DFC

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Tokens and accounts in the context of digital currencies

This Fed paper reviews how the cryptocurrency community has approached the concepts of tokens and tokenization, and discusses "tokens" in the context of CBDC. By highlighting how the terms "tokens" and "accounts" are used by the cryptocurrency community and the central banking community, this note seeks to inventory the subtly and sometimes obviously different ways these common terms are being used by different people to reference different concepts. Misalignment of this ambiguous terminology could create issues for legal frameworks and oversight regimes for digital currencies and so-called tokenized financial markets.

#Fintech #CryptoAssets #CBDC #DFC

·federalreserve.gov·Dec 23, 2020

Tokens and accounts in the context of digital currencies

Bank of Canada Getting Serious About Digital *Cash*

The Bank of Canada aims to design a CBDC with cash-like properties in digital form. While not aiming for cash-like anonymity, CBDC should be highly private yet meet the obligation to be compliant with anti-money laundering and other regulations. Regardless of their circumstances, CBDC should be usable by all Canadians, even by those without a bank account or access to a cellular phone, in remote communities not well served by cellular networks, and/or those with sensory, motor and cognitive impairments. And the CBDC should continue to work even during electrical power and network outages.

#Fintech #CryptoAssets #CBDC #DFC

·careers.bankofcanada.ca·Dec 23, 2020

Bank of Canada Getting Serious About Digital *Cash*

The Oyster Card & CBDCs

Can the Oyster Card help us sort out privacy issues with CBDCs? In a chapter of "The End of Money" there is a discussion about anonymity in electronic money, using the data storage of the London Ground Oyster Card as an example. With the Oyster Card, you need to register for an account, and all journey and transaction history is held for only 8 weeks. That's so you can replace your lost card when needed or not get billed for a journey where only an entrance or exit turnstile is working. And it does give the police and transit people the ability to track who was in a station to investigate crime--for a limited time.

#Fintech #CryptoAssets #CBDC #Privacy #DFC

·franklinnoll.com·Dec 22, 2020

The Oyster Card & CBDCs

Inclusion by Design: Crafting a Central Bank Digital Currency to Reach All Americans

This Kansas City Fed paper finds that a central bank digital currency (CBDC) could alleviate some of concerns facing unbanked American households. However, whether most unbanked households would view a CBDC any differently than a bank account remains to be seen. If some unbanked households see no distinction between the two, then a CBDC may not be able to reach those who wish to remain outside of the financial system. To overcome this challenge, policymakers may need to further consider whether to differentiate CBDC access from other digital products offered today and provide corresponding financial education.

#Fintech #CryptoAssets #CBDC #FinancialInclusion #DFC

·kansascityfed.org·Dec 21, 2020

Inclusion by Design: Crafting a Central Bank Digital Currency to Reach All Americans

Stability, Elasticity, and Reflexivity: A Deep Dive into Algorithmic Stablecoins

Can an algorithmic stablecoin truly achieve long-term viability? Will algorithmic stablecoins always be subject to extreme expansionary and contractionary cycles? Which vision of an algorithmic stablecoin is more compelling: a simple rebasing model or a multi-token “seigniorage” system (or something else entirely)? This article seeks to explore some of these fundamental issues, both from first principles reasoning and by drawing on some empirical data from recent months.

#Fintech #CryptoAssets #Stablecoins #DFC

·insights.deribit.com·Dec 21, 2020

Stability, Elasticity, and Reflexivity: A Deep Dive into Algorithmic Stablecoins

The curious case of Tether: a complete timeline of events

Tether follows the I.O.U. model, where virtual coins are supposed to represent actual money and be redeemable at any time. It all sounds well and good, but for one thing: There is no evidence to suggest Tether is fully backed. More troubling, the issuance of tethers correlates with the rapid run up in price of bitcoin from April to December 2017 when bitcoin peaked at nearly $20,000. If authorities were to step in and freeze the bank accounts underlying tether, it is hard to guess what impact that could have on crypto markets at large. See Amy Castor's timeline of events that reveals a full picture of the controversy surrounding Tether and Bitfinex.

