Interbank market news scan: Jamaica closer to testing central bank digital currencies; Bitcoin is the world’s 3rd largest currency in total value …

The Strategic Takeaway: Governments of varying size from the United States to Jamaica are ready to compete with the threat alternative digital currencies like bitcoin poses to nation-state payment systems. Traders and investors should keep their eyes on the long term viability of cryptocurrencies in the current political environment. Even as larger financial institutions consider bitcoin as a hedge against declines in other assets including the dollar and consumers see more opportunities to use cryptocurrencies to purchase goods and services, nation-states will only tolerate the threat to their payment systems for so long.

Cryptocurrency issuers and the exchanges that support them will have to make the political and legal arguments that support their incorporation into a nation-state’s payment system. Central bank digital currencies have the potential of offering a faster payments system for the average consumer. Claims of decentralization, anonymity, and democratization of finance may fall on deaf ears if central bank digital currencies offer the average consumer a significant improvement over what the consumer is comfortable with.

In the meantime, cryptocurrency stakeholders should be prepared for closer regulatory scrutiny including threats of stringent regulation especially if there are either mass losses in cryptocurrency valuations or if investors are subjected to massive and/or frequent amounts of fraud.

Cryptocurrencies. Cryptocurrencies have emerged as a financial instrument over the last year, but have reached new heights over the last quarter, becoming financial equality tools and placing power back in the hands of investors. How cryptomarkets revolutionised financial freedom (raconteur.net)

Stablecoins. Thailand’s central bank said it will issue regulations on asset-backed stablecoins this year after warning against the illegal use of a new baht-denominated stablecoin that was created outside the country. Thai Central Bank to Regulate Stablecoins This Year | Nasdaq

Cryptocurrencies. Now the third-largest cryptocurrency by market cap, Cardano (CCC:ADA-USD) is alive with buzz in the crypto community. Indeed, Cardano is one of those alt coins that gets less attention these days, mainly due to the sheer size of rivals Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD) 3 Reasons Why Cardano Has Outperformed So Impressively (yahoo.com)

Central Bank Digital Currency. Most of global payments are already digital, yet a central bank digital currency would provide risk-free, central-bank backed money denominated in a national unit of account — like cash, though updated to the demands of a digital financial system. Here’s How a Central Bank Digital Currency Could Work (msn.com)

Central Bank Digital Currency. After quietly exploring the viability of a central bank digital currency (CBDC) for some time, Bank of Jamaica (BOJ) took the decision in May 2020, as a part of our ongoing retail payments reform, to venture into this digital innovation that is fast becoming a feature of global central banks. A primer on BOJ’s central bank digital currency (jamaicaobserver.com)

Cryptocurrency. Deutsche Bank has published a report stating that bitcoin is too important to ignore, noting that it is now the third-largest currency in terms of the total value in circulation. Deutsche Bank: Bitcoin Now 3rd Largest Currency, Too Important to Ignore – Markets and Prices Bitcoin News

Currency pair20 January 202122 March 2021Percentage change
ADA/USD *.381.18210.5
BTC/USD36,841.7058,335.0058.3
ETH/USD1,358.491,813.6833.5
LTC/USD159.13200.6526.1
Source: OANDA *Yahoo Finance

Interbank market news scan: Fed chair opines on necessity for an improved payments system and testing central bank digital currencies…

The Takeaway: Soon after issuing a statement on the fed funds rate and how warranted attention paid to rising yields should be, Federal Reserve Board chairman Jerome Powell remarked today about the need to further strengthen the global payments system with emphasis on its cross border nature. Mr Powell also provided an update on the testing of central bank digital currencies. Stakeholders in the payments system may want to pay attention to how intermediaries are treated in a central bank digital currency regime.

