India Central Bank, RBI, Considers Rolling Out Digital Rupee In A ‘Phased’ Manner

India Central Bank, RBI, Considers Rolling Out Digital Rupee In A ‘Phased’ Manner

The Reserve Bank of India (RBI) is working on a phased implementation strategy for its central bank digital currency (CBDC) program.

India Considers Running CBDC Pilot Programs

The Deputy Governor of RBI, T. Rabi Sankar, said the bank is investigating the issuance of a CBDC and may consider running a series of pilot programs to that effect.

While speaking at a conference organized by the Vidhi Center for Legal Policy, Sankar said introducing a CBDC would help protect the Indian populace from volatile private digital assets.

According to the deputy governor, a phased introduction of a digital Rupee would allow time for needed legal changes to the country’s foreign exchange rules.

Sankar said that several issues would be examined before CBDC implementation could be considered. He added that security or privacy concerns and how retail payments would be organized would also be looked into.

“Some key issues under examination are – (i) the scope of CBDCs – whether they should be used in retail payments or also in wholesale payments; (ii) the underlying technology – whether it should be a distributed ledger or a centralized ledger, for instance, and whether the choice of technology should vary according to use cases; (iii) the validation mechanism – whether token-based or account-based, (iv) distribution architecture – whether direct issuance by the RBI or through banks; (v) degree of anonymity etc.”

While the Indian government has shown signs of interest in CBDC previously, that has not been the same with cryptocurrencies. The country has exhibited various attempts to ban cryptocurrencies outrightly.

Earlier this year, the government hinted at its plans of introducing a law to ban private cryptocurrencies. The legislation had sought to prohibit cryptocurrencies while allowing for certain exceptions to promote blockchain technology.

However, the mood has somewhat changed in recent months, with signs of the country taking a moderate approach and regulating the crypto market.

CBDCs Making Progress In Different Countries

CBDCs have gained a lot of attention over the past year. Several countries have moved forward to study and implement CBDC pilot tests in the wholesale and retail segments.

South Korea recently chose Ground X, a blockchain subsidiary of a local internet company Kakao, as the technology provider for the pilot tests of its digital Won.

According to local media agency Korea JoongAng Daily, Ground X would participate in the South Korean CBDC project alongside US-based blockchain company ConsenSys. Other Kakao affiliates like KakaoBank and Kakao Pay would also participate.

The European Central Bank is also making progress. Last week the bank approved an investigation phase for a CBDC, which would last for 24 months. This stage would focus on addressing issues surrounding design and distribution.

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Author: Jimmy Aki

European Central Bank Kicks Off New Phase Of Digital Euro Project

European Central Bank Kicks Off New Phase Of Digital Euro Project

The European Central Bank (ECB) is moving forward with its central bank digital currency (CBDC) plans. Today, the bank announced that its Governing Council had approved the investigation phase of the digital euro project.

Investigation Phase Scheduled For 24 Months

The ECB, which has been discussing the potential launch of the CBDC for years, will now move to the exploration stage. According to the announcement released by the bank, the investigation phase of the euro-zone CBDC would last for 24 months.

This phase is aimed at addressing key issues in the design and the distribution of a CBDC. For this purpose, the ECB said it would consult with stakeholders ranging from banks to retailers.

The ECB further noted that the digital Euro is aimed at complementing cash and not replacing it. The project is focused on making sure digital payments are still within the purview of central banks. This is to avoid leaving digital payments to the private sector. ECB President Christine Lagarde said,

“Our work aims to ensure that in the digital age, citizens and firms continue to have access to the safest form of money, central bank money.”

Lagarde added that the CBDC would meet the needs of EU citizens and avoid making negative impacts on local financial stability and the ECB’s monetary policy.

Lagarde had previously said in an interview with Bloomberg that she expects the CBDC to launch within four years.

According to Fabio Panetta, an ECB Executive Board member, experiments carried out so far show that the digital Euro would be environmentally friendly. He said that the energy usage would be negligible compared with the energy consumption and carbon footprints of cryptocurrencies like Bitcoin.

ECB Digital Euro Journey

The ECB has been discussing the potential issuance of the digital Euro for years. In January, the European Commission and the ECB collaborated to evaluate the potential issues that could arise from the digital Euro.

The bank also held a public consultation in which 8,000 participants gave feedback. The consultation that closed on January 12th found privacy a primary concern among 41% of respondents.

Privacy has been one major concern for governments regarding CBDCs as they struggle with finding a balance between preventing illicit financial activity and preserving confidentiality.

However, several central banks around the world are moving forward with their CBDC plans. Central banks in countries like the United Kingdom and Japan are moving from discussion to exploration of a CBDC.

