MAS Head says Central Banks and Regulators “Should Welcome” Decentralized Finance

While the future of money shouldn’t be “left entirely to central bankers,” Ravi Menon warns not to discount the possibility of crypto whose widespread use could “lead to an erosion of the nation state’s monetary sovereignty.”

The head of the Monetary Authority of Singapore (MAS) is bullish on decentralized finance (DeFi), and that central banks and regulators can potentially shape this decentralization.

Earlier this week, Ravi Menon, Managing Director at Singapore’s central bank, gave remarks at the “Decentralised Finance and the Future of Money” panel at the Andrew Crockett Memorial Lecture by Mark Carney via Video Conference.

Here, he talked about centrifugal forces driving financial functions away from the traditional core and affecting all aspects of the monetary system.

“The delivery of retail financial services is being decentralized,” said Menon, explaining that it is happening in two ways.

One is by non-financial players, including big tech, fintech, and smaller technology firms which are often unregulated and providing payments, lending, savings, and investments as complements to their core digital service.

The second is regulated financial players who are reinventing their business models and leveraging on technology to offer an array of non-bank digital platforms in an attempt to reach new customers at lower acquisition costs.

“Central banks and regulators should welcome both these developments,” said Menon, adding, regulators also need to be on alert about new sources of risk.

What needs to be done is “adapt our regulatory approaches,” including paying greater attention to market conduct, consumer protection, and technology risks and making regulatory frameworks more modular and agile.

“Technology is enabling a fundamentally different approach to financial infrastructure, compared to the centralized systems of today.”

Menon takes note of crypto networks here which are based on self-executing smart contracts and non-custodial financial services, where users maintain control over their assets at all times.

While by replacing intermediaries and central parties, these networks reduce cost and risk, by decentralizing key aspects of financial infrastructure, they “can also potentially enhance inclusion and innovation.”

Though self-governing networks can not meet the high standards of governance, security, and resilience that are demanded of critical infrastructure, “central banks would do well to incorporate these innovations in designing the next generation of payment infrastructure,” he added.

However, while cryptos like Bitcoin have “failed to become money,” Menon urges not to discount the possibility of better algorithms leading to such cryptocurrency whose widespread use “could lead to an erosion of the nation state’s monetary sovereignty” and have implications for “central banks’ ability to safeguard financial stability,” to which small economies may be particularly vulnerable.

Given that currency competition is not an unfamiliar challenge, the top official says, the benefits of an independent monetary policy have to be weighed against the efficiency gains from adopting a more widely used currency.

“The future of money is too important a matter to be left entirely to central bankers.”

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Author: AnTy

Ray Dalio: Bitcoin Is A ‘Long-Duration Option On A Highly Unknown Future’

Ray Dalio: Bitcoin Is A ‘Long-Duration Option On A Highly Unknown Future,’ But Ticks Regulation & Lack Of Privacy Risks

Bridgewater Associates founder called Bitcoin “one hell of an invention,” which the firm considers an investment for new funds in line with “cash is trash.”

Bridgewater Associates founder Ray Dalio has finally completed his journey from being negative on Bitcoin to neutral and now turning positive.

In his note to clients this week, which was later posted on Bridgewaters’ website, Dalio called Bitcoin “one hell of an invention.” He is also considering cryptocurrencies as investments for new funds that will offer protection against the debasement of fiat money in line with his “cash is trash.” Dalio wrote,

“To have invented a new type of money via a system that is programmed into a computer and that has worked for around 10 years and is rapidly gaining popularity as both a type of money and a storehold of wealth is an amazing accomplishment,”

“There aren’t many alternative gold-like assets at this time of rising need for them.”

Basically, there is a growing need for money or storehold of wealth assets that are limited in supply… that can be privately held, he further said.


While Bitcoin can “disrupt the existing monetary system” and make investors “very rich,” it has its risks in terms of being vulnerable to being hacked and restricted by governments wanting to control the money supply, he noted. And “the more successful it is the more likely” that the “government would invade the privacy and/or prevent the use of Bitcoin,” which would mean a “plunge” in demand.

