Značka: CBDC

Taiwan central bank governor considers interest-free CBDC design to prevent fiat deposit flight

As reported by local news outlet bnext.com on Wednesday, Chin-long Yang, governor of the Central Bank of the Republic of China (Taiwan), recommended a no-interest design for the country’s central bank digital currency, or CBDC, pilot. In explaining the decision, Yang said that a CBDC where interest is paid on digital asset deposits would likely become a replacement for fiat New Taiwan dollar (NT$) deposits in banks. “Once the banks’ available deposits decrease,” Yang explained, “it would lead to a corresponding increase in the cost of financing and thereby increase the cost of borrowing for consumers.” Yang further warned that even interest-free CBDCs could lead to “digital bank runs” during times of financial instability and quickly spiral into a liquidity crisis for financial institutions. But nevertheless, the country’s central bank governor recognized a surge in demand for electronic payment solutions in recent years:”The ratio of electronic payments as a % of all payments in Taiwan has risen from 40% in 2017 to 60% in Q1 2022. Therefore, there is the possibility of greater demand in the populace for a CBDC that provides a safe, trusted, no-commission, no credit risk and no liquidity risk form of digital payment solution.”Taiwan is currently in the second stage of its CBDC pilot program, where its central bank provides the CBDC to five selected Taiwanese banks for distribution among consumers. Based on the pilot program results, the central bank will proceed to the next steps. However, it has already been identified in trials that the distributed ledger technology within the CBDC could not handle high frequency, high volume consumer transactions. Another point of concern is the lost functionality of the payment solution in the event of power outages.

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VTB sealed the first deal with digital financial assets in Russia

VTB Factoring, a subsidiary of Russia’s state-owned bank, reported the first major deal with digital finance assets. As part of the deal, the bank subsidiary acquired a tokenized debt pool of the engineering company Metrowagonmash, issued via the fintech platform Lighthouse.On Wednesday, June 29, VTB reported the deal on its webpage, claiming it to be the first issuance and placement of digital financial assets secured by cash in the Russian Federation. In the announcement, the bank compares it with the issue of short-term commercial bonds. Anton Musatov, CEO at VTB Factoring, emphasized the new technology’s potential regarding the access of Russian businesses to the funds necessary for operational activities:“Apart from the standard factoring procedure, [here] a client shouldn’t necessarily sign a service contract to sell its debt pool. The issuer’s readiness to tokenize it and the factoring bank’s decision to acquire it.”In June 2022 the largest Russian bank Sber announced its first operation with the digital financial assets (DFA) to take place in Mid-July, after finally obtaining a license from the country’s central bank. While current legislation on the DFA was put in force in 2020, in June 2022 the head of the Financial Markets Committee of the Russian parliament’s lower chamber introduced a bill that would prohibit the use of DFA as a “monetary surrogate”. Related: Russia to include crypto into its tax code: Here is what the rules might look likeIn February 2022 VTB conducted the first successful testing of the operation with “digital rubbles”, a central bank digital currency (CBDC) project of the Bank of Russia. Later, the bank announced its first purchase of DFAs in exchange for the digital ruble. By the press time, there is no information on whether the aforementioned deal was made via CBDC.

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CBDC may threat stablecoins, not Bitcoin: ARK36 exec

