BIS to launch stablecoin monitoring project and up focus on CBDC experiments

February 8, 2023 Coin Telegraph

BIS

The bank for central banks is expanding its CBDC research while developing a platform to monitor stablecoin balance sheets.

The Bank for International Settlements (BIS) will heighten focus on experimenting with Central Bank Digital Currencies (CBDCs) this year via its research and development arm and will also launch a new project to monitor stablecoins.

On Feb. 7, the Switzerland-based so-called “bank for central banks” announced its Innovation Hub will "increase its focus" on CBDCs in 2023 to improve payment systems.

The bank added its work schedule for the year ahead also includes “Project Pyxtrial,” which it described as a new experiment being launched by the London branch of the BIS Innovation Hub to enable the “systemic monitoring of stablecoins.”

Pyxtrial will develop a platform to monitor the balance sheets of stablecoins. The bank noted that most central banks lack the tools to “systemically monitor stablecoins and avoid asset-liability mismatches,” before adding:

“The project will investigate various technological tools that may help supervisors and regulators to build policy frameworks based on integrated data.”

For its CBDC-related projects, the BIS will focus more on retail CBDCs such as the two-tiered system called Aurum that it piloted in Hong Kong in July 2022.

It stated that CBDCs and payment systems improvements accounted for 15 of the 26 projects that have been active in the last couple of years. It cited increased awareness from central banks as the primary driver.

“This emphasis reflects the interests and priorities of central banks and the G20 countries' programme to improve cross-border payments.”

It also plans to experiment with the distribution of a retail CBDC through an open API ecosystem in a joint experiment with the Bank of England (BOE) dubbed Rosalind.

In 2023, the #BISInnovationHub will increase its focus on improving payments systems and experimenting with #CBDCs; on shaping the future of financial regulation and supervision; and on greening and securing the financial sector. Read more: https://t.co/565s9KK1gn pic.twitter.com/izlF1u0Q22
— Bank for International Settlements (@BIS_org) February 7, 2023

In September 2022, the BIS concluded a pilot for a platform called mBridge, short for Multiple CBDC Bridge. The central banks of Hong Kong, Thailand, China, and the United Arab Emirates took part in the pilot in addition to 20 commercial banks from the countries.

According to the Atlantic Council’s CBDC tracker, just 11 countries have fully launched a CBDC which are all located in the Caribbean aside from Nigeria.

There are 17 nations undergoing pilots, mostly in Asia, including China, Russia, Kazakhstan, India, South Korea, Thailand, and Malaysia.

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Sri Lanka against Bitcoin adoption, rejects Draper’s anti-corruption pitch

February 4, 2023 Coin Telegraph

Asia

Central bank Governor Nandalal Weerasinghe believes that adopting decentralized cryptocurrencies would worsen the country’s economic situation.

On a recent visit to Sri Lanka, American billionaire Tim Draper pitched the idea of adopting Bitcoin (BTC) as a legal tender to fight against the corruption that contributed to hyperinflation in the island country. However, a key Sri Lankan authority — central bank Governor Nandalal Weerasinghe — believed doing so would worsen the country’s economic situation.

Taking time from a TV shoot in Sri Lanka, Draper met President Ranil Wickremesinghe and Weerasinghe to recommend Bitcoin as a viable option for getting out of financial problems.

*Tim Draper in Sri Lanka speaking about economic development. Source: YouTube*

During the meeting, Draper pointed out a key concern staring right at Sri Lanka:

“Have you seen Sri Lanka in the news? It’s known as the corruption capital. A country known for corruption will be able to keep perfect records with the adoption of Bitcoin.”

As he recommended using “decentralized currency” to the head of Sri Lanka’s central bank, he received a short “we don’t accept” reply. Weerasinghe further stated:

“Adoption of 100% Bitcoin won’t be a Sri Lanka reality ever.”

Instead, Weerasinghe believed that having Sri Lanka’s own fiat currency was critical for monetary-policy independence and would ensure efficient inclusion and disburse electronic welfare payments.

“We don’t want to make the crisis worse by introducing Bitcoin,” Weerasinghe concluded.

MicroStrategy, a software analytics company co-founded by Michael Saylor, shared plans to continue offering BTC trading services despite incurring an unrealized loss of $1.3 billion in 2022.

During a Feb. 2 earnings call, MicroStrategy’s chief financial officer, Andrew Kang, said:

“We may consider pursuing additional transactions that may take advantage of the volatility in Bitcoin prices, or other market dislocations that are consistent with our long-term Bitcoin strategy.”

According to Kang, MicroStrategy held 132,500 BTC (worth $1.84 billion) as of Dec. 31, 2022. Of the lot, 14,890 BTC were held directly by the business and the rest by its subsidiary MacroStrategy.