In simple words, Bitcoin is a “long-duration option on a highly unknown future,” but keep in mind it can still potentially lose about 80% of its value, he said.

In his Thursday’s note, Ray Dalio said he felt compelled to “clarify what I think of Bitcoin” and cautioned that he is no expert in this.

While he doesn’t explicitly go bullish on Bitcoin, this is a big positive endorsement from Dalio. He says Bitcoin has succeeded in “crossing the line” from a speculative idea to something that is likely to have value.

“Because there aren’t many of these gold-like storehold of wealth assets that can be held in privacy and because the sizes of their markets are relatively small, there exists the possibility that Bitcoin and its competitors can fill that growing need.”

However, besides the risk of supply, as there can always be something better that comes along and displaces Bitcoin, privacy is another issue to Dalio, who says, “it appears that Bitcoin will unlikely be as private as some people surmise.”

Overall, Bridgewater has Bitcoin in its sight as they “intently” focus on finding an “alternative storehold of wealth assets.”

Bridgewater is also looking to “soon offer an alt-cash fund and a storehold of wealth fund in order to better deal with the devaluation of money and credit that we consider to be a major risk and opportunity, and Bitcoin won’t escape our scrutiny,” he wrote.

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Author: AnTy

Pakistan Regulators Look to Build Friendly Framework for Digital Assets

Pakistan seems to realize the potential of digital assets in the financial future as the country seems geared up for formulating a new framework to regulate cryptocurrencies such as bitcoin. This is highly bullish since Pakistan was among the very few countries that in mid-2018 blanket banned digital assets in any form. It wasn’t until April of 2019 that regulators started to change their minds.

The Securities and Exchange Commission of Pakistan (SECP), on November 6th, released a consultation paper about regulating digital assets. The paper mentioned that the finance ministry is looking to make new laws as they look at the regulatory frameworks set by other countries.

SECP believe digital assets is a “start of a new era of digital finance.” The consultation paper further noted that to propel this new digital finance era, a new set of frameworks would be required to drive its adoption.

“Digital assets also known as Virtual Assets, and Crypto Assets are the start of a new era of Digital Finance, and demand innovative regulatory measures and approaches by the regulators across the world.

This could only be possible by initiation of a new era that re-invents regulatory regime/measures as they are known to the regulators globally today.”

It is also important to note that many developed countries in the West are currently discussing launching a Central Bank-issued Digital Currency (CBDC); however, the consultation paper makes no mention of any such plans by Pakistani financial watchdog. At present, they are only focusing on regulating private digital assets such as bitcoin.

The paper made a note of two types of tokens, namely security tokens and utility tokens, where the regulatory body sees a security token as an important tool that might help in fractionalizing real-world assets and digitize them.

The paper mentions that they have 2 choices as regulators; restrict digital assets due to current rules or take a ‘let-things-happen’ approach. Which they mention that they are heavily leaning towards the do-no-harm approach.

The paper also welcomed feedback from the stakeholders of the decentralized space in developing the new framework.

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Author: James W

WEF Report Says Blockchain Is A Core Component in Sustainable Digital Finance

The World Economic Forum (WEF) recently released a new report about the future of digital finance on Wednesday. The WEF report noted that blockchain and Artificial Intelligence, the Internet of Things (IoT), and mobile platforms represent a core element of digital finance’s sustainable future.

The report noted that blockchain combines coming of age technologies with a sustainable environment-conscious business model. In the report, UBS executive Karin Oertli noted that all these nascent technologies could help organizations and governments to meet their sustainability goals. Oertli wrote,

“We believe that sustainable digital finance will play an essential role in efficiently channeling this capital to fuel innovation, growth, and job creation, at the same time supporting the transition to a sustainable, low-carbon economy.”

Currently, many European countries and top silicon tech firms’ save pledged to reduce their carbon footprint to zero in the next decade owing to the growing concern over climate change and global warming. Thus it has become even more important to bring sustainable business models to rescue the planet earth before it’s too late.

