January 2021

• India’s Private Crypto Ban and CBDC Bill (January 31, 2021)

  The Indian government is introducing a bill that would ban private cryptocurrencies as well as launch a CBDC of its own. There will be exceptions but most private cryptocurrencies in India will be prohibited. Nischal Shetty, founder, and CEO of Indian exchange WazirX, says they have been preparing for this bill and they have been pushing for regulations to prevent the banning of private cryptocurrencies. Shetty agrees with India issuing its own CBDC but is against the banning of private cryptocurrencies as millions of Indians own this type of currency. He also does not believe private cryptocurrencies are real because, by their nature, they are decentralized and public. With the second largest population, it is important to get right the first time so India will not be making hasty regulations. Go to Article.

• Central Banks’ CBDC Progress (January 28, 2021)

  A Bank of International Settlement (BIS) survey found that 67% of participating central banks are researching CBDCs but the majority are still in early stages. The survey consisted of 65 central banks that represent 72% of the world’s population and 91% of global economic output. Although several central banks are conducting pilot programs, a widespread roll out of CBDCs is not soon to come. It seems that the Chinese central bank has the most developed CBDC with several ongoing pilot programs in major cities and European central banks and the Indian monetary regulator are following behind. Central banks are skeptical of cryptocurrencies like Bitcoin and Ethereum as they see these currencies having no widespread use as a means of payment. Go to Article.

• Central Banks Needed for Digital Money says BIS Exec (January 28, 2021)

  Agustin Carstens, general manager at the Bank of International Settlements (BIS), believes central banks should be controlling digital money. He says this would guarantee stability of value, ensure the elasticity of the aggregate supply of such money, and oversee the overall security of the system. He also stated how Bitcoin is very unstable and even though private stablecoins like Facebook’s Diem are decently credible, Carstens believes that digital money should be heavily regulated and supervised by a central bank. Go to Article.

• DCEP Security and Privacy Concerns (January 28, 2021)

  China’s Digital Currency/Electronic Payment (DCEP) system could allow the government to monitor financial transactions between the country’s residents in real time. Because of these privacy and security concerns, other countries must develop tools for creating and managing CBDCs. The Center for New American Security believes that the DCEP will be monitored by the Chinese Communist Party to strengthen digital authoritarianism domestically and export its influence and standard setting abroad as well as pose as a threat to financial privacy long upheld in free societies. The United States as well as private companies are currently pondering whether the DCEP should be blocked. The Peoples Bank of China said they will be able to examine transactions to prevent crime and that the DCEP will be able to monitor financial transactions, but the transacting parties will remain private. Go to Article.

• BIS Survey Indicates Widespread CBDCs Soon (January 27, 2021)

  A survey from the BIS shows that 86% of central banks are researching Central Bank Digital Currencies (CBDC). Although many of these central banks will not release a digital currency soon, about 14% of central banks are moving forward with development and pilot programs. The BIS survey indicates that central banks that represent roughly a fifth of the world’s population are set to release a general purpose CBDC in the next three years. The BIS general manager believes that without an identity attached to digital currency, money laundering and cross-border instability concerns are increased and efforts to boost financial inclusion are undermined. Go to Article.

• BIS Survey Reports Near-Future Extensive CBDC Availability (January 27, 2021)

  A BIS survey reports that 20% of the world’s population will have CBDCs available by 2024. 65 Banks responded to the survey and these banks represented 72% of the global population and 91% of global economic output. 86% of central banks have been doing work involving CBDCs. With retail CBDCs becoming more popular, some banks have exclusively been researching it while other banks are doing both wholesale and retail. The banks that are not researching CBDCs are mostly smaller jurisdictions unlike the banks that are researching CBDCs which are generally highly populated areas with high mobile phone use and internet access. Go to Article.

• Hong Kong’s Position in Connecting China (January 25, 2021)

  Hong Kong can better connect China’s digital yuan with the world, but it will have to follow the People’s Republic of China’s national strategic goal. As the Trump administration was parting the US and Chinese economies, Beijing started financial integration efforts with other major economies, such as Hong Kong. Hong Kong’s financial service members were able to survive Covid-19 with an asset management industry of $3.7 trillion in assets under management by facilitating channel fund flows in and out of mainland China. This does not affect the nation’s financial stability. China’s connection to the global economy is shown by Hong Kong’s stock connect schemes which helps avoid leakage of yuan-based assets from the Chinese financial system as Chinese investors’ funds flow back to their onshore bank accounts as soon as the money has been withdrawn from the city’s stocks. Go to Article.

• RBI Researching Potential Digital Rupee (January 25, 2021)

  The Reserve Bank of India (RBI) is researching the need for a digital currency and will implement one if necessary. Although CBDCs are recognized as legal tender in India, the government and regulators consider them a liability because the country’s relationship with CBDCs is complicated as there was a blanket ban on crypto currencies until March 2020. Since March, crypto usage in India has been increasing but many are still unsure if crypto will take root. The RBI has reported a 12.5% and 4.5% increase in volume and value, respectively, since 2011. Go to Article.