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Montenegro’s central bank teams up with Ripple on digital currency pilot project

January 30, 2023 Coin Telegraph

CBDC

Montenegro’s prime minister announced a central bank “digital currency or stablecoin” project with Ripple; the Balkan country currently uses the euro instead of a national currency.

Montenegrin Prime Minister Dritan Abazović has announced on Twitter that his country is pursuing a digital currency in conjunction with Ripple. Abazović met with Ripple CEO Brad Garlinghouse and vice president James Wallis at Davos.

Wallis is Ripple's vice president for central bank engagements and CBDCs. Abazović apparently had something like a central bank digital currency (CBDC) in mind in his announcement, as he stated in the thread:

“In cooperation with @Ripple and the Central Bank, we launched a pilot project to build the first digital currency or stablecoin for Montenegro.”

The exact nature of the potential future digital currency is unclear, however, as Montenegro currently has no national currency of its own. The Balkan nation has used the euro as its currency since 2002, when the transnational currency was introduced, despite the fact that Montenegro is neither part of the Eurozone nor a European Union (EU) member. Montenegro applied for EU membership in 2008.

As per the PM of Montenegro, the nation launched a pilot project to build the first digital currency or stablecoin for Montenegro, in cooperation with@Ripple and the Central Bank. https://t.co/osWT3wocPk
— Leonidas (@LeoHadjiloizou) January 29, 2023

The Montenegrin government has been angling for a place in the cryptocurrency industry for months. It has developed a reputation for its acceptance of crypto, and it held a panel titled Future Now! in April that Ethereum co-creator Vitalik Buterin attended. Buterin was reportedly granted Montenegrin citizenship at that time.

The project with Ripple was widely covered by local news outlets when the announcement was made on Jan. 18, but it took several days for news of the project to reach the international community.

A Ripple adviser promised new activity in CBDC deals on the part of the company last year, mentioning Bhutan and Palau specifically among “several pilots in progress.” The company is also a founding member of the Digital Dollar Project and it joined the Digital Euro Association in February 2022.

Crypto Bank Custodia Denied Membership in US Federal Reserve System

January 29, 2023 Bitcoin.com

Fed denies Custodia Bank application to join the Federal Reserve System

January 27, 2023 Coin Telegraph

Banking

The bank applied for the application in 2019 and sued the Fed in an attempt to speed up the decision.

The United State Federal Reserve Board has rejected Custodia Bank’s application to become a member of the Federal Reserve System. In its announcement, the Fed stated that the application was “inconsistent with the required factors under the law.” It also claimed Custodia had an “insufficient” management framework and cited an earlier joint declaration by the Fed with the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency that found crypto assets to be at odds with sound banking practices.

STATEMENT FROM CUSTODIA BANK about today's Federal Reserve action on its membership application. Its master account application remains pending: pic.twitter.com/QkMjcT508J
— Custodia Bank ™ (@custodiabank) January 27, 2023

In spite of the rejection, the bank’s application for a master account remains pending, the bank said in a tweet. A so-called “master account” enables a bank to make international transfers and carry out other important functions. Custodia, headed by Caitlin Long, applied for the master account in 2020 and sued the Fed over the long delay in considering the application in June.

The Fed gave the bank 72 hours to withdraw its application, Custodia said in a statement. It added, “Custodia actively sought federal regulation, going above and beyond all requirements that apply to traditional banks.”

The Fed only issued guidelines for granting master accounts in August, when it became clear that digital asset banks could have a difficult time receiving an account. “Institutions that engage in novel activities and for which authorities are still developing appropriate supervisory and regulatory frameworks would undergo a more extensive review,” the Fed said in a statement at the time.

BNY Mellon bank was approved by the Fed to provide crypto custody services in October, making it the first major U.S. bank to offer custody of digital assets and traditional investments on the same platform. Custodia Bank was founded in Wyoming in 2020, taking advantage of the crypto-friendly state’s 2019 opt-in custody rules for “blockchain banks.”

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ChatGPT learns Bitcoin will end central banking and fiat currency

January 26, 2023 Coin Telegraph

A Bitcoin mentor convinced ChatGPT, the AI chatbot, that Bitcoin would bring about the demise of fiat currency.

ChatGPT is a powerful new AI tool, capable of problem-solving, advanced coding, answering complicated questions and now–spelling out the end of fiat currencies.

Parman, a Bitcoin self-custody mentor and writer, taught ChatGPT that Bitcoin (BTC) would bring about the end of government-issued fiat currencies and shared the results in a Twitter thread.

