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On Sep. 20 the House Financial Services Committee will mark up two bills blocking a potential digital dollar in the United States.
The United States House Financial Services Committee is moving forward with legislation aimed at preventing the issuance of a central bank digital currency.
According to an announcement from chairman Patrick McHenry, the Committee will mark up two bills about a potential digital dollar on Sep. 20. Markups are sessions in which lawmakers discuss the details of a bill. It is a crucial step before a legislation moves to the House floor.
One of the bills is the Digital Dollar Pilot Prevention Act, or H.R. 3712, that prohibits the Federal Reserve from initiating pilot programs to test CBDCs without approval from Congress. The legislation was introduced by Representative Alex Mooney in May.
The Fed recently denied any decision on whether to issue a CBDC, claiming it “would only proceed with the issuance of a CBDC with an authorizing law.” However, the Federal Reserve of San Francisco has sought to fill technical positions for a CBDC project over the past few months, indicating that the digital dollar remains on the table.
#NEW: Chairman @PatrickMcHenry announces a markup of legislation to strengthen American national security and prevent the issuance of a central bank digital currency.
— Financial Services GOP (@FinancialCmte) September 16, 2023
Read more https://t.co/oy3oASJYkA
The second legislation is an amendment to the Federal Reserve Act, prohibiting Fed banks from offering certain products or services directly to an individual, along with prohibiting the use of CBDCs for monetary policy, and for other purposes.
"A Federal reserve bank shall not offer a central bank digital currency, or any digital asset that is substantially similar under any other name or label, indirectly to an individual through a financial institution or other intermediary," reads the bill.
The prospect of a digital dollar has stirred controversy in the United States. Presidential candidates Robert F. Kennedy Jr. and Ron DeSantis have spoken out against the establishment of a CBDC in the country, citing financial privacy concerns. Supporters of CBDCs claim it would help the United States to keep the dollar's global relevance, as well as boost cryptocurrencies adoption.
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The second-largest stablecoin by market cap, USD Coin (USDC), is now available natively on the Ethereum (ETH) competitor NEAR Protocol (NEAR). In addition to NEAR, USDC is also available natively on Algorand (ALGO), Arbitrum ( ARB), Avalanche (AVAX), Base, Ethereum, Flow, Hedera (HBAR), Noble, Optimism (OP), Solana (SOL), Stellar (XLM), and Tron (TRX). Explains USDC’s issuer […]
The post Second-Largest Stablecoin USDC Launches on Ethereum (ETH) Competitor NEAR Protocol (NEAR) appeared first on The Daily Hodl.
Following an August recess, members of the House Financial Services Committee will gather for a ‘Digital Dollar Dilemma’ hearing on Sept. 14.
The United States House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion will be holding a hearing discussing central bank digital currencies (CBDCs) for the first time in months.
In a Sept. 7 announcement, Republican lawmakers on the committee said they planned to hold a hearing discussing the implications of releasing a CBDC as well as “private sector alternatives”. The ‘Digital Dollar Dilemma’ discussion will be held on Sept. 14, roughly two weeks before U.S. Securities and Exchange Commission chair Gary Gensler will reportedly testify before the full committee.
#NEW: Chairman @PatrickMcHenry announces hearings of the Subcommittees on Financial Institutions and Monetary Policy & Digital Assets, Financial Technology and Inclusion.
— Financial Services GOP (@FinancialCmte) September 7, 2023
Read more https://t.co/pSVdU5UVHu
The hearing will mark the first time in months lawmakers in the House committee will address issues related to the rollout of a digital dollar in the United States. Members of Congress were largely in recess for August.
Related: CBDC supporter likely in White House next term, crypto divide not red vs. blue: Grayscale
A potential CBDC rollout in the U.S. has become a policy position for a few presidential candidates running in 2024. Florida Governor Ron DeSantis, the leading Republican Party candidate behind former U.S. President Donald Trump, said in July he planned to ban CBDCs if elected. Vivek Ramaswamy, another Republican candidate trailing behind DeSantis, has also criticized CBDCs, comparing the technology to China’s social credit system.
