The Reserve Bank of Zealand has said the proposed digital version of the country’s physical cash would provide universal access to central bank money, either in physical cash or digital form. According to the central bank, the digital version will not only be government-backed but will also be denominated in the local currency. Universal Access […]
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Bank of England, HM Treasury Respond to Digital Pound Consultation Amid Strong Public Interest
Amidst public interest, the Bank of England and HM Treasury have addressed key concerns regarding the digital pound, reassuring the public of stringent legislative measures for privacy and control, alongside the maintenance of traditional cash.
HM Treasury and Bank of England Respond to Public’s Digital Currency Concerns, No Final Decision yet on Digital Pound
The Bank of England and HM Treasury have unveiled their response to the public consultation on the potential introduction of a digital pound, following engagement from the public and industry experts. Over 50,000 responses were received, indicating the public’s interest in the future of digital currency in the United Kingdom.
Key concerns raised by the respondents centered around privacy and control of funds, along with the continued availability of traditional cash. The authorities have assured that robust legislative measures will be implemented to safeguard user privacy and control before the roll-out of any digital pound. This includes primary legislation to ensure that neither the Bank of England nor the government will have access to users’ personal data.
The digital pound is envisaged as a supplement to existing forms of money, not a replacement. Economic Secretary to the Treasury, Bim Afolami said, “We will always ensure people’s privacy is paramount in any design, and any rollout would be alongside, not instead of, traditional cash.“
Sarah Breeden, Deputy Governor for Financial Stability, underscored the importance of trust in all forms of money and pointed out that, “[i]t is essential that we build that trust and have the support of the public and businesses who would be using it if introduced.”
No final decision has been made to pursue the digital pound, also known as a central bank digital currency (CBDC). The ongoing work involves exploring the feasibility and potential design choices of a digital pound in the UK economy. This phase will focus on how the digital currency can provide greater choice, convenience, and innovation for everyday payments.
The digital pound aims to coexist with cash in a digital era, offering an alternative for everyday transactions. It would be issued by the Bank of England and designed to be convenient, widely available, and easily exchangeable with other forms of money. The proposed digital currency would be accessible through digital wallets and intended primarily for transactions rather than savings, without paying interest. Initial restrictions on how much an individual or business could hold are also part of the plan.
Before the launch of a digital pound, detailed legislative processes and further public consultations are planned. The proposed design of the digital pound has been generally well-received, but concerns about access to cash and control over personal data led to the commitment to introduce primary legislation for user protection. The future legislation will also prevent the government from programming the digital pound.
The Bank of England currently proposes a holding limit of 10,000-20,000 British pounds, though this may be subject to future reviews. The digital pound is expected to be accessible in several countries, barring those under sanctions. Experiments and further public consultations are planned to test the digital pound in real-world scenarios.
Would you be open to using the digital pound if it were available? Share your thoughts and opinions about this subject in the comments section below.
Hong Kong Regulators Unveil Public Consultation Paper on Stablecoin Regulation
Hong Kong Monetary Authority (HKMA) and Financial Services and the Treasury Bureau have released a public consultation paper to gather residents’ opinions on the proposed regulatory regime for stablecoin issuers. The HKMA also announced the introduction of a sandbox arrangement whose purpose will be to convey supervisory expectations and guidance on compliance to prospective stablecoin issuers.
HKMA’s Sandbox Arrangement
On Dec. 27, the Hong Kong Monetary Authority (HKMA) and Financial Services and the Treasury Bureau (FSTB) released a public consultation paper to gather residents’ opinions on the proposed regulatory regime for stablecoin issuers. The consultation period began on the day of the announcement and will end on Feb. 29, 2024, the two bodies said in a joint statement.
In addition to releasing the consultation paper, the HKMA announced that it will introduce a sandbox arrangement whose purpose will be to convey supervisory expectations and guidance on compliance to prospective stablecoin issuers. The sandbox arrangement will also enable the regulator to get prospective stablecoin issuers’ perspectives on the proposed regulatory requirements.
