Day: July 12, 2023

The Reserve Bank of India is Expanding CBDC While Dismissing Privately Issued Stablecoins

by Blockchain News

The Reserve Bank of India (RBI) is planning to increase the number of Central Bank Digital Currency (CBDC) transactions to one million per day by the end of 2023, according to Deputy Governor T Rabi Sankar. This ambitious target comes as the RBI currently records around 5,000-10,000 transactions daily with its retail CBDC, the e₹-R.

CBDCs are a type of digital or virtual currency that is issued and regulated by a country’s central bank. They represent a digital form of a country’s fiat currency and are backed by the monetary reserves of that country. CBDCs are designed to operate and function like traditional money but in a digital form, which can be used for everyday transactions, cross-border payments, and other financial operations.

The RBI’s strategy to boost CBDC usage includes leveraging the Unified Payments Interface (UPI) network. “There will be one QR code, and you can swipe the QR code using the CBDC app. If the merchant has a CBDC account, the payment will settle in the CBDC wallet. If the merchant does not have a CBDC account, then there will be an option to make payment using UPI,” Sankar explained.

Currently, 1.3 million customers and 0.3 million merchants are using the retail digital Rupee, with 13 banks offering retail CBDC. These banks have partially rolled out interoperability, allowing the QR code to be scanned using the CBDC app. Full interoperability for CBDC customers using UPI for payments is expected by the end of the month. The RBI also plans to onboard the remaining 20-25 banks to offer interoperability to CBDC customers, although this may take more time.

Sankar also highlighted the potential of CBDCs in reducing costs for cross-border transactions, which currently stand at a high 6% for small value transactions according to World Bank estimates.

In contrast to Sankar’s positive attitude toward CBDC, he warned that stablecoins pose an existential threat to policy sovereignty, particularly for countries like India. Stablecoins linked to underlying currencies, while beneficial to certain economies, could lead to the risk of dollarisation and transfer of seigniorage to private issuers, replacing the use of the rupee in the economy.

Stablecoins are a type of cryptocurrency that are designed to maintain a stable value relative to a specific asset or a pool of assets. Stablecoins can be pegged to a currency. They are often used to provide stability in the highly volatile crypto markets. Examples of these include Tether (USDT) and USD Coin (USDC), which are not issued by a central bank or government, but by private companies, thus weakening the authorities’ control over it.

Sankar suggested that a stable solution would be for every country to have its own CBDC, with a mechanism for these CBDCs to interface and transact with each other.

The RBI is also considering the anonymity aspect of CBDCs, a defining feature of the currency. However, Sankar emphasized that any decisions regarding anonymity must be legally backed and consistent with the Prevention of Money Laundering Act (PMLA).

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UK Treasury to Omit Derivatives, Unbacked Tokens from Sandbox

by Blockchain News

The United Kingdom Treasury Department has suggested in its recommendations for a digital securities sandbox that unbacked crypto assets and derivatives be removed from the scope of the project. 

In a consultation document that was released on the 11th of July, HM Treasury stated that the regulatory sandboxes that will be formed under the country’s Financial Services and Markets Act would provide the United Kingdom government with the time to change the existing laws for crypto goods if it were deemed necessary to do so. This statement was made in reference to the fact that the regulatory sandboxes will be formed under the country’s Financial Services and Markets Act.

However, according to the consultation paper, these considerations may not be taken into account when it comes to “unbacked” crypto assets, which are assets for which laws are still in the process of being formed, as well as derivatives. This is because “unbacked” crypto assets are assets for which laws are still in the process of being developed.

The U.K. Department of the Treasury has announced it will consider views and recommendations regarding its proposed digital securities sandbox until the consultation period ends in August 2023. Given the framework, it’s possible that even cryptocurrencies like Bitcoin and Ethereum may not qualify for participation in this Treasury initiative

Legislators in the United Kingdom have in the past referred to cryptocurrencies as “unbacked” and stated that they need to be categorized as a kind of gambling. They have also advocated for the classification of blockchain technology as a form of gambling.