• Blockchain Plans for Russia, the BIS, and China (January 22, 2021)

  Global entities are doing further research into blockchain and stablecoin technology. Russia’s largest retail bank, Sberbank, is planning the launch of its Sbercoin by this spring. The Bank for International Settlements (BIS) is focusing on wholesale CBDCs as this will help optimize payments between central banks. Although the future of the digital Yuan in China is unknown, with many of its citizens using it, the digital Yuan currently remains charging ahead and many believe that China eventually plans on circumventing existing, mostly western, systems of international payments. Go to Article.

• BIS Trials to Help Streamline Global Payments (January 22, 2021)

  The Bank for International Settlements’ Innovation Hub (BISIH) is researching ways to improve cross-border payments by making them faster and cheaper using CBDC technology. The BISIH center in Singapore is working on an “international settlement platform” for entities of different CBDCs. The Hong Kong center is focusing on tokenizing green bonds for retail investors as well as facilitating foreign exchange transactions using CBDCs along with continuing research on stablecoin issuance. The Swiss Center for BISIH is still settling tokenized assets in central bank money. Go to Article.

• BISIH Centers Researching PoCs for CBDC (January 22, 2021)

  The BIS Innovation Hub centers are working on Proof-of-Concepts with the central banks they are associated with. The BISIH Hong Kong Center and Hong Kong Monetary Authority are working on the Green Bond tokenization project along with developing a system where Stablecoins can be issued using different models. The BISIH center in Singapore and the Monetary Authority of Singapore will be creating a system to transact different CBDCs. The Thailand center is also working with the Hong Kong Monetary Authority to study the implementation of Distributed Ledger Technology to transact instantaneously, even with a different CBDC. Go to Article.

• Brazils Advancements in Blockchain Technology (January 22, 2021)

  Like most other countries, Brazil is looking into the positives and negatives of blockchain technology. Institutional investment is almost guaranteed to increase as well as tokenization in the Brazilian Market. OriginalMy CEO, Edison Osório believes that Brazil will gain prominence because of its local regulator establishing a regulatory sandbox for blockchain technology. Countries in Latin America have started to use blockchain technology for certifying documents and the progression of this technology is most likely accelerating the adoption of crypto assets. The Central Bank of Brazil has not solidified any plans for the short term of the transformation of the Brazilian real into a digital currency. Go to Article.

• Digital Yuan Trial in Shenzhen (January 22, 2021)

  China is having its third trial with testing digital currency by giving citizens of Shenzhen 20 million digital yuan or roughly $3.1 million. Like the other trials, recipients of the digital currency were chosen by lottery and will be able to spend it at more than 3,500 shopping locations during a specific period; this trial is from February 1-9. Fan Yifei, deputy governor of the People’s Bank of China (PBOC), says that the digital yuan will be legal currency and will be issued by the PBOC to be designated to commercial banks. Go to Article.

• DLT Proof-Of-Concept for Sweden CBDC (January 20, 2021)

  To test the possible ramifications of introducing their e-krona into reality, Sweden’s central bank, Sveriges Riksbank, is looking into distributed ledger technology (DLT). The DLT they are using is called Corda and they are using it due to Accenture’s proposal based on Corda and how it matches Riksbank’s criteria the best. Although Riksbank teamed up with Accenture in late 2019 to help with Sweden’s CBDC, deputy governor of Riksbank, Cecilia Skingsley, clarified that Riksbank has not confirmed an e-krona and they are still investigating different options. Go to Article.

• Bank of France DLT Trial Successful (January 19, 2021)

  In December, the Bank of France processed 2 million Euros or $2.4 million worth of a CBDC in their trial experiment. Their trial consisted of using technology to settle monetary fund shares on a private blockchain platform and they successfully did this for the first time. SETL, a UK based regulated blockchain services provider, provided IZNEZ, the distributed ledger technology for the pilot and it was used to keep track of monetary transactions. The Bank of France stated how the CBDC will help make transactions faster and more traceable. Go to Article.

• China CBDC Races Ahead (January 16, 2021)

  China is continuing research on its CBDC as the country plans on turning it into an M0 currency. With a digitalized central currency comes the risks of privacy as the government will be able to monitor the financial system extensively but, the monitorization can help reduce the chance of a financial crisis as well as crackdown on corruption. Implementation elsewhere will most likely be slower than China as China’s government can make banks and e-commerce platforms synchronize quickly, unlike in the U.S. where the government has much less power over banks. One of China’s main reasons for CBDC development is to make the yuan seen as a major currency but the dollars dominance over the financial market will be undisturbed. Go to Article.