Central bank digital currencies (CBDC) do not pose any direct threat to cryptocurrencies like Bitcoin (BTC) but are still associated with risks in relation to stablecoins, one industry executive believes.According to Mikkel Morch, executive director at the digital asset hedge fund ARK36, a state-backed digital currency like the U.S. dollar doesn’t necessarily have to be a competitor to a private or a decentralized cryptocurrency.That’s because the use cases and value proposition of the decentralized digital assets “often go beyond the realm of simple transactions,” Morch said in a statement to Cointelegraph on Thursday.The exec referred to Federal Reserve Chair Jerome Powell who earlier this year hinted that the United States government would not stop a “well regulated, privately issued stablecoin” from coexisting with a potential Fed digital dollar.As such, active commitment to the CBDC development does not mean that other countries like Singapore are unfriendly to non-state-backed cryptocurrencies, Morch said. The executive suggested that a CBDC roll-out may even “facilitate the proliferation of non-sovereign cryptocurrencies and blockchain technologies.”However, the concept of a CBDC is still associated with some risks in regard to stablecoins, Morch noted, stating:“Admittedly, though, a CBDC may diminish the role of and the demand for privately issued stablecoins provided that there is a market for stablecoins already in the country – which is more the case in the U.S. than it is in Singapore.”Morch’s remarks came in response to Singapore’s financial regulator and central bank pledging to be “brutal and unrelentingly hard” on any “bad behavior” from the cryptocurrency industry.On June 23, Singapore’s Monetary Authority’s (MAS) chief fintech officer Sopnendu Mohanty expressed a lot of skepticism about the value of private cryptocurrencies. He also said that he expected a state-backed alternative to be launched within three years.ARK36’s Morch also tied Mohanty’s latest comments with the recent dramatic events in the crypto industry, including the failure of the Terra ecosystem last month, the liquidity crisis of the Celsius crypto lending platform and Three Arrows Capital’s insolvency.Related: Stablecoins highlight ‘structural fragilities’ of crypto — Federal ReserveMorch specifically suggested that MAS’ comments on going brutal make a lot more sense if one takes into account that Three Arrows Capital, also referred to as 3AC, is a Singapore-based firm. “If half of the rumors about how the fund handled the capital of its customers are true, there is little wonder that Singapore’s financial authority sees the need for more regulation in the space,” he added.

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'Brutal and unrelentingly hard': Singapore regulator's clampdown on crypto

Singapore’s financial regulator and central bank has pledged to be “brutal and unrelentingly hard” on any “bad behavior” from the cryptocurrency industry.The comments come from Monetary Authority of Singapore (MAS)’s chief fintech officer Sopnendu Mohanty, explaining in an interview that “if somebody has done a bad thing, we are brutal and unrelentingly hard.”He also hit back at the rhetoric of certain crypto market participants who have criticized the regulator for not being friendly enough to crypto, and instead questioned the legitimacy of the market, saying:“We have been called out by many cryptocurrencies for not being friendly, my response has been: Friendly for what? Friendly for a real economy or friendly for some unreal economy?” The fintech chief believes the world is “lost in private currency” and is the cause behind the wider market turmoil. Mohanty added the city-state enacted an “extremely draconian” and “painfully slow” due diligence process for licensing crypto businesses in response to the conservative stance the regulator has towards crypto.Singapore introduced licensing for crypto firms in January 2020 and has been stringent on which companies are approved for a license. Cointelegraph reported in December 2022 that the MAS had knocked-back approvals for over 100 licenses from companies who had applied.In January cryptocurrency providers were barred from advertising their services in public areas such as public transportation which extended to public websites as well as print, broadcast and social media.MAS is extending its ability to police crypto businesses too, in April the regulator passed new requirements for firms to obtain a license and be subject to Anti-Money Laundering and Combating the Financing of Terrorism requirements if they wanted to provide services outside of the country.Related: Singapore to explore digital asset tokenization on public chainsMany crypto businesses were set up in Singapore due to both its low taxes and the perception that the city-state was one of the more crypto-friendly but the regulatory tightening suggests that is changing as the country focuses on its Central Bank Digital Currency (CBDC).On June 21 payment systems provider, the Mojaloop Foundation opened a CBDC Center of Excellence (COE) in Singapore which sees MAS on its Working Group and Mohanty as a board advisor.With the opening of the COE Mohanty thinks a state-backed alternative cryptocurrency could be launched within three years.The COE is aimed at reducing costs and inefficiencies of payment platforms and cross-border payments, Mohanty said he welcomed the move as a “step forward into the future of financial services”.

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US lawmaker lays out case for a digital dollar

