CBDCs are one of the major topics in crypto this year, and the experts that Cointelegraph spoke to have a lot to say about it.
It is hard to imagine that just two years ago, the general discourse around central bank digital currencies, or CBDCs, was mainly focused on the potential and possibility of issuing them. Even in 2019, the question was about whether we need state-owned cryptocurrencies, with only 70% of central banks worldwide studying the potential of issuing a CBDC, according to a survey published by the Bank for International Settlements at the beginning of 2019. But this year, everything is indeed different.
2020 started with a major event within the financial world: the World Economic Forum in Davos, where the WEF released a toolkit for policymakers regarding the creation of CBDCs. And according to a recent BIS report, 80% of the world’s central banks have already been evaluating CBDC adoption. The news that central banks worldwide had started actively researching, studying, testing, etc., kept coming every month this year: Australia, Brazil, Cambodia, Estonia, Jamaica, Kazakhstan, Kenya, Lithuania, Russia, South Korea, Sweden, Thailand and the United Arab Emirates, to name a few. Even Japan, which two years ago was among the major critics of central bank digital currency, changed its mind.
Although the inevitability of central bank digital currency becoming a global phenomenon became certain this year, there is an important trend that has also become clear: Central banks in emerging market economies are moving toward issuing CBDCs more rapidly than developed countries, which are taking a more cautious stance. For example, the European Central Bank is discussing launching a consideration phase for a digital euro next year, and launching a digital euro is at least a five-year plan. Canada is also developing a CBDC at “a good pace,” according to Timothy Lane, deputy governor of the Bank of Canada. Japan’s digital yen will take years to issue, according to a former Bank of Japan official, while this fall, the Bahamas became one of the first countries in the world to officially launch a CBDC. Russia is expected to launch the first pilots for its digital ruble next year.
The situation is quite different for the world’s major economies, the United States and China, whose technological competition has resulted in a “digital cold war.” The Chinese digital yuan project — referred to as the Digital Currency Electronic Payment, or DCEP — already has years of history, and this year, the project made a lot of progress, although many details remain limited. Concerns about issuing a digital dollar ahead of the digital yuan opened the year and soon enough were followed by the Digital Dollar Project’s white paper release. The conversation of this tech competition between the two countries was even brought to the U.S Senate. Some even controversially argued that the 2020 U.S. election sealed China’s victory in CBDC leadership. Though, the question of whether being the first in launching a CBDC will be enough to win global reserve currency status remains open. Most importantly, China does not intend to replace the U.S. dollar with the digital yuan, and collaborative efforts between the two great powers on developing CBDCs might be indeed the best option for the world.
There may be many reasons for such rapid CBDC development all over the world, but the major reason is the COVID-19 pandemic, which was highlighted by the European Central Bank, the Bank for International Settlements and many other experts. The coronavirus pandemic, which has driven humanity’s technology development at least 20 years forward, has become a serious challenge for global economies, and CBDCs have started to be seen as an appropriate tool to fix the financial system.
And while some are raising serious privacy concerns in regard to CBDCs and emphasizing that they would be a step toward a more centralized system, the potential of national digital currencies is surely becoming our present reality, not just the financial system of the future. CBDCs are a serious step in financial system development, as they can improve bank accounts, alter traditional finance entirely, reshape world economies, change our conceptions of money and how we use it by replacing cash, and even become a part of a “new monetary order.” And as 2020 will be ending soon, Cointelegraph reached out to experts in the blockchain and crypto space for their opinions on the impact of CBDCs on the crypto space and beyond.
How did CBDC development affect the crypto space this year, and what can we expect in 2021?
Brian Behlendorf, executive director of Hyperledger:
“The level of competency within the technical teams at central banks, particularly in regard to CBDCs and their potential and limitations, would astound many in the crypto community who would assume otherwise. This year, we have seen not just hints dropped and research projects engaged, we’ve seen pilots and even some production systems and complementary institutions like the BIS and OECD tackling the regulatory issues head-on. A key question is whether these networks will be accounts-based or bearer-based — the latter being what most in the crypto community intuitively understand as ‘Not your keys, not your coins.’
