Fintech Daily Digest

GooglePay, Walmart-backed PhonePe and AmazonPay, plus Indian fintech firms Cred and Mobikwikare, are reportedly seeking to join the Reserve Bank of India (RBI) e-rupee central bank digital currency (CBDC). Initially, the RBI had permitted only banks to offer e-rupee via their mobile applications, but in April 2024 it said payment firms could also offer e-rupee transactions via their platform once approved by the RBI.

The Federal Reserve Bank of New York (NY Fed) published a study of the impact and effectiveness of regulation in decentralized systems, using sanctions imposed in 2022 by the U.S. Department of Treasury's Office of Foreign Assets Control (OFAC) on the Tornado Cash (TC) crypto-asset mixer. It documented an immediate and lasting negative impact on TC following the sanction announcement. This conclusion was based on tracking Ethereum block proposers and the builders responsible for selecting transactions for settlement. Many large builders cooperated with the sanctions. A couple of builders who did not comply with the sanctions, acting for philosophical reasons rather than monetary motives, were responsible for most of the ongoing TC transactions. https://www.newyorkfed.org/research/staff_reports/sr1112.html

U.S. District Court for the Southern District of New York Judge Analisa Torres has ordered Ripple Labs to pay a $125 million civil penalty and said the firm was "permanently restrained and enjoined" from violating U.S. securities laws as part of a case brought by the Securities and Exchange Commission (SEC) regarding Ripple's sales of XRP tokens. The penalty is less than the $2 billion that the SEC was seeking, but more than the $10 million maximum that Ripple had proposed. Although this seemingly closes the long-running case, the SEC may appeal the judgment. Also, Judge Torres expressed doubts that Ripple won't violate federal securities laws in the future give "Ripple's willingness to push the boundaries" of the court order. https://storage.courtlistener.com/recap/gov.uscourts.nysd.551082/gov.uscourts.nysd.551082.974.0_1.pdf

The National Bank of the Kyrgyz Republic (NBKR) published a draft of proposed amendments to the country's central banking legislation to firm up the legal status of a digital som central bank digital currency (CBDC). These amendments affect eight key legislative acts, including the Civil Code, Budget Code, Code of Offenses, Tax Code, Law on Consumer Protection, Law on Payment Systems, and Law on Banks and Banking Activity. Public feedback, comments and suggestions must be submitted by September 7, 2024. https://www.nbkr.kg/newsout.jsp?item=31&lang=ENG&material=120922

JP Koning writes that, before anti-money laundering laws arrived in Switzerland, anyone could walk into a Swiss bank and open an account without showing any ID. The bank would then issue you a bearer savings book. Ownership of the savings book was considered by the bank to be proof of ownership of the underlying funds in the account. The person who opened the account could keep the book or, if they wanted to, pass it on to someone else without notifying the bank, at which point this second person was now entitled to the underlying funds, who could pass the book on to a third person, etc. In essence, Swiss banks were issuing their own version of cash or stablecoins.

The U.S. Securities and Exchange Commission (SEC) is reportedly not likely to appeal the August 7, 2024 ruling by Judge Torres on its lawsuit against Ripple Labs. Although the judge ruled against Ripple, the $125 million civil penalty imposed was less than the $2 billion that the SEC was seeking. However, an injunction was imposed to prevent further violations of Section 5 of the Securities Act, regarding Ripple's sales of XRP tokens. The SEC was reportedly happy that the Court found that the fact that Ripple has shown a "willingness to push the boundaries of the [Court's summary judgment] Order [that] evinces a likelihood that it will eventually (if it has not already) cross the line".