Commenting on the two developments, Christopher Hui, the Secretary for Financial Services and the Treasury, said:
With the implementation of the licensing regime for VA [virtual assets] trading platforms from June this year, the legislative proposal to regulate FRS [fiat-referenced stablecoin] is another important measure facilitating Web3 ecosystem development in Hong Kong.
Hui added that by having the necessary licensing and enforcement parameters, Hong Kong will be able to oversee stablecoin issuers in line with international standards.
Eddie Yue, the CEO of HKMA, while his organization is supportive of innovation, it is still required to put in place “guardrails and standards to enable the long-term, sustainable, and responsible development of the virtual asset ecosystem.”
Yue added that the public consultation process, as well as the sandbox arrangement, show that the HKMA is on course to achieve this goal. The joint statement said the consultation paper can be found on the websites of both the FSTB and the HKMA.
What are your thoughts on this story? Let us know what you think in the comments section below.
Central Bank of Brazil Opens Public Consultation on Virtual Assets Service Provider Rulemaking
The Central Bank of Brazil opened a new public consultation to obtain feedback for regulating the operations of virtual assets service providers (VASPs) in the country. The bank organized a questionnaire of 38 questions divided into different themes that can be partially, or fully answered until January 31, 2024.
Central Bank of Brazil Seeks Input on VASP Regulation
The Central Bank of Brazil is preparing to finally issue rules for Virtual Assets Service Providers (VASPs) operating in the country. The institution opened a public consultation seeking input from market participants and individuals to prepare the rules VASPs would have to follow, according to the faculties it received since the approval and sanction of the cryptocurrency assets law in December 2023.
The bank introduced a 38-item questionnaire that can be answered totally or partially, indicating the numbers and themes respondents want to address in their statements.
Each question is part of a broader subject of the public consultation, including areas such as asset segregation and risk management, activities developed and virtual assets traded, hiring essential services, governance and conduct rules, cyber security, providing information and protecting customers, transition rules, and general manifestations.
The issue of asset segregation has significance, given that it was initially proposed to be part of the final text of the approved cryptocurrency assets law, but was finally left out due to the limitations it would impose on the operations that VASPs could conduct. Tax exemptions for mining projects leveraging renewable energy were also left out of the final text and might be affected by these rules.
The public consultation process will be open until January 31, 2024, and all answers will be publicly available for review on the bank’s page.
What do you think about the public consultation of the Central Bank of Brazil to regulate the operation of VASPs? Tell us in the comments section below.
European Banking Authority Launches New Consultation on Crypto Travel Rule
The European Banking Authority (EBA) has recently launched a new consultation process concerning implementing the so-called travel rule for cryptocurrency transactions. The institution is seeking feedback on the defined procedures that crypto assets service providers (CASPs) must complete to collect the needed information to comply with the travel rule, and the actions they must take when getting this information is not possible.
European Banking Authority Holds Consultation on Guidelines for Travel Rule Adoption
The European Banking Authority (EBA) has opened a new consultation that seeks to receive feedback on the procedures proposed to apply the travel rule to transfers that use wallets hosted by crypto asset service providers.
The rules are focused on “preventing the abuse of funds and certain crypto-assets transfers for money laundering and terrorist financing purposes” and complement another consultation process made by the institution in June that dealt with due diligence procedures for anti-money laundering processes.
In its most recent Opinion about money laundering and terrorism financing risks, the EBA found that most competent European authorities believe risks related to crypto assets service providers (CASPs) are significant or very significant.
These risks are derived from many factors, including “the pseudo-anonymity of transactions, the interaction with the dark web, the use of crypto-assets in predicate offenses such as cybercrime, complex fraud schemes, crypto-investment scams, increasing money laundering, and circumvention of sanctions.”
Guideline Details
The presented guidelines leave out the application of the travel rule for transactions between unhosted wallets, given that these exclude the intermediation of a CASP. However, incoming transactions from an unhosted wallet to a wallet hosted by a CASP will have to comply with the travel rule if the amount involved is over 1,000 euros (,096).