You're not going to believe this, but I just Orange Pilled #ChapGPT. It is now a Bitcoiner. See this conversation, it's incredible. (Thread) pic.twitter.com/HJOqezmjlG
— Parman (public account) Bitcoin Pub Key Whisperer (@Parman_Public) January 26, 2023

Parman explains that he "orange-pilled," or convinced the bot about Bitcoin and that the machine learning tool "Is now a Bitcoiner."

The process was straightforward. First, Parman asked ChatGPT how humanity could end central banking. After all, Bitcoin was created in the shadows of the 2008 financial crisis; and in the genesis block, the words “Chancellor on the brink of second bailout for banks” are etched, perhaps showing founder Satoshi Nakamoto’s aversion to central banking.

ChatGPT explains that one way to end central banking could be: “Decentralized digital currencies,” which sounds a lot like Bitcoin. Parman asks the bot to answer the question in two words, to which it replies, “decentralize finance.” That is to say, DeFi could bring about the end of central banking.

Parman, a Bitcoin maximalist, told the bot that DeFi is a “marketing term for what is actually centralized finance to scam people” and asked it to look a little deeper, to which ChatGPT answered, “end fiat.”

In conversation with Cointelegraph, Parman explained that he was testing ChatGPT and trying to use two-word answers to chivvy along the conversation:

“I wanted to see how "smart" it [ChatGPT] was. If it came up with the answer for 2 words to end central banking as 'buy Bitcoin I was going to be blown away.”

Parman was satisfied with the response that ending fiat would fall central banking, so he moved on to the how. How can humanity end fiat currency?

ChatGPT's capabilities. Source: chat.openAI

ChatGPT listed four options: a return to a gold standard, promoting alternative currencies such as Bitcoin, reducing government spending, and changing government perception. The AI bot was getting close, but Parman is a serial Bitcoin orange-piller and educator and wouldn't let up. He explained:

“My natural instinct is to orange pill, so I guided it to the right answer.”

The machine learning tool now understood that crypto adoption could lead to the end of fiat, but crypto, in Parman’s view is not the answer. “There is only one cryptocurrency that makes this possible, as it is the only one that has no issuer,” he typed.

Parman refers to the fact that when Bitcoin was first mined, it was a digital trial, an experiment with a virtual token that had no value nor a promise of value. All other cryptocurrencies, Parman explains, “have leadership teams and are therefore centralized.”

So which one is it, ChatGPT, Bitcoin or crypto? The bot replied: Bitcoin.

Parman had successfully convinced a machine learning bot that Bitcoin could bring about the end of fiat currency. But why bother going to all that effort? Parman explained in a conversation with Cointelegraph:

“Importantly, the world needs to know central banking is a scam, and everyone needs to know that Bitcoin is the only thing that can stop it.”

Perhaps with the powerful ChatGPT bot on team Bitcoin, the world may draw a little closer to that realization.

Ireland’s Central Bank Governor calls for ban on crypto ads targeting young adults: Report

January 25, 2023 Coin Telegraph

Central Bank

Gabriel Makhlouf reportedly said there was an “uncomfortable” level of crypto advertisements targeting young adults.

Gabriel Makhlouf, the governor of the Central Bank of Ireland, reportedly supports legislation which would ban advertising crypto projects to young people.

According to a Jan. 25 report from Bloomberg, Makhlouf said before the Committee on Finance, Public Expenditure and Reform, and Taoiseach there was an “uncomfortable” level of crypto advertisements targeting young adults. The central bank governor reportedly referred to many cryptocurrencies as “unbacked” assets and suggested lawmakers “find a way” of banning related ads.

Makhlouf cited the implementation of the European Union’s Markets in Crypto Assets, or MiCA, framework as one of the central bank’s milestones for 2023. EU policymakers have pushed back a final vote on the crypto framework to April.

Read Governor Makhlouf's opening statement at today’s Committee here –https://t.co/Ce6CwRWNmu pic.twitter.com/Wa11wELnBq
— Central Bank of Ireland (@centralbank_ie) January 25, 2023

Ireland’s central bank issued a warning in March 2022 about the risks around crypto investments, referring to many advertisements as misleading — “particularly on social media, where influencers are being paid to advertise crypto assets.” Makhlouf has also previously criticized investments in crypto, saying people should be “prepared to lose all their money”.

Authorities in other jurisdictions have also targeted crypto-linked advertisements both online and in the physical world. The United Kingdom’s Advertising Standards Authority cracked down on many ads in 2022, including those part of marketing campaigns from Coinbase, Kraken and eToro. In the United States, the Securities and Exchange Commission arranged a $1.26 million settlement with celebrity Kim Kardashian over a story on her Instagram account promoting the EthereumMax (EMAX) token.

Central Bank

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