To see what we’re following, follow the links …

Crypto Exchanges: “Bitcoin is the most talked about cryptocurrency but Ethereum [the blockchain] has more features, including being more flexible” in its hosting of decentralized finance (DeFi) than the Bitcoin blockchain, according to Bank of America. Bank of America Sees DeFi ‘Potentially More Disruptive Than Bitcoin’ – CoinDesk

Decentralized Finance: Reputation-based lending is coming to decentralized finance (DeFi) next month with the release of Maple Finance’s “Pool Delegates” lending suite. Maple Finance Raises $1.4M for Its Reputation-Based DeFi Lending Platform (yahoo.com)

Crypto Exchanges: A number of venture capital giants have completed a financing round for Ethereum-based volatility and derivatives protocol Volmex Finance. Volatility derivatives project Volmex Finance attracts backing from VC giants (cointelegraph.com)

Crypto Prices: Bitcoin’s (BTC) price slid Thursday, retreating along with U.S. stocks and oil prices as U.S. Treasury yields touched some of the highest levels in a year. https://www.coindesk.com/market-wrap-bitcoin-loses-steam-60k-bond-yields

Yields: Rising U.S. bond yields will not hurt Asia’s emerging markets as badly as they did during the “taper tantrum” eight years ago, according to a report by S&P Global Ratings. https://www.cnbc.com/2021/03/18/asias-emerging-economies-can-withstand-rising-us-yields-says-sp.html

Central Banks: Both of the Federal Reserve and the Bank of England vowed to keep liquidity plentiful and not to taper support in the face of rising inflation until they see prolonged signs of an economic recovery. The FOMC served up a surprise with the majority of the dots flat through 2023. Both USD and GBP fell sharply after their respective central banks’ decisions before later stabilizing. Fed, BoE step back, yields push up (fxstreet.com)

Payments System: Federal Reserve chairman Jerome Powell offers remarks on improving the payments system. Closing remarks by Chair Powell at a conference hosted by the Committee on Payments and Market Infrastructures – Federal Reserve Board

Currency pairs that include top countries with foreign direct investment in the US …

The majority of foreign direct investment in the United States is held by Japan, the United Kingdom, Canada, the Netherlands, Germany, France, and Luxembourg. Since the Biden administration has taken office, the dollar-yen and dollar-euro have seen appreciation (4.9% and 1.5%, respectively), while the dollar-pound and the dollar-loonie have fallen, 2.4% and 2.3%, respectively.

Currency pair20 January 202119 March 2021Percentage change
USD/JPY103.9300108.99004.9
USD/GBP0.73450.7170-2.4
USD/CAD1.27311.2433-2.3
USD/EUR (1)0.82540.83741.5
Source: OANDA (1) The euro is the currency of France, German, and Luxembourg

18 March 2021, 9:46 pm EST

Interbank market news scan: Crypto rates fall as crypto exchanges seek more support from traditional finance platforms …

The takeaway:

Cryptocurrency exchanges are doing their best to gain increased legitimacy in the world of finance by hiring advocates with knowledge of Washington or taking their increasing valuations on to publicly traded stock exchange platforms. Meanwhile, the Federal Reserve’s decision today to maintain its fed funds rate may continue to drive more investors toward cryptocurrencies as the dollar continues to fall in value relative to other currencies. With low-rates expected through 2023, there is no end in sight for increased crypto valuations, although hiccups are expected along the way. This is not to say that crypto will maintain its hold on the digital currency space. Bitcoin, for example, is not truly anonymous, according to Digitex CEO Richard Byworth. If that is the case, does that give non-anonymous central bank digital currencies less competition in the future?

Also, cryptocurrency saw another fall in valuation as of 11:07 pm EST 17 March 2021.