The guidelines describe a set of procedures that CASPs must apply to determine if the user starting the transaction is in control of both addresses involved. These involve advanced analytical tools, taking photos or videos of the user, sending a predefined amount to the CASP’s account, signing a specific message in the account and wallet software, and requesting the customer digitally sign a message into the account and wallet software, among other actions.
CASPs should use at least two procedures to obtain the required data. Nonetheless, if CASPs cannot collect the information after these processes, they should leverage more processes to complete the required information.
The consultation will run until February 26, 2024.
What do you think about the EBA’s consultation on the travel rule procedures? Tell us in the comment section below.
Latam Insights — Honduras Opens Public CBDC Consultation, Venezuela Applies to Enter BRICS
Welcome to Latam Insights, a compendium of Latin America’s most relevant crypto and economic news during the last week. In this issue: Honduras opens a central bank digital currency (CBDC) consultation, Venezuela applies officially to join BRICS, and Trubit launches Pix payment integration in Brazil.
Honduras Opens CBDC Issuance Public Consultation
The Central Bank of Honduras has opened a public consultation regarding issuing a central bank digital currency (CBDC). The public consultation marks the next phase of a plan to modernize the country’s payment systems. In a report issued by the bank, titled “The Future of Money and Payments in Honduras, which route to Follow?” the institution considers the implications and changes it must apply to its legal system to adopt a CBDC.
The poll asks users about the central bank’s role in the national payments system, proposing a series of options to modernize it, including launching a CBDC, designing a bank-managed payments system, and promoting the adoption of stablecoins.
Honduras faces challenges on the financial inclusion front, as only 33% of the population had access to a bank account by 2021 while the rest relied on cash, according to the National Commission of Banks and Insurance. In 2017, 75% of the payments were made using physical money, per Mastercard numbers.
Venezuela Officially Applies to Be Part of BRICS
The government of Venezuela has presented an official application to join the BRICS bloc, integrated by Brazil, Russia, India, China, and South Africa. Venezuelan President Nicolas Maduro stated that he was optimistic about the reception of the proposal by the bloc.
He stated:
Venezuela made its proposal to join the group and we hope it will be positively valued by the nations that integrate it.
Venezuela has the support of Brazilian President Luiz Inacio “Lula” de Silva, who in May told Maduro he favored the entrance of Venezuela into BRICS. The applications of at least 25 nations will be discussed in the next BRICS summit that will be held in South Africa later this month.
Trubit Integrates Pix Payments in Brazil
Trubit, a Latam-focused cryptocurrency wallet and exchange platform, has integrated Pix functionality into its platform, marking its entrance into the Brazilian market. According to the Brazilian central bank, Pix is the most used payment system in Brazil, accounting for 30% of the transactions made in 2022, surpassing the usage of more traditional payment methods like credit and debit cards.
With Pix’s integration, Trubit allows Brazilians to deposit and withdraw Brazilian reales into its platform. “We believe this milestone integration will facilitate a much easier and faster user experience on our TruBit platform,” said Maggie Wu, CEO of TruBit. In June, the company launched MMXN, a Mexican peso-pegged stablecoin.
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What do you think about this week’s Latam Insights report? Tell us in the comment section below.
Kazakhstan Launches Consultation on Proposals to Improve Crypto Trading
Financial authorities in Kazakhstan are starting a public consultation on draft changes to the country’s framework for digital-asset trading. The proposals include measures to reduce risks in the crypto market and improvements to the structure of exchange platforms.
Kazakhstan’s Financial Hub Seeks to Amend Its Concept for Trading Digital Assets
The Astana Financial Services Authority, the body that oversees the Astana International Financial Center (AIFC), has published a consultation paper detailing proposals aimed at upgrading Kazakhstan’s regulated ecosystem for cryptocurrency operations.
The document suggests measures to reduce market risks in the government-controlled trading environment. The regulatory body has also prepared solutions to improve the current structure of the crypto platforms working out of the Central Asian nation’s financial hub.
Residents of the AIFC, as well as other interested parties, have been invited to participate in the consultation, the crypto news outlet Forklog reported, quoting the announcement. The managing authority will accept public feedback until Feb. 25.
