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Bank of Spain issues registration guidelines for crypto services

All individuals and institutions in the country, including banks, will have to sign up using the new AML registry from the Bank of Spain.

The central bank of Spain is introducing new registration guidelines for local virtual currency service providers, or VASPs, including banking institutions.

The Bank of Spain has issued instructions on VASP registration for Anti-Money Laundering, or AML, purposes, requiring institutions to submit their registration requests through an electronic registry, Cointelegraph en Español reported Oct. 25.

Issuing the guidelines on Oct. 19, the Spanish central bank noted that the obligation to sign up in the registry applies to “all individuals and institutions providing virtual currency exchange services” like cryptocurrency trading and custody services.

The regulator stressed that VASPs will have to register “regardless of whether they are also registered in other administrative records in the Bank of Spain or other related authorities.”

According to the official statement, institutions are required to proceed with the registration even if their end customers are not located in Spain. Individuals are also recommended to use the electronic registry form but may also proceed via other channels like mail, the central bank said.

The instructions specifically require both legal entities and individuals to issue reports on their measures for preventing illicit activity like money laundering and terrorism financing, including certain information on their clients.

Related: Brazil aims to tighten penalties for crypto-related financial crimes

According to the statement, the Bank of Spain will analyze data and evaluate potential risks while taking into account VASPs’ types of clients, operated countries, products, business relationship purposes, operated volumes and others.

According to the local news agency El País, the Bank of Spain initially announced plans to establish AML procedures for VASPs in June 2021. In August, Spanish lawmakers backed a legal initiative to legalize the usage of cryptocurrency for mortgage and insurance purposes.

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Nigerian president to unveil eNaira central bank digital currency

The Nigerian central bank digital currency was originally slated for launch earlier this month, but it has been delayed.

Nigerian President Muhammadu Buhari is set to officially introduce the country’s central bank digital currency (CBDC), the eNaira.

The Central Bank of Nigeria (CBN) has published a document in which it reaffirmed its intention to introduce the eNaira after previously attempting but failing to do so on Oct. 1. According to the design paper for the eNaira, the CBN now considers itself prepared to implement Nigeria’s CBDC. 

The CBN is working on a global cryptocurrency that will be used as a means of payment and a store of value in addition to replacing cash.

The CBN, in its own statement, downplayed the risks of missing a deadline. Rather, the bank emphasized the value of getting things right the first time and how doing so contributes to long-term success for digital currencies. The CBN stressed the need to get off on the right foot rather than rushing to release a digital currency that has not yet received all necessary approvals.

As previously reported by Cointelegraph, the Nigerian Federal High Court approved the rollout of a CBDC as a legal tender on Oct. 2.

Related: French central bank pilots blockchain-based CBDC for debt market

The CBN published the document containing its design principles for the eNaira together with an overview of what is expected of the Nigerian digital currency. The two documents are available on the bank’s website in English and were also provided in Hausa and Yoruba.

According to the CBN, rather than concentrating all of its efforts on launching the eNaira on time, it has spent its effort on designing and architecting the eNaira. It has also allocated a lot of time to educate potential users about the currency’s capabilities, risks, and how they will be mitigated.

The central bank stated that these key facts should reassure Nigerians that the eNaira, which will be accessible to offline users, has been carefully planned and prepared for launch.

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Russian Crypto Industry Association Slams Government for Doing ‘Nothing’ to Regulate Sector

Russian Crypto Industry Association Slams Government for Doing ‘Nothing’ to Regulate SectorThe main organization representing participants in the Russian crypto space has lambasted authorities in Moscow for not doing enough to regulate the industry. The criticism comes four years after President Putin directed institutions to legally define the status of digital financial technologies. Regulators Accused of Failure to Take Russian Crypto Market Out of Shadow Russian […]

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Bank of Russia Not Ready to Allow Bitcoin ETF Trading, Governor Says

Bank of Russia Not Ready to Allow Bitcoin ETF Trading, Governor SaysCentral Bank of Russia isn’t prepared to admit a bitcoin exchange-traded fund (ETF) to the market, the head of the regulator, Elvira Nabiullina, told Russian media. Her statement, reaffirming the bank’s hardline stance on cryptocurrencies that has been recently criticized again, came after the debut of bitcoin ETFs in the U.S. Central Bank of Russia […]

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Pakistan Government Not Against Crypto Investments, High Court Calls for Regulations

Pakistan Government Not Against Crypto Investments, High Court Calls for RegulationsThe executive power will not oppose cryptocurrency investments, a high-ranking government official has told lawmakers in Pakistan. The statement comes as a regional high court has urged the federal government to regulate cryptocurrencies and formed a committee to look into the matter in the coming months. Minister Says Pakistan Government Has No Objection to Investments […]

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PayPal co-founder Peter Thiel says he ‘underinvested’ in Bitcoin

Billionaire Peter Thiel shared concerns that investing in Bitcoin is already a “known secret.”

