Category: CBDCs

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Banking CBDCs Crypto News Payments

Visa Partners with ConsenSys to Pilot CBDC

American multinational payments giant Visa has partnered with ConsenSys, a blockchain software tech company, to build the proper infrastructure to pilot its own CBDC (Central Bank Digital Currency).

As per an announcement on January 13, Visa will integrate its payment module into ConsenSys blockchain infrastructure to issue a CBDC pilot to test retail applications such as cards and wallets, with an anticipated launch by the end of the first quarter of 2022. Visa clients will be able to integrate the infrastructure to issue CBDC-linked payment cards and wallet credentials.

Visa revealed it will be working with approximately 30 banks worldwide to receive insights over what they want to achieve with CBDCs, a topic long discussed among these financial institutions.

Decentralised Entities Working With … Banks?

Visa has been already working with CBDC products since last year. For instance, in October 2006 it announced it was working on developing a protocol to send digital currencies between blockchains to operate as a “universal payment channel”, which will connect CBDC networks between countries.

On the other hand, ConsenSys is an Ethereum-based protocol that allows developers to build next-generation blockchain infrastructure for businesses, with a special Ethereum suite to access the decentralised web. But the crypto community’s reaction to ConsenSys working with central banks has sparked outrage:

“CBDCs are a form of digital dollar, or that’s what we’ve been told by most media channels. CBDCs are actually far away from the original concept of decentralised money as it would be in the hands of centralised financial entities, turning it into a potential surveillance tool“, as cautioned this week by US lawmaker Tom Emmer:

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Blockchain CBDCs China Crypto News NFTs Regulation

China Plans to Create NFTs on a State-Backed Centralised Blockchain

China has created its own version of non-fungible tokens (NFTs), which are in no way linked to any cryptocurrencies or public blockchains and will be running on its state-backed Blockchain Service Network (BSN).

China’s Blockchain to Support NFTs

According to the South China Morning Post, BSN will be rolling out a new infrastructure that will support the use of NFTs called BSN-Distributed Digital Certificates (BSN-DDC).

The ban on cryptocurrencies in China doesn’t necessarily affect the use of NFTs, with one of the technical advisers to BSN stating that NFTs “have no legal issue”. Mainly it’s important that they do, however, distance themselves from cryptocurrencies.

The platform is poised to launch by the end of the month and only Yuan will be permitted for transactions. The main reason public blockchains have been outlawed is that regulators cannot intervene in events classified as illegal, as well as the fact that the state requires all internet systems to verify user identities, which usually isn’t the case with public decentralised applications.

BSN-DDC Could Disrupt the Industry

The BSN-DDC is compatible cross-chain and according to the report, issuing an NFT could cost as little as 0.05 yuan (A$0.01). At the moment the biggest NFT market is for digital art, but China is looking more at using it for certificate management.

NFTs in China will see annual output in the billions in the future.

He Yifan, chief executive officer, Red Date Technology

The expected rise of NFTs in China is in part also due to the platform that will “offer application programming interfaces for businesses or individuals so they can build their own user portals or apps to manage NFTs”.

China’s Solution to Monitoring Chains

According to the report, Red Date, a technical support provider to BSN, has come up with a solution to govern blockchains in China. By connecting them to the open permissioned chain run by China Mobile, China UnionPay and State Information Centre public chains can be “localised”.

Red Date CEO He Yifan also added that since 2018, more than 20 public chains have undergone this process and with the new BSN-DDC another 10 will be integrated including “the adapted version of Ethereum and Corda, plus domestic ones like FISCO BCOS”.

China has long been working on blockchain technology and was even one of the first countries to start research on CBDCs. The Digital Yuan will even be controlled by Smart Contracts, with China’s mobile CBDC wallet launching ahead of the Winter Olympic Games.

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Banking CBDCs Crypto News Cryptocurrency Law

US Lawmaker Introduces Bill Prohibiting ‘Surveillance Tool’ Retail CBDC

A US lawmaker is seeking to stop the Federal Reserve from issuing a CBDC (Central Bank Digital Currency) directly to its consumers due to concerns over privacy of customers’ data.