If the ECB eventually adopts a CBDC, it would most likely follow in China’s footsteps. China has already advanced CBDC plans with trial runs in different provinces across the country. Meanwhile, both South Korea and Sweden appear to have moved from exploration to testing in recent months.

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Author: Jimmy Aki

Central Bank CBDC’s Could Enhance Cross Border Payments: BIS, IMF, World Bank at G20

Central Bank CBDC’s Could Enhance Cross Border Payments: BIS, IMF, World Bank at G20

While Central banks seem to be focusing more on the domestic use of cross-border networks of central bank digital currencies (CBDC), the Bank of International Settlements (BIS) believes CBDCs should be used beyond borders.

CBDC Proposed At G20

In a report published alongside the International Monetary Fund (IMF) and the World Bank, the BIS proposed a cross-border network of CBDCs to the G20.

Although cross-border networks are usually criticized for their high cost, low speed, limited access, and insufficient transparency, the global finance triumvirate believe CBDC could change that.

The report analyzed how CBDCs could facilitate enhanced cross-border payments through integration and cooperation. This includes basic compatibility tests and finding common ground between various national efforts in order to reap the full benefits of digital currencies.

The report then dwelled on the importance of interoperability between CBDCs since various CBDCs would roll out at different paces in several jurisdictions.

“If different jurisdictions’ CBDC projects are coordinated effectively, the clean slate presented by CBDCs might be leveraged to enhance cross-border payments,” the paper explained.

While no central bank has launched a CBDC yet, most CBDC studies and development efforts from the apex banks have been largely focused on domestic use and not cross-border payments.

When central banks were asked earlier this year whether they were thinking of exploring CBDCs’ cross-border use, the majority said no.

The survey which was carried out in the first quarter of 2021 with 50 central banks as participants showed that most central banks have not yet taken a firm position on the CBDC issue.

While more than 25% were considering allowing retail CBDC use by non-residents, 14 and nearly 20% said that they are not yet considering this but may do so in the future. Only 8% of the central banks initially considered allowing cross-border retail issued CBDC, while others said they might do so in the future.

Central Banks Exploring CBDCs

Several central banks around the world are currently working on studying or developing pilot tests for digital fiat. Different countries seem to have taken different approaches to CBDCs in terms of design, research, and development efforts.

China’s digital yuan is still leading the game. The country has distributed more than 200 million yuan in digital currency as part of pilot projects across the country. It has conducted trials of its digital currency across different provinces, including Shenzhen, Suzhou, Xiongan, and Chengdu.

China also intends to test its digital yuan with foreign athletes and visitors during the Beijing Winter Olympics to be held in 2022.

Many countries have also piloted CBDCs for cross-border use. This includes France, Switzerland, Singapore, and Bahrain among others.

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Author: Jimmy Aki

Bank of America Sets Up Dedicated Research Team to Study Crypto

Bank of America Sets Up Dedicated Research Team to Study Crypto

America’s second-largest bank, Bank Of America, has established a team dedicated to researching cryptocurrencies, Bloomberg reports.

Cryptocurrencies: One of the Fastest Growing Ecosystems

In a memo, the bank emphasized the growing interest in cryptocurrencies, describing them as one of the fastest-growing emerging technology ecosystems.

Bank of America’s head of global research, Candace Browning, noted that

“We are uniquely positioned to provide thought leadership due to our strong industry research analysis, market-leading global payments platform, and our blockchain expertise.”

According to the memo, Alkesh Shah, the bank’s former head of the Global Technology Specialist team, will lead the cryptocurrency research team.

Shah will report to Michael Maras, who leads Bank of America’s fixed-income, currencies, and commodities research globally. Mamta Jain and Andrew Moss will also join the crypto research team and will report to Shah.

Shah has been working in Bank of America since 2013 and has previously worked at Morgan Stanley and Lehman Brothers Holdings Inc.

Bank of America has been in the blockchain scene for years. In 2018, the bank held the largest number of blockchain patents compared to other banks, and in 2019 it filed 722 patent applications.

The North Carolina-based bank also began hiring for several blockchain positions that same year.

In May this year, the Bank of America joined Paxos Trust. co, a blockchain-based settlement network for equities. Thanks to this partnership, the bank began settling stock trades in minutes rather than days using blockchain.

Bank Of America Becomes Latest Wall Street Bank Taking Crypto Step

With this creation of a crypto research team, the Bank of America becomes the latest US financial institution to dive deeper into crypto.

Several Wall Street banks have capitalized on investors’ frenzy for digital assets in recent times. Banks have been rapidly expanding into the world of cryptocurrencies, with many pushing to offer wealth-management products or custody services for the asset class.

