~ Leave a comment

On Tuesday (May 9, 2023) at 10am EST (3 pm UK time) I’ll be chatting (virtually) with author and commentator David Birch (15Mb Ltd) about what to expect from the introduction of new forms of money, such as central bank digital currency (CBDC) and stablecoins. Are the use cases strong enough to expect their adoption? Are we ready and eager to use and receive payments in these new forms of money? [Sign up at FNA]

Binance faces US probe of possible Russian sanctions violations

The US Department of Justice (DOJ) is reportedly investigating whether Binance was used illegally to let Russians skirt US sanctions and move money through the cryptocurrency exchange. Binance is also already being examined by the Internal Revenue Service (IRS) and federal prosecutors, regarding anti-money laundering obligations compliance, and the Securities and Exchange Commission (SEC) has been scrutinizing whether the exchange has supported the trading of unregistered securities. [Read more at Bloomberg]

Mapping the privacy landscape for central bank digital currencies

An article by Raphael Auer, Rainer Böhme, Jeremy Clark and Didem Demirag explores the multiple dimensions of retail CBDC privacy considerations. They point to the number of distinct stakeholders, combined with the technical challenges, as possibly responsible for stalling progress toward deploying retail CBDC. One step forward is understanding who the key stakeholders are and what their interests are in payment records. Knowledge of conflicting interests is helpful for developing requirements and narrowing the range of technical solutions. This article contributes to the literature by identifying three stakeholder groups – privacy enthusiasts, law enforcement, and data holders – and exploring their conflicts. A main insight is that nuanced data-access policies are best to resolve the conflicts, which in turn rule out many technical solutions that promise “hard privacy,” meaning solutions relying on cryptography and user-guarded secrets without room for human discretion. This observation shifts attention to a softer form of privacy-enhancing technologies, which gives authorized stakeholders the capability to access certain payment records in plaintext under defined circumstances. Such a system depends on compliance and accountability, supported with technically enforced access control, limited retention periods, and audits. This is referred to as “soft privacy”. [Read more at Pulpsy.com] 

Crypto-assets and CBDC – Potential implications for developing countries

The United Nations Conference on Trade and Development (UNCTAD) published a paper aimed at supporting developing country policymakers in their thinking about crypto-assets. Crypto adoption has been strong in developing countries, based on its purported capacity to increase financial inclusion, reduce costs of remittances, and ease access to investment finance and export credit. However, any substitution of national sovereign currencies by crypto-assets can jeopardize financial stability and the effectiveness of monetary policy, reduce the effectiveness of capital controls, pose risks to countries’ monetary sovereignty and, through the pseudonymous character of crypto assets, facilitate illicit financial flows. Some of these challenges can be addressed by regulation, improving financial inclusion and monetary stability, CBDC, fast retail payment systems and improved auxiliary digital infrastructure. [Read more at the UNCTAD]

A simple model of a central bank digital currency

The National Bureau of Economic Research (NBER) published a paper that highlights the trade-offs between physical and digital forms of retail central bank money based on a general equilibrium model. It finds that the key differences between cash and CBDC include transaction efficiency, possibilities for tax evasion, and, potentially, nominal rates of return. It establishes conditions under which cash and CBDC can co-exist and shows how government policies can influence relative holdings of cash, CBDC, and other assets. The paper illustrates how a CBDC can facilitate negative nominal interest rates and helicopter drops, and also how a CBDC can be structured to prevent capital flight from other assets. [Read more at the NBER]

Wholesale CBDC – 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 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] 

Stablecoin runs and the centralization of arbitrage

A paper by Yiming Ma, Yao Zeng, and Anthony Lee Zhang analyzes the run risk of USD-backed stablecoins and uncover a dilemma between stablecoins’ price stability and financial stability. They show that panic runs exist even though general investors only trade stablecoins in secondary markets with flexible prices. Run incentives are reinstated by stablecoin issuers’ liquidity transformation and the fixed $1 at which arbitrageurs redeem stablecoins for cash in the primary market. The authors discover that more efficient arbitrage amplifies run risk. This explains why stablecoin issuers only authorize a small set of arbitragers even though it comes at the expense of maintaining a stable secondary price. In other words, the centralization of arbitrage embeds an inherent tradeoff between run risk and price stability. The paper’s findings are based on a model and a novel dataset on stablecoin redemptions, trading, and reserve assets. Calibrating the model, the authors find a higher run risk for USDT, the largest stablecoin, compared to USDC, the second-largest stablecoin. However, even USDC bears significant run risk due to its less concentrated arbitrage and more concentrated deposit holdings. [Read more here]

Upcoming conferences, webinars and speaking engagements:

Kiffmeister’s global central bank digital currency monthly monitor

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

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

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

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

Kiffmeister’s #Fintech Daily Digest (20230504)

~ kiffmeister ~ Leave a comment

Florida and North Carolina legislators approve anti-CBDC legislation

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

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

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

Upcoming conferences, webinars and speaking engagements:

Kiffmeister’s global central bank digital currency monthly monitor

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

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

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

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

Kiffmeister’s #Fintech Daily Digest (20230502)

~ kiffmeister

Bhutan has been mining Bitcoin with hydropower since BTC price was $5,000

The commercial and investment arm of Royal Government of Bhutan, Druk Holding and Investments (KHI), has been mining Bitcoin since April 2019 when the crypto-asset was priced around $5,000 (versus the current $28,000 or so). KHI is exploiting the country’s vast amounts of cheap energy generated through its hydro projects. Plus the the country’s high mountain passes or mountains provide natural cooling for the mining rigs that would consume a lot of power for air conditioning in warmer places. [Read more at The Bhutanese]

Coinbase launches International Exchange with Bitcoin and Ethereum perpetual futures

The Bermuda-based Coinbase International Exchange launched following regulatory approval from the Bermuda Monetary Authority (BMA). It will initially offer Bitcoin and Ethereum perpetual futures settled in USD Coin (USDC) only to qualified institutional clients outside of the United States through an application Programming interface (API). According to Coinbase, perpetual futures accounted for nearly 75% of global crypto trading volume in 2022, and Coinbase’s offerings will allow leverage of up to 5x. [Read more at Coinbase]

Upcoming conferences, webinars and speaking engagements:

Kiffmeister’s global central bank digital currency monthly monitor

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

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

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

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