China Planning to Legalize Digital Yuan; Forbids Yuan-backed Digital Tokens

China continues to lead in developing its central bank digital currency (CBDC) as it now considers giving it a legal foundation in an upcoming law revision, reported South China Morning Post.

In the past few weeks, the trial of the digital yuan in the real world took place through the giveaway of 50,000 digital “red packets”— a series of trials have been conducted in Suzhou, Shenzhen, Chengdu, and Xiongan — and now the central bank is also addressing all the problems that emerged in the pilot tests.

According to the media report, The People’s Bank of China (PBoC) published a draft law on Friday that would give the Digital Currency Electronic Payment (DCEP) system a legal status.

For the first time, it included the digital yuan, which was also defined as part of its sovereign fiat currency.

As per the draft law, issuing yuan-backed digital tokens by any party or any plans to replace the renminbi in the market would be forbidden.

DCEP, meanwhile, will be allowed to be circulated and converted like coins and physical banknotes.

“Its centralised management will be good to fight against cryptocurrencies and global stablecoins and prevent their erosion of currency-issuance rights,” Mu Changchun, head of the central bank’s digital currency research institute, said on Sunday at the Bund Summit in Shanghai.

The central government has already made clear that DECP won’t replace cash, but there are some domestic concerns related to its convertibility, privacy, and safety. Mu touched on these potential pitfalls as he said,

“The PBOC will also face anti-counterfeit issues in the digital era, and we must lower the cost.”

He further added that the central bank would be asked: “to coordinate the construction of digital currency application scenarios for the purpose of identification.”

A digital yuan product suitable for those senior citizens that don’t use smart terminals is also in development.

As for the threat the government-led project poses to private mobile tools like WeChat Pay and Alipay, Mu said they are just electronic wallets while the DCEP is the money inside them as such “not competitors.”

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Author: AnTy

Ripple Shortlists A Move to Asia and Europe Should it Leave the US

Ripple Labs considers Japan, Singapore, Switzerland, UAE, and the UK as possible jurisdictions should the blockchain patent services company leave the US amidst a lack of regulatory clarity, said Ripple CEO, Brad Garlinghouse. In an interview with Bloomberg, he said,

“The common denominator between all of them is that their governments have created a clarity about how they would regulate different digital assets, different cryptocurrencies.”

When it comes to the US, authorities here are unclear on the status of cryptocurrencies, said Garlinghouse adding that there are different opinions on whether crypto is a currency, commodity, property, or security. “Regulation shouldn’t be a guessing game,” he said.

“Ripple is definitely a proud U.S. company, and we’d like to stay in the U.S. if that was possible, but we also need regulatory clarity in order for us to invest and grow the business.”

In “contrast” to the US, Garlinghouse said Japan had created an “environment for a very healthy market to develop.”

The country has already introduced a registration system for crypto exchanges about three years back. Moreover, Ripple has close ties with Japanese financial conglomerate SBI Holdings, and its CEO Yoshikata Kitao also sits on Ripple’s board since last year.

“Japan is one of our fastest-growing markets, in part because we have key partners like SBI,” he said. “I have spoken to the SBI team about the fact we are looking at” Japan as a potential destination, Garlinghouse said.

Ripple has been thinking of a move for some time now; in another of his interviews, Garlinghouse has said that China is already decades ahead in the digital currency sector.

In terms of a central bank digital currency, China has moved further ahead in its digital currency trial as it distributed 200 digital yuan to 50,000 people spendable at 3,000 retail outlets. Other central banks, including the Federal Reserve, meanwhile are still in the research phase.

The playing field won’t level until a country established a lead in “the internet of value,” he said.

The pandemic raised the interest in digital currencies and not just for CBDC. According to Garlinghouse, the coronavirus pandemic has given a “tailwind” to crypto markets because of all the money printing central banks have been doing.

While the monetary stimulus, which is “inflationary on some level,” drives the demand for crypto, a move away from cash is also helping, he said.

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Author: AnTy

Indian Securities Regulator Urges the Exploration of Blockchain for the Securities Market

Ajay Tyagi, the Security and Exchange Board of India’s (SEBI) chairman, considers blockchain technology for use of securities that needs to be considered as it has great potential.

SEBI regulates the securities market in India. On January 23, at a research conference arranged by the National Institute of Securities Market, Mr.Tyagi believes AI, machine learning and blockchain tech have great potential for securities. These were his exact words regarding the blockchain technology:

“Blockchain could be used in clearing, settlement and record-keeping given its benefits in maintaining records in distributed ledgers, while still being a single source of truth.”

