Fintech Daily Digest

The Bank for International Settlements (BIS) proposed a formally defined model to represent three key functions of payment system architectures: issuance/withdrawal, holding and transfer of funds in a standardized manner. The model defines payment diagrams, using a precisely defined syntax. The paper illustrates the application of these diagrams for domestic and cross-border account transfers, as well as cash, card, e-money and stablecoin payments. However, the payment diagrams can be used for any type of funds and can be applied across different payment system architectures. It also demonstrates how the diagrams correspond to the balance sheet approach commonly used in economics, and that it offers added value by providing an end-to-end visualization of every stage of the payment journey. The model provides a tool for central banks, regulators and the payment industry to better understand and compare existing and new payment system architectures.

Fnality has released a new "Earmarking" feature that allows banks to program funds for release upon receipt of proof of an event elsewhere. For example, institutions will be able to systematically program when funds move in exchange for a specified asset, or a related market event. A proof is a cryptographically signed piece of data representing specific information from another system, triggering the release of the £FnPS's digital representation of central bank funds. When an Earmark is in place prior to its release, the funds remain on the originating participant's balance sheet at all times. https://fnality.com/news/earmarked-funds

Colombia's Banco de la República (BanRep) is exploring the use of a wholesale central bank digital currency (CBDC) in a tokenized financial market based on distributed ledger technology (DLT). As part of this agenda, BanRep, in collaboration with the Ministry of Information Technology and Communications, Ripple and Peersyst, is conducting an experiment to issue wholesale CBDC and tokenized securities. This involves building a scalable blockchain prototype in a test environment with simulated participants. The experiment evaluates efficiencies in delivery versus s payment (DVP) for primary issuance and in the clearing and settlement of transactions in the secondary market, as well as direct CBDC transfers between the wallets of financial entities on the blockchain.

According to Nigerian news outlet Proshare, the People's Bank of China (PBOC) has announced that its digital RMB cross-border settlement system *will be fully connected* to the ten ASEAN nations and six Middle Eastern countries. Needless to say, the crypto press took the ball and ran with it, some even saying that the full-scale launch had taken place on exactly March 17, 2025. However, this is likely fake news based on cobbling together disparate stories from over the last few years, like those around the ongoing mBridge proof-of-concept project. https://www.ledgerinsights.com/fake-news-china-links-cbdc-payments-to-10-asean-6-middle-eastern-countries/ https://www.linkedin.com/feed/update/urn:li:activity:7316086740497195008/

Valor Economico is reporting that some of the firms involved in the Banco Central do Brasil Drex (BCB) wholesale central bank digital currency (CBDC) project are reducing resource commitments to it. This is reportedly due to frustrations with the BCB's privacy requirements to hide transaction data from all the banks involved except the one that is executing it, while allowing the BCB to see everything and be able to reverse transaction with a court order to that effect. All this must be achieved without harming the digital currency's programmability and composability allowed by its distributed ledger technology (DLT) based platform.

Latvian central bank opens payment system to nonbanks (Fintechnews Baltic) xpate, an electronic money institution licensed in Latvia, has become the first non-ank payment service provider to join the Latvijas Banka Electronic Clearing System (EKS). This marks the first instance within the euro area where a central bank has enabled direct participation of non-bank payment service providers in a system it maintains. As of October 17, 2024, Latvijas Banka has opened access to the EKS for licensed payment and electronic money institutions, as well as credit unions. https://www.bank.lv/en/news-and-events/news-and-articles/news/17221-the-first-non-bank-payment-service-provider-has-joined-latvijas-bankas-payment-system-eks

The Bank of England (BOE) is now accepting applications to conduct hands-on experimentation to explore the feasibility of different digital pound (DP) use cases in a simulated environment (no real customers or real money payments will be involved). Its goals include assessing the viability of potential business models for payment interface providers (PIPs) and external service Interface providers (ESIPs), and assessing the requirements necessary for a DP to provide a platform for innovation. The Lab is expected to run from August 2025 to July 2026, during which there will be two phases (see below). Applications are open to all private and public sector companies and organisations from technology, payments, banking, retail and other relevant sectors.

Ripple and the U.S. Securities and Exchange Commission (SEC) have filed a joint motion pause their appeals to finalize a potential settlement in their legal spat. It goes back to December 2020, when the SEC sued the company over an alleged $1.3 billion unregistered securities offering. In 2023 Federal district judge Analisa Torres ordered Ripple to pay a $125 million fine which was significantly less than the $2 billion sought by the SEC. Hence, on October 10, 2024 SEC filed a notice of appeal and a week later Ripple responded with its own cross-appeal. https://x.com/FilanLaw/status/1910422206854902184

The Bank of England (BOE) published a report on their project aimed to assess whether it is technically feasible to implement an offline payment functionality for a digital pound. The project confirmed the technical feasibility, there are trade-offs, particularly around user experience and preventing double spending and counterfeiting, that make implementing it challenging. It showed that there are several technology choices that could be made for offline payments today, but those are dependent on policy choices, such as risk appetite, product proposition and liability, which impact the options available for mitigating security risks.

The Bank of England (BOE) published an an overview of its initial thinking and work on the potential roles and responsibilities of digital pound (DP) intermediaries and a preliminary conceptual framework for a DP rulebook (or similar document) aimed at facilitating the proper management of the DP were one to be launched. It includes five broad elements; (I) the key participants in the DP ecosystem, (ii) the governance and oversight of the DP payment system, (iii) intermediaries' obligations and minimum standards, (iv) the core functions intermediaries are expected to support, and (v) the governance of intermediaries.

