Group items tagged

France's new crypto law grants blockchain-related projects the right to a bank account, provided they opt in to being regulated

With regard to their volatile prices, limited number, small total amount, and concentrated market, stablecoins have so far met with a mixed success. They rather represent a complement to the crypto-assets market. However, the arrival of very large issuers, securing a higher degree of confidence to users, and apt to reach a wide public, could give their projects a potentially systemic impact. These global stablecoins would create risks, in particular for financial stability and monetary policy, and in lesser-developed economies. This paper reviews these risks and the way the private sector, regulators and central banks can address them.

France's Autorité des Marchés Financiers (AMF) clarified its crypto-asset position in its response to the European Commission's consultation. Though the AMF defines any crypto-asset as "a digital asset that may depend on cryptography and exists on a distributed ledger," it still thinks it's early for precise classification of such assets. However, it clarified that proper distinction between crypto-assets that are qualified as financial instruments and that falls under electronic money should be made.

These days, by far the fastest and most efficient way of delivering money is via smartphones and mobile devices. The U.S. government should simply provide a general portal to a wide range of payment delivery mechanisms. Visa and Mastercard are easily capable of handling these payments, especially as their normal transaction volumes have fallen significantly due to the shutdown. But the government should also work with platforms such as Venmo, Zelle, Square Cash, Paypal, Apple Pay and Google Pay [Chime, a San Francisco fintech startup, says it's piloted a way to distribute the $1200]. And it could also offer payment in cryptocurrency as an option.

U.S. Stablecoin reserves may not be fully protected by FDIC insurance. And if they aren't, then stablecoins may actually be less secure than ordinary bank deposit accounts. If people really are investing in stablecoins because they think they are safer than bank deposit accounts, I'm afraid they have allowed the smoke to get in their eyes and the mirrors to blind them.

This article examines how the issuance of a digital currency by a non-bank operator impacts competition between banks in a cashless society. Unlike banks, the digital currency provider is not allowed to engage in maturity transformation. I analyze how the fee charged for the digital currency impacts the interest rates on loans and the fees charged by banks to depositors for paying from their bank account and opening an account in a bank. I derive the conditions under which consumers use the digital currency to pay. I also discuss how the distribution mode of the digital currency may impact its use for payments.

"There's good reasons to consider switching to satoshi as the unit of account. Quoting in satoshi rather than bitcoin could help convince people who don't have a great deal of money that bitcoin can still be for them despite its high price. Sats can become the savings vehicle of choice for ordinary people who want a safer and higher-yielding place for their money than bank deposit accounts. "

"Let me say it again: on both digital currency and payments, we in Europe must be ready to move as quickly as needed or risk an erosion of our monetary sovereignty - something we cannot tolerate. European citizens must have access durably to effective and independent means of exchange."

"Experts from the euro area national central banks and the ECB participated in the experiments, which were grouped into four work-streams. These work-streams assessed different design features covering four main areas: the digital euro ledger, privacy and anti-money laundering (AML-CFT), limits on digital euro in circulation, and end-user access. The objective was to address the key design questions that had been left open by the Report on a Digital Euro. The experiments were conducted in a multidisciplinary environment and also involved participants from academia and the private sector, without endorsing any specific technical solution."

"While it is clear that crypto-assets undergoing technical and economic trials bring about opportunities to improve our payment systems, they can also bring material risks to our payment systems which, if unaddressed, might introduce new sources of fragmentation, instability and fraud. In that context, beyond contributing to the adaptation of the regulatory framework to address those risks, central banks may contribute further in revisiting and possibly improving the conditions under which they make available central bank money for settlement purposes. "

The potential role of a DLT-based wholesale CBDC is in worth considering if not desirable according to the Banque de France's Denis Beau, and the central bank is quite open for experiments in that direction, together with the ECB and other central banks of the Eurosystem.

The New York State Department of Financial Services and France's Autorite de Controle Prudentiel et de Resolution will work to "ease the entry" for fintech innovators into their respective markets. The aim is to encourage innovation in the financial services markets by supporting financial firms that abide by their respective regulations, while still protecting consumers. The NYDFS and ACPR will refer fintech innovators to each other to, in principle, improve speed to market. https://www.dfs.ny.gov/reports_and_publications/press_releases/pr202006031

FTX has a gaping hole in its balance sheet that has existed for a long time. We don't know exactly how long, but the size of the estimates (ranging from $6-$10 billion) suggests several months if not years. FTX CEO Sam Bankman-Fried (SBF) has been trading while insolvent. He's not the only crypto oligarch to do so: Celsius's Mashinsky also traded while insolvent for an extended period of time.

The Banque de la République d'Haïti has requested technical assistance from the IMF to help address the risks associated with CBDC deployment. Support has been received from specialized foreign firms and collaboration has been initiated with countries that have already launched a CBDC, particularly in the Caribbean.