As Bitcoin (BTC) marked a new all-time high above $67,000, PayPal co-founder and billionaire venture capitalist Peter Thiel said he should have bought more Bitcoin.

Thiel spoke of cryptocurrencies, central banks and artificial intelligence (AI) during an interview in Miami hosted by policy think tank Lincoln Network, Bloomberg reported Oct. 20.

“You’re supposed to just buy Bitcoin,” Thiel said, adding: “I feel like I’ve been underinvested in it.”

The tech investor noted that his only concern about buying Bitcoin was that the investment “secret was already known by everybody.” “I think the answers are still to go long. Maybe it still is enough of a secret,” he added.

According to Thiel, the latest Bitcoin rally is definitely a big concern for global central banks. The cryptocurrency’s surge to its new historical highs “surely tells us that we are at a complete bankruptcy moment for the central banks,” Thiel stated.

In the interview, Thiel also criticized AI as an opponent to crypto’s force for decentralization. “AI, especially the sort of low-tech, surveillance form, is essentially communist,” he said, adding that AI is technology that is “going to destroy the world.”

Related: Bitcoin briefly flippens Swiss franc after rally to new ATH

Thiel is one of the most vocal proponents of Bitcoin, claiming that Bitcoin succeeded as currency in 2014. The venture capitalist is also known for calling Bitcoin “a hedge against the whole world falling apart.” Earlier this year, the venture capitalist warned that the Chinese central government may be supporting Bitcoin as a means to undermine the foreign and monetary policy of the United States.

PayPal, which Thiel co-founded back in 1998, has been moving into crypto over the past year. The company officially announced its plans to introduce the ability to buy and sell cryptocurrencies like Bitcoin last October. PayPal has since rolled out crypto services in the United States and the United Kingdom.

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French central bank pilots blockchain-based CBDC for debt market

Led by Belgian financial services firm Euroclear, the latest French CBDC trial involved a system by tech giant IBM.

The central bank of France continues actively exploring a central bank digital currency (CBDC), completing a significant trial of a blockchain-based CBDC in the country’s debt market.

Over 500 institutions in France have participated in a 10-month experiment testing a CBDC issued by Banque de France for government bond deals, The Financial Times reported Oct. 19.

The CBDC trial was led by Belgium-based financial services firm Euroclear and used a system developed by American technology giant IBM. The CBDC test also involved the French public debt office alongside the central bank and a consortium of major financial companies operating in France, including firms like BNP Paribas, Crédit Agricole CIB, HSBC and Société Générale.

As part of the trial, the participants traded government bonds and security tokens, settling them using a CBDC supplied by the central bank. The project tested use cases of a CBDC in a range of everyday activities, such as issuing new bonds, using them in repurchase agreements, as well as paying coupons and redeeming deals.

“We have together successfully been able to measure the inherent benefits of this technology, concluding that the central bank digital currencies can settle central bank money safely and securely,” Euroclear executive Isabelle Delorme said.

According to Soren Mortensen, global director of financial markets at IBM, the project “went well beyond previous blockchain initiatives” because it successfully trialed “most central securities depository and central bank processes” while cutting off existing interim steps like reconciliation between market intermediaries.

Related: G7 leaders issue central bank digital currency guidelines

After launching an experimental CBDC program in March 2020, the central bank of France has been consistently testing various CBDC use cases. In June, Banque de France tested a CBDC to simulate the settlement and delivery of listed securities in collaboration with Swiss cryptocurrency bank SEBA. Previously, the central bank piloted a CBDC to issue $2.4 million worth of simulated shares using a private blockchain platform.

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Asian CBDC projects: What are they doing now?

Governments in Asia are quickly researching or implementing CBDCs. What does this mean for the region’s overdependence on the U.S. dollar?