The European Central Bank (ECB) published the fourth update on the work of the digital euro Rulebook Development Group (RDG) in developing a draft digital euro scheme rulebook. The draft rulebook sections have been updated to reflect more than 2,000 comments received as part of the RDG's interim review in 2024. The report also provides an update on the RDG workstreams since the last update published in September 2024.

The Journal of Cybersecurity published a paper that proposes a secure offline payment model utilizing a Trusted Platform Module (TPM) to enhance the security of digital currency transactions. Additionally, the monotonic counter, the basic component of the TPM, is integrated into this model to prevent double spending in a completely offline environment. The research presents a protocol model that combines these easily implementable technologies to facilitate the efficient processing of transactions entirely offline. However, it is crucial to acknowledge the security implications associated with the TPMs and near-field communications upon which this protocol relies.

Noelle Acheson published an article that discusses the European Central Bank's (ECB) digital euro initiative and its underlying motivations. It highlights how the ECB initially presented the digital euro as a response to consumer demand for a pan-European digital payment platform, but later, the focus shifted to concerns about the dominance of US and Chinese payment platforms in Europe. The author points out that the ECB's push for a digital euro is driven by a fear of losing demand for the euro to dollar-backed stablecoins and a lack of confidence in European banks' ability to compete. The author concludes that the ECB's actions reveal a deeper issue: a recognition of the entrenched divisions within the European banking system and a move towards increased public control of commercial marketplaces.

"Our exploration into the coexistence of stablecoins and CBDCs reveals a complex and evolving landscape of technological innovation in the payment and financial sectors. We underscore the need for a nuanced understanding of both private and public digital money, highlighting their distinct roles, potential benefits, and inherent risks within the global financial ecosystem. While stablecoins offer innovative solutions and contribute to diversification within the financial and payment sectors, their regulatory challenges and risk factors necessitate careful oversight. Conversely, the emergence of CBDCs represents a significant step by central banks in modernizing monetary systems and potentially enhancing financial inclusion, but these developments raise their own sets of challenges and risks."

Ripple is acquiring prime broker Hidden Road for $1.25 billion. With the acquisition, Ripple becomes the first crypto company to own and operate a global, multi-asset prime broker. Hidden Road offers institutions a one-stop-shop of advanced services including clearing, prime brokerage, and financing across foreign exchange (FX), digital assets, derivatives, swaps, and fixed income. The acquisition will make Ripple's RLUSD the first stablecoin to enable efficient cross-margining between the digital asset space and traditional markets, and increase XRP Ledger usage.

Euroclear has joined the Hong Kong Monetary Authority's (HKMA) Project Ensemble, aimed at using wholesale central bank digital currency (CBDC) to settle interbank tokenized exposits and assets. As an Architecture Community member, Euroclear will contribute by developing a set of industry standards to support interoperability in Hong Kong's tokenization ecosystem.

The U.S. Securities and Exchange Commission published a notice that deems that "covered stablecoins" are considered "non-securities" and exempt from the agency's transaction reporting requirements. Covered stablecoins are those that don't offer holders the right to receive any interest, profit, or other returns, don't reflect any investment or other ownership interest in the stablecoin issuer or any other third party, don't afford holders any governance rights with respect to the issuer or stablecoin, and/or don't provide holders with any financial benefit or loss based on the issuer or any third party's financial performance. The SEC's criteria for covered stablecoins are consistent with regulations stipulated in the Senate's GENIUS stablecoin bill, and the House of Representatives' Stable Act of 2025. https://www.sec.gov/newsroom/speeches-statements/statement-stablecoins-040425

The First Digital USD (FDUSD) stablecoin lost its U.S. dollar peg after Tron founder Justin Sun claimed that its issuer, First Digital Trust, is effectively insolvent. First Digital Trust denied the allegation, saying that its stablecoin is backed one-to-one with U.S. Treasuries. FDUSD, which is prominently used by Binance after it dropped support for its own BUSD USD stablecoin in 2023, plunged as low as $0.95 in the wake of the allegations. Despite its small market capitalization (about $2.5 billion), it's trading volume is second only to Tether (market cap of about $144 billion) and ahead of USDC ($60 billion).

Ripple has integrated its enterprise-grade Ripple USD (RLUSD) USD-denominated stablecoin into its Ripple Payments cross-border payments solution. RLUSD allows enterprises to facilitate instant settlement of cross-border payments, access liquidity for remittance and treasury operations, integrate with decentralized finance (DeFi) protocols, bridge between traditional fiat currencies and the crypto ecosystem, and provide collateralization for trading tokenized real-world assets on-chain. Since launching in December 2024, RLUSD is nearing $250 million in market capitalization and $10 billion in trading.

Stablecoin circulation has exceeded $215 billion globally as of Q1 2025, with on-chain transaction volume hitting $5.6 trillion in 2024-equivalent to 40% of Visa's payments volume. Tether (USDT) and USD Coin (USDC) remain the giants - with ~$140B and ~$55B circulating respectively - but their combined ~90% share in 2024 is slowly diluting as new issuers emerge. Notably, PayPal USD (PYUSD) launched in late 2023, FDUSD (First Digital USD) out of Hong Kong, Agora's AUSD,Ethena's USDe, and others like TrueUSD (TUSD) and DAI collectively make up the remaining ~10%. By 2030, stablecoins are expected to be integral to global finance, especially in cross-border payments, B2B transactions, and digital asset settlement.