G7 pushes accelerating global implementation of ‘travel rule’ for crypto assets

May 15, 2023 Coin Telegraph

Group of 7 members met in Japan, where they discussed CBDCs and crypto regulation, with an eye towards quickly implementing the “travel rule” for crypto assets.

The G7 committee recently met in Niigata, Japan, to discuss, among other topics, the global financial implications for central bank digital currencies (CBDCs) and the laws governing the transfer of cryptocurrency assets.

In a communique summarizing the discussions, the committee reiterated its support for developing CBDCs with the caveat that further investigation was needed to ensure they are grounded in “transparency, the rule of law, sound economic governance, cyber security and data protection.”

The communique described the International Monetary Fund’s (IMF’s) work in developing a “CBDC Handbook” as “welcome,” and said the G7 committee was looking forward to the first set of deliverables to be published by the 2023 World Bank Group and IMF Annual Meetings — slated to take place in Marrakesh, Morocco on Oct. 15.

＼#G7新潟／
G7新潟財務大臣・中央銀行総裁会議は共同声明を採択し、３日間の日程を終えて閉幕しました。
共同声明の詳細はこちら▼https://t.co/V1Vgq4IB4I

写真は、議長国会見の模様です。 pic.twitter.com/Tfytu0R6lw
— 財務省 (@MOF_Japan) May 13, 2023

Committee members also discussed the controversial “travel rule” requiring any financial institution processing cryptocurrency transactions greater than $3,000 to disclose the sender’s name, address, and account information. Per the communique, the committee’s stance was made clear:

“We support initiatives by the Financial Action Task Force (FATF) on accelerating global implementation of the FATF Standards on virtual assets, including the “travel rule”, and its work on emerging risks, including from DeFi arrangements and peer-to-peer transactions.”

The G7 committee comprises representatives from Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, with the European Union serving as a “non-enumerated” member.

The Niigata meeting precedes the annual G7 summit, scheduled to take place in Hiroshima from May 19-21.

While it’s still unclear if U.S. President Joe Biden will attend, as the impending debt ceiling impasse is causing a deadlock in Congress, the Financial Times reports that “the U.S. wants its rich nation partners to increase the economic pressure on China” during the summit.

Interestingly, while Ukraine was mentioned 17 times in the Niigata meeting’s communique (Russia received 18 mentions), China wasn’t mentioned at all.

Samsung to research South Korea’s CBDC for offline payments

May 15, 2023 Coin Telegraph

CBDC

The collaboration will have both parties researching the offline capabilities of the CBDC issued by South Korea’s central bank.

Tech giant Samsung Electronics has reportedly partnered with South Korea’s central bank to conduct research on central bank digital currency (CBDC) for offline payments.

On May 15, the Bank of Korea (BOK) and Samsung signed a memorandum of understanding (MOU) for research on offline CBDCs, according to local media KBS World. The collaboration will have both parties researching the offline capabilities of the CBDC issued by the central bank.

Samsung also participated in the second phase of the BOK’s 10-month CBDC simulation experiment research, which concerned the retail use of CBDCs. The first stage of the BOK’s CBDC research tested basic functions such as CBDC’s issuance, distribution and redemption.

*Samsung Electronics and the Bank of Korea sign an MOU for CBDC research on offline payments. Source: samnews24.com*

The latest MOU is aimed at testing the South Korean CBDC’s potential to conduct remittances and payments using near-field communication (NFC) on Samsung mobile devices instead of the internet. Samsung Electronics vice president Won-Joon Choi revealed that the collaboration allowed the tech giant to apply Samsung’s high-level security technology to the digital currency field. He added:

“Based on cooperation between the two companies, We expect to be able to make a great contribution to the development of global offline CBDC technology.”

As part of the collaboration, Samsung reportedly obtained hardware certification for the Security International Common Criteria Evaluation Assurance Level 6+ grade.

Despite keen interest in CBDCs, Samsung recently banned employees from using generative artificial intelligence (AI) tools like ChatGPT on all Samsung-owned devices and internal networks.

As Cointelegraph previously reported, Samsung introduced the policy after a staff member uploaded a “sensitive code” to the platform. An internal memo addressing the matter read:

“HQ is reviewing security measures to create a secure environment for safely using generative AI to enhance employees’ productivity and efficiency.”

Banking giants, including JPMorgan, Bank of America, Goldman Sachs and Citigroup, have also restricted the use of generative AI tools.

