The latest from the world of CBDCs
Kuwait and Peru join the club
The head of the Central Bank of Kuwait (CBK), Basel Al Haroun, recently spoke about the bank's CBDC research in an interview published in the Banker. As part of the project, the central bank has pooled together a group of experts from various fields at CBK to study this topic.
The Central Reserve Bank of Peru (BCRP), with technical support from the International Monetary Fund (IMF), is actively exploring the benefits and risks of a central bank digital currency (CBDC). Potential benefits include lowering the entrance threshold to financial services and strengthening monetary and financial stability, security, and the efficiency of payment systems. A survey was conducted to gather the views of stakeholders, including substantial market players, on the key points contained in the bank’s accompanying white paper.
Sweden does not need an e-krona yet
Sweden does not yet need a central bank digital currency (CBDC), according to government-driven research. After more than two years of work, the Payments Investigation project has submitted more than 900 pages of analysis to the government. The investigation, led by Anna Kinberg Batra, concluded that the case for a Swedish CBDC, or e-krona, is not yet strong enough. "We have a guarantee on bank deposits if anything happens to the banks, and the banks are also under strict supervision under a tough regulatory framework." However, the report recommends that Sveriges Riksbank continue to study the potential benefits of a CBDC and return to the Swedish Parliament in 2024 with new proposals if warranted.
Ghana delays CBDC launch
The Bank of Ghana (BoG) is postponing the launch of its e-Cedi central bank digital currency (CBDC) due to the effects caused by the economic turmoil of 2022. The pilot phase of the project was completed when individual consumers in Sefwi Asafo in the North-West region of the country used the currency to purchase items, goods, food and services, even when users were offline
Montenegro developing a pilot CBDC
The Central Bank of Montenegro (CBCG), together with Ripple, is developing a strategy and pilot program to launch a national stablecoin, according to a tweet by Prime Minister Dritan Abazovic in January.
Jamaica increasing demand for JAM-DEX
The Government of Jamaica has launched two new stimulus programs aimed at increasing the adoption rate of the JAM-DEX centralized banking digital currency (CBDC). The first is the Small and Micro Entrepreneurship Incentive Program, in which the first 10,000 entrepreneurs who register on the official JAM-DEX platform by April 1, 2023, will receive 25,000 Jamaican dollars (about $164). The second is the Personalized Wallet Holder Loyalty Program, which provides regular JAM-DEX users with loyalty points that can be redeemed for things like 2% cashback on certain purchases.
Launch of the Universal Monetary Unit
The Digital Currency Monetary Authority (DCMA) announced the official launch of an international central bank digital currency (CBDC) at the International Monetary Fund (IMF) Spring Meeting in 2023. The press release implied that the Universal Monetary Unit (UMU) algorithmic stablecoin had received the blessing of the IMF, although the quote included in the release from IMF financial adviser Tobias Adrian, taken from a November 2022 speech, says nothing about DCMA involvement. Additionally, the following quote from the DCMA Legal Counsel is conveniently opaque: "While the IMF has not formally endorsed the UMU, in reviewing the DCMA document and in weekly discussions within the team, the IMF has not yet raised any objection to UMU's approach to monetary sovereignty.”
BIS tests alternative to CBDCs
BIS has tested technology that facilitates interaction between central banks without the use of digital currencies or blockchain protocols. The BIS Nexus project links traditional financial systems (TARGET, FedWire and others) for cross-border payments.
The year-long experiment included the Bank of Italy, the Central Bank of Malaysia (BNM) and the Monetary Authority of Singapore (MAS), as well as payment system operators PayNet and Banking Computer Services (BCS). Test payments were initiated using only the mobile phone numbers and company registration numbers of recipients through the Eurosystem TARGET Instant Payment Settlement (TIPS), Malaysian Real-Time Retail Payments Platform (RPP) and Singapore's Fast and Secure Transfer System (FAST).
Stablecoins
Stablecoin law in Wyoming
The Governor of Wyoming signed SF 127, the Wyoming Stable Tokens Act, into law, creating the Wyoming Stable Token Commission and authorizing the issuance of stable tokens in the state. According to the law, the Wyoming stable token is "a virtual currency representing one US dollar held in trust by the State of Wyoming and redeemable for one US dollar" that can only be issued in exchange for a US dollar. The law also defines criteria regarding the limitation of liabilities and requires the commission to issue at least one Wyoming stablecoin no later than December 31, 2023. This law can be seen as a “response” to the Fed, which barred the Custodia bank from access to its accounts.
Coinmetrics data
The current issuance of stablecoins is estimated to equal $120 billion. Although the total supply has decreased by only $8 billion, or 5%, significant market events have caused large movements in the stablecoin ecosystem.
The history of BUSD looks tragic.
And the collapse of the Circle Reserve Bank prevented the USDC from using the attack on BUSD to its advantage. As a result, only Tether is benefiting from the market shocks so far.
Regulations
SEC vs Everyone
Several Coinbase products have fallen under scrutiny from regulators, including:
1) An as-yet-unknown number of tokens;
2) Coinbase Earn, a staking service;
3) Coinbase Prime, an institutional custody and trading solution;
4) Coinbase Wallet, a self-storage wallet.
Bankless has been chronicling SEC activity in a special section titled, SEC vs Everyone. In addition to Coinbase, the Paxful P2P exchange, which operates mainly in Africa and Latin America, found itself in the crosshairs of American regulators, who forced it to cease operations.
On Friday, 14th April, the Securities and Exchange Commission voted three to two to reopen comment on a controversial complicated rulemaking proposal that could sweep decentralised exchanges into the regulator’s scope. It seeks to amend the existing Regulation Alternative Trading Systems. The commission also released supplemental information on how the proposal relates to crypto assets.
Republican Commissioner Hester Peirce, who has affectionately been dubbed “Crypto Mommy”, has called the Reg ATS amendments an “unmarked backdoor”.
Europe
European legislators have passed a new law imposing a €1,000 limit on anonymous cryptocurrency transactions as part of the Anti-Money Laundering and Terrorist Financing (AML/CFT) package. The bill also aims to limit anonymous monetary transactions in excess of 7,000 euros where it is not possible to identify the sender. The bill received an overwhelming majority of votes — 99 votes "for" with eight "against" and six abstentions. The European Parliament will begin negotiations on the final text of the package of measures after its plenary session in April.
2023 Digital Euro Conference
The Digital Euro Association presented its vision at the Digital Assets Conference in Frankfurt, which also included a session dedicated to the Digital Euro.