🇬🇧13📰CBDCs, Stablecoins and WEB3: News Synthesis On March and April Markets, Instruments, …
… Scenarios, Analysis and Considerations
CBDCs: Christine Lagarde & Europe; the doubts of Sweden; China clear about the anonymity of transactions; privacy considerations; United Kingdom: Norway; Russia; Australia; Japan, South Korea and Thailand; considerations on the East under Western influence; Caribbean; Jamaica; USA; US and EU considerations; Ripple;
Payments: Germany own on DLT; Africa, boom in mobile services; Rakuten; J.P. Morgan; Morgan Stanley; Paypal; MOB, Signal’s cryptocurrency; considerations on MOB; Tesla and AXA; Bottlepay; Visa;
Stablecoins: New Zealand; Thailand, the smart men of Tether and Bitfinex; the seignorage-style;
CryptoCurrencies: Pakistan; South Corea; US and UK taxes; rank, polls, lobbies; criticisms for and against; considerations on NFT;
WEB 3.0 and DeFi: share transfer in California; Wyoming and DAO; 14th Chinese Five-Year Plan; decentralized social networks; Italy and copyright on the blockchain; Forbes’s analysis about DeFi competitiveness and Chainlink’s analysis about systemic risk of asset accumulation;
Rules and Regulations: Turkey; FAFT new guidelines;
🔜 Next Insight: Bitcoin End or Beginning of the Myth?
🇪🇺 Christine Lagarde declared to Bloomberg TV that ‘EuroCoin’ will see the light within at least four years, provided that EBC receives the political green light this summer: confirming the haze of doubts and hesitations in which the thinking heads of ECB this post find themselves. Unfortunately they struggle, or pretend to struggle, to understand the direction in which the world is turning. Very, very interesting instead the results of the public poll on the introduction of the digital Euro and that can be read here.
🇸🇪 Even Sweden, after a rocket start, begins to have doubts. As I have written in previous episodes, the first perplexity comes from the fact that young people in that country do not know what paper currency is: if it must, as is right, remain in circulation alongside the digital one, it is necessary to educate them. Now a report addresses the problem of anonymity and off-line circulation, impossible to achieve with a CBDC the first, very difficult the second. As a pioneer Sveriges Riksbank is leading the way in every respect. Internal forecasts give a slippage in widespread adoption about 4/5 years.
🇨🇳 On the subject of privacy and CBDC, China is very clear, as usual. The head of the Digital Currency Research Institute of PBoC declared, at a thematic meeting of BIS in March, that anonymity will exist only between users, and not towards the central bank, and that the eventual anonymous wallets will be limited in the maximum amounts and will have as reference a cell phone number. Mr. Mu Changchun also hoped for the setting up of a relational and technical, supranational agreement for the circulation of the different CBDCs and reiterated, for his country, the coexistence of DC/EP with the payment systems of Ant and Tencent which, currently, manage 98% of payments by mobile.
🧐 👉 It is clear, if there was still a need to emphasize it, that with the current frameworks to protect privacy it is impossible to guarantee it, especially if the operation is delegated to the same institutions that manage the tools. New frameworks involving third parties as guarantors are needed. This is especially in light of the fact that the European people, as the ECB survey shows, put the protection of privacy first.👈
🇬🇧 The UK comes down heavily on the institutional side on FinTech. As part of the Financial Conduct Authority’s work, the aim is to create the Center For Finance, Innovation and Technology (CFIT) to develop the country’s fintech operationally through territorial hubs. As part of this, a task-force has been created between Treasury and BOE to explore the development of CBDC.
🇳🇴 Norway, after four years of study and research, through the central bank is starting with experimental testing.
🇷🇺 Bank of Russia press conference with CBDC testing forecast for 2022 and coming online for 2023.
🇦🇺 Australia, at first opposed to going the CBDC route, now through the mouth of the Governor, Philip Lowe, has undertaken a study group.
🇯🇵🇰🇷🇹🇭 Japan, said the Central Bank Governor, has no intention of issuing CBDC any time soon, following, and in agreement, with the American and European line of operation. However, considering how the subject is progressing, especially in the geographical area to which it belongs, it does not want to be found unprepared: therefore, in 2021, tests will continue to refine the national model on retail and interbank; on the same page South Korea; also in Thailand tests continue: here, however, the will for now is to implement the instrument within 3/4 years.