There’s a substantial risk that the regulatory imperatives to fight crime and fraud clash with the freedom to run the software of one’s choice, echoing the long battles to be able to run the cryptography of one’s choice as a first principle, and we may find regulators hurtling toward banning noncustodial wallets. That would be a bad thing for everyone, from the crypto community to CBDCs and all other sorts of digital assets.
My belief is that regulators and central banks will be satisfied by KYC/AML implemented using digital identity systems — probably of the self-sovereign variety, often running on these same networks — to make those kinds of regulatory decisions ‘late binding’ at the time of transaction, no matter where keys are stored, for matters of sheer practicality. Banks in countries whose regulators understand that better than others will have a competitive advantage, and that might not be the countries we think of today as being furthest along in CBDC deployment.”
Brian Brooks, acting comptroller of the currency of the U.S. Treasury Department’s Office of the Comptroller of the Currency:
“Central bank digital currencies are among the most important topics being discussed right now. The question at this point is not whether but how to accomplish the digitization of the dollar and other fiat currencies.
The United States usually wins when we unleash the power of our innovative, dynamic private sector, with the government setting the rules rather than building the products. But either way, given the intense focus of other countries in this area, let me say that because of the important role of the U.S. dollar, we need the United States to step forward on this field.”
Da Hongfei, founder of Neo, founder and CEO of Onchain:
“It will certainly be a boon to the blockchain space as the rapid development of CBDCs further affirms the integral role blockchain will play in building the world of tomorrow. As blockchain innovation accelerates, I believe countries around the world are increasingly recognizing the need to build a truly digital future that will resolve the current inefficiencies and shortcomings of today’s global order. As asset digitization picks up steam, I am confident that we will move toward the smart economy of the future.”
Denelle Dixon, CEO and executive director of the Stellar Development Foundation:
“CBDCs can and will be a huge innovation in our lifetimes, particularly as a tool for financial inclusion. This year, the COVID-19 pandemic highlighted how impactful CBDCs could be. Policymakers, governments and central banks increasingly are recognizing there are ways to better serve citizens and create more equitable access to the financial system in a way that’s faster, cheaper and more efficient.
From our discussions with governments around the world exploring this technology, I think 2021 will see central banks take the learnings from this year and start putting CBDCs into practice.
As for which countries will take the lead, China seems to have a head start, but development will likely be slower and more complicated in less restrictive societies. There are so many countries exploring the possibilities of CBDCs at the moment that it is hard to pick a front-runner, but the increased focus around the globe makes that an exciting race to follow.”
Dominik Schiener, co-founder of the Iota Foundation:
“CBDCs will be developed in parallel to advancements in the crypto space. While CBDCs are very interesting, they tackle a very different use case than familiar crypto assets like Bitcoin or Iota. They are issued and backed by a central bank with the authority to print new capital at will. They are also not necessarily intended for consumers or everyday people. Crypto assets, by contrast, are generally controlled by a public algorithm that manages their supply and distribution.
In 2021, we will see central banks piloting internal tests of CBDCs. However, they will probably be doing so on private or even non-blockchain networks. They may even decide to launch their own networks. CBDCs will not be hampered by technical hurdles but regulatory uncertainty. This will drag out the deployment of CBDCs in the real world past 2021 and into 2022, or even 2024 and beyond.
China is clearly the leader when it comes to CBDCs. They are taking the technology way more seriously than other countries and seem to have less regulatory controls blocking innovation of blockchain and digital-asset technology.”
Emin Gün Sirer, CEO of AvaLabs, professor at Cornell University, co-director of IC3:
“Libra really kicked monetary authorities and central banks into gear, as the existential threat of Facebook’s network triggered a ‘fight or flight’ response. Regardless of the catalyst for their efforts, it is indisputably positive to see the gatekeepers of the traditional financial system realize the importance of crypto.