As a direct consequence of the Financial Services and Markets Act, businesses that operate in the United Kingdom and engage in the trading of cryptocurrencies will be forced to comply with a number of particular regulations. These rules are designed to encourage the development of innovative technologies while simultaneously protecting the interests of consumers.

The Financial Conduct Authority in the United Kingdom issued a warning to firms that the framework would only allow four routes to lawfully communicate cryptoasset promotions commencing in October 2023.

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European Commission Unveils Strategy to Lead Web 4.0 and Virtual Worlds

by Blockchain News

A new strategy for Web 4.0 and virtual worlds has been unveiled by the European Commission in an effort to steer the next technological revolution and guarantee a safe, open, and welcoming online environment for individuals, organizations, and government agencies across the EU.

Web 4.0, the next generation of the internet, is expected to integrate digital and real objects and environments, enhancing interactions between humans and machines. The EU economy’s outlook beyond 2030 identifies digitalisation as a key driver, with Web 4.0 as a significant technological transition that will bring an interconnected, intelligent, and immersive world. The global virtual worlds market is projected to grow from €27 billion in 2022 to over €800 billion by 2030.

The new strategy aims to create a Web 4.0 and virtual worlds that reflect EU values and principles, where people’s rights are fully respected and European businesses can thrive. The strategy aligns with the 2030 objectives of the Digital Decade policy programme and its key pillars of digitalisation: skills, business, and public services. It also addresses the openness and global governance of virtual worlds and Web 4.0.

Key pillars of the strategy include:

  1. Empowering people and reinforcing skills: The Commission plans to promote guiding principles for virtual worlds and develop a ‘Citizen toolbox’ by the first quarter of 2024. It will also work with Member States to set up a talent pipeline and support skills development through projects funded by the Digital Europe Programme and the Creative Europe programme.

  2. Supporting a European Web 4.0 industrial ecosystem: The Commission has proposed a candidate Partnership on Virtual Worlds under Horizon Europe, starting possibly in 2025, to foster excellence in research and develop an industrial and technological roadmap for virtual worlds.

  3. Supporting societal progress and virtual public services: The Commission is launching two new public flagships, “CitiVerse”, an immersive urban environment for city planning and management, and a European Virtual Human Twin, which will replicate the human body to support clinical decisions and personal treatment.

  4. Shaping global standards for open and interoperable virtual worlds and Web 4.0: The Commission will engage with internet governance stakeholders worldwide and promote Web 4.0 standards in line with the EU’s vision and values.

The strategy builds on the work of the European Commission on virtual worlds and consultations with citizens, academia, and businesses. The Commission hosted a European Citizens’ Panel on Virtual Worlds between February and April 2023, whose recommendations have guided specific actions included in the strategy on Web 4.0 and virtual worlds.

The Commission’s initiative is a significant step towards ensuring that the future of the internet and virtual worlds is shaped by a broad range of stakeholders, reflecting diverse perspectives and interests. It highlights the EU’s commitment to leading the next technological transition, fostering innovation, and ensuring that the digital environment remains open, secure, and inclusive.

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Former FTX Executive Under Investigation for Potential Campaign Finance Violations

by Blockchain News

Ryan Salame, the former co-CEO of FTX Digital Markets, is reportedly under investigation by U.S. authorities for potential violations of campaign finance law. Salame, along with his girlfriend Michelle Bond, who ran as a Republican candidate for New York’s 1st congressional district in 2022, are at the center of this investigation.

The authorities are specifically scrutinizing the financial ties between Salame and Bond in relation to Bond’s 2022 congressional campaign. This information comes from a recent report by The New York Times. It’s important to note that this investigation is separate from the federal charges that other individuals linked to FTX and its subsidiaries have faced since the exchange filed for bankruptcy in November 2022.

The Federal Election Commission (FEC) has set limits on individual campaign contributions. For the 2022 election cycle, individuals could donate up to $2,900 to a primary campaign for a federal office candidate, and an additional $2,900 for the general election. FEC records show that Salame made two donations of $2,900 each to support Bond’s primary campaign in Massachusetts, and two more donations of $2,900 each for the general election.