New WEF Report In Line With OECD Research

The latest sustainability report from WEF is not the first report of its kind, which has touted Blockchain as the key to sustainable future business models. It reinstates the research conducted by the Organization for Economic Cooperation and Development (OECD). The OECD report had made similar claims regarding blockchain and said,

“The core properties of blockchain and other DLT can enable deeper technological integration, standardization, and the possibility of new business models.”

Carbon dioxide emissions are growing significantly with each passing year. Some of the western countries have taken it upon themselves to make sure to cut their carbon footprint from now onwards.

The emergence of blockchain as key to a sustainable future comes just in time as crypto space has been battling the criticism over Bitcoin’s network electricity consumption and carbon emission.

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Author: Hank Klinger

Federal Reserve Chairman Jerome Powell to Speak About Digital Currencies Today

As part of a panel on “Cross-Border Payments—A Vision for the Future,” at the International Monetary Fund’s (IMF) annual meeting, Federal Reserve Chairman Jerome Powell will speak about digital currencies Monday.

The panel will start at 8 a.m. ET on Oct. 19.

During this virtual event, while discussing the potential solutions to enhance the cross-border payments, the “benefits and risks” of digital currencies and their macro-financial implications will also be covered.

“On Monday, Jay Powell gives his input on central bank digital currencies at the IMF talk listed above. Central Bank digital currencies are coming, and they will change everything… They are coming under stealth of X-border payments but it means so much more…” said former hedge fund manager Raoul Pal, CEO of Real Vision Group.

It is, however, not mentioned if Powell would be sharing his thoughts on a digital dollar.

Other panelists include Agustín Carstens, general manager of the Bank for International Settlements (BIS); Ahmed Abdulkarim Alkholifey Governor of the Saudi Arabian Monetary Authority; and Nor Shamsiah, governor of Bank Negara Malaysia with IMF Managing Director Kristalina Georgieva as the moderator.

You can watch live here:

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Author: AnTy

US Congress Banking Committee Discusses The Development Of Digital Money and Payments Systems

  • The U.S Congress banking committee discusses the future of digital money and payments
  • Former U.S Commodities and Futures Trading Commission (CFTC) chairman is among the witnesses set to present to the committee.

With over 32 bills on digital currencies and payment systems introduced in the 116th U.S Congress, these new technologies got yet another day in the lawmakers’ chambers. According to a remote hearing earlier today, the U.S Senate Committee on Banking, Housing, and Urban Affairs discussed the “Digitization of Money and Payments.”

Details released on the hearing put forward three witnesses who vouched for digital payments, stablecoins and presented the advantages of developing a digital dollar. The witnesses are Former CFTC chairman and Senior Counsel at Willkie Farr & Gallagher LLP, Christopher. J. Giancarlo, Paxos co-founder and CEO, Charles Cascarilla, and Professor of Law at Duke University, Prof. Nakita Q. Cuttino.

In his pre-written statement to the committee, Giancarlo urges that the development of new financial systems to push America into the 21st century. He focuses on the long settlement and bank transfer times, land titles issuance, and recent delays in distribution of the $2 trillion stimulus checks – some taking a month to reflect in citizen’s accounts.

To bring new technological solutions, Giancarlo, who launched the Digital Dollar Project, a non-profit organization aiming to digitize the greenback, will be explaining the need to have a digital USD. He further wrote:

“The United States must take a leadership role in this next wave of digital innovation or be prepared to accept that the innovation will incorporate the values of America’s global competitors.”

Cascarilla looks to focus on stablecoins, and the possible creation of a Fed-controlled digital token, a CBDC. Given the current challenges in the banking system, Charles believes the integration of stablecoins is critical to the U.S’ financial infrastructure and maintaining its position in global economics.

He concluded his statement:

“Supporting growth and innovation with a US CBDC would facilitate the necessary upgrades to our financial infrastructure, reduce systemic risk, increase inclusion for all Americans and reinforce our values and the long-term position of the US dollar.”

According to Nikita’s statement, the development of digitized payment and money systems needs to focus on “the time and access frictions facing low-income Americans.” While digital payments streamline traditional banking, there are challenges still that obscure the countrywide adoption of these new technologies.

