Giesecke+Devrient (G+D) has unveiled its Filia Unplugged offline payment solution that can be integrated into existing digital payment platforms, including tokenized deposit systems, instant payment systems, or mobile money services. It enables use cases such as peer-to-peer payments (P2P) or payment-to-business (P2B) payments. The solution stores monetary tokens on a hardware wallet (e.g. the SIM card of a smartphone) and requires only two wallets to operate, which can then be used without an online connection, for example via near field communication (NFC).

The EU is saying if you want to use stablecoins to buy crypto and do DeFi stuff, have at it. But if you want to use stablecoins to pay for goods and services like your coffee or your rent, then you need to use Euro (or other EU currency) stablecoins. The limits are really about monetary sovereignty.

Societe Generale - Forge was awarded an Electronic Money Institution (EMI) license by France's Autorité de Contrôle Prudentiel et de Résolution (ACPR), making its EURCV stablecoin compliant with the EU Markets in Crypto-Assets (MiCA) regulations that came into force on June 30, 2024. To date there hasn't been a huge amount of EURCV activity. The current EURCV balance is €11.1 million, with one wallet holding a €10.3 million balance and Bitstamp just under €600,000. https://www.sgforge.com/stablecoin-elevation/

The Pan-African Payment and Settlement System - PAPSS - enables the efficient flow of money securely across African borders, minimizing risk and contributing to financial integration across the regions. Whether shopping, transferring money, paying salaries, dealing in stocks and shares or making high-value business transactions, PAPSS' real-time infrastructure provides a reliable, cost-effective answer for instant payments. PAPSS works in collaboration with Africa's central banks to provide a payment and settlement service to which commercial banks, payment service providers and fintechs across the region can connect as 'Participants'.

Paxos received full approval from the Monetary Authority of Singapore (MAS) for its Singapore entity to offer digital payment token services as a Major Payments Institution. The approval enables Paxos to issue stablecoins in line with MAS's upcoming stablecoin framework. With the approval, Singapore becomes the third market, alongside the United States and United Arab Emirates, that Paxos and its related entities are authorized to issue stablecoins. Paxos has selected DBS Bank, Southeast Asia's largest bank by assets, as its primary banking partner for cash management and custody of stablecoin reserves.

The Bahamas is reportedly preparing regulations that will require commercial banks to provide access to Sand Dollars in a bid to stimulate adoption. Governor John Rolle said with take-up of the central bank digital currency (CBDC) still limited, so commercial banks are being told of forthcoming regulations that will effectively force them to distribute it. Rolle said requiring commercial banks to embed the Sand Dollar in their systems should help usage but acknowledged the bigger problem was to get more merchants to accept it as a form of payment.

Circle, the issuer of USDC and EURC, has become the first global stablecoin issuer to achieve compliance with the European Union's Markets in Crypto-Assets (MiCA) regulatory framework. This was enabled by the company's attainment of an Electronic Money Institution (EMI) license ('agrément en qualité d'établissement de monnaie électronique) from the Autorité de Contrôle Prudentiel et de Résolution (ACPR). Of the top 10 stablecoins by market capitalization, only USDC is currently MiCA-compliant.

True offline payments are possible. They rely on, among other measures, strong hardware security, which is well-established in the industry. What is new is that CBDC will enable additional use cases, for example when both payer and payee are offline. But the technology for that is already there.

As part of the Eurosystem exploratory work, the first two trials with the Deutsche Bundesbank's Trigger Solution were successfully settled. The use case comprised the issuance and primary distribution of a commercial paper with the use case team Clearstream as a market distributed ledger technology (DLT) operator, and two market participants (DekaBank and DZ Bank). The exploration was conducted as a trial in the participants' production systems and ultimately resulted in real and final bookings in TARGET, the Eurosystem's payment system, by using the Trigger Solution. The Trigger Solution links DLT platforms operated by the market with the traditional Eurosystem payment system (TARGET), thus enabling the direct settlement of DLT-based wholesale transactions in central bank money on participants' existing RTGS accounts.

The Bank for International Settlements (BIS) announced that phase three of Project Nexus, which is aimed at enhancing cross-border payments by connecting multiple domestic instant payment systems (IPS) globally, is now complete. The next phase will see Bank Negara Malaysia, Bangko Sentral ng Pilipinas, the Monetary Authority of Singapore, the Bank of Thailand and domestic IPS operators - who worked together in phase three - joined by the Reserve Bank of India, expanding the potential user base to India's Unified Payments Interface (UPI), the world's largest IPS. Bank Indonesia will continue its association with the project with special observer status. Nexus is designed to standardize the way domestic IPS connect to one another. Rather than an IPS operator building custom connections for every new country to which it connects, the operator only needs to make one connection to Nexus. This single connection would allow the IPS to reach all other countries in the network.

The Bank of Japan published the minutes of the seventh "Liaison Meeting on Central Bank Digital Currency (CBDC)" held on May 29, but it's in Japanese only. However, Norbert Gehrke has kindly provided a translation. Here are some of the points (all via the Ministry of Finance) that I found particularly interesting...It is not essential to allow non-residents to use CBDC from the initial issuance stage, because of the challenges associated with KYC and AML/CFT for non-residents and the possibility that their need for CBDC might not be particularly high. No concrete decisions have yet been made regarding CBDC cost sharing between the public and private sectors, in response to a suggestion from the Japan Securities Dealers Association that the public sector should bear all the cost because CBDC is the foundation of economic activities. CBDC is viewed as complementary to cash, and it is not essential for CBDC to replicate all cash functionalities. For instance, offline functionality, which carries risks of double-spending and counterfeiting, might not be necessary during the initial stages if cash remains usable. Regarding anonymity, the extent to which it can be ensured, given AML/CFT concerns, is still under consideration.