CBDCs Are a “Surveillance Tool”

Minnesota Republican Tom Emmer introduced a bill on January 12 that would prohibit the Federal Reserve (Fed) from issuing CBDCs to US citizens. The bill briefly explains why such a product would turn into a “surveillance tool” for the Fed in the future, as customers may be forced to register with the central bank to access their money.

Emmer cited China’s efforts to accelerate the spread of the digital yuan to a broader population within the country, with tech giants such as Alibaba and Tencent joining the government to help reach its goal.

However, Emmer believes this will end up in a massive surveillance system directly aimed at Chinese citizens, tweeting that the “US should prioritise blockchain technology with American characteristics rather than mimic China’s digital authoritarianism out of fear”.

Emmer, echoing the majority Republican view, went on to say that the Fed doesn’t have the power to handle these type of demands on its systems like private financial entities do.

As other countries, like China, develop CBDCs that fundamentally omit the benefits and protections of cash, it is more important than ever to ensure the US’ digital currency policy protects financial privacy, maintains the dollar’s dominance, and cultivates innovation.

Tom Emmer, Minnesota Republican

Are CBDCs a ‘Perversion of Crypto’?

CBDCs are simply a digital form of fiat currency issued and regulated by a central bank and/or government authority. Despite continuous efforts by global governments to improve such a product, privacy remains the number one concern, and former NSA consultant and noted whistleblower Edward Snowden concurs.

As Crypto News Australia reported last October, the former NSA consultant argues that CBDCs aren’t so much a form of digital dollar as “something closer to being a perversion of cryptocurrency“.

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Blockchain CBDCs China Crypto News

China Pilots Mobile Wallet for CBDC Ahead of Winter Games

The People’s Bank of China (PoBC) has launched iOS and Android apps for digital yuan transactions in selected cities ahead of next month’s Winter Olympics. This comes after China declared all cryptocurrency transactions illegal last year.

How the App Will Work

The new app will link users’ phone numbers to payment services provided by commercial banks using China’s central bank digital currency (CBDC).

China published a whitepaper outlining the progress of the CBDC, formally called e-CNY. The document reveals that the e-CNY uses smart contracts programmability as part of one of its seven major features.

According to the above tweet from BlockBeats, individual users in China may now download a version of the app to try out “personal wallet opening and management and e-CNY exchange and circulation services”. The app is currently only available for trial in 11 locations within China: Shenzhen, Suzhou, Xiong’an, Chengdu, Shanghai, Hainan, Changsha, Xi’an, Qingdao, Dalian, and the area where the Winter Olympics will be held.

Thus far, China has been testing the digital yuan through lotteries in some cities for limited users. The central bank hopes to expand the number of people using the digital yuan.

China also undertook CBDC tests in mid-2021 to determine the usefulness of digital currencies. Following testing, China announced it would pay the salaries of certain residents in the Xoing’an region in digital yuan.

PRC Unveils ‘FinTech Development Plan (2022-2025)’

Along with the release of its digital wallet, the PBoC has unveiled its FinTech Development Plan (2022-2025), which outlines the importance financial planners place on the digitisation of the economy. The document does not explicitly discuss blockchain technology, or cryptocurrency, though the trend has been toward exerting greater control over the trajectory of China’s digital economy to ensure government access to financial data.

Last year the Chinese government expelled the majority of bitcoin mining operations, crushing the country’s contribution to the Bitcoin network’s hashing power within the country and pushing the miners that remain further underground.

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Banking CBDCs Crypto News

Bank of Jamaica Successfully Completes CBDC Trial, Rollout Scheduled for Q1 2022

The Bank of Jamaica (BOJ) has recently completed its Central Bank Digital Currency (CBDC) pilot with eCurrency Mint. The project will be rolled out in the first quarter of 2022 with the onboarding of more users and two extra wallet providers.

Another Nation Opts For a CBDC

Jamaica has joined the Bahamas and Ukraine and a handful of other countries that are implementing a CBDC into their monetary system.

According to a release from the Jamaica Information Service, the BOJ concluded its CBDC pilot on December 31.

As part of the pilot, the BOJ minted 230 million Jamaican dollars (JMD), or about US$1.5 million, for 57 customers by way of person-to person, cash-in and cash-out transactions through 37 accounts. This was all done at an event sponsored by the National Commercial Bank (NCB), one of the ​​island nation’s largest financial institutions.