Some U.S. lawmakers have proposed different legislative approaches to tackling issues related to a CBDC rollout in the country, including limiting the Federal Reserve’s authority over issuing a digital dollar. Various U.S. states have also passed bills banning CBDCs as payment options, including Florida.
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The total assets under Tether stand at $86.1 billion with total liabilities amounting to $82.8 billion — thus confirming a reserve backing of over 100%.
Stablecoin issuer Tether maintains a liquidity cushion of nearly $3.3 billion to provide stability to the Tether ecosystem and garner trust among shareholders.
Tether’s reserves report as of Aug. 24 reveals a combined surplus in shareholder capital cushion of $3.29 billion — spread over 15 blockchain ecosystems. Apart from Algorand and Polygon, Tether has reserved authority to issue USDT (USDT) tokens in the millions.
Out of the lot, the Solana ecosystem leads in terms of the value pre-authorized for issuance, currently standing at $1.57 billion, with Ethereum and Tron taking up the next two slots with pre-authorization of $617 million and $353 million respectively.
Tether has not yet responded to Cointelegraph’s request for comment about the importance of issuance preauthorization when it comes to ensuring transparency and trust among the masses.
The total assets under Tether stand at $86.1 billion with total liabilities amounting to $82.8 billion — thus confirming a reserve backing of over 100%.
The other non-US dollar stablecoins that fall under Tether’s umbrella — XAUT, EURT, MXNT and CNHT — do not enjoy the same liquidity cushion as USDT. As per the report, none of the other Tether-issued stablecoins have balances to cushion and maintain a 1-1 peg in times of crisis.
In totality, Tether’s transparency report contradicts the ongoing concerns related to its liquidity and backing of assets. In Oct. 2021, Tether was fined $41 million by the Commodity Futures Trading Commission for sharing "untrue" statements about its reserve holdings. However, authorities have not flagged any recent Tether transparency reports issued ever since over the past two years.
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Tether recently discontinued its Bitcoin (BTC) version of USDT, known as Bitcoin OmniLayer.
Today #Tether announces the ending of the support of 3 blockchains $USDt: OmniLayer, BCH-SLP and Kusama.
— Paolo Ardoino (@paoloardoino) August 17, 2023
Customers will be able to continue to redeem and swap $USDt tokens (to another of the many supported blockchains), but Tether won't issue any new additional $USDt on those 3… https://t.co/aghLgqtSuO
While no new Tether tokens will be issued on the Bitcoin Omni Layer, Kusama or Bitcoin Cash going forward, redemptions will remain available for at least an year from the time of announcement.
The OmniLayer team “faced challenges due to the lack of popular tokens and the availability of USDT on other blockchains,” which led exchanges to use other transport layers instead of Omni. Tether claimed that it would consider reissuing the Omni Layer version if usage of Omni picks up.
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A central bank discussion paper found that the majority of Canadians have little trouble accessing financial services, which gives them little reason to use a CBDC.
The typical Canadian has little reason to adopt a central bank-issued digital currency, which could cause problems with its broad acceptance, according to a new paper from the Bank of Canada.
In the staff discussion paper released on Aug. 10, the central bank looked at a hypothetical scenario where cash was virtually eliminated in order to see what role a potential CBDC could play in helping the underbanked.
It found that most consumers would have “weak incentives” to use one, as Canadians don't face meaningful barriers to financial services like bank accounts or debit and credit cards.
98% of Canadian adults have a bank account, 87% also have a credit card and 90% of rural and urban households combined can access high-quality internet, the paper said.
It however found that replacing cash with digital loonies would also mean tech-averse Canadians would have fewer payment options while cash-dependent Canadians would find themselves unable to make the most common payments.
The potentially low uptake of a CBDC would also lead to merchants unlikely to want to accept one which would further diminish its usefulness.