China has been the clear leader thus far in activating public and private organizations to try and seize the first-mover advantage. By public accounts and information, it has made significant strides.
I can think of few clearer motivations for U.S. politicians and regulators to accelerate their own efforts and fend off the first real threat to the hegemony of the U.S. dollar in decades.”
Heath Tarbert, chairman and chief executive of the U.S. Commodity Futures Trading Commission:
“We have seen a lot of countries touch CBDCs in 2020. An impetus for a lot of work was the COVID-19 pandemic. We saw how a CBDC helped with government payments to individuals that could not access them otherwise due to the pandemic. I could imagine a lot of other countries are going to be looking at what has been learned during this pandemic and identify how to move forward with their own CBDC.
Here in the United States, U.S. dollar CBDCs are principally a matter for the Federal Reserve. We are tracking the work of the Boston Fed and MIT on exploring CBDC design and technology. We are also encouraged by the work of the BIS’s Innovation Hub on CBDCs.
My personal belief is that America must lead here. However, we must not just look to our government for the solution. The private sector moves faster; partnering with it while we determine a regulatory solution is probably the best path to move things forward.”
James Butterfill, investment strategist at CoinShares:
“We believe CBDCs are highly unlikely to replace crypto assets such as Bitcoin due to their inherent differences, primarily with the latter being distributed ledger, peer-to-peer systems. Bitcoin, in particular, has a predetermined monetary policy where the supply cannot be altered, making it far more attractive as a non-sovereign store of value compared with a CBDC, which will be designed to replicate its respective central bank’s fiat currency.
The concept of central bank digital currencies has garnered considerable attention from central banks in the second half of 2020. We expect there to be increased hype and confusion in 2021 as the details on how they are structured are revealed. There are considerable challenges to overcome.
A central bank issuing a CBDC would have to ensure the fulfillment of Anti-Money Laundering and Counter Terrorist Financing as well as satisfy the public policy requirements of other supervisory and tax regimes.
Some proposals have suggested the central banks administer the core ledger with an interface for regulated entities such as banks to connect to, but this hardly achieves the promised efficiency gains that a peer-to-peer ledger system should have.
If a central bank becomes a wallet provider, it runs the risk of hollowing out commercial banks, depriving them of a cheap, stable source of funding like retail deposits. In crisis periods, this could lead to a run on weaker banks as clients prefer the safety of a central-bank-backed wallet.
As the ledger will be central rather than distributed, can they ever be as secure and trustworthy?
Many of these issues will be difficult and time-consuming to resolve, and therefore, CBDCs aren’t coming anytime soon. Furthermore, while they are likely to come with efficiency gains that digital currencies offer, they are much closer to their underlying fiat currencies, not offering the diversification benefits and store-of-value features that digital assets such as Bitcoin offer.”
James Wallis, vice president of central bank engagements at Ripple:
“National CBDCs have been a positive development for the crypto space and have served as confirmation at the highest level that digital currencies are the future. In 2021, I expect to see a world where cryptocurrencies, stablecoins and CBDCs each have their place in finance and payments, with more defined use cases. As governments continue to pilot CBDCs and test new technology in the space, I think it’s likely that more regulatory clarity in those jurisdictions will follow suit and become more defined. It’s likely this will have an impact on other countries’ regulatory bodies that have been slower to embrace cryptocurrencies and blockchain technology.
The focus of CBDCs in 2020 was primarily on domestic solutions. The true potential for CBDCs is in interoperability among CBDCs and between CBDCs and other digital currencies and cryptos. This will require collaboration between central bank networks and private blockchains and will foster innovative use cases. We’re going to see a growing demand for a neutral bridge for currencies to provide liquidity and instant settlement for cross-border transactions.
China has led the charge for retail CBDCs by tying into e-commerce platforms — expect further expansion, including cross-border into Macau, Hong Kong and more. We will certainly see others following suit in 2021 and testing solutions that have the option to interoperate with private companies. Similarly, I think we will see more CBDCs that address specific use cases, like replacing cash as we have seen in Sweden with the e-krona project or the Sand Dollar implementation in the Bahamas that aims to bring inclusive access to regulated payments and other financial services for underserved communities.