For the pilot, BOJ used Irish cryptography security firm eCurrency Mint as the provider for its digital currency project after opening applications in July 2020. The scope of the pilot was limited to digital wallet providers who indicated readiness to participate within the timeframe.

National Rollout Ready to Go

As the roll-out commences, NCB will continue to bring on new customers, as well as add two other wallet providers who are currently in the virtual simulation testing phase.

As countries find more use cases for CBDCs this may turn out to be the year of central bank issued digital currency, with both Brazil and Peru potentially looking to introduce CBDCs in 2022.

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Banking Bitcoin CBDCs Crime Crypto News Investing Russia Scams

Russia Central Bank Moves to Ban Investment in Crypto

According to a report by Reuters, the Central Bank of the Russian Federation (CBR) is looking to ban crypto investments. In a directive issued earlier this week, the bank has also barred mutual funds from investing in digital currency.

Russia Rebels Against Crypto

The Russian Federation, which has long argued against cryptos – citing concerns of risks to financial stability, money laundering, and possible financial terrorism – has yet again spoken its mind.

After issuing concerns over the security implications associated with cryptos, the federation eventually gave them legal status in 2020 but banned their use as a means of payment. Following this, the central bank is now in talks with market players and experts regarding a possible overall ban on cryptos.

Should a ban be approved by lawmakers, it would apply to new purchases of crypto assets but not those made in the past. Russia’s current stance amounts to a “complete rejection” of all cryptos, a source close to the bank has said.

According to the bank, the annual volume of crypto transactions conducted by Russians amounts to about US$5 billion, with CBR first deputy governor Ksenia Yudaeva claiming the use of cryptos lowered the efficiency of monetary policy. According to Yudaeva, “The situation in developed market countries more and more resembles the so-called shadow financial system.”

CBR Seeks to Ban Mutual Funds from Investing in Crypto

Adding to the bad news for investors, Russia has issued a directive that prohibits Russian mutual funds from directly or indirectly investing in crypto assets.

According to the CBR, funds cannot invest in digital currencies or in “financial instruments, the value of which depends on the price of digital currencies”. The proposal issued by the CBR, in line with its hard stance on decentralised digital money, comes after the regulator urged stock exchanges to avoid trading securities tied to cryptocurrencies in July 2021.

Despite its firm stance against cryptos, Russia is currently working on a Ruble-backed central bank digital currency (CBDC). A pilot program was set for launch this month, but the deadline has been moved with a prototype expected to be created in “early 2022”.

Hacking a Cause of Concern for Russia

Hacking has become a hot topic in the crypto world as the incidence continues to rise. Of particular concern is the involvement of Russian-based hackers. In October, Google’s Threat Analysis Group (TAG) spent a good deal of time fending off hackers attacking the accounts of YouTubers to hijack and repurpose them to run ads for crypto scams. TAG had found that the perpetrators of the campaign were recruiting hackers from a “Russian-speaking forum”.

Last month, the US Department of Justice announced charges against a REvil ransomware affiliate responsible for the hack against the Kaseya MSP platform in which ransom demands totalled US$767 million. Law enforcement has also impounded an additional US$6.1 million from another REvil ransomware affiliate, Russian national Yevgeniy Polyanin, who remains at large.

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Blockchain CBDCs Crypto News Stellar

Ukraine Bank Launches CBDC Pilot Built on Stellar Lumens Blockchain

A recent announcement by the Stellar Development Foundation (SDF) has revealed that the Stellar blockchain will be used to pilot an electronic version of the hryvnia, Ukraine’s national currency. In addition to September’s news of the country legalising cryptocurrencies, Ukraine appears to be gradually embracing the entire digital asset ecosystem.

Stellar Partners with Fintech Firm and Ukraine Bank

‍The CBDC pilot will be carried out by global fintech firm Bitt and one of Ukraine’s oldest banks, TASCOMBANK. The project will be overseen by the country’s central bank, with additional oversight from the Ministry of Digital Transformation.

As part of the project, an electronic hryvnia will be issued on the Stellar blockchain. One of the main tests will be use cases for “programmable payroll for public employees at Diia, an IT solutions enterprise, as well as for peer-to-peer payments and merchant payments”.