To see what we’re following, follow the links …

CFTC should review crypto because it’s exploding: Baucus. https://www.bloomberg.com/news/videos/2021-03-12/cftc-should-review-crypto-because-it-s-exploding-baucus-video

Goldman, Citi lead U.S> banks plowing billions into China. https://www.bloomberg.com/news/videos/2021-03-17/goldman-citi-lead-u-s-banks-plowing-billions-into-china-video

Bitcoin may rise to $175,000 by year end. https://www.bloomberg.com/news/videos/2021-03-15/bitcoin-may-rise-to-175-000-by-year-end-diginex-ceo-video

Coinbase Global, the largest cryptocurrency exchange in the US, on Wednesday revealed that the company now has a valuation of $68 billion ahead of its planned direct listing due in large part to recent private transactions, Reuters first reported. https://markets.businessinsider.com/currencies/news/coinbase-ipo-valued-68-billion-ahead-direct-listing-bitcoin-cryptocurrency-2021-3-1030220737

Creator who sold NFT house for $500,000: “We’ll be living in an augmented reality lifestyle soon.” https://www.cnbc.com/2021/03/17/creator-of-first-nft-digital-house-krista-kim-on-augmented-reality-.html

Cryptocurrency exchange rates as of 17 March 2021 11:07 pm

BTC/USD=56,150.30 ETH/USD=1,771.60

BTC/EUR=47,097.80 ETH/EUR=1,485.99

BTC/GBP=40,364.90 ETH/GBP=1,273.55

BTC/AUD=72,505.00 ETH/AUD=2,287.61

BTC/CAD=69,904.10 ETH/CAD=2,205.55

BTC/CHF=51,975.70 ETH/CHF=1,639.89

BTC/JPY=6,124,550.00 ETH/JPY=193,236.00

BTC/CNY=365,010.00 ETH/CNY=11,516.50

Source: OANDA

18 March 2021 12:14 am EST

Interbank market news scan: Should the US be concerned about falling behind the “digital currency curve?” Bitcoin, Ethereum prices fall …

News you should be following. Follow the links …

China’s rapid development of its sovereign digital currency, the so-called digital yuan, is causing the United States to worry that it could fall behind in the race for financial technology innovation, analysts said. China digital currency: US ‘worried’ as it falls ‘behind the curve’ in race for financial innovation (koreatimes.co.kr)

Trading was muted overnight while markets await the latest views from central banks. The US Federal Reserve, the Bank of Japan and the Bank of England headline a cattle call of central banks due to deliver interest rate decisions this week. Markets stall ahead of Fed | CMC Markets

The US dollar is gaining ground on the other major currencies as the foreign exchange market reacts to rising Treasury yields. The prospect of inflation continues to dominate investors’ minds, as all the conditions appear to be in place for a massive rebound in economic activity that is likely to cause consumer prices to spike. Daily market commentary: The foreign exchange market reacts to rising Treasury yields (leaprate.com)

Despite banking services becoming increasingly digital and accessible through mobile devices, there are still 1.7 billion adults without an account at a financial institution. Although The World Bank’s 2017 report confirms some improvement in this regard, only 300 million individuals succeeded in overcoming this hurdle between 2014 and 2017. At this rate, the imbalance of financial access will remain a pressing problem for some time to come. DeFi Is the New Lemonade Stand (yahoo.com)

In 2021 the modern economic landscape is already beginning to shift. The growth of cryptocurrencies and decentralized finance (DeFi) has been a part of the discussion for years, but the reality of how it will impact securities trading is finally being realized. An increasing number of securities are now digitized, underpinned by distributed ledger technology (DLT) that provides the necessary tools that allow for faster, cheaper and ultimately more secure markets, regardless of asset type. The Rise of Digital Securities | Nasdaq

Cryptocurrency exchange rates as of 11:45 pm EST 16 March 2021 …

BTC/USD=55,332.10 ETH/USD=1,767.68

BTC/EUR=46,430.60 ETH/EUR=1,482.99

BTC/GBP=39,875.10 ETH/GBP=1,273.88

BTC/AUD=71,447.80 ETH/AUD=2,282.53

BTC/CAD=68,972.00 ETH/CAD=2,203.43

BTC/CHF=51,241.80 ETH/CHF=1,637.01

BTC/JPY=6,035,080.00 ETH/JPY=192,801.00

BTC/CNY=359,694.00 ETH/CNY=11,491.10

Source: OANDA

Interbank market news scan: Cryptocurrency exchange rates. India moves closer to banning crypto…