To keep up with other CBDC projects and to address the issues raised with the COVID-19 pandemic, we should expect more central banks to accelerate their CBDC initiatives, including the EU, South Africa, Brazil, the U.K. and, hopefully, the U.S., which has been lagging behind.
Due to the Chinese DC/EP initiative, we expect many more countries/regions to accelerate their CBDC efforts. China may be leading, but others will be moving quickly. Europe is actively exploring the feasibility of a digital euro, with several member states, including France, conducting experiments currently. In the United States, the Fed has an active collaboration with MIT’s Digital Currency Initiative to perform research related to CBDCs. We think these developments are positive and will lead to better designed, better functioning CBDCs.
Many developing countries are already leading the way with CBDC applications; it’s a natural next step that these governments will develop standardized digital wallets for every citizen. Whereas many developed countries — like the U.S. — are still debating the benefits of CBDCs. It’s unlikely that we will see anything of that scale deployed and adopted by its citizens in the next five or more years.”
Jimmy Song, instructor at Programming Blockchain:
“I don’t think it affects crypto that much, other than maybe bringing more people in that don’t like surveillance. CBDCs are a way for central banks to control our financial lives more than they do already.
I suspect that China will be one of the first, as it’s very authoritarian. I imagine it will cut out banks altogether and give each citizen a direct bank account with the central bank.”
Joseph Lubin, co-founder of Ethereum, founder of ConsenSys:
“When ConsenSys published its white paper ‘Central Banks and the Future of Digital Money’ at the World Economic Forum in January, the backdrop was a dramatic shift in the mechanics of money. Since then, the COVID-19 pandemic has only accelerated technological changes to how money moves. Privately issued stablecoins have nearly doubled from the beginning of the year, now with a market capitalization of $23 billion.
It’s really interesting what’s going on in that space, which has actually been ongoing for several years now. China’s DC/EP approach already had live trials in four major cities. This year, the Bahamas and Cambodia became the first nations to use digital currencies in their financial infrastructure. And in November, European Central Bank President Christine Lagarde signaled that her institution could create a digital currency within years and that policymakers intend to decide around mid-2021 whether to prepare for a possible launch. ConsenSys also announced four separate CBDC projects with the Hong Kong Monetary Authority, Societe Generale – Forge, the Bank of Thailand and the Reserve Bank of Australia in the third quarter of this year.
In this era of rapid advancements in the way that money moves is the recognition that we need systems to collaborate and trade with one another. Motivations for a CBDC around the world will be different — in some cases to provide greater control and in other countries, more efficient systems. Banks have monopolies and will compete for reserve status, and we’ll see about the regulation of stablecoins. But I firmly believe that blockchain-based systems can end up becoming the foundation for increased trustworthy collaboration.”
Mance Harmon, co-founder and CEO of Hedera Hashgraph and Swirlds Inc.:
“CBDCs are, in essence, a validation of the overall crypto space, given that they borrow many of the same concepts from cryptocurrency. In this regard, central bank digital currencies will continue to put a spotlight on the broader cryptocurrency and distributed ledger industry. However, they are likely to differ in one primary, fundamental way — and that is they will remain centralized, rather than embracing the public, transparent nature of cryptocurrencies.
In 2021, we will see small countries issue their first digital currencies — probably using private, permissioned ledgers — and we will continue to see advancement from China with regard to the digital yuan, where it seems to enjoy a first-mover advantage over other digital currencies.”
Paul Brody, principal and global innovation leader of blockchain technology at Ernst & Young:
“When it comes to central bank digital currencies, China already has the lead and is likely to stay in that position for the foreseeable future as it deploys this tokenized currency. It has a clear roadmap, it has been conducting tests, and it also has clear policy objectives bound up in the deployment of the Digital Currency Electronic Payment program.