Governor Ron DeSantis Signs Bill Prohibiting Use of Central Bank Digital Currencies in Florida

May 13, 2023 Bitcoin.com

Florida governor signs CBDC bill into law, restricting some uses of US and foreign CBDCs

May 12, 2023 Coin Telegraph

CBDC

The new law, signed by Governor Ron DeSantis, also urges other states to take action against the potential introduction of CBDCs through their commercial codes.

Florida Governor Ron DeSantis signed a bill restricting the use of central bank digital currencies (CBDCs) in the state, according to local news sources. The governor urged state lawmakers in March to draft the bill.

The new law prohibits the use of a United States federal CBDC “as money within Florida’s Uniform Commercial Code (UCC).” It also bans the use of CBDCs issued by foreign governments and calls on other states to use their commercial codes to institute similar prohibitions.

At the signing ceremony for the bill, DeSantis said he was spurred into action by U.S. President Joe Biden administration’s studies of the new financial technology. The United States does not have a CBDC and there is no current plans to introduce one.

DESANTIS ANTI CBDC BILL JUST PASSED THE HOUSE & SENATE

I brought a select few of our members up to Floridas Capitol to meet with

The Governors Team
The Chief Financial Officers team
The Office of Financial Regulation
The anti-CBDC Bill Sponsors

In order for us to push… pic.twitter.com/vnMQxxVoUF
— Samuel Armes (Florida Blockchain Business Assoc.) (@samuelarmes) May 3, 2023

“I don’t think they would have done that if they don’t intend on implementing this,” he said. Were a U.S. CBDC to be issued, it would be “a massive transfer of power from consumers to a central authority.”

DeSantis also saw the potential introduction of a CBDC as a threat to cryptocurrency:

“I think they want to crowd out and eliminate other types of digital assets like cryptocurrency because they can’t control that so they don’t like that.”

The bill the governor signed introduced changes to the state’s currency commercial code. “You started to have a movement among the states to actually add CBDC to their Uniform Commercial Codes and this is something that was pushed by a lot of powers that be to do that,” he said, in an apparent reference to the proposed Article 12 of the UCC now before state legislatures. DeSantis added:

“We looked at that and said […] We are not going to add central bank digital currency to our commercial code, but we also said […] We need to add protections for Floridians against this, and so we’ll put in the Uniform Commercial Code that CBDC is something we don’t recognize.”

The Uniform Law Commission has taken pains to dispel the idea that it is encouraging the adoption of CBDC, even recently issuing a clarification on its position.

John Montague of Florida-based Montague Law told Cointelegraph:

“This bill stipulates that transactions involving CBDCs won't be afforded the usual UCC protections, potentially dissuading entities or individuals from engaging in such transactions with CBDCs.”

He added, “The UCC can establish obligations and alter third-party rights, even without their direct contractual involvement. Florida has the authority to alter this definition.”

The law takes effect on July 1.

Magazine: China’s 180M digital yuan airdrop, Devastation in Turkey, Laos’ CBDC: Asia Express

BIS issues comprehensive paper on offline CBDC payments

May 11, 2023 Coin Telegraph

BIS

According to the Bank for International Settlements, offline payments with CBDC raise new risks related to counterfeiting, fraud and privacy concerns.

The Bank for International Settlements (BIS) is actively exploring opportunities for offline payments involving a central bank digital currency, or CBDC.

On May 11, the BIS Innovation Hub Nordic Centre published a comprehensive handbook exploring how CBDCs could work for offline payments.

The guide is written in collaboration with technical consultancy Consult Hyperion, addressing objectives for resilience, cash resemblance, accessibility and other offline CBDC features.

*Offline payments and ledger systems. Source: BIS*

Titled “Project Polaris,” the paper highlights new potential risks stemming from offline payments with CBDCs, including counterfeit or privacy concerns.

According to BIS and Hyperion, offline CBDC payments pose privacy threats as they can “both support anonymous transactions and be privacy-revealing depending on design.”

Some of the listed privacy concerns include the level of privacy protection offered by the value transfer protocol. “If the offline value transfer protocol does not support privacy by design, then offline payments can never be anonymous,” the handbook reads.

Offline CBDC payment transactions also raise privacy or even fraud issues when it comes to identification and verification of counterparty users.