For instance, Goldman Sachs Group Inc re-launched its cryptocurrency trading desk in March.

It also started offering investors access to non-deliverable forwards (NDFs), a derivative tied to bitcoin’s price that pays out in cash in May.

The bank is also looking at expanding into Ether by offering investors options and futures trading in the asset.

JPMorgan Chase & Co. has also begun offering crypto-related products. In March, the bank launched a Bitcoin exposure basket, a product to track public company stocks with Bitcoin exposure.

In addition to crypto offerings, JP Morgan also rolled out crypto-related job vacancies last month, leading to speculations surrounding its growing cryptocurrency ambitions.

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Author: Jimmy Aki

Bank Of France Governor Wants Europe To Regulate Crypto Now

The Bank of France governor Francois Villeroy de Galhau has called on the European Union to create a regulatory framework for cryptocurrencies.

According to him, if Europe does not make crypto regulation a priority, there could be dire consequences for the monetary sovereignty of states.

Villeroy Encourages The EU To Speed Up CBDC Plans

Speaking further at a Paris Europlace financial conference, the Central bank governor emphasized the increasing importance of digital currencies in financial markets.

He called on the EU to speed up plans in issuing a digital euro. “On both digital currency and payments, we in Europe must be ready to move as quickly as needed, ” Villeroy said. Villeroy’s statements centered around urgent ways of preventing the weakening of the Euro. He stressed the urgency saying there was little time in doing this.

He noted that many risks were surrounding the ECB’s payments control, with the digital Yuan being part of it. In addition to this, Europeans are using less cash by the day due to the growing role cryptocurrencies play in regional markets.

The use of cash decreased during the first few months of the pandemic, a movement that the governor said could lead to “marginalization of the use of central bank money.”

This is not the first time the central banker would be warning regulators against the risk of cryptocurrencies, including central bank digital currencies (CBDCs) and stablecoins.

During the Bundesbank conference held in September last year, Villeroy described the most imminent risk in Europe to be private financial infrastructures and monetary systems. According to him, they were positioning themselves as issuers and managers of currencies.

China’s Digital Yuan Drawing Criticisms

China is the leader in developing and deploying wholesale CBDCs. The country is currently testing its digital Yuan, where citizens in different provinces transact payments over their mobile phones.

However, the project has been considered a threat by most Western countries. This is due to the reports circulating the media that China is planning to topple the dominance of the US greenback with its digital renminbi.

However, former central bank governor Zhou Xiaochuan responded to these reports last month.

He said the digital yuan is not designed to replace the US dollar’s global dominance. He added that the CBDC is only focused on modernizing the traditional payment system while reducing costs and serving retail payment systems.

Meanwhile, various countries are warming up to CBDCs. The Bank of France has revealed plans to conduct further tests for its digital currency this year after completing a pilot program for its CBDC in January.

In the US, a Digital Dollar Project of five pilot projects was launched last month to test how a Federal Reserve-issued CBDC would operate.

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Author: Jimmy Aki

Monetary Authority of Singapore Partners With World Bank and IMF to Launch Global CBDC Challenge

Monetary Authority of Singapore Partners With World Bank and IMF to Launch Global CBDC Challenge

The Monetary Authority of Singapore (MAS) has launched a global challenge for financial institutions to submit ideas and solutions relating to retail Central Bank Digital Currencies (CBDCs).

The apex bank unveiled the challenge in partnership with the International Monetary Fund (IMF), World Bank, Asian Development Bank, and the Organisation for Economic Co-operation and Development.

Global Challenge To Seek Solutions For CBDC

The Global CBDC competition seeks innovative retail CBDC solutions to enhance payment efficiencies and promote financial inclusion.

Financial technology (FinTech) companies and financial establishments around the world have been invited to contest this challenge.

According to the bank, the competition would see participants submit solutions to 12 unresolved problems regarding CBDC instruments, distribution, and infrastructure.

At the end of the contest, three winners will be chosen, with each receiving S$50,000 (US$37,193) in prize money. In addition, up to 15 finalists would have the chance to receive mentorship and access to the APIX Digital Currency Sandbox.

The sandbox offers a comprehensive test and development platform, including a host of different application programming interfaces (APIs).

The chosen finalists would pitch their solutions to a global audience on Demo Day at this year’s Singapore FinTech Festival. The Singapore FinTech Festival is a global festival that will be held from 8 to 12 November 2021.

Other UN agencies which MAS partnered with on this project include the United Nations High Commission for Refugees, United Nations Development Programme, and United Nations Capital Development Fund.