• Feds Not Rushing U.S. CBDC (January 15, 2021)

  Federal Reserve Chairman Jerome Powell believes that cryptocurrency stablecoins may eventually have enough people to make them systemically important. Powell admitted that the Fed does not know the true extent of risks that accompany CBDCs even though it is a high priority. The Fed’s laid-back approach is due to the U.S. having the world’s reserve currency and, because of this importance, how it is better to implement a correct system than a fast and incorrect system. Others, like a senior Japanese finance minister, disagree with Powell as they think China’s digital currency could eclipse fiat monies, but the Chinese Finance Association has said that they have no intention of replacing international currencies. Go to Article.

• ABC Enables Digital Yuan ATMs (January 11, 2021)

  The Agricultural Bank of China (ABC) has enabled their ATMs to allow users to deposit and withdraw digital yuan. As China is accelerating in progress, it is possible that a large-scale rollout will occur in the near future and with the 2022 Olympics occurring in Beijing, there is added pressure to implement a seamless CBDC by then. China currently has crypto trading banned but a new CBDC could cause widescale digital asset adoption in the country. Go to Article.

• Executive Order Bans Chinese Transaction Apps (January 6, 2021)

  Now former president Donald Trump signed an executive order banning apps owned by Chinese billionaire Jack Ma’s Ant Group Co due to security issues. These apps include CamScanner, QQ Wallet, SHAREit, Tencent QQ, VMate, WeChat Pay, and WPS Office and Alipay. In October, Ma criticized China’s financial system and Ant Group’s initial public offering has been suspended by regulators causing industry watchers to believe that the People’s Bank of China is using the digital yuan to help curb the growth of Alipay and WeChat Pay. By banning Alipay, the US may be helping the Chinese CBDC as more people are forced to use digital yuan. The executive order will go into effect February 19, 2021. Go to Article.

• SDF To Help Ukraine’s CBDC Process (January 5, 2021)

  The Stellar Development Foundation (SDF) announced that it had signed a Memorandum of Understanding and Cooperation with Ukraine’s Ministry of Digital Transformation which will help put focus on the development of digital assets in the country. The SDF plans to help with the development process, implementation, circulation, as well as the regulation procedures of the asset. The CEO and Executive Director of the SDF, Denelle Dixon, divulged that the SDF was impressed by Ukraine’s commitment towards the adoption of innovation and digitalization. Go to Article.

• Stellar Agrees to Help Ukrainian Crypto Infrastructure (January 4, 2021)

  Ukraine’s Ministry of Digital Transformation has entered a memorandum of understanding with the Stellar Development Foundation to help with quality decision making regarding the crypto assets in Ukraine. The agreement, which was signed December 28, 2020, will help Ukraine potentially lead the Eastern European CBDC race as Stellar’s Lumen is currently ranked 13th in global market capitalization for all cryptocurrencies. Ukraine received Chanianalysis’ top spot in its global ranking for cryptocurrency adoption September 2020. Go to Article.

• Digital Yuan Trial in Shenzhen (January 4, 2021)

  China is continuing its digital yuan trials in large cities with a lottery in Shenzhen. The city is offering its citizens the chance to enter a lottery that will see 100,000 people winning 200 digital yuan, or $31, in digital yuan that they will have 10 days to spend at over 10,000 supported merchants in the city. By November 2020, China’s digital yuan has been transacted over 4 million times which is worth about 2 billion yuan, or $299 million. Go to Article.

• China’s CBDC and its Impacts (January 4, 2021)

  China is currently testing pilot programs for its digital yuan and it offers a sort of blueprint to other nations looking to have their own CBDC. Because the digital yuan does not have transaction fees, this might trigger wider adoption of the digital yuan when it is released nationally as other digital transacting companies like Alipay, WeChat Pay, and Chinese Banks will have to reduce or eliminate their transaction fees to keep customers. As card networks, such as Visa, are used by central banks to control and track digital fiat, they have pledged to work with central banks to enable CBDC. PYMNTS research has shown that three out of ten consumers think real-time payments are one of the most important features when they look for a financial institution and as many as 50.7% of millennials believe real time payments to be very important. Go to Article.

• Digital Yuan Trial in Shenzhen (January 4, 2021)

  100,000 Shenzhen residents are being given ‘red envelopes’ with 200 digital yuan each. The residents will have 10 days to spend the currency across 10,000 supported merchants but will first have to provide their resident ID cards and mobile phone numbers to register for a personal digital wallet for an app that digital yuan can be spent on. Research is still being conducted how the digital yuan may affect the global financial system which continues to pivot around the U.S. dollar as the global reserve currency. Go to Article.

• Stellar to Help Ukrainian Framework for CBDC (January 4, 2021)

  The Stellar Development Foundation has entered an agreement with the Ukrainian government to ease the creation and implementation of Ukraine’s CBDC. Oleksandr Bornyakov, deputy minister of the Ministry of Digital Transformation for the Ukrainian government, says that although Stellar will help lead to better decision-making regarding development of their Cryptocurrency ecosystem, it does not mean that Stellar will develop the Ukrainian CBDC. It is speculated that Ukraine might lead Eastern Europe’s cryptocurrency race as Chainanalysis gave Ukraine the top spot for cryptocurrency adoption in their global ranking. Go to Article.