In some cases, it may be crucial for offline CBDC payees or payers to identify the counterparty, and such transactions may not always involve face-to-face contact. Central banks would have to take into account such situations when designing offline CBDCs, BIS wrote, adding:

“The payer may want to be assured of the identity of the payee, the details given to them are valid and their payment goes to the right place. [...] Impersonation fraud is a potential area of risk that central banks need to consider with regard to privacy.”

The paper also mentioned the importance of interoperability and risk management systems for offline payments, stressing the need for the ability to detect potential breaches of offline purses.

“The roles and responsibilities of the ecosystem in supporting offline payments need to be better defined, and collaboration between public and private sectors will be required,” the handbook notes.

Offline functionality is a major feature of multiple CBDC projects currently being developed by global central banks. As previously reported, countries like Australia, India and Russia have been working on offline CBDC payment technology.

Australia’s central bank plans to launch a “live pilot” of a CBDC that features offline payments “in the coming months.” The Reserve Bank of India has been testing CBDC offline functionality since March 2023. The central bank of Russia expects to introduce the offline mode for the digital ruble by 2025.

Push to Launch American CBDC Will Drive Feverish Interest In Bitcoin, Says MicroStrategy’s Michael Saylor

May 10, 2023 The Daily Hodl

BoE fintech head says crypto doesn’t ‘fulfill any of the functions of money’

May 9, 2023 Coin Telegraph

Bank of England

At a recent event, Tom Mutton, the Bank of England’s head of fintech, touted the privacy benefits of CBDCs while denouncing the anonymity of cryptocurrencies.

The Bank of England’s director of fintech, Tom Hutton, recently spoke out on the United Kingdom’s plans to institute a central bank digital currency (CBDC) at the Crypto and Digital Assets Summit in London.

LIVE: Crypto and Digital Assets Summit Day 1. Tune in to hear leaders from across the industry debate the trends that are shaping the future of Crypto: https://t.co/ZiWtmb5j5M

Follow the thread below for key highlights pic.twitter.com/dNxGemJGzf
— Financial Times Live (@ftlive) May 9, 2023

According to a report, Hutton’s talk focused on privacy and anonymity — concepts he says are at odds with each other regarding the Bank of England’s digital currency focus.

While describing the U.K.’s plans for a digital pound as only being viable if “it has the very highest standards of privacy,” Mutton explained such a product was never meant to feature anonymity:

“Privacy and anonymity are used synonymously in a way they shouldn’t be.”

Apparently referencing the potential for cryptocurrency to be used in the commission of criminal acts — something experts estimate accounts for only 0.10% to 0.15% of all cryptocurrency use — Mutton also mentioned that anonymity was “a public policy problem and something that should not be allowed to continue.”

In further comments, Mutton explained that the digital pound would not be interoperable with cryptocurrencies. His reasoning: They don’t “fulfill any of the functions of money.”

Mutton’s comments come less than a month after the Bank of England’s deputy governor, John Cunliffe, spoke at the Innovate Finance Global Summit in London.

During the April 17 event, Cunliffe tackled CBDCs and stablecoins, telling eventgoers the latter would “offer the possibility of greater efficiency and functionality in payments,” but that “it is extremely unlikely that any of the current offerings would meet the standards for robustness and uniformity we currently apply both to commercial bank money and to the existing payment systems.”

In reference to a national CBDC, Cunliffe said a digital pound is “likely to be needed if current trends in payments and money […] continue.”

The Bank of England has yet to announce when the digital pound could launch — or, indeed, whether it will at all. In February, the bank issued guidance suggesting, as Cunliffe recently reiterated, such a product might be needed in the future, but that it was “too early to decide” as of now.

Canada’s central bank asks citizens what they want in a digital dollar

May 9, 2023 Coin Telegraph

Bank of Canada

Canadians are being asked what features they wish to see in a digital Canadian dollar even though there are no plans yet to issue one.

Canadians are being asked to submit what features they want to be included in a potential digital Canadian dollar, with the country’s central bank opening a consultation to the public.

On May 8, the Bank of Canada (BoC) launched a public consultation that will run until June 19, noting it’s exploring a virtual loonie as “the world becomes increasingly digital.”

The BoC’s senior deputy governor Carolyn Rogers said in a statement the bank wants to hear what Canadians “value most in the design of a digital dollar” to help it make choices relating to its security and reliability along with ensuring it “meets the needs of Canadians.”

Hey Canada, we need your input!