In addition to Salame’s contributions, Bond herself made significant financial contributions to her campaign. She personally contributed over $145,000 and loaned her campaign more than $877,000.

In April, Salame’s residence was reportedly searched by officials from the Federal Bureau of Investigation. However, as of now, no charges have been filed against Salame in relation to his tenure at FTX Digital Markets. Salame served as co-CEO of the exchange’s Bahamian arm starting in December 2021.

Interestingly, Salame was the individual who first reported FTX to Bahamian authorities over concerns about the exchange sending user funds to Alameda Research. The potential role he may play in the upcoming criminal trials of Sam Bankman-Fried, former FTX CEO, scheduled to begin in October 2023 and March 2024, remains to be seen.

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European Securities and Markets Authority Calls for Input on New EU Crypto Rules

by Blockchain News

The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator, has initiated its first consultation package under the Markets in Crypto-Assets Regulation (MiCA). The authority is seeking stakeholder comments until September 20, 2023, marking a significant step towards establishing concrete rules for crypto markets in the EU.

In this initial consultation package, ESMA is soliciting input on proposed rules for crypto-asset service providers (CASPs). The focus areas include CASP authorisation, identification, conflict of interest management, and complaint handling procedures.

The consultation also aims to collect insights on stakeholders’ current and future activities. This fact-finding exercise will help ESMA better comprehend the EU crypto-asset markets and their potential evolution. The data collected will remain confidential and will be used to fine-tune proposals in the upcoming second and third consultation packages.

Verena Ross, Chair of ESMA, emphasized the importance of this consultation package in implementing the MiCA framework. Ross stated that the initiative translates ESMA’s ambition to establish high regulatory standards for crypto-asset related activities in the EU into tangible requirements.

Ross also highlighted that ESMA is determined to ensure that entities involved in crypto-asset related activities understand that the EU is not a place for forum-shopping. She further reminded consumers that even with the implementation of MiCA, no crypto-asset can be deemed entirely safe.

ESMA will continue working on its remaining mandates alongside this consultation, with plans to publish a second consultation package in October 2023. The feedback received from this consultation will be considered for a final report, and the draft technical standards will be submitted to the European Commission for endorsement by June 30, 2024, at the latest.

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7-Eleven Jumps into NFT Space

by Blockchain News

Joining the ranks of Adidas, Coca-Cola, Louis Vuitton, and Nike, 7-Eleven, Inc. is making a significant move into the digital asset space. The convenience retailer is celebrating its 96th birthday by introducing a first-of-its-kind digital collectible (NFT) for Slurpee fans nationwide, following the trend set by popular Hong Kong convenience store 852, which issued its own NFT in 2022.

Starting at 7:11 p.m. ET on July 11, 2023, customers can enjoy their Slurpee drink virtually via a digital Slurpee drink dispenser on 7-Eleven’s website. Users can fill up their digital Slurpee drink cup with a mix of classic and limited-time flavors, share their Slurpee drink vibe on social media using #SlurpeeVibe, and mint their mix to add to their digital wallet.

7Rewards and Speedy Rewards customers who claim the digital collectible will receive seven extra entries to win Slurpee-inspired jewelry from premium designer King Ice. The digital mixology event will run through July 18.

Marissa Jarratt, 7-Eleven Executive Vice President and Chief Marketing & Sustainability Officer, said, “We’re always looking for new and creative ways to celebrate with our customers on our favorite day of the year, Slurpee Day. This year, we’re marking another first for the brand with our inaugural digital collectible, ‘Find Your Slurpee Vibe’.”

In addition to the digital collectible, 7-Eleven is introducing a limited-time 7/11 Birthday Collection capsule on 7Collection, the retailer’s online merchandise shop. The collection includes 7-Eleven-inspired party decor and trimmings, including apparel, balloons, wrapping paper, and more. Free shipping is available on all orders using the code SLURPEEDAY on July 11.