Connecticut House of Representatives member Jim Himes has released a proposal aiming to start a dialogue on the United States potentially launching a central bank digital currency, or CBDC.In a white paper released on Wednesday, Himes urged Congress to begin exploring the rollout of a digital dollar issued by the Federal Reserve to prevent the government from falling behind in innovations in financial technology. According to the U.S. lawmaker, a CBDC “should not be thought of as replacing legacy payment systems and currencies but as an additional alternative for consumers and businesses.”The white paper laid out a proposal in which a CBDC could present concerns over transparency, security and privacy when compared with fiat currency. Himes added that any regulatory framework on CBDCs enacted by Congress should include “strong user identification processes that require intermediaries to certify the identity of wallet holders,” with the Federal Reserve and “participating commercial entities” establishing guidance. “The longer the United States government waits to embrace this innovation, the further we fall behind both foreign governments and the private sector,” said Himes. “It is time for Congress to consider and move forward with legislation that would authorize a U.S. CBDC.”Source: CBDC white paper, Representative Jim Himes.Different agencies and departments within the U.S. government have explored the possible effects of a digital dollar in the event officials decide to launch one. In May, the Fed released a report concluding that “monetary policy implementation from a retail CBDC are highly dependent on the initial conditions of the Federal Reserve’s balance sheet.” Related: Democrat division over crypto isn’t all bad news for regulationAmong lawmakers in the United States, Himes has often pushed for congressional action on cryptocurrencies — specifically in regard to the technology being used to check Russia’s potential to evade sanctions — and introduced a section of a bill that many criticized as giving the Treasury Secretary unchecked power over certain crypto transactions. Minnesota Representative Tom Emmer also introduced a bill in January aimed at preventing the Fed from acting as a retail bank in the potential issuance of a digital dollar, suggesting lawmakers have not yet reached a consensus on a U.S. CBDC.

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Qatar Central Bank in ‘foundation stage‘ of launching digital currency

The 2.8-million nation of Qatar is going to join a growing range of countries, experimenting with the central bank digital currency (CBDC) concept. The Qatar Central Bank (QCB) is currently “in the foundation stage” of issuing its digital currency. On June 21, during the “Inflation Test” session at the Qatar Economic Forum, QCB Governor Sheikh Bandar bin Mohammed bin Saoud Al Thani revealed that the bank is working to find technological solutions for its CBDC. Right now the project is in its early stage, Al Thani specified:“Many central banks are now considering to issue CBDC, and we are not an exception to that. But we are still in foundation stage. We are evaluating the pros and cons of issuing CBDC and to find the proper and the right technology and platform to issue our CBDC.”“Currently, crypto are a technology innovation. It might take us to new era of fast, cheap, and more accessible financial services. However, those crypto assets which are not underlined by monetary authority might be less credible,” he added.First reports about the QCB exploring the possibility of CBDCs surfaced in March 2022. Back then, the head of the fintech section at QCB, Alanood Abdullah Al Muftah, disclosed that the bank is researching the concept due to the global trend. Related: ‘CBDCs are the natural evolution,’ says HyperLedger director BarbosaAt the moment, more than 100 countries globally have expressed their interest and/or started to research and develop CBDCs. Qatar’s main competitor in the Gulf region, the United Arab Emirates, launched its CBDC track as a part of its 2023–2026 tech strategy back in 2021. In the same year, it announced a joint project of cross-border CBDC payments with the central banks of Thailand, Hong Kong and China, as well as the Bank of International Settlements.

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BIS compares projects to transfer central bank digital currencies across borders

The Bank of International Settlements (BIS) Innovation Hub released a report Tuesday looking at four projects that examined wholesale central bank digital currency (CBDC) transfers across borders. The projects demonstrated the technical feasibility of the transfers, the BIS found, but practical and policy issues remain outstanding. The report considered the Jura project involving the central banks of Switzerland and France. Project Inthanon- LionRock2 and the ongoing mBridge project, involving currencies in Asia and the Middle East, were also examined, as was Project Dunbar, a joint effort of Australian, Malaysian, Singaporean and South African banking authorities. The projects looked at both cross-border payment, where the payer and a payee are residents of different jurisdictions and payment is made in the currency of the payer’s jurisdiction or in another currency, and offshore payments, where payment takes place take place between two institutions, neither of which is resident in the jurisdiction in which the payment is made, although the payment is typically made in the currency of that jurisdiction. All transfers used payment versus payment protection, where transfer in one currency is not finalized until a transaction in another currency takes place. Both intraday transfers and transfers that remained on the platform indefinitely were modeled. They used common platforms, although one project used a common platform with individual subnetworks. All the projects successfully demonstrated the feasibility of CBDC transfers. They showed that the use of smart contracts to automate rule enforcement lowers the costs involved in the transfers. The lack of intermediaries lowered the cost of transfers, with transaction being recorded in a single ledger and real-time balances being fully visible. At the same time, the project platforms were able to maintain differing access policies. Related: BIS: 90% of Central Banks are researching the utility of CBDCsOutstanding questions include how distributed ledger technology platforms will interact with existing systems, what challenges scalability presents and how resilience and security can be guaranteed. In addition, robust legal and governance frameworks will have to be implemented and the economic implications of a multiple CBDC system have to be understood, the report states.

