Wholesale CBDC Opportunity Says Fed Governor Bowman; Stablecoin Hearing Today

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CBDC – The Fed

Yesterday, Federal Reserve Governor Michelle Bowman commented “on the evolution of the money and payments landscape” including central bank digital currencies (CBDCs) at Georgetown University in Washington, DC.

She shared specific questions on what Congress should be asking and concluded: “From my perspective, there could be some promise for wholesale CBDCs in the future for settlement of certain financial market transactions and processing international payments.” But the “direct access,” consumer-level digital dollar (CBDC) with its privacy risks among concerns seemed “difficult to imagine,” she said. Read her speech. Bowman is a Republican.

CBDC – Israel

The Bank of Israel outlined on Monday potential scenarios for a CBDC of its own and known as “a digital shekel.” In a statement, the Bank explained, “A decision to issue a CBDC by the US or the European Union, or by a significant number of other developed economies, would be an important factor to the issuance decision in Israel. The probability of such a development in the next few years is significant.” Read the statement.

more tips:

Potential Scenarios for Deciding to Issue a Digital Shekel (PDF) – Bank of Israel

Future payment methods > Digital Shekel (CBDC) – Bank of Israel

stablecoins – today’s hearing

The Subcommittee on Digital Assets, Financial Technology and Inclusion led by Chair Rep. French Hill (R, AR) and Ranking Member Rep. Stephen Lynch (D, MA) will meet today and roll out the case for the new stablecoin bill from the House Financial Services Committee.

The hearing titled, “Understanding Stablecoins’ Role in Payments and the Need for Legislation” begins at 10:00 AM in the Rayburn House Office Building in DC.

Live webcast and agenda will be here.

Things to watch for:

The extent of Democratic support: will crypto critics such as Rep. Brad Sherman (D, CA), who is on the Digital Assets Subcommittee, support this regulation? Not to be lost here is that this legislation was originally shepherded, in part, by current HFS Ranking Member Rep. Maxine Waters (D, CA) when she was chair of HFS. Current Chair Patrick McHenry  (R, NC) was her partner on the bill when he was Ranking Member in the previous Congress.

Republicans butting heads with each other at the crossroads of stablecoins and CBDCs where “full reserve” stablecoins could potentially have their reserves deposited at the Fed for maximum safety and soundness. (Hear more from Circle CEO Jeremy Allaire on a Bankless podcast in March.) Republicans are generally anti-CBDC seeing government intrusion into private lives, but also pro-digital assets.

Given yesterday’s criticism by SEC Chair Gensler at the HFS’ SEC Oversight hearing around Circle’s USDC stablecoin de-pegging in what he called “crypto banks”, the Fed backstop would seem to overcome Gensler’s concerns.

US Treasury’s involvement: It will be interesting to learn about the involvement of the Biden Administration in the creation of the bill. The President’s pen gives final approval, after all.

stablecoins – Senator Brown

CoinDesk’s Nikhilesh De reported in his “State of Crypto” newsletter yesterday that in asking for comment on the stablecoin bill, a spokesperson for Senate Banking Chair Senator Sherrod Brown (D, OH) provided a statement saying that “stablecoins today ‘put people’s money and the financial system at risk.'”

The statement continued, “[Stablecoins are] not being used for payments – they’re being used for speculation. Senator Brown is continuing to look carefully at all the different approaches his colleagues have put forward and talk to the regulators. He is committed to putting consumers and the safety and soundness of our financial system first.”

The statement echoes the view of one of Chair Brown’s past Senate Banking witnesses, American University professor Hilary Allen, whose tweet thread over the weekend began, “So the HFSC stablecoin bill dropped. TL;DR, it won’t fix problems with stablecoins (which aren’t used for payments anyway), but it will extend govt safety net to more firms.”

With a point-of-view like Chair Brown’s, is the ratification of a stablecoin bill possible in the Democratically-controlled Senate?

on Coinbase leaving U.S.

Appearing during London’s FinTech week, Coinbase CEO Brian Armstrong said in an interview with former U.K. Chancellor George Osbourne that it’s not beyond the realm of possibilities that his company de-emphasizes the United States market. “I think if a number of years go by where we don’t see regulatory clarity around us…  we may have to consider investing more elsewhere in the world. Anything including, you know, relocating” said Armstrong according to CNBC.

Armstrong reiterated to CNBC that his company will continue to wage a legal war with the SEC for “years” if necessary and said, “The regulators’ job is to publish a clear rulebook and allow that market to be safe but also to flourish in that country and I think they’ve completely abdicated responsibility.” Read more.

use case: sneaker NFTs

Collectibles reached the world of sneakers long ago. Now, Nike is taking it a step further with an non-fungible token version of its sneakers. Can your virtual life go without? The company has invested in an NFT platform called .SWOOSH and promises that two new NFT versions of shoes will not only delight but “unlock utilities in the coming months for special access to physical products and experiences.’ Read the release. Big brands continue to be attracted to the allure of NFTs and the enormous and youthful community which lives online.

See Tiffany’s, Gucci, Dolce and Gabanna, Burberry or Louis Vuitton for starters.

offshore: funding in Africa

A new report produced by Crypto Valley Venture Capital in Switzerland claims that venture financing of blockchain businesses in Africa has grown 5x in a year.

FinTech publication Finbold observes, “Blockchain venture funding in Africa amounted to $89.6 million in 2021, only to soar to $474 million (or nearly 430%) in 2022, being the only region to record a triple-digit percentage increase in its share of the total global blockchain venture dollars raised.” Read the article.

you’re hired

Alexander Hamilton’s favorite bank, BNY Mellon, is beefing up its digital assets team in spite of crypto winter and a regulatory “krakendown.” The Block reports the hiring at BNY Mellon of “former Zodia Custody Chief Executive Officer Maxime de Guillebon as head of digital asset product. The Standard Chartered veteran spent 17 years working at the investment bank’s various units.” Read more.

And, read a short blog post about the hire on LinkedIn by Caroline Butler, CEO Custody & Digital Assets at BNY Mellon.

still more tips

As crypto thaws, regulatory questions may drive investment overseas – The Hill

How does blockchain fit into today’s enterprise? – Software Development Times

Hashgraph funds enterprise DLT projects. How decentralized is Hedera? – Ledger Insights

Intel just killed its crypto chip after less than a year – The Verge

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