“Congress must critically review innovations like CBDCs and stablecoins to ensure novel forms do not belie true functions. In terms of financial inclusion, this means ensuring that promises of open access are achievable and ultimately achieved.”

[Also Read: ‌Bank of Canada: Zero-Knowledge Proof Are Insufficient for National Scale CBDC Integration]

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Author: Lujan Odera

BIS Latest Report Discusses How Payment Are Evolving With Tokenization and CBDC’s

Bank of International Settlements (BIS) researchers focusing on the payments’ future, reveals their latest quarterly report released on Sunday.

The paper has 138 pages and looks at what’s on the horizon in the financial sector, especially since tokenization, central bank digital currencies (CBDCs) and cross-border payments are starting to be more and more in trend.

Conclusions on Tokenization

According to BIS, the tokenization of securities on distributed ledgers can streamline the settlement cycle and become too efficient for some investors to bear with it, seeing traders are used with slow settlement cycles, liquidity management concerns and intermediaries. The report also says DLT and smart contracts are still to be proven when it comes to settlement and clearing, reading further that:

“The ability of tokenized systems to interoperate with account-based systems will be key to their success.”

What About CBDCs?

Another one of the big stories circulating in the world of banking is that of CBDCs, so BIS didn’t hesitate to address it too. It clarifies that there’s no use to develop digital money if it wouldn’t bring any advantages and while the existing payment systems work, saying retailers wouldn’t want to use a system that’s not in demand, whereas most consumers find cash or credit cards much more convenient.

Trying to answer the question of how decentralized a CBDC system would be, the research says decentralization indeed eliminates the risk of the entire system’s failure, but it brings about new vulnerabilities. Here’s what the report reads exactly:

“The key vulnerability of a conventional architecture is the failure of the top node, for example via a targeted hacking attack. The key vulnerability of DLT is the consensus mechanism, which may be put under pressure, for example, by a denial-of-service type of attack.”

Meanwhile, some banks have publicly stated they don’t see DLT as the salvation that’s rumored to be, whereas others are pushing forward with trials on DLT-based CBDCs.

BIS Report on Payments

Agustin Carstens, the General Manager at BIS, said the impact of a completely different and brand-new backend payment infrastructure needs to be considered. Central banks have been put into working mode by Facebook’s Libra, so it’s not yet clear if stablecoins are going to bring the financial doom foreseen by some or not. BIS deemed the matter as unanswered and enduring, saying there’s a need for an international response. It brought its Innovation Hub into discussion, saying it may provide the looked-for global response.

The Innovation Hub will collaborate with monetary policy makers and bankers at developing frameworks on digital innovations. According to BIS, it has spokes in Hong Kong, Switzerland and Singapore, not to mention a good position for developing policies across different networks.

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Author: Oana Ularu

Shark Tank’s Robert Herjavec: Not A Big Believer in Gold; BTC’s Price Will ‘Quintuple’ Long-Term

  • “I’m a big believer in bitcoin, electronic payments in the future,” – Robert Herjavec, founder and CEO of Herjavec Group
  • The minute you have a large institutional company getting behind it then that world will change

According to Shark Tank’s Robert Herjavec, founder and CEO of Herjavec Group, Bitcoin is the future method of payment that will be accepted by most consumers in the coming years, due to its ease of use. Add the price of the world’s leading cryptocurrency will likely skyrocket. Herjavec told Kitco News,

“I’m a big believer in bitcoin, electronic payments in the future but I think we’re a long way away from that.”

While talking about the impact of coronavirus on the stock market that recorded its second-largest drop, Herjavec said that he is “not a big believer in gold,” though he understands the people’s need to go or the yellow metal. Bullion is a traditional safe-haven asset that soared to its 7-year high while the stock market took a brutal beating.

According to him, on a long-term basis base metals aren’t going to be an economic indicator. However, he is a believer in bitcoin, which is considered digital gold. He sees bitcoin’s future as the electronic payments but the digital asset is a long way away from that, he said.