Our public consultation on a potential #DigitalCanadianDollar is now LIVE. #HaveYourSay by June 19: https://t.co/p8BdG3tQ9h pic.twitter.com/vKRoBfAngu
— Bank of Canada (@bankofcanada) May 8, 2023

The bank was quick to state that it's not starting work on a central bank digital currency (CBDC) and wasn’t looking to replace cash if it does.

“At this time, a digital Canadian dollar is not needed. And any decision to issue one rests with Parliament and the Government of Canada.”

“Cash isn’t going anywhere,” the BoC added. It said, however, that many Canadians could be excluded from the economy in the future if the use of banknotes falls.

If a CBDC was issued, physical notes would still be provided “for those who want them” the bank said.

The BoC also outlined the possibility that cryptocurrencies or foreign CBDCs “could become widely used in Canada.”

It claimed this scenario could compromise the Canadian dollar and “pose a risk to the stability of our financial system.”

The consultation’s questionnaire asks Canadians a wide range of questions including the payment methods they’ve used in the last month, how often they would potentially use a Canadian CBDC and what design features they wish to see.

It also specifically asks if the survey taker uses or holds cryptocurrencies and features a range of demographic questions about gender, age, education and income.

Canadians are asked as part of the digital dollar consultation if they use or hold crypto. Source: BoC

The BoC said it will publish a report summarizing the consultation “later this year.”

Hall of Flame: Crypto Wendy on trashing the SEC, sexism, and how underdogs can win

Argentina says no to crypto payments, France tolerates ‘finfluencers’: Law Decoded, May 1–8

May 8, 2023 Coin Telegraph

Argentina

Argentina’s central bank banned payment providers from offering crypto transactions, adding that it intends to reduce the country’s payment-system exposure to digital assets.

Last week brought several significant international developments in regulation. Argentina’s central bank banned payment providers from offering crypto transactions, adding that it intends to reduce the country’s payment-system exposure to digital assets. While local payment providers refuse to comment on the decision, Argentina’s fintech chamber urged the government to reconsider, claiming that “it limits access to a technology that offers multiple benefits and opportunities for our society.”

In France, the Senate Committee on Economic Affairs approved an amendment allowing registered cryptocurrency companies to hire social media influencers for advertising and promotional purposes. The new wording would allow companies registered with France’s Financial Markets Authority to hire product influencers.

Meanwhile, Nigeria is preparing new industry regulations for digital asset platforms. The Nigerian Securities and Exchange Commission (SEC) is considering allowing licensed digital exchanges to list tokens backed by specific assets, including equity, debt and property. The SEC also aims to register fintech firms as digital sub-brokers, crowdfunding intermediaries, fund managers and tokenized coins issuers. The authority will not register crypto exchanges until the central bank provides clear regulations for the crypto market.

White House to build international standards for DLT

The United States Government released the national standards strategy for key and emerging technologies, with blockchain being one of them. The national strategy suggests that distributed ledger technology (DLT) and digital infrastructure would increasingly impact and be widely used in the economic sector. Some key areas where these technologies will be actively tested include automated and connected infrastructure, such as smart communities and the Internet of Things. DLT can be especially useful in building cybersecurity and privacy-based features and services.

North Carolina House passes bill banning CBDC payments to the state

The North Carolina House of Representatives has unanimously passed legislation prohibiting payments to the U.S. state using a central bank digital currency (CBDC). The latest version of the legislation aims to prohibit individuals from using CBDCs for any payments to the state. It also bars the Federal Reserve from using North Carolina as a potential testing ground for its own CBDC pilot. The bill will now move to the Senate, where it must pass before being signed into law or vetoed by Governor Roy Cooper.

Montana governor signs pro-cryptocurrency mining bill into law

Montana Governor Greg Gianforte has signed a bill into law essentially preventing local governments in the state from passing laws prohibiting cryptocurrency mining. The legislation effectively enshrines crypto miners’ rights in the state by revising existing laws, prohibiting discriminatory electrical rates for mining firms and not allowing taxation for crypto used as a payment method. It was introduced partly as a preventive measure in response to certain proposals in other states.

American CBDC Will Expand Government’s Power To Surveil and Control: Presidential Candidate Robert Kennedy Jr

May 6, 2023 The Daily Hodl

CBDC

White House to build international standards for DLT

North Carolina House passes bill banning CBDC payments to the state

Montana governor signs pro-cryptocurrency mining bill into law

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