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Binance and its stablecoins
Binance and its stablecoins
"The crypto ecosystem relies on stablecoins as a cheap and plentiful form of dollar liquidity. If all stablecoins were classed as securities, dollar liquidity for onshore crypto exchanges and platforms would dry up as stablecoin issuers either went offshore or out of business. It is very hard to see what would replace it, at least in the short term: U.S. dollars (and other fiat currencies) are not liquid on crypto exchanges, because to move them around requires banks, and non-USD stablecoins have gained little traction thus far. So trading crypto onshore would become much more expensive and considerably riskier. The dollar liquidity drought could also severely impact DeFi, because that relies on stablecoins (or derivatives of stablecoins) as collateral. So the SEC's action could bring down the onshore crypto ecosystem. "
#Fintech#CryptoAssets#Stablecoins#Paxos#Binance#BUSD#Regulation#UnitedStates#DFC
·coppolacomment.com·
Binance and its stablecoins
Crypto Firm Paxos Faces SEC Lawsuit Over Binance USD Token
Crypto Firm Paxos Faces SEC Lawsuit Over Binance USD Token
The US Securities and Exchange Commission (SEC) has issued Paxos a Wells Notice for allegedly selling unregistered securities by issuing BUSD. That characterization  typically hinges on the Howey Test, under which an investment contract exists if there is an "investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others." https://paxos.com/2023/02/13/paxos-issues-statement/
#Fintech#CryptoAssets#Stablecoins#Binance#BUSD#Paxos#Regulation#UnitedStates#DFC
·wsj.com·
Crypto Firm Paxos Faces SEC Lawsuit Over Binance USD Token
Paxos Will Halt Minting New BUSD Tokens
Paxos Will Halt Minting New BUSD Tokens
Paxos Trust will stop minting new Binance USD (BUSD) tokens starting from February 21, 2022 in accordance with directions and coordination with the New York Department of Financial Services (NYDFS). All existing BUSD tokens will remain fully backed and redeemable through Paxos until at least February 2024. Customers will be able to convert their BUSD tokens to Pax Dollar (USDP) another Paxos-issued stablecoin. https://www.dfs.ny.gov/consumers/alerts/Paxos_and_Binance
#Fintech#CryptoAssets#Stablecoins#Binance#BUSD#Paxos#Regulation#UnitedStates#DFC
·paxos.com·
Paxos Will Halt Minting New BUSD Tokens
UAE Plans to Issue a CBDC to Promote Digital Payments
UAE Plans to Issue a CBDC to Promote Digital Payments
The Central Bank of the United Arab Emirates (UAE) is planning to issue a central bank digital currency (CBDC) for domestic and cross-border payments in order to help drive innovation for domestic payments, and address the problems and inefficiency of cross-border payments and respectively. The issuance of a digital dirham is one of nine initiatives of the central bank's Financial Infrastructure Transformation Program. https://www.centralbank.ae/media/mdupathy/cbuae-launches-a-financial-infrastructure-transformation-programme-to-accelerate-the-digital-transformation-of-the-financial-services-sector-en.pdf
#Fintech#CBDC#UAE#DFC
·coindesk.com·
UAE Plans to Issue a CBDC to Promote Digital Payments
Project Polaris: secure and resilient CBDC systems, offline and online
Project Polaris: secure and resilient CBDC systems, offline and online
The BID Innovation Hub Nordic Centre Project Polaris is exploring the provision of offline central bank digital currency (CBDC) payments functionality, which could address requirements for resilience, crisis robustness, financial inclusion, cash resemblance, accessibility and other desiderata. Central banks considering the potential implementation of CBDCs with offline functionality must take into account issues such as security, privacy, risks, the types of solution, their maturity and applicability, and operational factors, among others.
#Fintech#CBDC#Offline#BIS#DFC
·bis.org·
Project Polaris: secure and resilient CBDC systems, offline and online
What emerging markets can teach about CBDC innovation
What emerging markets can teach about CBDC innovation
OMFIF and G+D: "Everyone should have access to convenient, secure digital payments and other financial services. CBDC has the potential to make this a reality. It is a digital version of physical cash – a ubiquitous and fully inclusive financial instrument that people can use independently from the issuer. For the 1.4bn unbanked adults globally, as well as unbanked children who form the next generation, CBDCs promote participation in the digital economy. This should also inspire developed nations to leverage offline functionality, where a bank account is not needed, and introduce a digital form of public currency that is simple, resilient and universally accepted. CBDCs could ease life for many people by offering a cheaper way for cross-border payments for migrant workers or enabling digital payments for small merchants like rural market vendors."