#Fintech #CryptoAssets #Stablecoins #Tether #Bitfinex #DFC

·amycastor.com·Dec 19, 2020

The curious case of Tether: a complete timeline of events

An Offline Payment System for Central Bank Digital Currencies

Visa published a technical paper that outlines an approach for offline point-to-point payments between two devices. The protocol allows digital money to be directly downloaded onto a personal device, such as a smartphone or tablet. The money is stored on a secure hardware embedded in that device and managed by a wallet provider (e.g. a bank). CBDC can be transacted from one device to another device directly without any intermediaries such as banks, payment networks, or payment processors. Examples of the underlying technology that can support point-to-point payments include Bluetooth and Near Field Communication (NFC).

#Fintech #CryptoAssets #CBDC #Offline #DFC

·usa.visa.com·Dec 18, 2020

An Offline Payment System for Central Bank Digital Currencies

Empty Set Dollar: An experiment in decentralised, composable, oracle-driven stablecoins

The recently launched Empty Set Dollar (ESD) stablecoin is built to be the reserve currency of decentralised finance. It sidesteps the centralisation risk of USDC, USDT, and TUSD, avoids AMPL and BASED’s death spirals, the 100+ percent collateralisation requirements of sUSD & DAI, and, most importantly, it integrates perfectly with existing DeFi protocols. The ESD protocol expands on the work of Basis.io, which voluntarily shut down before launch due to regulatory pressure on the team. https://www.emptyset.finance/

#Fintech #CryptoAssets #Stablecoins #DFC

·medium.com·Dec 18, 2020

Empty Set Dollar: An experiment in decentralised, composable, oracle-driven stablecoins

Paxos, Firm Powering PayPal's Crypto Service, Raises $142M

Paxos raised about $142 million from its series C round of funding from investors including Paypal. The New York-based company, which provides blockchain-based services to financial institutions and operates a cryptocurrency exchange, has raised more than $240 million in funding so far. Paxos has also submitted an application to the U.S. Office of the Comptroller of the Currency to become a federally regulated bank. It already has a trust charter and a number of other regulatory certifications.

#Fintech #CryptoAssets #Paxos #Stablecoins #DFC

·coindesk.com·Dec 17, 2020

Paxos, Firm Powering PayPal's Crypto Service, Raises $142M

The Unintended(?) Consequences of the STABLE Act

The recently introduced STABLE Act aims to ban any stablecoin that is not issued by a federal bank, whether it is issued by a state-regulated trust company, like Gemini Dollars, a consortium of state-licensed money transmitters like USDC, or by an Ethereum-based smart contract like Dai. The logical consequence is that if any person is running software that validates Dai or other stablecoin smart contracts (the Ethereum network client) they will, themselves, be violating the law unless they are a chartered bank. Hence, bhis bill would have the effect of also destroying the larger Ethereum network and any other smart-contract-enabled public blockchain as necessary collateral damage.

#Fintech #CryptoAssets #Stablecoins #Regulation #DFC

·coincenter.org·Dec 17, 2020

The Unintended(?) Consequences of the STABLE Act

Circle Confirms Freezing USDC on Law Enforcement's Requests

The Centre Consortium has blacklisted USDC addresses in response to law enforcement requests. Centre said it complies with all binding court orders that have appropriate jurisdiction over the organization. USDC runs on the Ethereum network, and a transaction on Etherscan indicates that, in the past, Centre has called “blacklist(address investor)” functions on addresses, essentially freezing all coins on them. When an address is blacklisted, it can no longer receive USDC and all of the USDC controlled by that address is blocked and cannot be transferred on-chain.

#Fintech #CryptoAssets #Stablecoins #FinancialIntegrity #USDC #DFC

·coindesk.com·Dec 17, 2020

Circle Confirms Freezing USDC on Law Enforcement's Requests

Rise of the central bank digital currencies: drivers, approaches and technologies

The Bank for International Settlements (BIS) has updated its database of central bank digital currency (CBDC) technical approaches and policy stances on issuance, based on central bank speeches and technical reports.

#Fintech #CryptoAssets #CBDC #DFC

·bis.org·Dec 16, 2020

Rise of the central bank digital currencies: drivers, approaches and technologies

Solutions for a Digital Euro and the future of payments

Blockchain for Europe published a roadmap for the future of payments in a Distributed Ledger Technology (DLT) oriented European economy. The paper provides an analytical framework dividing the digital payments value chain into three pillars: the contract execution system, the digital payment infrastructure, and the monetary unit. Based on this framework, the authors compare technology platforms, public and private sector payment solutions, including a bridge solution, e-money tokens, and central bank digital currency (CBDC) including "synthetic" CBDC. It concludes that the optimal payment solution for Europe would be a DLT-based euro CBDC but it is unlikely that it will be implemented in the short term, and unclear if it will address all the challenges and needs of the European economy and its consumers.

