Who will be first!
Here is our pick of the 3 most important Stablecoin news stories during the week.
This week we have seen an interesting argument play out. Who should be first to innovate at scale in Digital Currencies? Should this be State (slow, considered, careful) or should the Private sector (with Regulatory cover) be allowed to move fast and maybe break a few things?
First, a recap of the current state of play. A new working paper by the Bank for International Settlements (BIS) looks at the state of central bank digital currency (CBDC) projects around the world.
According to the study, as of mid-July 2020, at least 36 central banks had published retail or wholesale CBDC work.
At least three countries, namely Ecuador, Ukraine and Uruguay, had completed a retail CBDC pilot, and six retail CBDC pilots were ongoing in the Bahamas, Cambodia, China, the Eastern Caribbean Currency Union, South Korea, and Sweden, the research found.
Meanwhile, 18 central banks had published research on retail CBDCs, and another 13 had announced research or development work on a wholesale CBDC, the paper says.
Staying in Switzerland (where the BIS is located) the private sector folks building the next generation of digital money understand the need to collaborate.
Stablecoins, digital tokens pegged one-to-one to the Swiss franc (CHF) in this case, are a prime example. SEBA Bank and Sygnum Bank, the two B2B players that hold banking licenses from the Swiss Financial Market Supervisory Authority and that specialize in digital assets, are both involved in stablecoin explorations, as is the country’s respected crypto conglomerate, Bitcoin Suisse. “Within the Crypto Valley and here in Switzerland, there’s a very good collaboration going on, where everyone’s working together to try to design a Swiss franc stablecoin which has more or less the same definition or is fully interoperable,” said Matthew Alexander, SEBA Bank’s head of asset tokenization.
However, Politicians in the EU are getting very concerned about anyone from the Private sector stepping into their turf. Germany, France, Italy, Spain and the Netherlands called on the European Commission to draw up strict regulation for asset-backed cryptocurrencies such as stablecoins to protect consumers and preserve state sovereignty in monetary policy.
LONDON (Reuters) – A project involving 13 of the world’s largest banks and aimed at launching digital versions of major currencies in 2020 is no longer likely to get going this year, the company set up to run the effort said.
Technological development work on the previously named “Utility Settlement Coin” initiative has progressed, but it still needs regulatory approval, said Fnality International Chief Executive Rhomaios Ram. It hopes to receive that approval by the first quarter of 2021, “The technology is the least complicated part of this whole thing,” said Ram.
So in summary we have the Private sector slowing down, the state sector spreading up and the Politicians worrying about what all this could mean.
Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years.
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