#Fintech#CBDC#OMFIF#G+D#DFC
·omfif.org·
What emerging markets can teach about CBDC innovation
Billions Of Tether’s Reserves Were Stored At Cantor Fitzgerald, Capital Union And Ansbacher
Billions Of Tether’s Reserves Were Stored At Cantor Fitzgerald, Capital Union And Ansbacher
"Forbes has learned that Tether moved $37 billion of its reserves to an offshore bank called Capital Union in 2021. The move occurred after settling with the New York Attorney General’s office over claims it had misrepresented its finances. Tether also enlisted another Bahamian bank, Ansbacher, to hold some of its reserves. Tether has additionally been using New York financial services giant Cantor Fitzgerald as a custodian of U.S. Treasury bills. (Tether recently reported that more than half of its consolidated assets were in Treasuries last quarter.)"
#Fintech#CryptoAssets#Stablecoins#Tether#USDT#DFC
·forbes.com·
Billions Of Tether’s Reserves Were Stored At Cantor Fitzgerald, Capital Union And Ansbacher
Central Bank Digital Currencies and Banking: Literature Review and New Questions
Central Bank Digital Currencies and Banking: Literature Review and New Questions
The Bank of Canada (BoC) published a paper that reviews the literature on central bank digital currencies (CBDCs), focusing on their potential impacts on private banks. It evaluate these impacts in three areas of traditional banking: payments, lending and liquidity and maturity transformation. For each area, it discusses the lessons learned and identifies gaps in the research yet to be fully explored. It also takes a broader look at CBDCs and highlights two promising directions for future research. One is to study CBDCs through the lens of industrial organization, exploring issues such as platform competition and business models. The second is the crypto space and its new developments such as stablecoins and decentralized finance.
#Fintech#CBDC#DFC
·bankofcanada.ca·
Central Bank Digital Currencies and Banking: Literature Review and New Questions
Estimating Digital Infrastructure Investment Needs to Achieve Universal Broadband
Estimating Digital Infrastructure Investment Needs to Achieve Universal Broadband
The IMF published  a paper that develops a detailed model to evaluate the necessary investment requirements to achieve affordable universal broadband. The results indicate that approximately $418 billion needs to be mobilized to connect all unconnected citizens globally (targeting 40-50 GB/Month per user with 95 percent reliability). The bulk of additional investment is for emerging market economies (73%) and low-income developing countries (24%). It also finds that if the data consumption level is lowered to 10-20 GB/Month per user, the total cost decreases by up to about half, whereas raising data consumption to 80-100 GB/Month per user leads to a cost increase of roughly 90% relative to the baseline. Moreover, a 40% cost decrease occurs when varying the peak hour quality of service level from the baseline 95% reliability, to only 50% reliability. The paper concludes that broadband policy assessments should be explicit about the quantity of data and the reliability of service provided to users. Failure to do so will lead to inaccurate estimates and, ultimately, to poor broadband policy decisions.
#Fintech#Offline#Infrastructure#CBDC#DFC
·imf.org·
Estimating Digital Infrastructure Investment Needs to Achieve Universal Broadband
India's retail CBDC pilot does 770,000 transactions in 2 months
India's retail CBDC pilot does 770,000 transactions in 2 months
The Reserve Bank of India (RBI) said that the number of transactions using its retail CBDC had reached 770,000 since the pilot started at the end of November 2022. Volumes are small because most transactions are very low value. So far, there are 50,000 end users and 5,000 merchants involved. Eight banks are participating across five cities, with five more banks onboarding and another nine cities planned.
#Fintech#CBDC#Asia#India#DFC
·ledgerinsights.com·
India's retail CBDC pilot does 770,000 transactions in 2 months
Tether taps Cantor Fitzgerald to help oversee bond portfolio: Report
Tether taps Cantor Fitzgerald to help oversee bond portfolio: Report
The WSJ is reporting that financial services company Cantor Fitzgerald is helping Tether oversee a $39 billion bond portfolio comprised of United States Treasury securities. The report indicates that some firms on Wall Street are willing to support crypto service providers despite ongoing regulatory concerns facing the industry. "
#Fintech#CryptoAssets#Stablecoins#Tether#DFC
·cointelegraph.com·
Tether taps Cantor Fitzgerald to help oversee bond portfolio: Report
PayPal Pauses Stablecoin Work Amid Regulatory Scrutiny of Crypto
PayPal Pauses Stablecoin Work Amid Regulatory Scrutiny of Crypto
PayPal is reportedly pausing work on its stablecoin as regulators increase scrutiny of cryptocurrencies and Paxos,  a key partner in the project, faces a probe by the New York State Department of Financial Services. A PayPal official confirmed that the firm is exploring a US dollar backed stablecoin, adding that “if and when we seek to move forward, we will, of course, work closely with relevant regulators.”