International Blockchain Projects Given as an Example

Tyagi also talked about some international blockchain projects that research the securities market, giving them as an example. He said:

“Blockchain-based solutions are being developed by some foreign exchanges for settlement and by domestic exchanges for KYC recordkeeping purposes. There is a need for active research into these technologies to explore their best possible usage in securities markets.”

Technology Plays an Important Role on the Capital Markets

Tyagi emphasized how important the latest technologies are for the capital markets, by saying:

“Catching malpractices in the market using the standard tools is increasingly getting difficult. SEBI has already planned Data Lake project to augment analytical capability with advance analytical tools viz., AI/ML, deep learning, big data analytics, and natural language processing, etc.”

While the government in India is encouraged by blockchain tech being used in many cases, its stance on cryptocurrency is more on the negative side. As previously mentioned, India’s Supreme Court is now in the process of solving a petition that was filed against a ban imposed by the Reserve Bank of India (RBI) on the banking channel. January 28 is the date for the next hearing in this case.

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Author: Oana Ularu

Swiss Gov’t Says Digital Franc Is Too Risky Public Use, But Beneficial To Financial institutions

It may not be the time yet to have an electronic Swiss Franc for the population. The Swiss government considers that there are more risks than benefits in this digital currency that could eventually destabilize the financial system. This is despite the friendly position that the country has towards cryptocurrencies and blockchain technology.

No Electronic Swiss Franc For General Use

In a recent report released by The Federal Council, they analyzed the different opportunities and risks related to the creation of a digital Franc. At the moment, the risks outweigh the benefits of such a currency considering they could have a negative effect on financial stability.

The analysis was based on the creation of a digital currency that would be available to the general public and that it would be complementary to other existing forms of central bank money.

As the report explains, there are other countries that are exploring the possibility to issue a digital currency based on their local fiat currency. These countries include Sweden and China, however, there are no clear roadmaps about which could be the next steps before being able to use a Central Bank Digital Currency (CBDC).

Some of the benefits of CBDCs include better access to payment and financial services for users and easy access to money that is free of default risk. Moreover, it could be possible for monetary policies to become more efficient over time while reducing tax evasion and money laundering.

However, the government considers that digital currency for financial market players could be a much more promising strategy.

It is also worth mentioning that Christine Lagarde, the president of the European Central Bank (ECB) said that they should be ahead of the curve in terms of stablecoins and digital currencies because there is a demand that the ECB has to address.

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Author: Carl T

Coin Center Advocacy Group Informs UK AML Regulations Could Violate Users’ Privacy And Rights

Coin Center Advocacy Group Informs UK AML Regulations Could Violate Users’ Privacy And Rights
  • Regulators want to increase AML and CTF regulations
  • Coin Center considers they are violating users’ rights and privacy

According to the nonprofit research and advocacy center called Coin Center, the proposed anti-money laundering (AML) and counter-terrorism financing (CTF) regulations violate users’ privacy rights.

Coin Center has urged Her Majesty’s Treasury not to implement these regulations.

Could AML And CTF Policies Affect Privacy?

As cryptocurrencies and blockchain technology expand, regulators around the world are trying to control the market with new regulations. According to a recently released announcement, Coin Center informs that the proposal to broadening the scope of the UK’s AML and CFT regulations would violate UK citizens’ free speech and privacy rights.

They explained that this expansion is going to be affecting citizens’ rights as codified in the International Covenant on Civil and Political Rights (ICCPR) and in the European Convention on Human Rights (ECHR). The ICCPR and the ECHR prohibit institutions upon the privacy of persons unless the intrusions follow clear rules.

Coin Center also informs that the imposition of financial surveillance on every user of virtual currency would not be able to meet the standards imposed by the ICCPR and the ECHR. About speech rights, Coin Center wrote:

“Regarding speech rights, any law or regulation attempting to ban, require licensing for, or compel the altered publication (e.g. backdoors) of open-source cryptocurrency software would be unconstitutional under First Amendment-like protections for speech afforded to UK citizens by the ICCPR and ECHR.”

Coin Center believes that it is important to protect human dignity and autonomy. Moreover, they say that transactions are increasingly guarded and controlled by powerful intermediaries and also governments.

[Author Alert] The author’s opinions above are solely based on their own self-conducted research. Assume any and all authors are using, holding, trading and/or buying cryptoassets mentioned as a portion of his or her financial portfolio. Use information at your own risk, do you own research, never invest more than you are willing to lose.

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Author: Carl T