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CTFC commissioner proposes office focused on retail crypto investors

The commissioner said the potential of blockchain and cryptocurrency to change existing markets necessitates a new retail investor protection office similar to that of the SEC.

Commodity Futures Trading Commissioner (CFTC) Caroline Pham has proposed the creation of an “Office of the Retail Advocate” aimed at expanding the CFTC's consumer protection mandate.

Pham referred to the office as a “voice for the people” in a speech given at an event hosted by blockchain project Corda on Sept. 27, suggesting recent events in crypto make retail protection a more pressing issue, noting:

“The crypto crash, risk management failures, and substantial retail losses, gives urgency to the need to balance innovation with retail protection and appropriate regulation.”

Pham has modeled the proposed office on the Security and Exchange Commission's (SEC's) Office of the Investor Advocate, stating it’s a “tried-and-true way” to advance customer protection.

The SEC's office has four core functions according to Pham, which are to provide investors a say in policymaking, assist retail investors resolve problems with the SEC or self-regulatory organizations, support advisory committees, along with studying investor behavior and conducting research and economic analysis.

Pham highlighted the potential of digital assets and blockchains to change existing markets outlining “ten fundamentals for responsible digital asset markets,” noting:

“It might still be early, but there are promising use cases if we can achieve blockchain stability and scalability across layer 1, 2, or whatever’s next.”

These fundamentals include initially determining whether something is a security, mitigating systemic risks such as the cascading liquidations due to the collapse of Terra, protection of customers and the retail public, ensuring transparency, and addressing conflicts of interest.

The proposal marks the latest effort in a broader push from the CFTC to increase its authority over crypto markets and follows calls from the community and United States lawmakers seeking clarity on the regulation of crypto.

Related: CFTC Commissioner Kristin Johnson touts DCCPA bill in market risk advisory meeting

The CFTC has been under fire recently following its “regulation by enforcement” over the Ooki DAO case, with the community comparing it to the regulation by enforcement tactics seen in the SEC's handling of the ongoing Ripple case.

Pham said these views are hers and are not necessarily shared by the CFTC or other commissioners.

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SWIFT Is Experimenting With Decentralized Technologies to Allow CBDC Interconnection

SWIFT Is Experimenting With Decentralized Technologies to Allow CBDC InterconnectionSWIFT, the interbank payments protocol and messaging system, has announced it is working to connect the different central bank digital currency (CBDC) protocols in development today. The company has partnered with Capgemini, a digital services provider, making a series of experiments to ensure that the new set of CBDCs have cross-border payments and remittance capabilities. […]

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Sweden’s central bank completes first phase of digital currency pilot

The Sveriges Riksbank said that CBDC technology still requires further investigation.

After completing the first phase of its digital currency pilot project, Sveriges Riksbank has found some critical issues that must be addressed before Stockholmers can buy coffee and kanelbullar with e-krona.

In a recent study, Sweden’s central bank presented the first results of its central bank digital currency pilot on a network based on R3’s Corda blockchain.

The Riksbank simulated core aspects of a potential CBDC system, including liquidity supply via the Riksbank’s settlement system, RIX, and network members serving as e-kronor distributors. The central bank also simulated participants, end-users and payment instruments like mobile apps.

The Riksbank said that the new CBDC technology needs further investigation, with scalability presenting a major bottleneck. 

“The solution tested in phase one of the e-krona pilot has met the performance requirements made in the public procurement. But this has taken place in a limited test environment and the new technology’s capacity to manage retail payments on a large scale needs to be investigated and tested further,” the report noted.

The central bank also noted some privacy challenges, stressing that the information contained in an e-krona transaction must be protected to uphold banking secrecy laws and avoid revealing personal data. 

“The Riksbank is currently analysing to what extent the information stored in the transaction history can be regarded as information covered by banking secrecy and whether it comprises personal data,” the bank stated.

Mithra Sundberg, head of Riksbank’s e-krona pilot division in Stockholm, said that Sweden’s CBDC could probably require a new legal framework before it can be used. Given the scope of issues that need to be addressed before an e-krona can be seriously developed, Riksbank may continue its blockchain pilots until 2026.

Riksbank stated that it will extend its agreement with accounting giant Accenture as a technical supplier to continue e-krona testing. The focus for the second phase will include potential distributors of the e-krona, CBDC performance in retail payments, as well as storage methods. The new phase will also test offline e-krona functionality and integration with existing point-of-sale terminals.

As previously reported, Sweden has emerged as one of the world’s earliest CBDC explorers, announcing a pilot platform for the e-krona in late 2019. 

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China’s blockchain project BSN to integrate R3 Corda

Chinese banks will soon have access to a permissioned version of the Corda Enterprise infrastructure via the country's Blockchain Service Network.

Red Date Technology, one of the builders of China’s Blockchain-based Service Network, has obtained licensing rights from R3 to resell both the free and enterprise Corda implementations in China.

According to a press release by R3, the news marks the first occasion of the BSN developer being able to resell enterprise blockchain technology from an overseas company.

Since the R3 deal is with BSN China, developers will create a permissioned version of Corda to comply with Chinese blockchain regulations. Also, with banks reportedly being one of the likely users of the network, the country’s UnionPay cloud infrastructure will play host to BSN Corda notaries.

The partnership also offers an entry point for R3 into the Chinese market following the company’s significant expansion across Asia.

Commenting on the importance of integrating an enterprise blockchain project like Corda on the BSN, Red Date Technology CEO Yifan He remarked:

“Corda will go live in China via BSN’s Open Permissioned Blockchain Initiative to offer Chinese developers low-cost access to Corda technology. Red Date will also help to drive Corda and CorDapps’ adoption among all Chinese banks—enabling Chinese financial companies to streamline their business processes and receive the profound benefits of enterprise blockchain.”

According to the announcement, Chinese firms will have access to Corda Enterprise via BSN public city nodes from Q3 2021. Red Date Tech reportedly plans to include some Corda-based decentralized applications as part of the integration to bootstrap adoption for businesses that will utilize BSN Corda.

Since launching in 2020, BSN has continued to integrate several public blockchains to both the China-only and BSN international ecosystems. Back in February, Cosmos (ATOM) became the first public blockchain to be added to BSN China.

As previously reported by Cointelegraph, TON Labs inked a partnership deal with BSN developers to adapt the Telegram-built TON protocol for China’s blockchain project.

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