Crypto-foreign exchange rates …

BTC/USD=57,204.20 ETH/USD=1,771.42

BTC/EUR=47,844.90 ETH/EUR=1,481.59

BTC/GBP=41,071.20 ETH/GPB=1,271.84

BTC/AUD=73,643.60 ETH/AUD=2,280.49

BTC/CAD=71,357.70 ETH/CAD=2,209.70

BTC/CHF=53,141.60 ETH/CHF=1,645.61

BTC/JPY=6,236,150.00 ETH/JPY=193,112.00

BTC/CNY= 372,220.00 ETH/CNY=11,526.40

Source: OANDA

What are we following? Follow the links….

India will propose a law banning cryptocurrencies, fining anyone trading in the country or even holding such digital assets, a senior government official told Reuters in a potential blow to millions of investors piling into the red-hot asset class. India to Propose Cryptocurrency Ban, Penalising Miners, Traders (fxempire.com)

With the introduction of the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, India has pivoted towards a complete ban on cryptocurrencies other than sovereign cryptocurrencies; a stark departure from the traditional laissez-faire stand towards regulating cryptocurrencies. Skipping Regulation & Banning Cryptocurrency: A Lackadaisical Legislation Without Legitimate Aim? (entrepreneur.com)

Interbank market news scan: Kentucky puts crypto on the scams hit list; Bitcoin strengthens while Ethereum weakens …

Bitcoin and Ethereum exchange rates as of 10:46 pm EST, 10 March 2021 …

ETH/USD: 1802.11 BTC/USD: 55,359.60

ETH/EUR: 1514.47 BTC/EUR: 46,523.70

ETH/GBP: 1,296.95 BTC/GBP: 39,841.50

ETH/CHF: 1,675.78 BTC/CHF: 51,479.00

ETH/JPY: 195,759.00 BTC/JPY: 6,013,600.00

ETH/CNY: 11,726.50 BTC/CNY: 360,230.00

Source: OANDA

Follow the links …

These digital assets are known non-fungible tokens, or NFTs. Blockchain technology allows these items to be publicly authenticated, serving as a digital signature to certify who owns it and that it is an original work. NFTs cannot be exchanged on a like-for-like basis, as each one is unique – in contrast to fungible assets like dollars, stocks or bars of gold. Explained: Non-fungible tokens or NFTs (yahoo.com)

THE Zimbabwe Coalition on Debt and Development (Zimcodd) has rejected claims by banks that they cannot pay interest on deposits because they are not making profit, arguing domestic financial institutions are outperforming their regional counterparts. ‘Banks must pay interest on deposits’ – NewsDay Zimbabwe

Forex is one of the most enormous and liquid markets around the globe. In 2010, the forex market accounted for more than 3 trillion dollars of daily trading. But the surprising fact is that the market did not exist a century ago. Unlike the stock market, we cannot trace the roots of the forex market. Evolution of Forex to Become the Largest Financial Market | Finance Magnates

After dipping as low as $53,500, buyers have re-entered the main stage and pushed Bitcoin to $57K. There is a good chance that the benchmark cryptocurrency will head into territory above $60K. Bitcoin rushes to new highs, supported by strong demand (fxstreet.com)

The Department of Financial Institutions is reminding investors to be on the lookout for investment schemes pitched through the internet and social media. Department of Financial Institutions lists Internet, social media scams as top threats for Ky. investors – KyForward.com | KyForward.com

10 March 2021

Interbank market news scan: Will Ripple, XRP facilitate development of central bank digital currencies?