#Fintech #CryptoAssets #CBDC #DFC

·blockchain4europe.eu·Dec 15, 2020

Solutions for a Digital Euro and the future of payments

EMTECH Debuts Tech To Streamline Central Banking

EMTECH is rolling out its new Modern Central Bank Sandbox, which will help to streamline regulatory reviews and test central bank digital currencies (CBDCs). The platform will also help central banks that want to collaborate with innovators on new technology, and enabling them to innovate safely with effective oversight and quicker time to market. EMTECH also aims to provide central banks with an infrastructure for digital cash. For example, EMTECH is currently working with the Central Bank of the Bahamas on its Digital Sand Dollar Currency.

#Fintech #CryptoAssets #CBDC #DFC

·pymnts.com·Dec 15, 2020

EMTECH Debuts Tech To Streamline Central Banking

SatoshiPay to Become First User of German Bank’s Euro Stablecoin

SatoshiPay investor Blue Star Capital, the payments firm plans to integrate the regulatory complaint EURB euro-backed stablecoin into its DTransfer cross border money transfer service. German Bankhaus von der Heydt (BDVH) in partnership with Bitbond, has introduced EURB on the Stellar network. Bitbond was responsible for the development and integration of EURB, and BDVH provides its banking infrastructure and regulatory framework. EURB is the first fiat asset directly backed by a banking institution on Stellar and will allow instant money transfer on blockchain.

#Fintech #CryptoAssets #Stablecoins #CrossBorder #Payments #DFC

·polaris.brighterir.com·Dec 15, 2020

SatoshiPay to Become First User of German Bank’s Euro Stablecoin

Facebook’s Crypto Testnet Averages 6 Transactions Per Second

Facebook’s Diem/Libra testnet has been live for over a month as the Libra Association prepares for the next stage with broader participation among members. The latest update from the blockchain explorer finds the network performing at an average of six transactions per second (TPS), with the highest reported figure of 24 TPS. In comparison, Bitcoin and Ethereum blockchains execute close to four and 13 TPS, respectively. On the other hand, VISA support 1,700 transactions each second.

#Fintech #CryptoAssets #Stablecoins #Facebook #DFC

·cryptobriefing.com·Dec 14, 2020

Facebook’s Crypto Testnet Averages 6 Transactions Per Second

Understanding China’s Central Bank Digital Currency

In this paper, former Peoples Bank of China (PBOC) Governor Zhou Xiaochuan explains what China’s DC/EP is, the respective responsibilities of the central bank and second-tier institutions in the system, and the technological path. Interestingly, he says the idea behind DC/EP is not completely the same with that underlying central bank digital currency (CBDC) because the second-tier institutions actually own the e-CNY and offer guarantee of payment. This arrangement borrowed ideas from the three note-issuing commercial banks in Hong Kong. These banks are required to give the Hong Kong Monetary Authority 1 U.S. dollar for every 7.8 Hong Kong dollars issued, and in exchange receive a 100% reserve certificate. From the balance sheet’s perspective, the banknotes issued by the banks are their liabilities, their assets are reserves, and the liabilities of the central bank are the reserve certificates issued.

#Fintech #CryptoAssets #CBDC #DFC

·cf40.com·Dec 13, 2020

Understanding China’s Central Bank Digital Currency

Central Bank Money: Liability, Asset, or Equity of the Nation

Based on comparisons across a number of legal characteristics of financial instruments, this paper suggests that an appropriate characterization of "central bank money" (CBM) is as ‘social equity’ that confers rights of participation in the economy’s payment system and thereby its economy. This interpretation is important for macroeconomic policy in light of quantitative easing and potential future issuance of central bank digital currency (CBDC). It suggests that in robust economies with credible monetary institutions, and where demand for CBM is sufficiently and sustainably high, large-scale issuance such as under CBDC is not inflationary, and it does not weaken public sector finances.