Even though other countries are mostly just studying the concept, real-world experimentation is also going on with the use of stablecoins in smart contracts on Ethereum. This is a real-life laboratory for how CBDCs are likely to be used, if they are made accessible to the public, and I think the decision by the Bank of England to build a regulatory framework for them is a really good step to start understanding and managing the likely impact of CBDCs.”
Roger Ver, executive chairman of Bitcoin.com:
“That’s the fun part about being in this ecosystem: We don’t know where the next big thing will come from. It could be from a nation-state anywhere in the world, a Facebook or a lone wolf like Satoshi Nakamoto. The one thing we do know is that the pace of innovation is going to increase.”
Samson Mow, chief strategy officer of Blockstream:
“CBDCs don’t compete with Bitcoin; they compete with stablecoins and commercial banks.
China is definitely leading the way in CBDC development, and I would expect other nations to attempt to follow quickly. We’ve also seen the government of Bermuda experimenting with a stimulus token issued on the Liquid Network, which is very exciting.”
Sheila Warren, head of blockchain and DLT at the World Economic Forum:
“We’ve certainly seen increased attention in 2020 toward the digital currency space, especially from regulators and economists, which is slowly moving us toward normalizing crypto. In contrast, when we released our CBDC Policy-Maker Toolkit in January, these conversations were not yet as prominent in the public sphere.
This year, we’re starting to see things moving into production and the results of experiments becoming increasingly clear. Emerging economies continued to take the lead on experimentation and deployment — with interesting work out of Bermuda, the Eastern Caribbean and Cambodia — and of course, China remains the country to watch.”
Todd Morakis, co-founder and partner of JST Capital:
“There will likely be a number of CBDCs that launch in some limited form over the next year or two. We also expect continued growth in the number of banks issuing their own digitized currencies, with a particular focus in developing parts of the world.
We think that 2021 will be an interesting year for the adoption of digitized currencies and how that intersects with the evolving DeFi world.”
Vinny Lingham, CEO of Civic:
“China will take the early lead on central bank digital currencies. It has been clear that it wants to be the global unit of account. So, at some point in the future, we’ll see China and the U.S. duel to become the world leader on this front.
In terms of the effects on the crypto space, it’s important to remember that CBDCs are fundamentally different from crypto. A central promise of Bitcoin is that it’s non-political, and that’s important to many people who use Bitcoin. They do not want the currency to be open to manipulation by the state. Governments, by nature, cannot be non-political. So, CBDCs and crypto may coexist, but they will never be the same.
Further, I think there’s less than a 1% chance that any government-sanctioned fork would replace Bitcoin. And if this ever did happen, it would likely strengthen Bitcoin.”
These quotes have been edited and condensed.
The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
The proposed EU crypto market regulation will raise many compliance obstacles for the next Libra-like project seeking to operate in Europe.
In cryptoland, the fall tends to be regulators’ open season. As unprecedented as it’s been, 2020 is no exception to this trend. Tensions are high on both sides of the Atlantic: As markets were still processing the news of the United States Commodity Futures Trading Commission cracking down on derivatives exchange platform BitMEX, the Financial Conduct Authority, the British financial watchdog, moved to ban retail investors from using cryptocurrency derivatives altogether.
The densely packed news cycle has somewhat muffled the impact of another regulatory bomb that dropped a week earlier and is bound to have major lasting effects on the global financial system: The European Union’s proposed legislation for crypto-asset markets.
The far-reaching framework, designed to bestow regulatory clarity upon digital finance businesses serving residents of the European Economic Area, is bound to be especially consequential for two interconnected domains of the crypto industry that have dominated the narrative throughout much of 2020: stablecoins and decentralized finance applications. What gives?
Stablecoins as a threat to stability
At the moment, the draft, known as the “Regulation on Markets in Crypto-assets,” or MiCA, exists in the form of a proposal put forth by the European Commission, the EU’s executive branch. It is still bound to go through a rather lengthy legislative process before it becomes law, meaning that it might take months and even years before the new rules kick in.
