This looks like a very positive step forward in providing regulatory clarity for the UK private sector on the use of digital money and innovations with it, but the 'devil is in the detail' which no doubt will come out over the next few weeks as everyone analyses these papers.
There is a lot to chew on - the FCA's discussion paper is 110 pages, the BoE's looks almost as long and the CEO's letter is very dense - I expect CEO's, or at least their strategy teams will need to read it multiple times to understand the implications.
A key immediate observation is banks may issue tokenised deposits but are prevented from issuing stablecoins unless branded under a different entity - this is fair enough, but a pound is a pound and I expect branding stablecoins separately may cause confusion e.g. US stablecoins include USDT, USDC, TUSD, BUSD, PYUSD, USDP to name a few!
06 Nov 2023 12:02 Read comment
this is an interesting product and I am sure we will see more tokenisation of real-world assets including company shares from financial institutions - but how is this different to a gold ETF? and how is a token holder guaranteed that the gold backing their token has no "double duty" as collateral for something else?
02 Nov 2023 13:40 Read comment
Nat West share price down 11% today and 40% so far this year
27 Oct 2023 11:45 Read comment
Does the SEC really understand what AI is, its capabilities and impact? Like most pronouncements on AI this story lacks any concrete evidence and robust reasoning, just fear-mongering about what might happen, which equally, given the lack of arguments presented, might never happen.
21 Oct 2023 23:22 Read comment
It's surprising that this is open in the public domain. Keeping it discreet would have allowed Modulr to work through ist issues with the FCA and customers, but making it public must make life for them ten times as difficult.
21 Oct 2023 23:12 Read comment
This is an admission of ignorance.
Talk to any senior exec responsible for an ISO20022 project or any pundit extolling its virtues and you are led to believe that adopting ISO20022 is a silver bullet for interoperability and global standardisation. They are unaware of details such as message formats, tooling, rules and technology protocols (e.g. XML) and their simplistic knowledge is exposed. ISO20022 had its genesis in batch processing in the early 2000s. It has taken over 20 years for execs to catch up, meanwhile the market has moved on with open API standards, blockchain and instant messaging. ISO20022 is a good basis for defining and modelling payments data and securities data but as this proposal from the BIS suggests, standardisation is far from a given and requires a lot of effort and rule-making.
21 Oct 2023 22:59 Read comment
At a recent web3 event there were some serious misgivings about the FCA approach and the cryptoasset promotion regime:
- any page on any website that mentions any cryptoasset can potentially run foul of the promotion regime - a cryptoasset trade by an organisation breaching the promotion regime may be treated as a financial crime, implicating all the organisation's service providers including accountants, lawyers etc - the promotion regime goes far beyond any other jurisdiction's crypto regulations such as MiCA in Europe and may drive crypto business away from the UK
These are just points I heard from lawyers in the room, so check their accuracy, but there was a definite downbeat mood, nervousness and some bewilderment with a regulatory regime that is at odds with the UK government's vision for the UK to be a global hub for cryptoasset technology and investment.
09 Oct 2023 14:48 Read comment
Being able to see your bank balance when making a debit card payment is a great UX and will be immensely popular with consumers - it will be interesting to see if it makes any difference to unauthorised overdraft fee income, bounced direct debit debit income etc for banks which is why in the past they have been reluctant to provide such capability. My expectation is it will be a net benefit for banks in terms of customer retention, acquisition and engagement, so a win-win for banks and consumers (and Apple of course).
28 Sep 2023 10:44 Read comment
It would be logical for Carstens to make this call if the BIS were promoting wholesale CBDC - after all, their focus is the settlement of interbank liquidity flows which could benefit signfiicantly from wholesale CBDCs used programmatically to optimise liquidity and minimise settlement risks across borders. However, he is arguing for retail CBDCs, which the BIS seems to be trying to coordinate and progress in central bank inititiatives around the world. The BIS and central banks have next to zero experience of retail beyond issuing notes and coins (distributed by commercial banks) and it shows.
To state 'The public rightly demands forms of money that meet their needs and expectations.' is sophistry as there is no compelling evidence of public demand anywhere for CBDCs - take up of retail CBDCs launched so far such as in Nigeria or the Bahamas has been lack lustre and there is considerable public opposition to them in countries such as the UK and USA.
It will be interesting to see how CBDCs develop, but with retail CBDCs driven by little more than international group-think my bet is it will be wholesale CBDCs driven by market demand that will succeed.
27 Sep 2023 19:01 Read comment
"the main reason for establishing a CBDC is demand from the public" - in which case all CBDC projects should stop immediately as there is no demand from the public. Most people have no idea what a CBDC is, or how it is different to cash or bank deposits, therefore to imply there is public demand is wishful thinking.
In fact, where the public is aware of CBDCs there is considerable demand to prevent the introduction of a CBDC - witness the 50,000 responses to the BoE consultation on a CBDC, the majority expressing deep concerns with the project.
19 Sep 2023 16:26 Read comment
EBAday
Vicente QuesadaCo-founder at Gauss Trading
Alexander Dunaevco-founder at ID Finance
Richard PappCo-founder at FLIT Invest
Dmitry PanovCo-founder at Whillet - BaaS for embedded finance
Farnoush MirmoeiniCo-founder at KYC Hub
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