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Bank of Israel experiments with central bank digital currency smart contracts and privacy

On Monday, the Bank of Israel released the results of a lab experiment that examined user privacy and the use of smart contracts in payments. This was the central bank’s first technological experiment with a central bank digital currency (CBDC).The first stage of the experiment modeled the sale of a car within a two-tier system with an intermediary payment service provider. The bank said that the service provider completed Know Your Customer (KYC)/Anti-Money Laundering (AML) checks and provided the necessary blockchain addresses. A nonfungible token (NFT) was issued to show ownership of the car in the absence of a licensing authority to effect the transfer. A smart contract exchanged the seller’s NFT and the buyer’s money, with the seller retaining the right to cancel the transaction if the conditions on it, such as the price of the car, were not met.The experiment drew attention to two questions. The first was the amount of money held in digital form. To avoid bank disintermediation — massive withdrawal of traditional shekels and their conversion to digital form, a daily limit was suggested that could be written into the smart contract. The second question concerned the smart contract, itself. To reduce the chances of intentional or unintentional misuse of smart contracts, it was suggested that the ability to write smart contracts on the blockchain be limited to the payment service provider, but the extent of supervision required in that case remained undecided.The first stage of the experiment also highlighted the need to establish identity so that KYC/AML could be conducted through a centralized database. In the second stage, private digital shekels and ordinary digital shekels were created on blockchain infrastructure in a zero-knowledge-proof environment to examine limited privacy based on eCash technology in a variety of circumstances. Besides purely technical issues, it was noted that the level of privacy digital shekel users will be a policy issue. It likely falls somewhere between the complete anonymity of cash and the lack of privacy characteristic of current electronic money transfers. Israel has been considering the issuance of a CBDC since 2017. It conducted a pilot test in 2021.

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BIS: 90% of Central Banks are researching the utility of CBDCs

In a new annual economic report published by the Bank of International Settlements (BIS), the financial institution revealed that approximately 90% of central banks worldwide are investigating the feasibility of adopting central bank digital currencies, or CBDCs.The BIS report highlighted the ability of current sovereign fiat money to provide (relative) price stability and public oversight while criticizing crypto’s inability to perform “basic fundamental functions of money” and their opacity with regards to accountability to the general public. However, the report did highlight crypto’s programmable nature as well as the borderless elements of decentralized finance (DeFi) as potential benefits that would make a case for integration into CBDCs. There are currently three live retail CBDCs with 28 pilots. The digital yuan issued by the People’s Bank of China currently holds the dominant position with 261 million users. In addition, over 60 jurisdictions have fast retail payment systems.In making a case for the use of centralized digital assets, BIS cited recent adverse developments in the DeFi sector. One such example in the report is the implosion of Terra (LUNA) — now renamed Terra Classic (LUNC) — and Terra USD algorithmic stablecoin. Next, BIS went on to highlight the limited scalability of certain blockchains, such as Ethereum (ETH), causing network congestion and thereby sharp increases in transaction fees.It also raised the question of the feasibility of layer-1 solutions due to the significant fragmentation of such blockchains to address such drawbacks. Finally, the report pointed to a record amount of cryptocurrency hacks in the past year as part of digital assets’ inherent safety risks.

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ECB may cap digital euro at 1.5T tokens — Executive board member

Fabio Panetta, an executive board member of the European Central Bank, or ECB, proposed the central bank limit the total holdings of a digital euro in an effort to prevent the digital currency from being used as a form of investment.In a Wednesday speech for the Committee on Economic and Monetary Affairs of the European Parliament, Panetta hinted the ECB could cap the number of digital euros between 1 and 1.5 trillion tokens. The proposed limit would be part of an effort aiming to disincentivize residents from HODLing tokens as an investment like crypto assets, with “with larger holdings subject to less attractive rates.” “Our preliminary analyses indicate that keeping total digital euro holdings between one trillion and one and a half trillion euro would avoid negative effects for the financial system and monetary policy,” said Panetta. “This amount would be comparable with the current holdings of banknotes in circulation. As the population of the euro area is currently around 340 million, this would allow for holdings of around 3,000 to 4,000 digital euro per capita.”You can watch Executive Board member Fabio Panetta discussing the ongoing work on a digital euro at the European Parliament’s Committee on Economic and Monetary Affairs @EP_Economics https://t.co/98ggEHbwLg https://t.co/GZxn1ejqMe— European Central Bank (@ecb) June 15, 2022Panetta also reiterated that companies in the private sector would likely need to coordinate with public officials for an effective rollout of a digital euro. He has previously suggested the importance of the CBDC being accepted in both physical and online stores and allowing easy person-to-person payments.Related: ECB, Eurosystem begins experimental prototyping of digital euro customer interfaceThe ECB announced in July 2021 that it had launched a two-year investigation phase for the CBDC, with a possible release in 2026. In May, the central bank released a working paper suggesting that a “CBDC with anonymity” may be a preferable option when compared with traditional digital payments, but many in the EU are still opposed to a digital euro.