🧐 👉 East and Southeast Asia countries in the area of Western influence are a bit on the fence. On one side Europe and USA talk and not work and, on the other side, the point geo-giant that, proceeding at high speed, can add a further serious factor of local instability. Therefore, the countries of the area are doing well to be ready, to continue the soft-power work, strengthening the inter-operability agreements in place with China and acting as a bridge between the two worlds.👈
🏴☠️ Eastern Caribbean Central Bank (ECCB, the monetary authority that encompasses the part of the Caribbean where XCD, Eastern Caribbean Dollar, circulates, namely Anguilla, Antigua and Barbuda, Commonwealth of Dominica, Grenada, Montserrat, St Kitts and Nevis, St Lucia, St Vincent and the Grenadines), relying on the technical facility provided by Bitt and DLT DCash, has issued digital XCDs. The currency for now circulates only in 4 of the ECCB countries (Antigua and Barbuda, Grenada, St Kitts and Nevis and St Lucia), for an experimental retail trial period in collaboration with commercial banks.
🇺🇸 The giant slowly moves. MIT and the FED in Boston, which are jointly developing prototypes for digital USD have stated that they will see the light in July; the FED has issued a paper on the preconditions for the issuance of a CBDC and Governor Jerome Powell has reiterated the institution’s focus on issuance with the clarification of the necessary coexistence with paper.
🧐 👉 There is a difference between the U.S. and European wait-and-see position. The first derives from having as a base the world currency par excellence and, ultimately, already the digital version of it, in the form of stablecoins issued by individuals: taking time to devise the best in terms of product and market balance is a correct strategy that does not affect, for now, the competitive advantage of USD. The second, the European one, is only due to the cumbersomeness of the political-bureaucratic system that should provide, quickly, with competence and with actors that assume responsibility, to provide a competitive product in a scenario characterized by unquestionable competitive decadence, at the EU level, already present before and aggravated by it.👈
🌎 Ripple has also entered the CBDC market by announcing a platform for development, open-source, available to central banks and XRP based.
🇩🇪 Bundesbank has been experimenting with the use of DLT in securities exchange with a group of private banks.
🛖 GSMA’s State of the Industry Report on Mobile Money 2021 shows how Africa is the continent where half of the world’s mobile payment services are based.
Unbanking, underbanking and growth in remittances following the pandemic crisis have accentuated the growth of this phenomenon, especially in the sub-Saharan region.
🇯🇵 Rakuten, the Japanese leader in e-commerce, with 95 million registered users worldwide, after launching its own crypto linked to rewards points for purchases and transactions now allows convertibility with BTC and ETH.
J.P. Morgan introduced JPM Coin for B2B client transfers: note in the release how DLT is defined among ‘…the next generation of corporate treasury services’.
Morgan Stanley has begun to allow wealth management clients access to funds held in BTC, the first major US bank to do so in the management sector.
PayPal has launched for now in the USA, but progressively with extension in all countries where the company is present, ‘Checkout with Crypto’, that is the function that allows to pay the shopkeeper with cryptocurrency.
Signal, one of the messaging apps that best guarantees the effective privacy of interlocutors in communications, has put MOB into beta, for now only in the UK. MOB is a proprietary crypto that allows for the exchange of funds between Signal users.
🧐 👉 I make my the many criticisms that have been raised about the MOB/Signal issue. Never mind the pumping of the listing through insiders but, as someone observes, what was the need? Until now the messaging apps that have tried to combine their own crypto have all been mercilessly beaten (Telegram and Facebook with Libra docet) attracting the eyes of all the controllers of creation. Then, if it had to be done to raise funds for the whole Signal project, as stated, was it necessary to use Stellar as DLT for MOB? Is it the best-solution for privacy in general? ZCash and Monero already provide, more than decently, for privacy safeguards in monetary transfers and work on much more robust DLTs.👈
Tesla and AXA Insurance: for the record you can now buy a Tesla manufactured car or an AXA insurance contract with BTC.
Bottlepay is an app that allows interaction between crypto payment and social networks, in the sense of sending money through social. Great idea is slowly evolving: for now you can only use BTC but, importantly, Twitter has been implemented as a carrier.
VISA is counting on making available by the end of the year the settlement of payments in its network via USDC, stablecoin against US dollar.
🇹🇭 The BOI, Thailand’s central bank, has issued authorization guidelines to issue stablecoin in Bath
🇺🇸 The never-ending story of shenanigans (see this blog’s posts from 2018 onwards for a history) on the part of Tether, and Bitfinex which owns it, gets a new chapter. The penultimate episode saw the issue of the lack of collateral capacity against Tether’s issuance close in late February, provisionally, with a agree with the NYC Attorney General, costing the two companies 18.5 million and a requirement for periodic audits. On March 29, an auditing report was made public by Moore Cayman (Moore Global) where the collateral was declared to have occurred. The doubts are still many, also because, speaking of financial intelligence, every now and then instructive analyses come out on the subject, like this one that creates a fairly outlined picture of the characters that have succeeded in the strategic functions of Tether and Bitfinex.
👀 Good analysis, perhaps a bit biased because the company where the author works issues seignorage-style (algorithmic, here to know) stablecoins, on why this type of stable, which is little talked about, is struggling to catch on.