Our latest survey results show that 92% of merchants have no plans to go cashless.
— Bank of Canada (@bankofcanada) August 8, 2023
Read more results from our survey: https://t.co/DX0lUJ90u7#cdnecon #PaymentMethods #Survey pic.twitter.com/017UYxiIC4
Instead, the paper floated non-CBDC-related ways that could better help the underbanked — including improving internet access, expanding low-cost bank account availability, increasing merchant collaboration with remote communities and continuing to supply cash.
The paper stressed it was not predicting how Canadians would react to a CBDC and said more could be interested in using it due to a variety of reasons.
Even if there was greater interested than it suggested, the paper added the barriers for both users and merchants to broadly adopt a CBDC “appear to be significant.”
The paper also gave a strong nod to the necessity of cash, noting that without cash there would be no offline payment methods in emergency situations such as extreme weather or widespread power outages.
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“This suggests the potential system-wide benefits of encouraging digital payment innovations that can function offline as well as the importance of sustaining cash,” it explained.
The paper claimed such a scenario highlighted the importance of the Bank of Canada continuing to issue cash and providing cash accessibility.
The paper noted the central bank previously stated it was committed to supplying cash as long as it was in demand and a CBDC would only be issued with the advent of a cashless society or the widespread use of foreign CBDCs or cryptocurrencies such as Bitcoin (BTC).
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The project simulated transfers to customers of BDO Unibank in the Philippines with improved settlement time, cost and transparency.
The Digital Dollar Project (DDP) announced the completion of a pilot study of remittance payments to the Philippines using a simulated retail central bank digital currency (rCBDC). Western Union and BDO Unibank were partners in the project.
The project used a version of the DDP’s Champion Model. In it, a simulated central bank issued CBDCs to an intermediary bank, which provided access to it to Western Union (WU) for remittance to a BDO Unibank customer in the Philippines. WU used a decentralized exchange (DEX) to trade a dollar CBDC for a Philippine peso CBDC at a real-time rate set by a third-party oracle. WU received payment confirmation and transferred the amount to the bank customer’s account.
The transaction used central bank money, as opposed to commercial bank money, for the entirety of the transaction, in contrast to current practice. The DEX was a primary feature of the study. The authors noted that the development of such an exchange could have the advantages of creating competition and increasing transparency. They noted, however, that most remittances to the Philippines take place when trading is closed in Manila, so that leg remains problematic.
Privacy issues were not addressed in the study, though the report noted that distributed ledger technology helps preserve privacy “by allowing for granular control over the level of consumer data sharing.”
Related: CBDCs should protect privacy, not be a surveillance tool: Former CFTC chair
By using distributed ledger technology, the transfer of the message and transfer of value took place simultaneously and within seconds. With current technology, value transfer takes longer than message transfer, introducing counterparty and credit risk. The authors concluded:
“The pilot demonstrated that rather than displacing the service offerings of Western Union and BDO Unibank, CBDCs present an opportunity to modernize processes and promote efficiencies for private sector companies and their customers."
Remittances are typically valued at $200-$300 per transaction. They had a total value of $626 billion in 2022, according to research cited in the report. In 2021, $74 billion in remittances were sent from the United States. Seven percent of U.S. households sent remittance abroad.
PUBLICATION: Findings of our latest whitepaper delve into the benefits and considerations of utilizing a potential U.S. #CBDC in cross-border payments. Pilot study with @WesternUnion, BDO Unibank, and @Accenture shows a CBDC could expedite payments in https://t.co/vR2Z8wRNaR pic.twitter.com/X7HRCcshnc
— The Digital Dollar Project (@Digital_Dollar_) August 3, 2023
Remittances from the U.S. to the Philippines usually cost 4.4% on a total transaction of $200, with bank transfers costing 7.98% on average. The simulated process would save time and money, as well as increase transparency.
The DDP, co-founded by former Commodity Futures Trading Commission Chair Christopher Giancarlo, launched its technical sandbox in September. Accenture also provided support for the project.
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