The text makes it apparent that stablecoins, which are also called “asset-referenced tokens” and “e-money tokens” in the document, have been squarely at the top of European lawmakers’ minds: MiCA singles out this asset class and affords it a bespoke regulatory framework.
Under the proposed law, stablecoin issuers will have to be incorporated as a legal entity in one of the EU member states. Other requirements include provisions related to capital, investor rights, custody of assets, information disclosure and governance arrangements.
Albert Isola, the minister for digital and financial services of Gibraltar, explained to Cointelegraph that the reason for the European Commission’s heightened attention to stablecoins is the authority’s concern for the Eurozone’s financial stability:
Stablecoins are widely considered to potentially bring significant benefits as a digital method of payment, providing for greater financial inclusion and a more efficient method of transferring funds. They are also viewed as a potential risk to financial stability and integrity and could dilute the effectiveness of monetary policy. It would appear logical that the European Union may not welcome an entity other than the European Central Bank issuing Euro in an electronic format.
Isola mentioned that “disruptors,” such as the prospective stablecoin Libra, have the potential to significantly decentralize the control of currencies.
Seamus Donoghue, vice president for sales and business development at digital finance infrastructure provider Metaco, cited the impressive growth of the stablecoin market in recent months as a prerequisite for regulatory attention, which he called a “positive response”:
The USDC stablecoin’s market cap alone has grown 250% in 2020 from $520 million to $1.86 billion, with a significant acceleration in growth over the last two months. Bank regulators have no doubt also observed that although the asset class in the context of the traditional payments space remains relatively small, it has the potential to have a huge impact on regulated banks and payments incumbents.
The specter of Libra
Illustrating the depth of the top EU officials’ concern over preserving the union’s monetary sovereignty is the fact that, earlier in September, “finance ministers of Germany, France, Italy, Spain and the Netherlands issued a joint statement outlining that stablecoin operations in the European Union should be halted until legal, regulatory and oversight challenges had been addressed,” said Konstantin Richter, CEO and founder of the blockchain infrastructure company Blockdaemon.
Richter added that some of the more visible figures in European financial policy, such as the German minister of finance, Olaf Scholz, have advocated for the introduction of the regulatory framework.
Most experts who talked to Cointelegraph mentioned Facebook-backed stablecoin Libra as the point of departure in the EC’s thinking about the dangers and opportunities that asset-referenced tokens present.
MiCA opens with an explanatory memo that discusses how the crypto asset market is still too “modest in size” to pose a serious threat to financial stability; however, things can change, the framers admit, with the advent of “global stablecoins, which seek wider adoption by incorporating features aimed at stabilizing their value and by exploiting the network effects derived from the firms promoting these assets.” There has been a single stablecoin project to this date falling into the scope of this description: Libra.
Mattia Rattaggi, board chairman at FICAS AG — a Swiss-based crypto investment management firm — opined that stablecoins are the application of blockchain technology with the highest probability of big impact — something regulators are well aware of:
Stablecoins have grasped the attention of regulators over 12 months ago with the presentation of project Libra by Facebook and have since been closely monitored by the public and regulators around the world. Regulators are realizing that stablecoins are bound to increase efficiency in the payment system — particularly the international one — and promote financial inclusion.
Further hedging against the potential disruption of the Eurozone’s monetary stability, the MiCA proposal specifies even stricter compliance requirements for issuers of asset-referenced tokens deemed “significant.” The significance criteria include the size of the customer base, market cap, volume of transactions, and even “significance of the issuers’ cross-border activities and the interconnectedness with the financial system.”
Bad news for DeFi?
Stablecoins largely power another sprawling domain of crypto financial activity: a diverse array of applications and protocols that exist under the umbrella of decentralized finance. Given the stringency of the proposed requirements around asset-referenced tokens, it is plain to see how complicated things can get if, say, the bulk of liquidity locked in a certain decentralized protocol is denominated in a stablecoin that is not compliant by the MiCA standards.