Just like stocks, Bitcoin shed half of the gains it made in 2020, so far. Surging as high as $10,600 this month, bitcoin went back to $8,450 level yesterday. But Herjavec said he will buy the crypto asset at its current prices because, in the long term, the price of bitcoin will quintuple.

Referencing an analyst, he said over the long run consumers always go for convenience and bitcoin is just convenient. As for the crazy bitcoin price forecast, that goes as high as a million-dollar, they “don’t sound crazy” to Herjavec and sees it becoming a reality.

But he does say, one has to “disassociate the price of an individual type of Bitcoin.” Herjavec added,

“Because part of the challenge with Bitcoin is there is no one Bitcoin you can buy different types of Bitcoin and I think it’s a bit of a fragmented industry. The minute you have a JPMorgan Chase or you have a large institutional company getting behind it then that world will change.”

Watch the full video here:

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Author: AnTy

Will Blockstream’s Watchtowers Help Keep The Lightning Network Safe From Attacks?

The Lightning Network (LN) may be controlled and ordered by Watchtowers in the future. Watchtowers are guided by Blockstream’s c-Lightning team and would be a very important improvement on the Lightning Network, the second-layer scaling solution proposed to solve Bitcoin’s scalability issues.

Lightning Network Controlled By Watchtowers

At the moment, the Lightning network works with fraud proofs in order to avoid channels that steal funds. Watchtowers will solve this issue in a new enforcement proposal for the LN called Eltoo. Offline users can protect their funds by deferring to Watchtowers.

This is not the first time that this solution is proposed or tested. Indeed, Lightning Labs and other developers have been working with it. However, this is the first time that such a solution would be implemented on c-Lightning.

In order to protect users, Watchtowers register information from users and store it locally. At the same time, they would be very useful for those nodes that go frequently offline. Nodes that are run by cellphones and similar devices are generally less stable than others.

The c-Lightning developer Christian Decker explained that these Watchtowers are going to play a very important role when users run an unreliable network.

During the last years, the Lightning Network has been growing as a solution for the scalability issues that are affecting Bitcoin and other cryptocurrencies. However, it still needs some time to be developed and tested before it is able to reach the market.

In order for the new Watchtower solution to be approved, it is necessary for the Taproot Bitcoin Improvement Proposal (BIP) to be accepted by the whole Bitcoin community. It is worth pointing out that some months can pass before the market sees this implementation on the Lightning Network.

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Author: Carl T

Digital Asset Security Firm Fireblock Backed By Fidelity Gets EY’s SOC 2 Type II Accreditation

Fidelity Digital Assets (FDAS) thinks that in the future, custodians will work from behind the scenes to store cryptocurrencies for clients from different firms.

At the same time, its enterprise-based platform for crypto transactions, Fireblocks, has just passed an EY audit that confirms it complies with data security standards, which has led to talks with Wall Street clients.

FDAS Doesn’t Have Any Plan to White-Label Its Custody Services

FDAS is a Bitcoin (BTC) custodian and broker for institutional investors. It doesn’t have any plan to white-label its services, this being just a theory about the future it has launched. What it has announced is that this month it’s going to open a new European entity. At the moment, FDAS sources its liquidity mostly from over the counter (OTC) trading desks, but it has plans to have its own crypto exchange until this year is over.

Fireblocks Was Awarded a SOC 2 Type II Certification

After a 6-month audit on how Fidelity’s Fireblocks processes, protects and manages customer data, the company was given a Service Organization Control (SOC) 2 Type II Certification. Fireblocks’s service allows institutions to move digital assets securely. Its platform was launched in June and it supports 180 cryptocurrencies in addition to 22 exchanges. In an EY report, it’s mentioned that Fireblocks met or exceeded the SOC 2 Type II criteria and that it’s going to be evaluated every year in order to comply with all security standards.

Few Crypto Businesses Have the SOC 2 Type 2 Accreditation

According to Fireblocks’ co-founder and CEO, Michael Shaulov, only a few crypto businesses are SOC 2 Type II accredited. Now, the company is looking for clients from outside the crypto world, like financial institutions that want to try the asset class. It has been confirmed that is already in talks with Wall Street firms.

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Author: Oana Ularu