Advancing Slowly but Steadily (Regulatory Digest, Nov 16—22)

Crimea and international trading center, Estonia licensing crypto products, CBDC to lessen risks for cross-border payments, Canada's and Romania's regulation ideas, SWIFT expelling Central Bank of Iran, Catalonia to vote via a blockchain, Philippines, Thailand, Cambodia and China on digital currencies

  • The Crimean Republican Association of Blockchain Investment Technologies (Krabit) plans to set up an international training center to teach students from economically and politically sanctioned countries about blockchain – the underlying technology behind cryptocurrencies. The course will be taught as part of the university curriculum and lecturers will include members of the association.
  • According to Bitnovosti, Estonia issued licenses to almost 500 cryptocurrency exchanges and 400 wallet providers. A law firm called Njord studied data from the country’s Registrar of Economic Activities and found that procuring a license for cryptocurrency-related businesses is easy and uncomplicated. To keep exchanges and other related businesses in check, the lawmakers of Estonia created the Estonia Money Laundering and Terrorist Finance Prevention Act.
  • According to a joint report by the Central Banks of Canada, Singapore, and the UK, a Central Bank Digital Currency (CBDC) will lessen risks for cross-border payments. The report delved into existing challenges presented by extra-territorial payments and the disadvantages of the current correspondent banking model.
  • Canada’s House of Commons Standing Committee on Finance (FINA) proposed cryptocurrency regulation measures to thwart money laundering. The country’s Members of Parliament recommends crypto-to-fiat exchanges to register as a money service business.
  • Oxfam, a global charity organization, spearheads BlocRice in Cambodia to boost the transparency and tracking of the country’s rice logistics. BlocRice is an app that applies the distributed ledger technology for implementation of smart contracts. The ledger will record the fresh from the farm price of organic rice, its trade volume and the means of transport.
  • Global financial payments system, SWIFT, expels the Central Bank of Iran. This will present a challenge for Iran when it comes to effecting clean intercontinental transactions. To mitigate this, Iran will launch its own state-backed cryptocurrency: the Crypto-Rial.
  • Romania’s Directorate for Investigating Organized Crime and Terrorism (DIICOT) is probing if the ‘Rezist’ movement is being financed through cryptocurrency. The DIICOT is examining crypto transactions that moved through several organizations. The public prosecutor responsible for the investigation is looking into the possibility that every transaction might have originated from the Stefan Batory Foundation located in Poland.
  • Erol Yarar, chairman of International Business Forum – a Muslim-focused lobby group, said the US currency has become a ‘sanctioning tool’ losing its function as a tool for international trade. Yarar further says that because of this, a common cryptocurrency for Muslim countries will be made to impair US dominance in the global financial system.
  • UnionBank of the Philippines is in the works to launch an island-to-island (i2i) blockchain project to give provincial banks the means to obtain access to the central banking network. It also intends to reach those without access to banks in the country’s rural areas.
  • Singapore’s Central Bank, the Monetary Authority of Singapore (MAS), completes the basic regulatory bill for the country’s payment services, and it includes cryptocurrencies. The Payment Services Bill was forwarded to the Singaporean parliament. MAS detailed the bill as bestowing a welcoming environment for innovation in the area of payments services. At the same time, it will lessen the probability of risks in the payments value chain.
  • Information from La Vanguardia, a Spanish newspaper, tells that the government of Catalonia is prospecting blockchain technology for electronic voting. The Director of Citizen Participation of the Government of Catalonia, Ismael Peña-López, disclosed the plan for the e-voting system will be introduced in the year 2020.
  • Bloomberg reports that Silver Castle, an investment company in Israel, set in motion two crypto funds, while another is pending. It is anticipated to gather $50 million by the end of this year.
  • The Thai News Agency (TNA) reports that the Bank of Thailand (BOT) governor has said that replacing money with a Central Bank Digital Currency, or CBDC, will take time. The complicated nature of the process, technological efficiency, and the eagerness of citizens to adopt such a change are components that have to be considered. Thus, Thailand is not likely to make the switch in the next 3 to 5 years.
  • A document written by the Minister of Industry and Information Technology of China encourages hastening the development of blockchain standards within the country where he relays that the technology has the potential be applied not only to finance, but also to social welfare, logistics, and entertainment industries. He invites his country to ‘play a key role’ in the technology’s international development, whilst restructuring the standards to fit China’s general environment.
  • China’s Ping An Bank will establish a boutique bank operating on the blockchain, IoT, and cloud services. The cutting-edge, sophisticated technologies will enhance management and service capabilities.

... And Not to Miss Out

  • The US SEC issued a public statement on 16 November regarding the issuance and trading of digital asset securities. According to the statement, the SEC is encouraging innovations within the field but market participants are called to conform to the federal securities law framework. The statement cited its most recent actions against various crypto companies and exchanges, which includes AirFox, Paragon, and EtherDelta’s founder.