#Fintech #CryptoAssets #CBDC #Accounting #DFC

·papers.ssrn.com·Dec 13, 2020

Central Bank Money: Liability, Asset, or Equity of the Nation

Digital Asset Market 2021: The Year of the Institutional Investor?

According to Caitlin Long, three factors will contribute to a meaningful increase in institutional investment in cryptoassets in 2021. The first is the post-"halving" Bitcoin bull market, which happens every four years after Bitcoin’s inflation rate is cut in half, according to its pre-set algorithms. Another factor is the continued significant investment in institutional custody infrastructure to digital assets of all types. The third factor is the explosion of velocity of US dollar stablecoins as financial transactions went increasingly digital around the world, which will continue in 2021 when bank-issued versions will come into the market.

#Fintech #CryptoAssets #Institutionalization #Stablecoins #Bitcoin #DFC

·finopsinfo.com·Dec 13, 2020

Digital Asset Market 2021: The Year of the Institutional Investor?

Designing CBDC Using the Delphi-Analytic Network Process

The emergence of stablecoins is a growing concern for authorities worldwide including Indonesia as it could affect financial stability. Thus, if a central bank chooses to develop a central bank digital currency (CBDC) to tackle this problem, the design should conform to the country’s characteristics and consumer needs. This study draws on experts’ opinions from various economic agents and utilises an amalgamation of the analytic network process (ANP) and the Delphi method to show that the cash-like CBDC model is the most appropriate digital currency design for Indonesia, since it could enhance financial inclusion and reduce shadow banking in Indonesia.

#Fintech #CryptoAssets #CBDC #Stablecoins #DFC

·bmeb-bi.org·Dec 12, 2020

Designing CBDC Using the Delphi-Analytic Network Process

IMF leader on digital payments for skilled trades workers

The continuing transition to digital finance is likely to affect sectors across the board. Artisans, or skilled craftsmen and women, are no exception. According to Kristalina Georgieva, managing director for the International Monetary Fund, or IMF, digital money for these skilled workers hinges on a tetrad of factors.

#Fintech #CryptoAssets #CBDC #Payments #DFC

·cointelegraph.com·Dec 12, 2020

IMF leader on digital payments for skilled trades workers

Sweden Explores Moving to Digital Currency

Sweden’s government launched an inquiry that will explore the feasibility of the Riksbank issuing an e-kronor central bank digital currency, and review the meaning of the concept of legal tender. More broadly, the inquiry's assignment includes mapping what the payment market looks like and may look like in the future, based on developments in Sweden and in other countries. In that regard, it will map the division of roles between the state and the business community in the payment market and take a position on the state's future role. The inquiry is expected to be completed by the end of November in 2022. https://www.regeringen.se/pressmeddelanden/2020/12/anna-kinberg-batra-ska-utreda-statens-roll-pa-betalningsmarknaden

#Fintech #CryptoAssets #CBDC #PaymentSystems #DFC

·bloomberg.com·Dec 11, 2020

Sweden Explores Moving to Digital Currency

JPMorgan Using Blockchain to Move Billions in Repo-Market Trades

The first live trades JPMorgan conducted were between the bank’s broker-dealer and banking units, using the Onyx blockchain platform. In a test environment, JPMorgan has also traded with Goldman using Bank of New York Mellon Corp. as the triparty agent. Goldman is expecting to join Onyx for intraday repo trading as soon as January.

#Fintech #CryptoAssets #Stablecoins #JPMCoin #DFC

·bloomberg.com·Dec 10, 2020

JPMorgan Using Blockchain to Move Billions in Repo-Market Trades

JPMorgan just conducted a blockchain-based repo transaction using its eponymous JPMCoin

JPMorgan executed a blockchain-based repo transaction using its JPMCoin wholesale stablecoin and atomic trade settlement that links the two legs of the transaction to ensure that the transfer of one asset occurs if and only if the transfer of the other asset also occurs. "The repo market provides a widely used form of secured financing, however, current operational limitations prevent the meaningful use of such financing to meet intraday liquidity needs. Using blockchain enables borrowers and lenders to execute shorter-term, intraday repo transactions with real-time, simultaneous transaction settlement, creating new ways to access intraday liquidity." https://www.businesswire.com/news/home/20201210005155/en/J.P.-Morgan-Executes-Intraday-Repo-Transaction-Using-Blockchain