The approved proposals will be added to the draft amendments to the AIFC Digital Assets Trading Concept expected to be released later this year. Among them are mechanisms to prevent market abuse, limit settlement risks and disclose information to investors.
The initiative comes after the parliament in Nur-Sultan adopted a bill devoted to regulating the country’s crypto space. Along with other legal acts, the law “On Digital Assets in the Republic of Kazakhstan” introduces rules for the mining and circulation of cryptocurrencies.
The legislation also envisages the establishment of a licensing regime for crypto miners and exchanges to replace the existing registration system. Kazakhstan became a mining hotspot following China’s crackdown on the industry and has been looking to regulate the sector and the sale of minted coins.
The influx of miners was blamed for the country’s growing power deficit and authorities have been cracking down on unauthorized crypto farms. They have also taken down a number of illegal crypto trading platforms as only exchanges registered at the AIFC are allowed to provide such services.
Do you think Kazakhstan takes steps to expand its legal framework for digital assets in order to become a regional crypto hub? Tell us in the comments section below.
Britain Announces Plans for ‘Robust’ Crypto Rules, Launches Consultation
The U.K. has unveiled “ambitious plans” to “robustly regulate” various crypto activities, while seeking to protect customers and grow its economy. In the next three months, British authorities will accept public feedback on the new regulatory proposals designed to govern digital assets like traditional finance.
British Government Sets Out to Regulate Crypto Market, Remains Committed to Innovation
The executive power in London has announced plans to regulate a wide range of crypto-related activities through new rules for the young industry that will be consistent with Britain’s regulations for the traditional financial sector.
A public consultation on the proposals has been launched and will continue until the end of April. In the published paper, the U.K. Treasury reaffirms its belief that “crypto technologies can have a profound impact across financial services.” The document provides an overview of the consultation work ahead.
The British government also insisted its approach to regulation “mitigates the most significant risks, while harnessing the advantages of crypto technologies” and expressed hopes to enable the crypto industry to expand, invest, and create jobs. Economic Secretary to the Treasury Andrew Griffith emphasized:
We remain steadfast in our commitment to grow the economy and enable technological change and innovation – and this includes crypto-asset technology. But we must also protect consumers who are embracing this new technology.
The draft rules aim to ensure that crypto exchanges “have fair and robust standards.” They will be responsible for “defining the detailed content requirements for admission and disclosure documents,” an announcement revealed on Wednesday.
Officials also indicated they want to strengthen the rules for intermediaries and custodians that facilitate cryptocurrency transactions and store customer digital assets. They believe this would help to establish a “world-first regime” for crypto lending.
The move comes in the aftermath of several high-profile failures that shook the crypto space, including the collapse of major crypto exchange FTX. The British government has previously said that it intends to adopt regulations that would prevent market abuses.
Majority of Crypto Asset Companies in the UK Fail to Receive Regulatory Approval
The regulatory proposals follow last week’s announcement by the U.K.’s Financial Conduct Authority (FCA) that most entities that want to do business with crypto assets in Great Britain, 85% of all applicants, have failed to convince regulators they can meet the country’s minimum anti-money laundering (AML) requirements.
The regulator said it had identified significant failures in spheres such as due diligence, risk assessment, and transaction monitoring. “In many cases, key personnel lacked appropriate knowledge, skills and experience to carry out allocated roles and control risks effectively,” the FCA said.
Meanwhile, the Treasury Committee at the House of Commons is still looking into the potential threats and opportunities associated with crypto assets and the need for regulation. “We are in the middle of an inquiry into crypto regulation and these statistics have not disabused us of the impression that parts of this industry are a ‘Wild West,’” Harriett Baldwin, chair of the select committee, was quoted as stating.
What effect do you think the upcoming U.K. rules will have on the development of the country’s crypto industry? Share your expectations in the comments section below.
Swiss Federal Council Initiates Blockchain Law Consultation Period
n The Swiss Federal Council has started its consultation on the adaptation of federal law for blockchain developmentn
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