Oleksandr Bornyakov, deputy minister of Digital Transformation of Ukraine, noted:

This pilot project will serve as a technological basis for the issuance of electronic money, and is the next key step to advance innovation of payment and financial infrastructure in Ukraine.

Oleksandr Bornyakov, deputy minister of Digital Transformation of Ukraine

Build It, Test It, and It Will Come

The stated objective of the project is to “pilot the issuance of electronic money on an open blockchain with asset-control capabilities for issuers”.

TASCOMBANK will build and test the regulated electronic hryvnia on Stellar, which will be deployed on Bitt’s digital currency management system. Part of Stellar’s appeal, according to Bitt CEO Brian Popelka, is its “many benefits, including greater flexibility that aligns with the electronic hryvnia’s specific needs”. Volodymyr Dubey, TASCOMBANK’s chairman of the board, was similarly optimistic about the project’s prospects, saying:

With the rapidly growing impact of virtual assets on our everyday life and economic landscape, it is essential to utilise the advantages of blockchain technology and new related products as a part of the bank’s long-term market strategy. Electronic currency paves the way to more sophisticated products in the virtual assets field that we are excited to explore.

Volodymyr Dubey, chairman of the board, TASCOMBANK

Stellar Making Strides

Earlier this year, the Stellar Foundation announced a partnership with Moneygram and USDC as part of its move into the global remittances space. Now, its ambitions have expanded into central bank digital currencies (CBDCs) with its CEO and executive director expressing great confidence that its blockchain is up to the task.

Stellar is an open network that was designed with asset issuance in mind, and is uniquely suited to assets like the electronic hryvnia. It offers issuers, like TASCOMBANK, a suite of controls that they can configure for their asset control needs while maintaining the interoperability and flexibility of an open ledger.

Denelle Dixon, CEO and executive director, Stellar Development Foundation

This regulated electronic hryvnia will be built under the current e-money legislation of Ukraine, and the payment services law governing the circulation of electronic money and future issuance of a digital currency is anticipated to take effect in 2022.

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Australia Banking CBDCs Crypto News Regulation

RBA Wholesale CBDC Trial ‘Project Atom’ Heralded a Success

While the Reserve Bank of Australia (RBA) has been investigating central bank digital currencies (CBDCs) for some time, its policy position has not always been clear. However, in a report released this week, there are signs that wholesale CBDCs may indeed be around the corner.

Project Atom Forecasts Efficiency Gains

Project Atom was a collaborative research project undertaken during the past year exploring the potential use and implications of a wholesale CBDC using distributed ledger technology (DLT). The CBDC itself is intended to be used by wholesale market participants (ie, banks and other financial institutions) for the funding, settlement and repayment of a tokenised syndicated loan on an Ethereum-based DLT platform.

According to the RBA, the results of the trial demonstrated that “the digitisation of syndicated loans on a DLT platform could provide efficiency gains and reduce operational risk by replacing highly manual and paper-based processes”.

Other aspects of the trial involved exploring the programmability of CBDCs that “could improve efficiency and reduce risk in transactions”.

Project Atom demonstrated the potential for a wholesale CBDC and asset tokenisation to improve efficiency, risk management and innovation in wholesale financial market transactions. The project also demonstrated the benefits of collaboration in advancing our knowledge in this area. The bank will continue its research on CBDCs as part of its strategic focus area on supporting the evolution of payments.

Michele Bullock, Assistant Governor (Financial System), RBA

Overall, despite noting potential improvements in efficiency, risk management and innovation, the RBA noted that more detailed policy work was required before the introduction of any CBDCs.

Retail CBDCs?

As reported by Crypto News Australia in February of this year, the position then was that there was no strong case for issuing retail CBDCs. And this, more or less, appeared to be the case until mid-November, but as of this week things have seemingly moved in the opposite direction, as noted by ABC business reporter David Taylor:

This shift in direction is not entirely unexpected, as CBDCs naturally confer more powers on those in control. They represent programmable money, a behavioural finance innovation enabling central bankers to use the tools at their disposal to target specific individuals, groups or demographics to drive whatever consumer behaviours they are looking to achieve.