The Global CBDC Challenge will also be supported by Amazon Web Services, Mastercard, payments platform Partior, blockchain software developer R3 and blockchain project Hyperledger.

Banks Around The World Working On CBDCs

Many central banks around the world are currently developing CBDCs. According to reports from Bison Trails, 80% of Central banks are studying CBDCs and making efforts to make their currencies compatible with the digital economy.

Most of these advancements are focused on wholesale CBDCs, which will promote central bank-level payments. However, some are also considering retail CBDCs, which consumers and businesses will be able to use like cash.

China still has the lead in developing and deploying CBDCs. The country is currently testing a digital Yuan version, where customers can transact payments over their mobile phones.

The US kicked off a Digital Dollar Project last month to test how a Federal Reserve-issued CBDC would operate.

The project, which consists of five pilot projects, is aimed at evaluating how the digital dollar can benefit people who are unbanked or underbanked as well as individuals who do have access to banking services and small businesses.

Meanwhile, unlike other countries, El Salvador took a more radical approach as opposed to having a CBDC. The country recently became the first to make Bitcoin a legal tender.

El Salvador is also considering mining Bitcoin using geothermal energy derived from volcanoes.

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Author: Jimmy Aki

Tanzania’s Central Bank says It’s Working on President’s Directive to Prepare for Bitcoin Adoption

Tanzania’s Central Bank says It’s Working on President’s Directive to Prepare for Bitcoin Adoption

The central bank of Tanzania said it is working on President Samia Suluhu’s directive to prepare for cryptocurrencies, which could reverse the ban put on digital assets in 2019.

The new president came to power in March after the death of her predecessor John Magufuli and is much more open to foreign investment than him. Earlier this month, she said the arrival of crypto assets in the East Africa nation was inevitable.

“In the financial sector, we have witnessed the emergence of blockchain technology or cryptocurrency,” Hassan said during the opening of a new central bank branch in Mwanza this month.

“Many countries in the world have not accepted or started using these currencies. However, I would like to advise the central bank to start working on those issues. Just be prepared.”

These comments came not long after El Salvador became the first country in the world to adopt bitcoin as a legal tender.

Back in November 2019, Tanzania’s central bank banned crypto, saying they were not recognized by local law as legal currencies, and warned its citizens to stay away as they might lose money if they invested in such speculative assets.

But now, the Bank of Tanzania is adapting following the president’s comments.

“The bank is working on the directives given,” a central bank spokesperson told Reuters this week but declined to give further detail.

The spokesperson didn’t share if they plan to adopt existing cryptocurrencies or look to issue their own central bank digital currency (CBDC).

Tanzania Bankers’ Association chairman Abdulmajid Nsekela welcomed the President’s push for the $63 billion economy that relies heavily on cash transactions.

“The most challenging element for regulators is to be caught by surprise by innovations,” he said, adding: gradual preparations would help them assess the risks and come up with ways of addressing them in advance.

However, analysts warned that progress might be slow because while the change in tone from the president is clear if it’s to be seen “whether the central bank will take concrete steps towards embracing cryptocurrencies,” said Faith Mwangi, an analyst at Tellimer.

Similar moves to adopt Bitcoin as legal tender is being made by Paraguay and Panama as well.

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Author: AnTy

Investment Bank, Bernstein, Hosts Webinar on ‘Building Leverage Products for DeFi’ with Alpha Finance

Investment Bank, Bernstein, Hosts Webinar on ‘Building Leverage Products for DeFi’ with Alpha Finance

Investment bank Bernstein is hosting a webinar on yield farming in decentralized finance (DeFi).

The webinar, “Bernstein Crypto Live: Building leverage products for DeFi,” will be hosted on June 22 at 8:30 am ET.

Bernstein’s Indian Financials and Fintech director Gautam Chhugani will be hosting Alpha Finance Lab co-founder Tascha Punyaneramitdee.

“Alpha Finance is building leverage products to complement existing DeFi yield-farming and DeFi crypto-trading products” defines the official notice for the upcoming webinar.

According to the announcement, the bank will consider the need for leveraged products, system leverage in crypto, liquidations, and the impact of leverage during drawdowns.

They will also focus on understanding Alpha Homora and Alpha-X, other levered products that Alpha Finance can build, Alpha token staking and token-holder incentives, and Alpha Launchpad – an incubator platform for DeFi.

Alpha Finance Lab is an ecosystem of DeFi products that has launched Alpha Homora on Ethereum and BSC, a leveraged yield farming and leveraged liquidity providing product. For this, the loans are over-collateralized; as such, users can increase their realized yields but run the risk of being liquidated in case of a sharp reduction in their collateral value.