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PBOC: China’s Digital Currency Not Launching in November

Coinspeaker PBOC: China’s Digital Currency Not Launching in NovemberThe People’s Bank of China (PBoC) announced that the long-awaited central bank-issued digital currency will not be ready in November as it had been predicted in crypto circles. From the bank, they added that reports saying Alibaba and Tencent are among the first financial institutions to receive the currency was incorrect.This came as a surprise because just few weeks ago we could hear that it will “be better than Libra“, and they even enthroned their new digital currency chief Changchun Mu who claimed their upcoming digital yuan would have even more features. Mu also recently took over the role of director of the PBOC’s research institute on digital currencySo, it doesn’t really seem that these were only rumors but rather that the bank couldn’t fulfill some of the law obligements.Be it as it may, this was presented as the “DC/EP” (Digital Currency/Electronic Payments) currency, which has been in the works for five years, and should be the first of its kind to be adopted on a massive scale.Obviously caused by news of Facebook’s cryptocurrency, the central bank quickly went on accelerating the development of its digital money. Let’s not forget they, said its development is one of their focuses for the second half of this year and that it could be launched as early as next year.Now suddenly, the central bank claims information such as the timing of the currency launch and participating institutions was false but explains nothing more about the (real) reasons.The clarification follows a Forbes report from August citing multiple sources who then said the launch of the digital currency was approaching and could fall before the November 11 Chinese e-commerce festival known as Singles Day. The sources also said Chinese commercial banks and payment companies such as above mentioned Alibaba and Tencent will be among the first institutions to receive DC/EP for distribution.The central bank said in the statement that the progress of the DC/EP would be announced in due time and urged the public to follow official announcements.Also let’s not forget that in July, PBoC’s former governor Zhou Xiaochuan said that one option would be to enable “commercial entities” to issue the digital coin, as Hong Kong allows with its dollar. He also said that the announcement of the Facebook-led Libra crypto project meant the government should “make good preparations and make the Chinese yuan a stronger currency” through the digital currency.Be it as it may, while PBoC cannot decide whether they said something to be done or not, Asia Pacific Digital Bank (APDB) already announced the preliminary launch of its stable coin USDA, backed by U.S. dollars on a 1:1 ratio, which is said to be strategically endorsed by the Wall Street Group. The main idea of this currency is to follow the concept of “freedom, equality, and sharing”.PBOC: China’s Digital Currency Not Launching in November
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IMF Educates on Stablecoins, Is Government Adoption Possible?

The International Monetary Fund has always shown some crypto-curiosity. In a recent document, the IMF commented on the use cases and utility of stablecoins, or assets with a pegged value. IMF Bigs Up Stablecoins In a recent IMF staff paper, part of the Fintech Notes series, the organization outlines the promises and risks of those assets, as a new arrival on the fintech scene. The IMF immediately points out the advantages of stablecoins, creating the potential for fast and accessible global payments. Stablecoins are various types of tokenized currencies, most often the US dollar. But there are various ways this peg is achieved. One way is to simply store dollars in a bank, making the stablecoin redeemable. The riskier type is an algorithmic stablecoin, with its value derived from other crypto coins. Pegged Coins Bring Personal Finance and Macro Risks The IMF sees risks in the stablecoin markets, especially for smaller economies. If a local currency is shunned in favor of a global stablecoin, whether Libra or another asset, this could lead to unwanted dollarization of the economy and a loss of national currency sovereignty. Right now, there is competition among some stablecoins. But the IMF predicts that in the future, a single network could monopolize the market. Such a network could displace banks and ruin other payment networks. Within the crypto space, a monopoly has already happened in a way, as Tether (USDT) covers more than 97% of all stablecoin deals. Banks will also have to compete with the stablecoins, while providing services for some of the projects. The other threat is that various types of stablecoin networks could hide terrorism financing and illicit activities. Despite the fact that a blockchain record can be transparent and accessible internationally, regulators may still have a hard time tracking that information. Currently, some stablecoins are issued only after the buyer goes through a KYC process. But even that process can be subject to fraud or identity theft. Stablecoin projects also don’t provide the same recourse in case of loss or fraud, and the IMF envisions firms will need to comply with capital and liquidity requirements, much like banks. Central banks have explored various types of pegged digital coins for a while. People’s Bank of China has stated it may issue a digital yuan. India has also mentioned the potential of a digital rupee, though not announcing a date. The IMF has been skeptical of alternative national currencies. The Fund issued a special warning to the Marshall Islands regarding its intention to distribute a national crypto asset, the Sovereign (SOV). What do you think about stablecoins? Share your thoughts in the comments section below! Images via Shutterstock The post IMF Educates on Stablecoins, Is Government Adoption Possible? appeared first on Bitcoinist.com.
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