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Atlantic Council looks at how to maintain central bank digital currency cybersecurity

The U.S. thinktank Atlantic Council released a report Wednesday on cybersecurity issues related to central bank digital currencies (CBDC). The authors provide a generalized discussion of CBDC security, but with a clear focus on the United States and issues specific to it.They determined that the security risks presented by a CBDC depend heavily on its design, with performance, security and privacy being balanced variously in different designs. The report looked at six design options, only three of which are being considered or deployed in real life. Privacy was identified as the main risk from a CBDC for consumers. In some designs, a CBDC could store a record of user activity and transactions, leading to the risk not only of thetheft of funds but also the theft of users’ personal information. The report says that:“A CBDC could contain large volumes of personally identifiable information ranging from what prescription drugs you buy or where you travel each day.”Reduced regulatory oversight was seen as a risk from the introduction of a CBDC of any type as well. Nonetheless, increased privacy can enhance security, the report said, while still providing “some level” of regulation. The Fourth Amendment to the U.S. Constitution, protecting against unreasonable search and seizure, should apply to the CBDC ledger, the report noted, forcing prosecutors to obtain a court-issued warrant before accessing it. Related: ‘CBDCs are the natural evolution,’ says HyperLedger director BarbosaThe report provided a range of recommendations for the design of a CBDC. It emphasized that the current system of wholesale and retail payment systems faces significant and complex risks, many of which are the same as a CBDC would face and recommended using existing security systems to safeguard CBDCs when possible.The fast recovery of payment volumes on Fedwire, the U.S. Federal Reserve’s domestic funds transfer system, after the attacks on September 11, 2001, which knocked out critical infrastructure, was cited as evidence of the system’s resilience. The hacking of the Bangladesh Bank in 2016 was held up as an example of the vulnerability of the public-private wholesale payment system as a whole. The report also summarized the 20 pieces of CBDC-related legislation now before the U.S. Congress.

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Consensus 2022: Web3, unpacking regulations, and optimism for crypto’s future