Bitcoin and Ethereum exchange rates as of 10 March 2021, 5:30 am EST

ETH/USD: 1,818.90 BTC/USD: 53,961.00

ETH/EUR: 1,530.63 BTC/EUR: 45,408.90

ETH/GBP: 1,311.22 BTC/GBP: 38,899.80

ETH/AUD: 2,365.32 BTC/AUD: 70,171.70

ETH/CHF: 1,695.32 BTC/CHF: 50,294.90

ETH/JPY: 197,890.00 BTC/JPY: 5,870,770.00

ETH/CNY: 11,848.20 BTC/CNY: 351,500.00

Source: OANDA

For what I am following, follow the links …

The Central Bank of Nigeria (CBN) has announced a scheme that seeks to boost international remittances as well as to encourage the use of official corridors when retrieving funds. The CBN’s move to incentivise recipients follows the plummeting of the country’s official remittances inflows as recipients opt for non-traditional corridors such as cryptocurrencies. Nigeria to Pay 1.2 Cents for Each Dollar Remitted to the Country to Combat Cryptocurrency Use – Emerging Markets Bitcoin News

The worldwide cryptocurrency market size is anticipated to arrive at USD 1,758.0 million by 2027, displaying a CAGR of 11.2% during the estimated time frame. The developing tendency of people in created nations towards virtual cash trade strategies will immensely affect the market during the gauge time frame. Cryptocurrency Market to Expand with Increasing Internet Penetration, says Fortune Business Insights (yahoo.com)

Banque de France, the central bank of France, has reportedly discussed XRP and Ripple for the launch of a central bank digital currency (CBDC). The central bank is planning to prefer XRP over Bitcoin and Ethereum. Bank of France, Likely to Prefer XRP over Bitcoin and Ethereum | Finance Magnates

Bitcoin’s value surpassed $1 trillion on Tuesday as the price of the cryptocurrency jumped. Bitcoin (BTC) value exceeds $1 trillion for second time (cnbc.com)

10 March 2021

Interbank market news scan: Foreign exchange and cryptocurrency rates …

As of 4:17 pm EST, these are prices for top traded currency pairs:

EUR/USD=1.1850

GBP/USD=1.3826

AUD/USD=0.7649

USD/CAD=1.2669

USD/CHF=0.9351

USD/JPY=108.8600

USD/CNY=6.5250

Source: Reuters

As of 4:30 pm EST, these are select prices for Ethereum and Bitcoin:

ETH/USD=1548.18 BTC/USD=49112.00

ETH/EUR=1299.20 BTC/EUR=41,213.70

ETH/GBP=1118.47 BTC/GBP=35,480.40

ETH/AUD=2011.80 BTC/AUD=63,818.80

ETH/CAD=1958.59 BTC/CAD=62,130.80

ETH/CHF=1439.56 BTC/CHF=45,666.20

ETH/JPY=167,662.00 BTC/JPY=5,318,610.00

ETH/CNY=10,049.70 BTC/CNY=318,798.00

Source: OANDA

8 March 2021

A problem for the US government is that in twenty years time, the dollar may be a reserve currency for the unwashed…

The current crypto play …

Bitcoin and Ethereum continued their gains this week. The BTC/USD pair has climbed 10.4% to 50,415.50 USD from its value on 1 March 2021, while the ETH/USD pair has climbed 9.6% to 1,565.26 USD over the same period. The BTC/EUR and ETH/EUR pairs also climbed 10.4% and 9.6%, respectively between 1 March and 4 March 2021. The BTC/GBP and ETH/GBP pairs have followed suit with increases of 10.2% and 9.4%, respectively.

Source: OANDA

Another example of more practical crypto use: NFTs

Rock group Kings of Leon recently announced that they are dropping a new album in the form of a non-fungible token, A non-fungible token is a type of cryptocurrency that holds assets like art, tickets, or music and operates on blockchain technology. According to an article in The Rolling Stone, music groups are exploring NFTs as a way to offset two decades of losses due in great part to streaming where consumers are gaining access to an artist’s product at next to nothing costs.