The rapid growth of mainstream attention toward cryptocurrencies has forced the hands of numerous governments to create their digital alternatives. Over the past few years, interest from various jurisdictions has been pointed towards central bank digital currencies (CBDCs) — digital versions of government-issued fiat.

Given their capacity to use blockchain technology to facilitate a simplified fiscal policy — not to mention calibrate privacy features and even provide cross-border banking services to the unbanked — CBDCs continue to gain even more attention from various governments worldwide.

Already, surveys show more than 80% of central banks are researching CBDCs, with some working on proofs of concept that could eventually lead to the introduction of fully functional CBDCs. Out of the surveyed central banks, 10% plan to offer a retail version of a CBDC in the next three years, with another 20% set to make the move in under six years. 

In Asia, these efforts have been compounded by China’s release of the world’s first CBDC after setting up a task force as early as 2014. By 2016, the People’s Bank of China (PBoC) had already established a Digital Currency Institute, which developed a prototype CBDC.

Major Asian banks have shown great interest in CBDCs as reports show collaborative efforts by Thailand’s, Hong Kong’s and China’s central banks to create a digital ledger technology (DLT) for a CBDC prototype designed to bridge cross-border gaps. 

In this article, we give you a brief look at some developing CBDC projects on the Asian continent.

China

China ranks among the world’s top economies to embrace digital currencies with the release of the digital yuan — a CBDC project issued by the PBoC. 

Dubbed the Digital Currency Electronic Payment (DCEP) China’s digital yuan (e-CNY) is set to completely replace cash payments and has been rolled out in the country’s major cities since April 2020. 

China’s DCEP, while sporting some anonymity features, is controlled, tracked and registered on smartphone apps by the Chinese government, giving them the ability to freeze accounts at will. 

Perhaps one of its advantages is the fact that users on China’s DCEP network can reverse or correct erroneous transactions, which is one of the features that is non-existent on decentralized digital currencies like Bitcoin (BTC). 

As China’s CBDC takes shape, various countries (especially the United States) have grown increasingly concerned that the new CBDC initiative will help China tighten increased surveillance on its citizens and private companies. 

The move is also seen as an attempt to supplant the dominance the U.S. dollar enjoys in international trade. Even so, China’s e-CNY remains highly localized with no significant attempts by the Asian nation to take its CBDC international.

Hong Kong

Just recently, the Hong Kong Monetary Authority (HKMA) released a white paper discussing plans to experiment on the benefits of retail CBDCs for the city’s cross-border markets. 

Hong Kong is now governed under a one-country, two-system framework where it maintains its own financial and judicial system separate from mainland China. However, HKMA is working with China’s central bank to explore the infrastructure development of its digital Hong Kong dollar (e-HKD).

According to the white paper, “The architecture proposed in Hong Kong’s e-HKD features a flexible and efficient two-tier distribution model of a CBDC that enabled privacy-preserving transactions, traceability and cross-border synchronizations of ledgers.”

The white paper is the result of CBDC research by Hong Kong’s major financial authority that has been ongoing since 2017 under the aegis of “Project LionRock.” The HKMA considered the opinions of academic and industry experts and plans to conduct more trials to ensure the readiness of both a retail and wholesale CBDC.

South Korea 

South Korea’s latest move towards a CBDC has seen the Bank of Korea (BoK) make calls for a technology partner to help pilot a CBDC program set to run till the end of the year. 

In a report published by BoK in February this year, the central bank announced plans to test and distribute a digital won while outlining the legal challenges that accompany a state-issued digital currency.

Apart from selecting a technology partner to help with the project, BoK has also announced that its CBDC will first operate in a limited test environment in order to analyze the functionality and security of the CBDC.

According to previous remarks by a BoK official, South Korea’s cash transactions are on the decline, and the central bank is only taking steps in preparation “for the expected changes in payment settlement systems [worldwide].”

The Philippines

In the summer of 2020, the central bank began to consider the creation of a CBDC by forming a committee task force to study the issue.

Bangko Sentral ng Pilipinas had confirmed in a virtual briefing that a committee was set up to look into CBDCs. In the briefing, Governor Benjamin Diokno explained that a feasibility test and an evaluation of the policy mechanisms of issuing a CBDC were underway. 