#Fintech#CryptoAssets#Stablecoins#PayPal#DFC
·bloomberg.com·
PayPal Pauses Stablecoin Work Amid Regulatory Scrutiny of Crypto
The National Bank of Georgia Advances Digital Lari Project
The National Bank of Georgia Advances Digital Lari Project
The National Bank of Georgia (NBG) is inviting fintech companies to express interest in participating in its digital lari central bank digital currency (CBDC). In April 2021, NBG launched the first stage of the project and invited interested financial technology providers to participate. Now the NBG will select a technological partner based on information provided by the companies, including the CBDC system, technical capabilities, security, and technological proposal for the pilot project. The deadline for submissions is February 15, 2023.
#Fintech#CBDC#Asia#Georgia#DFC
·nbg.gov.ge·
The National Bank of Georgia Advances Digital Lari Project
JP Morgan touts bank-issued deposit tokens
JP Morgan touts bank-issued deposit tokens
A new report from JP Morgan and Oliver Wyman touts the benefits (versus stablecoins) of blockchain-based deposit tokens issued by licensed depository institutions which evidence a deposit claim against the issuer. However, it points out that while deposit tokens that run on public unpermissioned networks offer the greatest degree of interoperability and benefits, private permissioned ledgers introduce fewer challenges for regulated institutions, and would require appropriate alternative controls to create a trusted environment for funds transfers.
#Fintech#CryptoAssets#Stablecoins#DFC
·finextra.com·
JP Morgan touts bank-issued deposit tokens
Stablecoin giant Tether records surprise $700 million profit
Stablecoin giant Tether records surprise $700 million profit
Tether said in a new USDT attestation report that it made a $700 million net profit in Q4 2022. The company says it has added the money to its USDT reserves. Tether said its latest quarterly results were buoyed by interest rate hikes by the U.S. Federal Reserve, which have resulted in higher yields on government debt. Tether makes money from various fees, including a $1,000 withdrawal fee (with a minimum withdrawal requirement of $100,000), as well as investments in digital tokens and precious metals as well as issuing loans to other institutions. https://assets.ctfassets.net/vyse88cgwfbl/53L8YRM4ZHCEeqlpKbc3Q8/846eb5a7f53a47d53676ee3fbb1b3062/Std_ISAE_3000R_Opinion_BDO_31-12-2022_Tether_CRR.pdf
#Fintech#CryptoAssets#Stablecoins#Tether#USDT#DFC
·cnbc.com·
Stablecoin giant Tether records surprise $700 million profit
Building a more Resilient Cash Cycle
Building a more Resilient Cash Cycle
"The rapid succession of crises, particularly the Covid-19 pandemic and the Russian invasion of Ukraine, have clearly demonstrated the importance of a resilient cash cycle. Several countries are taking measures to further secure the supply of cash in times of crises."
#Fintech#CBDC#Cash#DFC
·cashessentials.org·
Building a more Resilient Cash Cycle
Central Bank of Brazil to Test Security and Transaction Privacy Levels of the Digital Real
Central Bank of Brazil to Test Security and Transaction Privacy Levels of the Digital Real
Banco Central do Brasil will reportedly focus its first digital real tests on determining the levels of privacy and security that can be achieved with the proposed central bank digital currency (CBDC) infrastructure. The tests will be conducted later this year and will set up a simplified operation to transact with a still-to-be-determined tokenized asset. The tests would start after the current laboratory phase of the digital real, which is currently being conducted as a part of the open LIFT challenge project that is testing nine different proposals. https://einvestidor.estadao.com.br/comportamento/real-digital-primeiro-teste/
#Fintech#CBDC#LATAM#Brazil#DFC
·news.bitcoin.com·
Central Bank of Brazil to Test Security and Transaction Privacy Levels of the Digital Real
Five hurdles to mint a CBDC
Five hurdles to mint a CBDC
Huw Van Steenis: Many central bankers are proposing to create a “Goldilocks CBDC”: Not so much in circulation that it causes a run on the banking system as individuals switch savings to CBDCs, but not so little that it is irrelevant. But is it really worth spending many billions for something so limited and risky? And what is the use case? The history of money suggests creating a Goldilocks scheme is going to be difficult. But it also shows many monetary false starts of technology and ideas that were later adopted. Here are a five things to consider. First, work needs to be carried out to understand why all CBDC pilots so far have disappointed. Second, do not underestimate the potential financial stability and monetary policy impacts. Third, the focus should be on wholesale, not retail. Fourth, only use systems battle-tested at scale (hurdle for critical market infrastructure should be very high). Finally, there should be an honest conversation about the implications for privacy if central banks can track spending of CBDCs, issues of competition with private banks and the structure of finance before committing to the more radical versions of CBDCs.