Perhaps this is why Edward Snowden, a known privacy advocate, regards them as a tool for financial surveillance. It’s also a reason why many are turning to Bitcoin, a truly decentralised alternative.

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Australia CBDCs Crypto Exchange Payments Regulation

Treasury Moves to Consider Feasibility of CBDC and Crypto Legalisation Reforms

The Australian government is making strides in reforming consumer and business payments as well as building a framework for the regulation of the crypto market as innovations in payment technology rapidly increase.

The Rise of New Payment Technology

Australia has long been working on the possible implementation of a Central Bank Digital Currency (CBDC), and a year-long study by the Reserve Bank of Australia (RBA) has determined that a CBDC could be used by the wholesale market for the funding, settlement and repayment of a tokenised syndicated loan on Ethereum-based distributed ledger technology (DLT). Research will continue accordingly.

The report comes as the Australian government is in the process of overhauling its regulatory framework for payment systems for the first time in more than 20 years. The concern with emerging payment technologies – such as those provided by Ant Group Co or even Tether – is that a digital currency pegged to the US dollar could pose a threat to monetary regimes and add a new layer to cross-border payments.

If we do not reform the current framework, it will be Silicon Valley that determines the future of our payments system […] These are significant shifts which we need to be in front of.

Josh Frydenberg, Australian Federal Treasurer

According to the Australian Taxation Office, more than 800,000 Australians have made transactions with digital assets since 2018. Since the technology is available and people are using it, the country has also opted to broaden its payment laws to cover online transaction providers such as Apple Inc and Alphabet Inc’s Google, as well as buy-now-pay-later (BNPL) providers like Afterpay Ltd. This would effectively end their run of operating without direct supervision.

Australia Leading Crypto Regulation

Leading up to the reform, in October an Australian Senate committee released a 12-point crypto reform plan to assist in the regulation of the growing digital asset ecosystem. Now full-scale crypto regulation is coming to Australia, and it includes licences for exchanges, laws for DAOs, action on de-banking and a review of tax settings.

The move to regulate digital assets is an important one with many factors to consider, but consultation and discussion are essential first steps with the support of key individuals in government positions.

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Bitcoin CBDCs Crypto News Ethereum India

India to Ban All Cryptocurrencies But Its Own

In a shocking plot twist, India will ban all private cryptocurrencies bar a select few in a bill seeking to regulate digital currencies announced by parliament.

The Indian government will allow a limited number of cryptos to promote their underlying technology and uses, and the country is set to launch its own digital currency in December following “serious concerns” regarding private cryptos.

An estimated 15 to 20 million Indian crypto investors will be affected after the government announced it was looking to ban most private cryptos, except those it will allow according to a legislative agenda. Bitcoin and Ethereum are among the digital assets set to be banned as legislative bodies cite “serious concerns” surrounding cryptos in general.

‘Financial Terrorism’ a Symptom of Unregulated Cryptos

Indian Prime Minister Narendra Modi has said countries should work together to ensure the safety of cryptos so they do not “end up in the wrong hands”. Modi has also claimed that the unregulated nature of digital assets makes them prone to money laundering and financial terrorism.

Through the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, India looks to restrict the domestic marketing and advertising of cryptos. In a country where many well-to-do citizens have traditionally turned to gold as an investment, the new ban will see some 15 to 20 million investors no longer able to go the crypto route as an alternative.

One Indian crypto user took to Reddit to express his dismay at the situation in detail:

I am an Indian and I am ashamed to admit it today! from CryptoCurrency

Like many others, the country has fallen on difficult times during the Covid-19 pandemic and is struggling in its fight against the virus. Australian cricketers Pat Cummins and Brett Lee have stepped in to help, each donating a generous amount of money. Lee turned to cryptos to fund his donation, giving one bitcoin to Crypto Relief, which went towards boosting the oxygen supply for Covid patients on the subcontinent.

India to Pilot CBDC in 2022

The Reserve Bank of India (RBI) is looking at the feasibility of a Central Bank Digital Currency (CBDC) and may launch one in the upcoming fiscal year. The CBDC is a digital derivative of a legal tender issued by a nation’s central bank.

Yet many are raising concerns regarding India trying to make its own digital currency that will be held by the reserve. Arguments are being put forward such a currency will defeat the entire purpose of cryptos.