Can elephants learn to dance?
Here is our pick of the 3 most important Stablecoin news stories during the week.
This week, speaking at Davos no less, the Bank of England governor Andrew Bailey has proclaimed that Bitcoin, Crypto Currencies and one supposes privately issued stablecoins days are numbered, but that digital innovation in payments was ‘here to stay’.
He said that “crypto-currencies in their current state were not likely to be the final settling point, as businesses, consumers and regulators would look for digital currencies which are stable, safe and well-designed before fully shifting away from traditional currencies like the pound and dollar.”
To me the real question is can large regulatory organisations learn to be “Agile” and deliver new and innovative projects? The Bank of International Settlements or the Central Bank for Central Banks is certainly leading the way with it’s innovation hubs and this week made this announcement.
Among the newly launched projects will be:
- a proof of concept solution for a regulatory reporting platform employing data analytics and data visualisation to provide supervisors with deeper and more timely insights to address risks;
- a proof of concept platform using multiple wholesale CBDCs to explore the feasibility of faster and cheaper cross-border payments;
- a technological research project and associated prototype(s) for tiered retail CBDC distribution architectures; and
- a distributed ledger technology prototype for distribution of tokenised green bonds to retail investors.
Sberbank, the largest state-owned bank in Russia, has reportedly filed an application with the Bank of Russia to launch a blockchain platform for its “Sbercoin” stablecoin.
Sergey Popov, director of the transaction business at Sberbank, announced the news on Jan. 21 at a local financial event Russian news agency Interfax reports.
At “Digital transformation and prospects for regulating the digital economy,” Popov said that Sberbank applied with the central bank in early January, explaining that the registration procedure usually takes no longer than 45 days. As such, the bank may launch its platform and stablecoin by the spring this year, the official said. However, Sberbank is still working out how to tax Sbercoin:
“There is a high probability that this project will be launched in the spring. There is one more issue that has not yet been fully resolved, which is connected to the taxation of digital financial assets. But we hope that this question will be resolved soon.”
So in summary, we are seeing big State organisations making promises that they can innovate and provide a better service than private or community run projects such as Bitcoin, Ethereum or the current stable of stablecoins. But if they could be that innovative, why haven’t they done it already? The problem that needs fixing is their slow and inefficient payment rails. It’s been around forever, but now they are going to fix it. Colour me sceptical.
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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