#Fintech#CBDC#UnitedKingdom#DFC
·ft.com·
Five hurdles to mint a CBDC
Indonesia launches wholesale CBDC consultation
Indonesia launches wholesale CBDC consultation
Bank Indonesia (BI) launched a consultation for the first phase of its three-stage Project Garuda, central bank digital currency (CBDC) initiative. The current consultation is the first of two wholesale CBDC iterations, focused on basic functionality, including integration with the real time gross settlement (RTGS) system, and covers banks and "wholesalers" who will be responsible for distributing a future retail digital rupiah. The digital rupiah will use a permissioned blockchain network. The second phase of the project will include the settlement of tokenized securities, as well as other wholesale use cases. The third phase will focus on retail CBDC. https://www.bi.go.id/en/rupiah/digital-rupiah/Documents/Consultative-Paper-Rupiah-Digital-BI.pdf
#Fintech#CBDC#Asia#Indonesia#wCBDC#DFC
·ledgerinsights.com·
Indonesia launches wholesale CBDC consultation
Policy Statement on Section 9(13) of the Federal Reserve Act
Policy Statement on Section 9(13) of the Federal Reserve Act
The US Federal Reserve Board issued a policy statement that said that issuing dollar-denominated tokens on open, public, and/or decentralized networks, or similar systems is highly likely to be inconsistent with safe and sound banking practices. The Board believes such tokens raise concerns related to operational, cybersecurity, and run risks, and may also present significant illicit finance risks, because—depending on their design—such tokens could circulate continuously, quickly, pseudonymously, and indefinitely among parties unknown to the issuing bank. Importantly, the Board believes such risks are pronounced where the issuing bank does not have the capability to obtain and verify the identity of all transacting parties, including for those using unhosted wallets.
#Fintech#CryptoAssets#Stablecoins#Regulation#UnitedStates#DFC
·federalregister.gov·
Policy Statement on Section 9(13) of the Federal Reserve Act
Proposing an interval design feature to central bank digital currencies
Proposing an interval design feature to central bank digital currencies
This paper adds to the extensive and rapidly growing literature by proposing a new type of Central Bank Digital Currency with an embedded time-limitation design feature based on a validity interval within which time-period the digital currency is an effective claim against the central bank. We call this interval Central Bank Digital Currency. Focusing on four use cases, we analyze the merits of the proposed interval design feature. We find that there are several potential applications in the context of liquidity management, lending, monetary policy of central banks and derivative transactions. It can be argued that interval CBDC have several potential advantages, including the reduction of counterparty credit risk, enabling remuneration, and enlarging the monetary and fiscal toolkit.
#Fintech#CBDC#DFC
·sciencedirect.com·
Proposing an interval design feature to central bank digital currencies
Asia’s Interest in Wholesale CBDC—and Challenges to Cross-border Use
Asia’s Interest in Wholesale CBDC—and Challenges to Cross-border Use
In the years ahead, new financial market infrastructures based upon digitized central bank liabilities called wholesale CBDCs may emerge in Asia. Given the dollar’s preeminent role in intra-Asia trade and finance, how these new systems are linked to each other—and to dollar payments channels—will depend in part on the role that U.S. institutions play. The launch of new, technologically sophisticated national-level large-value payment systems across emerging market economies in Asia could ultimately help advance U.S. interests in the region—including by increasing the efficiency and reducing the costs of converting dollars into local currencies. The extent to which this will happen depends in part on whether Washington creates a policy environment that helps facilitate U.S. institutions and technologies in playing a more significant role in the build-out of more efficient, lower-cost cross-border channels for wholesale financial transactions in Asia.
#Fintech#CBDC#wCBDC#CrossBorder#DFC
·carnegieendowment.org·
Asia’s Interest in Wholesale CBDC—and Challenges to Cross-border Use
What keeps stablecoins stable?
What keeps stablecoins stable?
Using trades between the stablecoin treasury and private investors, we quantify how improved arbitrage design stabilizes the price of the dominant stablecoin, Tether. We identify two 2019 design reforms: migration of Tether from the Omni to the Ethereum blockchain and decentralization of issuance. These reforms increased investor access to arbitrage trading with the treasury, reducing the absolute size of peg deviations by half. Further evidence for the importance of arbitrage design is present in the stability mechanism of the stablecoin DAI and in the creation of authorized merchants for the pegged coin WBTC.