Like most governments and traditional financial institutions, the officials in the Philippine government were not shy to admit to the significance of blockchain technology. Diokno said, “Cryptocurrency for us has always been beyond the asset itself but more on the blockchain technology that underpins it.” 

In line with these remarks, the Philippine Bureau of the Treasury, in partnership with the Philippines’ Digital Asset Exchange and UnionBank, had launched a mobile application built on blockchain tech for distributing government-issued treasury bonds.

A few months later, however, saw the Philippines’ central bank reject the possibility of issuing a CBDC any time soon. Citing the need for ongoing research and study, the country’s central bank noted that its CBDC research so far could benefit from looking at established use cases of digital currencies in the private sector as well as other industrial applications.

Singapore 

From as early as 2016, the Monetary Authority of Singapore had been looking into CBDC initiatives and is now seeking commercial partners to help develop the currency.

By setting up challenges and competitions to discover and develop a retail CBDC, Singapore was able to establish a healthy diversity of solutions with the participation of more than 300 individuals.

Singapore’s move to launch a CBDC began as a joint project with an institute dubbed “Project Dunbar” that mainly focused on building an in-house retail CBDC for the country. 

Soon after, the Singaporean central bank announced cash prizes for participants issuing digital currency ideas. Finalists in the challenge included ANZ Banking Group, Standard Chartered Bank, Criteo, Soramitsu and HSB Bank Limited, to mention a few. 

Throughout 2021, the Singaporean authorities have maintained a crypto-friendly stance with approvals given to crypto exchange platforms to operate similar to other digital payment token services. 

Cambodia

Cambodia's “Project Bakong” is probably one of the few fully operational retail CBDCs out there. The country’s blockchain-enabled money transfer project was originally launched in October 2020.

By June 2021, the project was reported to have amassed over 200,000 users with an overall indirect outreach of over five million users. What’s more, the first half of 2021 saw Cambodia’s CBDC project hit a transactional throughput of 1.4 million transactions valued at $500 million. 

Developed on a hyper ledger platform, the Cambodian CBDC features mobile connectivity that allows users to connect to financial institutions and make payments without a centralized clearing entity. 

Apart from the declared goal of using the CBDC to wean off dependence on the U.S. dollar, officials also disclosed that plans are underway to explore a cross-border transaction capability through a partnership with Thailand’s central bank and Malaysia’s largest bank.

Japan

In Japan, the country’s central bank joined hands with a group of other seven central banks in October 2020 to publish a report that examined CBDCs

Since then, the Bank of Japan (BoJ) has begun a proof-of-concept to test the core CBDC functions. While the testing phase was scheduled to end by March this year, officials from Japan’s panel on digital currencies have said that the digital yen should be compatible with other CBDCs and that the BoJ is still ironing out its key functions.

An offline capability of the CBDC is one of Japan’s core considerations as it strives to establish a digital currency that is resilient to disruption given Japan’s vulnerability to natural disasters, earthquakes, floods and tsunamis. 

At the start of 2020, Japan’s parliamentary vice-minister for foreign affairs said that Japan’s digital currency could be a joint venture with public and private partners to align Japan’s goal with global changes in fintech.

Thailand

Since 2019, Thailand has joined forces with Hong Kong’s HKMA to test the use of a CBDC that would be used in cross-border payments between financial institutions in both countries. 

According to a press release by the Bank of Thailand, “The development of a CBDC is a key milestone with the potential to alter the financial infrastructure and ultimately the financial landscape which could cause many changes in the roles of many stakeholders.”

Similar to other CBDC initiatives, the Bank of Thailand will seek out consultations and feedback with the general public as well as with the private and public sector on the “development and issuance of retail CBDC.”

The Bank of Thailand plans to start pilot tests for the usage of its CBDC in the second quarter of 2022.

Vietnam

Previously, the Vietnamese government had requested the State Bank of Vietnam to investigate blockchain-based currencies. It appears that Vietnam has joined the growing list of jurisdictions looking into CBDCs despite its previous harsh stance on cryptocurrencies. 

In May 2020, the country’s ministry of finance announced plans to research and formulate a regulatory law for the crypto industry, even as the country experienced high levels of growth in digital currencies. 

In July, the Vietnamese government decided to investigate CBDCs with plans to issue a pilot CBDC, given its utility for a small country in a global financial system that is dominated by the U.S. dollar.

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