Another major source of uncertainty is the requirement for all crypto-asset service providers, or CASPs, seeking authorization to operate in the EU to be legal entities with an office in one of the member states. Whether the European authorities will treat individual DeFi apps as CASPs remains an open (and central) question, but if this is the case, developer teams maintaining DeFi protocols might be forced to come up with workarounds that will stretch the notion of “decentralized” incredibly thin.
In their response to the proposed regulation, members of the International Association for Trusted Blockchain Applications expressed their concern that MiCA could effectively bar European residents from participating in DeFi markets.
Martin Worner, the chief operating officer and vice president of blockchain tooling provider Confio, believes that compliance issues could be resolved by implementing on-chain governance mechanisms tailored to specific jurisdictions’ regulatory frameworks:
[This could be] achieved within a self-sovereign framework where the institutions can develop compliant DeFi instruments, which work within their jurisdictions. Just as there are rules about businesses in different jurisdictions and how they do cross-border transfers, the same would apply on the blockchain.
Elsa Madrolle, international general manager at blockchain security company CoolBitX, told Cointelegraph that by the time MiCA becomes law, the DeFi landscape will have likely changed, much as the ICO landscape changed rapidly after the initial boom. By that time, “it will be quite clear what is required of DeFi projects to operate in the EU or seek out EU customers.”
Madrolle thinks that at that point, DeFi projects will fall into one of two categories — regulated and unregulated — and the big question will be whether the rest of the world will align itself with the European framework.
Nathan Catania, a partner at XReg Consulting — a regulatory and policy firm that has recently published a breakdown of the proposed regulatory framework — is hopeful that it is possible for regulators to reconcile MiCA requirements with not regulating DeFi out of existence. Catania said:
I believe that a project which is sufficiently decentralized and does not provide the service on a professional basis to a third party cannot be considered a CASP and there is still room for DeFi projects to exist.
Today, many DeFi protocols are far from being fully decentralized. The battles over how much decentralization is good enough are still ideological and are primarily fought inside the crypto bubble. It looks like the day when regulators join this debate will come, but with some very tangible implications for crypto businesses.
The Gibraltar Financial Services Commission (GFSC) has updated its guidance notes for distributed ledger technology (DLT) providers to include recommendations for risk management, as well as clarify aspects around the issuance of digital assets. In a statement released on September 17, the regulator said the new updates are part of an ongoing effort to adapt […]
The post Gibraltar Updates Distributed Ledger Framework to Align With FATF Crypto Regulations appeared first on Bitcoin News.
EU residents are becoming more comfortable with digital and contactless payments.
The pandemic has seen consumers adopt digital payments in increasing numbers and the trend was accelerating, said the President of the European Central Bank (ECB) Christine Lagarde.
She also indicated a panel of euro-zone central bank officials is set to reveal a verdict on a European central bank digital currency (CBDC) imminently.
Speaking at an online conference hosted by Deutsche Bundesbank on Sept. 10, Lagarde, stated that EU residents had embraced digitalization, with e-commerce sales increasing roughly 20% between February and June, even as total retail sales declined 1.2%. She said the volume of online payments had experienced “double-digit growth rates” since the start of the outbreak.
“The pandemic has served as a catalyst, accelerating the transition towards a digital new normal,” Lagarde stated. “A vast majority of consumers expect to continue to use digital services as often as they do now or even more often.”
Other institutions have reached the same conclusion as data comes in regarding the economic fallout of COVID. An August report from Singapore’s DBS Bank stated that “the ongoing pandemic has added fuel to the move toward a society with less cash dependence.”
Lagarde supports the ECB developing a CBDC to address the move towards digitalization, in addition to faster and cheaper cross-border payments. Last September, when she was the head of the International Monetary Fund (IMF), the ECB president said she would focus on ensuring EU institutions adapt to the changing financial environment by being open to crypto.
“The Eurosystem has so far not made a decision on whether to introduce a digital Euro,” Lagarde said.
“But, like many other central banks around the world, we are exploring the benefits, risks and operational challenges of doing so.”
According to the ECB president, the results of a taskforce studying the potential effects of a CBDC on Europe will be announced “in the coming weeks.”