🇵🇰 Pakistan has a federal committee for the development of cryptoeconomy and, in this context, it has been decided that the province of Khyber Pakhtunkhwa, rich in hydroelectric energy, will become a zone of facilitated investments for mining-farms
🇰🇷 The volume of cryptocurrency transactions in South Korea has surpassed that of KOSPI, the Seoul stock exchange.
Reasoned and motivated rank of top exchangers, including reputation: useful.
J.P. Morgan survey of 3,400 on institutional investor sentiment to invest in cryptoassets: 14% to be avoided, 21% passing fad, 7% resource set to become important, 58% existing alternative. Overall, however, only 22% expressed a proximate and positive possibility for their operations in crypto.
Report, again J.P. Morgan now unleashed on the subject, on the prospects for development and growth in the short term of digital finance, with an all-encompassing vision, that is, with respect to all the instruments currently known but, above all, in function of the change that the pandemic situation has brought to the sector.
👎🏻 ‘Bitcoin’s dirty little secrets’ is the name of Bank Of America’s report which, starting from price analysis, thoroughly destroys the Bitcoin & C. myth in almost all its articulations and expressions.
👍🏽 ‘In the short term, Bitcoin is here to stay…’ this is, instead, one of the opinions expressed by Deutsche Bank in the report dedicated to cryptocurrency in the series aimed at the future of payments.
🧐 👉 I didn’t talk about prices, NFTs, Coinbase at NASDAQ and other such matters that, conveniently, you can find, maybe going beyond the obvious said or written by generalist newspapers, in any specialized blog. In the next post I’ll try to analyze what cryptoeconomy has become and how it had to be integrated in the fiat world to survive and thrive because I think this is the interesting aspect (like all innovations) of the cryptoworld. Actually no, two reports I make, both on NYT articles and about Coinbase: the first, about how the company treats customers, the second about its lobbying activity through CCI.👈
Web 3.0 and DeFi
In California, companies can transfer shares via blockchain-based DLTs: the Bill allowing this is currently provisional and considering the good results obtained, it is expected to be made final.
Wyoming, as I have already written, is progressively proving to be one of the world leaders in the transposition of innovations characterizing the cryptoeconomy: after the licenses for cryptobanks, already operational, the Bill for the incorporation into the legislative framework of the state of DAO organizations has been definitively approved.
🇨🇳 China’s 14th Five-Year Plan, 2021–2025 recently released in its final version, mentions the word ‘blockchain’ explicitly for the first time. It is done in the chapter dedicated to the construction of a digital China, within the framework of key emerging technologies, and its development is indicated as a backbone platform for the evolution and interaction of smart services. Previously, as written in these lines, ‘The Blockchain Industry in China-2020 Annual Report’ by Huobi had defined drive and development path.
🇮🇹 Good news from Italy where SIAE, the public society for the protection of copyrights, has made operational together with Algorand the management through NFT of the rights themselves. It must be said that Soundreef, the main European competitor to SIAE and its continental sisters, has also Italian origin and it has been working on blockchain for some time.
Jack Dorsey, Twitter, is moving forward on the path, taken in 2019 with the BlueSky project, of creating a standard for decentralized social networks. In this paper they evaluate the pros and cons, compared to the existing in WEB3.0, and approaches to the various optics including monetization.
Forbes optimally analyzes, in an informative and popular way, the competitiveness of DeFi compared to traditional finance, the different stages of development and why it is destined to stay. Must-read to understand.
Chainlink delves into how smart-contracts can be a solution to the systemic risk that comes from the accumulation of assets in the hands of unreliable intermediaries. Worth reading as a possible perspective.
Rules and Regulations
🇹🇷 Turkey has announced the launch of the bill, within three weeks, through which the cryptomarket will be regulated internally
🌏 FAFT at the end of March amended the guidelines for crypto operators and , as a result, before issuing it initiated a survey on them among private ones to feel the pulse. The substance of the updates concerns:
- DEXs and cryptocurrency escrow services are considered virtual resource service providers (VASPs);
- CBDCs are not to be considered cryptocurrencies but currencies issued by central banks, on a par with fiat currencies;
- stablecoins are virtual assets (VA) and FATF standards apply to them.
- only NFTs that can facilitate money laundering (ML) and terrorist financing (TF) are to be considered VA, i.e., those that can give rise to a secondary market;
- VASPs should assess and mitigate proliferation financing (PF) risks, here for FAFT’s definition of proliferation financing;
- best practices for VASP counterparty due diligence and clarification and guidance on new travel rules, here to see what travel rules are and their difference with KYC;
- options to mitigate the risks of peer-to-peer transactions, in practice between and to non-hosted private wallets, conceptually taking on board what FINCEN proposed in December in the US
Next Insight: Bitcoin End or Beginning of the Myth?
This is a English adaptation of a neuronal Italian/English AI translation by DeepL