The project’s roadmap includes multiple products focused on DeFi applications, including a Defi launchpad for new projects, explains the notice. Their other product AlphaX is a non-order book perpetual swap.

The project is backed by The Spartan Group, Multicoin Capital, DeFiance Capital, and Delphi Ventures.

There is currently $1.2 billion of total value locked (TVL) in the project and 74.6 million ALPHA tokens staked, representing 26.14% of ALPHA’s circulating supply.

ALPHA token holders earn fees by staking their tokens, which are currently trading at $0.477 per coin, down 83.6% from its peak of $2.93 five months ago.

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Author: AnTy

Despite ‘Significant’ Demand, Denmark’s Biggest Bank Will Maintain ‘A Very Cautious Approach’

Despite ‘Significant’ Demand, Denmark’s Biggest Bank Will Maintain ‘A Very Cautious Approach’

The Nordic region is simply staying away from crypto due to a lack of regulation in the sector.

Danske Bank says it won’t allow trading of Bitcoin and other cryptocurrencies on its platform despite the growing interest from its clients.

The reason for not lifting the ban on trading crypto is the lack of transparency and regulation in crypto trading, as per the bank’s website. Denmark’s biggest bank also warned of volatility, “opaque” pricing, and the carbon footprint of crypto mining being at odds with its goal of sustainable banking.

“We recognize that there is a significant global market for crypto currencies and that many customers find cryptocurrencies interesting,” the bank said.

“However, as a financial institution, Danske Bank for several reasons maintains a very cautious approach towards cryptocurrencies.”

The bank is currently under investigation for money laundering in the U.S. and Europe.

Danske said it was waiting to see the developments to be made under new European Union legislation, Regulation of Markets in Crypto Assets (MiCA), and that it will review its position if crypto assets get properly regulated.

“We continuously monitor developments in the area of cryptocurrencies, and as the cryptocurrency market matures and is further regulated, we will review our position.”

Nordic Region Staying Away From Crypto

A Swedish hedge fund Volt Capital Management also said it wouldn’t invest in Bitcoin because they prefer a regulated market.

Nordea Bank Abp has also banned Bitcoin, saying it is too risky to explore without regulations and won’t let employees trade it either.

Earlier this week, the head of Sweden’s financial regulator, Erik Thedeen, further warned of a “significant risk” that crypto assets may be used for criminal purposes.

“Financial firms need to ask themselves whether they really want to invest in or encourage the growth” of such assets when they have “no obvious valuable, legitimate use,” he said.

Not Everyone Is Onboard

Elsewhere, a Coinbase user complained on Reddit that he is having issues with withdrawing money from Coinbase to their Citibank account via instant debit card.

“They informed me that they are no longer accepting incoming credits from Coinbase or other cryptocurrency-related institutions,” wrote the user.

However, this isn’t the first such incident. Back in 2018, four banks Citi, JPMorgan Chase, Bank of America, and Capital One, prohibited purchasing cryptocurrencies at the platform using their credit cards.

But now banks have started to get comfortable with crypto, with big giants like Goldman Sachs and JPMorgan offering crypto trading services to their clients.

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Author: AnTy

Still Working with Binance.US, Clarifies Silvergate Bank After the Reports of Cutting Ties with Binance

Still Working with Binance.US, Clarifies Silvergate Bank After the Reports of Cutting Ties with Binance

Crypto-friendly Silvergate Bank took to Twitter to confirm that they are working with cryptocurrency exchange Binance.US in “good standing.”

Binance.US is “an active participant on the Silvergate Exchange Network,” added the bank late on Thursday.

This clarity came after the reports that the Silvergate Bank has abruptly cut ties with leading exchange Binance.

Binance has reportedly sent an email to customers in English and Spanish language, informing them that the exchange will no longer support USD deposits and withdrawals via Silvergate Bank over SWIFT from June 11, reported The Block.

“Rest assured, we are working hard to provide an alternative USD solution,” further reads the email.

In December, Binance launched the Silvergate funding option for international users that allow customers to deposit and withdraw USD from their accounts.

In response to this, Binance.US said on Twitter, “We are proud to continue working with Silvergate Bank as one of our banking partners.”

However, no such confirmation has been made in regards to Binance.

In separate news, Binance’s Chief Finance Officer (CFO) Wei Zhou has left the company after working for three years. Zhou’s track record in initial public offerings ignited the rumors at the time that Binance might be considering going public, but CEO Changpneg Zhao has denied any such plans.

“After three years at Binance, Wei has decided to leave for personal reasons,” the spokesperson said.

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Author: AnTy