#Fintech #CryptoAssets #JPMCoin #Stablecoins #DFC

·theblockcrypto.com·Dec 10, 2020

JPMorgan just conducted a blockchain-based repo transaction using its eponymous JPMCoin

Euro stablecoin launched on Stellar by one of Europe’s oldest banks

Germany's Bankhaus von der Heydt (BVDH) has issued a Euro stablecoin (EURB) on the Stellar network with the collaboration of Bitbond, a German tokenisation and digital asset custody technology provider. With the go-live on Stellar, Bitbond also integrates the stable coin into the securitization platform developed for BVDH, including the automatic mining and burning of tokens. The Federal Financial Supervisory Authority (BaFin) has already provided their approval for Bitbond to issue tokenized bonds on Stellar.

#Fintech #CryptoAssets #Stablecoins #Stellar #Tokenization #DFC

·cointelegraph.com·Dec 10, 2020

Euro stablecoin launched on Stellar by one of Europe’s oldest banks

Would the STABLE Act Make Running an Ethereum Node Illegal?

The plain text of the Stable Act presents the bizarre possibility, one which is apparently intended by the drafters, that node operation on any unlicensed chain that supported any stablecoin contracts would be unlawful and, pursuant to 12 U.S. Code § 1833a, would be subject to fines of up to $1,000,000. Criminal penalties might also be possible. This post deals with this point.

#Fintech #CryptoAssets #Stablecoins #Regulation #Ethereum #DFC

·coindesk.com·Dec 10, 2020

Would the STABLE Act Make Running an Ethereum Node Illegal?

Monetizing Privacy

In a market where consumers choose between payment options, and firms compete with products and prices, we show that payment data drives the formation of a market monopoly. Active intervention can successfully restore and maintain a competitive market, but often at the expense of both efficiency and consumer welfare. The introduction of a low-cost anonymous means of electronic payment, or digital cash, preserves the market structure and improves consumers' welfare by enabling them to monetize their private information. There are, however, challenges to the private provision of digital cash. We discuss the potential role of central banks in providing digital cash.

#Fintech #CryptoAssets #CBDC #Privacy #DFC

·papers.ssrn.com·Dec 8, 2020

Monetizing Privacy

Exclusive: Facebook faces lawsuit over crypto project's new name

Facebook could be in hot legal water after rebranding its upcoming crypto project to Diem — a name already taken by a London fintech. Finance app Diem is threatening to sue Facebook and its partners for copying the name, telling Sifted it is preparing to take action. The Diem app allows consumers to sell their possessions instantly, rather than waiting for bidders on eBay; offering a digital pawnbroker of sorts. Users also get their own DIEM debit cards and accounts, creating what the company calls a ‘Bank of Things.’

#Fintech #CryptoAssets #Stablecoins #Facebook #DFC

·sifted.eu·Dec 8, 2020

Exclusive: Facebook faces lawsuit over crypto project's new name

Six ways China's newest larger-scale digital yuan lottery is different than before

The city of Suzhou will give away 20 million DC/EP central bank digital currency (CBDC) via lottery, which is similar to the first one conducted in Shenzhen. However, for this pilot some of the 100,000 lottery winners (up to 1,000) will be selected to test an offline payment feature based on near-field wireless technologies. These DC/EP wallets will be capable of sending transactions between two smartphones or hardware devices even without an internet connection.

#Fintech #CryptoAssets #CBDC #DFC

·theblockcrypto.com·Dec 6, 2020

Six ways China's newest larger-scale digital yuan lottery is different than before

Warning of the Dangers Posed by the Shadow Payment System and Shadow Digital Money

A payments revolution has prompted a proliferation of shadow digital money. This money is unsound. It is not insured by the government, nor is it backed by safe assets. Federal regulation is needed to guarantee safety and soundness, to restore full monetary control to the Federal Reserve, and to prevent a race to the bottom between competing state and federal regulatory regimes. The OCC should recommend that Congress enact new legislation that requires MSBs to back their monetary liabilities 1:1 with bank deposits. With this change, innovation in payments would be just that—innovation in payments—and not also unauthorized and unsound money issuance.

#Fintech #CryptoAssets #Stablecoins #Regulation #DFC

·papers.ssrn.com·Dec 5, 2020

Warning of the Dangers Posed by the Shadow Payment System and Shadow Digital Money