While some may view this type of cryptocurrency as nothing by coupons on steroids, I believe the ability of individuals, groups, and institutions to turn their brands into micro-economies creates a long term problem for governments. For example, as a Kings of Leon NFT comprised of intricate digital art work grows in popularity over the years, it becomes a tradeable asset with increasing gains. Not only will it be tradeable for dollars, but it will be traded for other NFTs or other digital assets issued by your “utility” platforms. Kroger, Southern Company, and Delta may accept from a resident of Atlanta a NFT in exchange for a certain amount of groceries, energy, or airline tickets.

In the future, for consumers who are denied access to private platforms where they can trade for NFTs or other digital assets, they may be stuck with the dollar as their only currency. The future problem for the US government could be that a reduced network effect resulting from a fall off in use of its payment system may find government forced to shift more of the cost burden onto poorer citizens with no access to private platforms. Will government have to redesign its purpose in order to meet a potential shift in the use of its payment systems? And if so, how should that shift look?

4 March 2021, 1:22 pm EST

Individual brands becoming their own “crypto-banks” not a far off possibility …

Data from OANDA, a brokerage, sees the dollar, euro, and pound values of Bitcoin continued their climb this week. The BTC/USD pair increased by 6.4% from 45,657.60 USD on 1 March 2021 (10:30 am EST) to today’s 48,609.70 USD. The BTC/GBP pair jumped 6.6% over the same period, from 32,761.20 GBP to 34,919.20 GBP. The BTC/EUR pair was not to be outdone with a 6.7% increase from 37,809.80 EUR to 40,353.90 EUR.

The Ethereum trade saw higher increases percentage wise. The ETH/USD came in today at 1,532.36 USD, up 7.3% from 1 March. The ETH/GBP and ETH/EUR were up 7.4% and 7.6%, respectively, over the same period.

Volatility will remain an issue for some time as the business media reports cryptocurrency as prominently a speculative play even as mainstream investment bank willingness to facilitate trade in cryptocurrency increases. What will quiet volatile moves in cryptocurrency prices is if more consumers see crypto as part of the mainstream payment system.

A recent article in Vogue sheds some light on that possibility. The article addresses up front the taint that crypto has to shake; that it is a medium for money laundering, drug trafficking, and tax evasion. But the article also points out that activity such as online gaming and the issuance of nonfungible tokens (NFT) are driving Bitcoin resurgence.

A NFT is published on an Ethereum blockchain ledger, is certifiably singular, and prevents replication by others.

The article points out that fashion is making inroads into the metaverse, the virtual world where participants interact via avatars, and following the trend where physical assets e.g., collectibles, are represented in digital form.

The takeaway that got me excited was the finding among individuals interviewed in the article that platforms and individuals are moving toward issuing their own currencies. “Cryptocurrencies are like air miles in that they can only be used within the infrastructure of specific companies, ” notes the author, Kati Chitrakorn. Firms are taking the opportunity to launch their own currencies where their inventory is limited and they provide their fans with short windows on certain purchases.

“Imagine only being able to purchase a must-have product via the brand’s coin or getting access only if you hold a certain amount of these coins”, says Mahesh Vellanki of Rally, a blockchain platform. “Brands and creators might prefer to use their own tokens to build their own economies and interact with fans on their terms.”

Another takeaway from the article is a third way for the consumer to obtain Bitcoin or other cryptocurrencies. We are familiar with the mining aspect, where as part of validating a transaction a mathematical problem is solved by a “miner” who receives Bitcoin as compensation. We are seeing a lot of buying as the second option. The third option often overlooked in mainstream media is obtaining a loyalty token on certain platforms.

In the short term I see where operating within the current jurisdictional environment places a severe limit on these platforms to grow and their currencies maximized. Large platforms such as Amazon and Facebook already start with a huge advantage as non nation-state platforms were goods and services are exchanged. For the individual sovereign, their wealth generated by their ability to leverage their brand to issue currency is limited by the taxing authority they reside under.

Question is, can the individual, as a physical asset, digitize into an alternative space and create their own jurisdiction?