“Everything is bigger in Texas” proved to be true during Consensus 2022. The crypto conference took place June 9–12 in Austin, Texas, this year, attracting 17,000 people from across the globe, despite the 100-degree plus weather. According to the event sponsors, Consensus 2018, which was held at the Hilton Hotel in New York, had previously drawn in almost 9,000 attendees. Caitlin Long, CEO of Custodia — the Wyoming-based digital asset bank — told Cointelegraph that the event this year speaks volumes. “New York has sent a lot of this industry fleeing to places like Austin, Wyoming and Miami. It will be interesting to see if New York makes a comeback.”Aside from its new location, current market conditions were another defining factor of the event. However, attendees remained optimistic about the crypto ecosystem as a whole. In general, new projects and the rise of Web3 were the main discussion points rather than cryptocurrency prices. Ray Youssef, founder and CEO of Paxful — a peer-to-peer cryptocurrency marketplace — told Cointelegraph that crypto winters allow for building phases to start, which he fully supports. “We are now seeing projects build platforms that are real and empowering.”Building the crypto ecosystem in a bear marketTo Youssef’s point, Web3 and new tools to advance crypto ecosystems were hot topics of discussion. For example, Meltem Demirors, chief strategy officer of CoinShares — a digital asset investment firm — told Cointelegraph that despite the bear market, she has seen an increase in people interested in different facets of the crypto industry:“There are different niches and pockets of crypto I’m now seeing, some of which I haven’t even heard of. For example, the STEPN group is here, which is a whole move-to-earn movement. The music NFT and fashion NFT scene is also big here. These are newer communities I’ve read about and have engaged with, but seeing them congregate and host their own events has been really fun.”Demirors gave a keynote at the event on cults and how the crypto community is currently creating shared identity, belief systems and lifestyle rituals around emerging projects. “Cults usually have a negative connotation, but there is a massive crisis of meaning in our world today. People no longer focus on their occupation, religion or nationality. Crypto is filling this interesting role, bringing together people through memes, capitalism and community values,” she explained. As such, Demirors noted that she believes “crypto cults” are attracting many people because it provides a sense of purpose, along with capital. “There is an interesting convergence happening,” she said.While the crypto space continues to attract more participants, Staci Warden, CEO of the Algorand Foundation, told Cointelegraph that Alogrand views this crypto winter as an opportunity for building. “We think that there will be some shakeout in the industry and we are ready to innovate,” she remarked. Specifically, Warden explained that one area the Algorand community is focused on is what Web3 means for financial inclusion. “With Web2, everything went back to huge platforms, but with Web3, creators and contributors receive incentives and benefits for their participation.” With the rise of Web3 on the horizon, Warden shared that Algorand is “laser focused on real world use cases of financial inclusion and the monetization of creators for the work they do.”Web3 is also impacting a number of mainstream industries such as fashion and the creator economy. Shedding light on this, Justin Banon, co-founder of the Boson Protocol — a decentralized network for commerce — told Cointelegraph that last year, the crypto sector witnessed the nonfungible token (NFT) craze, which has prompted the fashion industry’s participation. “Physical fashion isn’t going away, but digital is arriving. It’s become obvious that the two will combine and become facets of the same thing,” he said. Banon also mentioned that a majority of the world’s population will undoubtedly spend more time in the digital world, which is why he believes there will be a need for digital fashion. “This will allow us to identify and differentiate ourselves,” he said. Regarding the creator economy, Solo Ceesay, co-founder of Calaxy — an open social marketplace for creators — told Cointelegraph that Calaxy recently raised $26 million in strategic funding to expand its operations and development efforts.Cointelegraph interviewing Solo Ceesay (left) and Spencer Dinwiddie (right) of Calaxy at Consensus 2022. Source: Rachel WolfsonWhile the emergence and growth of Web3-focused projects are notable, it’s also important to point out that current market conditions have been challenging for other key players. Peter Wall, CEO of Argo Blockchain — a cryptocurrency mining company — told Cointelegraph that many Bitcoin miners raised equity in 2021, but this has become difficult for some, given the bear market. “There are only two ways for miners to raise capital now, which is either through debt or by selling Bitcoin,” he said. Although this may be, Wall elaborated that only miners with a reputable track record will receive loans. “They need to be able to execute with clear plans, while not being over committed to machine purchases and bills they can’t pay.”Crypto’s regulatory landscape in the United StatesRegulations were also heavily discussed at the conference. This shouldn’t come as a surprise, as a number of key regulatory events took place leading up to the event. For example, the bipartisan crypto bill, also known as the “Responsible Financial Innovation Act,” was introduced in the United States Senate on June 7, 2022. According to a statement, the bipartisan bill sponsored by senators Cynthia Lummis of Wyoming and Kirsten Gillibrand of New York, “addresses CFTC and SEC jurisdiction, stablecoin regulation, banking, tax treatment of digital assets, and interagency coordination.”Senator Pat Toomey, the ranking member of the Senate Banking Committee, told Cointelegraph that he thinks the bipartisan bill is “terrific,” further noting that the bill contains modest differences in how stablecoins are treated compared with his stablecoin approach, which was drafted in April this year. Toomey added that while he has not released a bill yet, there are “bridgeable differences” between his draft and the legislation from Lummis and Gillibrand:“Kirsten Gillibrand