#Fintech#CryptoAssets#Stablecoins#DFC
·sciencedirect.com·
What keeps stablecoins stable?
Brazil central bank to launch its digital currency in 2024
Brazil central bank to launch its digital currency in 2024
Banco Central do Brasil (BCB) reportedly aims to launch its central bank digital currency (CBDC) in 2024. It will be designed to encourage banks to tokenize their assets, so it sounds like it's being designed for niche cases, rather than general purpose usage.The huge popularity of the BCB's PIX payment system might argue for such an approach. Its use now surpasses transactions with credit and debit cards in the country.
#Fintech#CBDC#LATAM#Brazil#PIX#DFC
·reuters.com·
Brazil central bank to launch its digital currency in 2024
BoE Governor Jon Cunliffe on a potential digital pound
BoE Governor Jon Cunliffe on a potential digital pound
The Bank of England is proposing a limit of between £10,000 and £20,000 per individual as the appropriate balance between managing risks and supporting wide usability of the digital pound. The Technology Working Paper accompanying the Consultation Paper sets out an illustrative and complementary conceptual model consisting of a core ledger, API layer, analytics and alias service. The core ledger operated by the Bank might be centralised, running as a traditional database, or it might use Distributed Ledger Technology (whether a blockchain or another form of the technology). The Bank would provide the digital pound and the central infrastructure, including the ‘core ledger’. Private sector firms – which could be banks or approved non-bank firms – would provide the interface between the Bank’s central infrastructure and users by offering wallets and payment services. These private companies would be able to integrate the digital pound, as the settlement asset, into the services they would offer to wallet holders. The wallets would be operated on a ‘pass-through’ basis. That is to say, they would not constitute a claim on the wallet provider in the way that a bank account is a claim on a bank. Nor would they represent a custody arrangement. Rather, the wallets would hold all of the customer related information and ‘pass-through’ the customers instructions to the Bank’s infrastructure. All of the digital pounds would be held on the Bank of England’s central ledger.
#Fintech#CBDC#UnitedKingdom#DFC
·bankofengland.co.uk·
BoE Governor Jon Cunliffe on a potential digital pound
BIS Innovation Hub unveils new stablecoin, DeFi, CBDC projects
BIS Innovation Hub unveils new stablecoin, DeFi, CBDC projects
The BIS Innovation Hub (BISIH) has unveiled its 2023 work program. This includes previously unannounced projects on stablecoins, DeFi and CBDC, including Project Pyxtrial at the London Centre that will monitor stablecoins to ensure that the backing assets at least match the stablecoin issuance. And "going into its fourth year of life, the BIS Innovation Hub is reaching a cruising altitude, with 21 ongoing and five concluded projects. The Hub will increase the integration of its global network with additional cross-centre projects such as Mariana, which connects the Singapore, Swiss and upcoming Eurosystem centres, and others." https://www.bis.org/about/bisih/about.htm?m=1%7C441%7C713
#Fintech#Payments#CrossBorder#BIS#CBDC#DFC
·ledgerinsights.com·
BIS Innovation Hub unveils new stablecoin, DeFi, CBDC projects
The digital pound: A new form of money for households and businesses?
The digital pound: A new form of money for households and businesses?
The Bank of England (BoE) and HM Treasury launched a digital pound central bank digital currency (CBDC) consultation. Both want to ensure the public have access to safe money that is convenient to use as everyday lives become more digital, while supporting private sector innovation, choice and efficiency in digital payments. At this stage, they judge it likely that the digital pound will be needed, but a decision to go ahead  won't be taken until around the middle of the decade, and it wouldn't be launched until the second half of the decade. Alongside the consultation paper, the BoE published a technology working paper on its CBDC technology thinking.
#Fintech#CBDC#UnitedKingdom#DFC
·bankofengland.co.uk·
The digital pound: A new form of money for households and businesses?
Cash or cashless? How people pay
Cash or cashless? How people pay
A European Central Bank (ECB) blog post by Ulrich Bindseil and Doris Schneeberger discusses findings from a recent ECB consumer survey and what they mean for the future of cash and digital means of payment. "Despite the preference for cashless payments, 60% of euro area consumers state that they value having the option to pay in cash. This shows that people appreciate having a choice when it comes to how they pay. Their decision may then depend on the particular situation or purchase." The post made it clear that "as cash remains widely used and valued, [the ECB is] committed to maintaining euro cash and will continue to make sure it is available.
#Fintech#CBDC#Cash#ECB#Eurozone#DFC
·ecb.europa.eu·
Cash or cashless? How people pay