"CBDC has brought a new thinking about the utility and functionality of money. It should be seen as an extension of existing payment systems but may be most effective for specific use cases only. CBDC is to equip financial systems with new functionality to address actual and future payment demands. It is to ensure central bank money can remain competitive... When being asked whether CBDC is a solution in search of a problem, I normally answer, that the question is referring only to problems we know. If we are looking to address the problems we know today, we are unlikely to be ready for the future."

The IMF published a paper that investigates the relationship between fintech and financial inclusion in a panel of 84 countries over the period 2012-2020. It finds that the impact of fintech on financial inclusion is statistically insignificant (and negative) in advanced economies, but it becomes positive in developing countries with a statistically highly significant overall effect. Taken as a whole, these results-robust to alternative estimation methods-indicate that fintech endeavors may have so far failed to promote financial inclusion across all countries, but helped expand financial inclusion to a certain extent in developing countries. The paper concludes that policymakers need to develop an adequate regulatory framework that balances fostering innovation and ensuring equitable treatment of individuals and groups. This requires better financial education, strong regulatory institutions, and well-calibrated prudential regulations for a level playing field and effective supervision.

The IMF published a paper that shows how cryptocurrency markets can fuel cross-border capital flight by serving as marketplaces that match counterparts with and without (illicit) access to FX. In countries where international transactions are restricted, crypto exchanges effectively allow domestic agents to pay a premium to buy foreign currency. The counterparts to these transactions are agents with access to FX, who sell crypto holdings purchased abroad. A stylized model illustrates that restricted foreign currency amid economic imbalances incentivizes these transactions via persistent crypto premia in local relative to global markets. The analysis of relative crypto pricing data in several country case studies provides empirical support that crypto markets serve as marketplaces for capital flight that already took place, rather than a novel channel for capital flight.

The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against Consensys, the parent company of MetaMask. It alleges that the company has been operating as an unregistered broker and engaging in the unregistered offer and sale of securities through MetaMask Swaps since 2020. The complaint claims that Consensys has collected more than $250 million in fees by brokering crypto asset transactions and offering staking services without proper registration, thereby depriving investors of crucial protections. The SEC seeks a permanent injunction, civil penalties and other equitable relief against Consensys for these alleged violations of federal securities laws. https://www.docdroid.com/YS1DSF5/sec-v-consensys-pdf

The Monetary Authority of Singapore (MAS) published a white paper on the first phase of its Global Layer One (GL1) tokenization initiative. GL1 is envisaged as a public permissioned distributed ledger technology (DLT) network developed by regulated institutions for use by the financial industry across jurisdictions to deploy inherently interoperable digital asset applications, governed by common standards and technology for assets, smart contracts, and digital identities. Financial institutions will be able to develop, deploy and use applications for financial industry use cases along the value chain, such as issuance, distribution, trading and settlement, custody, asset servicing, and payments. The whitepaper details the design principles, objectives, considerations and potential uses of GL1. GL1 plans to expand collaboration with more policymakers, central banks, regulators, international standards setting bodies and financial institutions as work on GL1 progresses.

Financial crime has become a growing risk for Sweden, with criminals taking 1.2 billion kronor in 2023 through scams, doubling from 2021. And law-enforcement agencies estimate that the size of Sweden's criminal economy could amount to as high as 2.5% of the country's gross domestic product. A Fortune article links these developments to switch from cash to electronic payments, and the pervasiveness of the BankID system that speeds such transactions up. It requires a six-digit code, a fingerprint or a face scan for authentication, but the system is being abused by fraudsters and scammers. Some are calling for banks to bear a bigger share of the burden when customers are defrauded, as will be the case in the United Kingdom, where, starting in October, banks will have to reimburse customers who have been conned into making transfers.

The Banque de France (BdF) and the Hong Kong Monetary Authority (HKMA) have launched a collaboration relating to wholesale central bank digital currency (CBDC). They will delve into the study of interoperability between their wholesale CBDC infrastructure, i.e. the BDF's DL3S and the HKMA's Project Ensemble Sandbox, with the main focus on real-time cross-border and cross-currency payments. The cross-border experiment aims to explore how to optimize settlement efficiency of cross-border transactions, and facilitate interoperability between financial market infrastructures in different jurisdictions.

The European Central Bank (ECB) published its first progress report on the digital euro preparation phase, which was launched on November 1, 2023 with the aim of laying the foundations for the potential issuance of a digital euro. The report outlines the progress made on key digital euro design aspects and the envisaged next steps for the project.

Usage of India's e-rupee, has slumped to just a tenth of the 1 million retail transactions per day peak hit in December 2023, according to a Reuters report. The transactions that are continuing are in part due to banks disbursing benefits to their employees via the e-rupee. This has helped to push up transactions to about 250,000 to 300,000 per day towards the end of each month. Apparently, the Reserve Bank of India (RBI) is not planning to rapidly expand the pilot and the current focus is on testing the technology and developing use cases for the digital currency.