said on our panel that we can bridge those differences on some of the things I said, but it’s also very constructive to have a Democrat and Republican senator introducing a pretty comprehensive bill that sensibly creates a regulatory framework that is meant to allow this space to thrive. From that point of view, I think it’s very constructive.”Echoing Toomey, Long mentioned that the bipartisan bill is an important advancement for the crypto sector, stating, “This is the bill to watch in Washington. There are now 50 different crypto bills that have been introduced in Congress and there is only one that is bipartisan sponsored by the powerful senator from New York State, along with the powerful senator on senate banking from Wyoming, which is the state leading digital assets. That is quite a combination.”Long added that stablecoin regulations and central bank digital currencies (CBDCs) will be major topics of discussion this year. For instance, although President Biden released an executive order in March 2022 calling for the research and development of a potential U.S. central bank digital currency, Long remarked that she does not believe the U.S. will issue a CBDC. “The Federal Reserve will put out the FedNow Service by the end of this year, which is only six months away. However, no rules have been revealed yet, so we don’t know what this will look like.”Moreover, Long predicts that stablecoins will be a main focus for regulators, pointing out that Wyoming’s special purpose depository regime falls into this category, alongside The New York State Department of Financial Services (DFS) regulatory guidance for U.S. dollar-backed stablecoins issued by DFS-regulated entities. Yet, Long explained that “it will be a couple of years before we realistically see what happens in terms of a law that actually passes” regarding stablecoins. She further remarked that regulators have had the opportunity to create regulations around stablecoins but have yet to act. She said:“Regulators have sat on legitimate applications of parties that have sought permission, while the scams have proliferated in this industry. It’s tough, but I firmly believe the regulators could have acted sooner. A lot of people wouldn’t have been hurt if they had done so.”Cointelegraph meeting with Senator Pat Toomey at Consensus 2022. Source: Rachel WolfsonTo Long’s point, Toomey said that he thinks there is now pressure and momentum to pass stablecoin legislation. “U.S Secretary of the Treasury Janet Yellen said in front of the banking committee that we should do it this year and I think that is realistic,” said Toomey. He added that the pressure has become greater due to the recent collapse of the Terra ecosystem.“I think it influences legislation in the sense that it has drawn attention to the crypto space, and it’s a wake up call to the federal government. My own view is that algorithmic stablecoins should be treated separately from fiat/asset backed stablecoins,” he said, adding, “But let’s be clear: Terra was very large, and when something that large can collapse, the natural inclination of a regulator is to look out across the field to see what other similar instruments and products are there, and the dangers that may arise.”Optimism reignsGiven the current state of cryptocurrency markets, it’s notable that many ecosystem participants remained optimistic about the future. In particular, Austin’s cryptocurrency community appears to be thriving, as it has become a hot spot for crypto mining companies and a number of Web3 projects.Patrick Stanley, core contributor to City Coins — thecryptocurrency project that has been implemented in New York State and Miami — told Cointelegraph that AustinCoin (ATX) can be activated at any time, noting that there is a group currently working on a proposal for getting new CityCoins up and running. “We want to be more deliberate about launching AustinCoin. We already have people on the ground in Austin, we have the capital, and there is clear commitment. We just want to ensure all of this before activating AustinCoin.” Stanley added that Austin Mayor Steve Adler is a “cryptocurrency progressive,” noting that he understands that CityCoins leaves less of a footprint than having big tech companies move to Austin. “CityCoins is like getting the tax revenue of a large company without the footprint and real estate going up. This has been very compelling to Mayor Adler,” he shared.Demirors also pointed out that she is excited about the advancement of crypto infrastructures, such as new data centers, semiconductors and the overall “plumbing” that makes cryptocurrency and any technology function properly. “We need to make sure the U.S. is a friendly jurisdiction for people to develop not only software, but also hardware to deploy at scale,” she said. While Demirors recognizes that most legislation currently isn’t being drafted around this aspect, she is hopeful that Texas and other states continue to take a welcoming approach to initiatives such as mining. Demirors also noted that the right to consumer and financial privacy isn’t being considered in crypto regulations, remarking that most of these bills want more financial surveillance. “I think as an industry, it’s important for us to push back on that, particularly in a world where CBDCs are being explored.”Finally, it’s important to point out that the crypto industry is continuing to bring on key players to help with advancements. For example, Grayscale Investments recently hired Donald B. Verrilli, a former U.S. Solicitor General, to join the firm to help push for a spot Bitcoin exchange-traded fund (ETF). Verrilli mentioned during a press conference at Consensus last week that he is trying to take public policy and move it in a constructive direction.As such, Verrilli aims to convince the U.S. Securities and Exchange Commission (SEC) to convert Grayscale’s Bitcoin Trust (GBTC) into a spot-based ETF. In order to accomplish this, Verrilli explained that it’s “arbitrary and capricious” to treat cases that are alike in a different manner, in which he referenced the SEC’s approval of a Bitcoin futures ETF, but not a Bitcoin-spot ETF. “It seems like this is a common sense point. I am new to this, but looking at it so far, it’s very hard to see what argument there could be for treating these things differently.”

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