7-Eleven is also offering $1 food deals, discounts on 7NOW Gold Pass subscriptions, and savings on fuel for new and existing 7Rewards and Speedy Rewards members. Those who sign up for 7NOW Gold Pass via the 7NOW Delivery app on July 11 will receive a free subscription of the service through the end of 2023. Fuel rewards members will receive an additional 11¢ off each gallon purchased on July 11 at 7-Eleven and Speedway branded fuel locations.

7-Eleven’s introduction of digital collectibles marks a significant step in the adoption of NFTs by mainstream retailers. The move could potentially open up new avenues for customer engagement and loyalty programs in the future, as it has for other major brands that have ventured into the NFT space.

Image source: Shutterstock

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US Senate Finance Committee Seeks Input on Taxation of Digital Assets

by Blockchain News

The US Senate Finance Committee has issued an open letter to the digital asset community and other interested parties, seeking their input on the taxation of digital assets. The letter, dated July 11, 2023, was signed by Chair Ron Wyden and Ranking Member Mike Crapo.

The rapid emergence of digital assets has raised novel regulatory issues, including the appropriate treatment under federal tax law. The Internal Revenue Code of 1986, as amended (IRC), draws distinctions between types of property, with no straightforward classification for digital assets. This uncertainty creates complex reporting issues for taxpayers and warrants examining how the IRC can provide clearer guidance for taxpayers on the treatment of digital asset transactions.

The Committee on Finance initiated a bipartisan effort to identify key questions that lie at the intersection of digital assets and tax law. To provide background on current law, Chair Wyden and Ranking Member Crapo asked the Joint Committee on Taxation to compile a report on the taxation of digital assets.

The letter seeks to better understand how Congress can address the tax challenges and opportunities presented by digital assets. It asks a series of detailed questions on topics such as marking-to-market for traders and dealers, trading safe harbor, treatment of loans of digital assets, wash sales, constructive sales, timing and source of income earned from staking and mining, nonfunctional currency, FATCA and FBAR reporting, and valuation and substantiation.

The Committee will collect answers to these questions on a rolling basis until September 8, 2023. Interested parties are requested to submit electronic copies of their answers to Committee staff at responses@finance.senate.gov.

Image source: Shutterstock

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What Is Web 4.0?

by Blockchain News

Web 4.0 (or Web4) is an innovative concept outlined by the European Commission, designed to compete with the rapidly emerging trend of Web 3.0, which is gaining significant momentum in countries or regions such as the USA, Mainland China, Hong Kong, and Singapore. The Commission’s vision for Web 4.0 aims to position the European Union at the forefront of the next technological transition, surpassing the decentralization of Web 3.0.

Characteristics

Web 4.0 is anticipated to provide truly intuitive, immersive experiences by seamlessly integrating digital and real objects and environments, enhancing interactions between humans and machines. This integration is expected to be achieved through advanced artificial and ambient intelligence, the Internet of Things (IoT), trusted blockchain transactions, virtual worlds, and extended reality (XR) capabilities. It is expected to be driven by open technologies and standards that ensure interoperability between platforms and networks, and freedom of choice for users.

Virtual Worlds

Virtual worlds, integral to Web 4.0, are immersive 3D environments that merge virtual, digital, and physical realities, offering highly interactive experiences. These environments persist and evolve even without user interaction and serve diverse purposes, including design, simulation, collaboration, learning, socializing, transactions, and entertainment.

These next-generation virtual worlds are finding applications across sectors such as education, healthcare, manufacturing, and public services, transforming the way we learn, work, and interact. However, they also present challenges, including privacy, security, ethical considerations, and societal impact, necessitating a balance between opportunities and risks.

In the EU, approximately 3,700 entities operate within the virtual worlds subdomain, contributing to about 24% of the global total. Policymakers are tasked with fostering economic growth and digital evolution while ensuring the creation of responsible and fair virtual worlds.

Opportunities

Web 4.0 and virtual worlds hold significant opportunities across industrial and societal domains. In manufacturing, virtual twins can help optimize production processes, making them more efficient and sustainable.

In the cultural and creative industry, virtual worlds offer new ways to create, promote, and distribute content and engage with audiences. In education and training, especially in the medical field, virtual worlds can be used for simulations, reducing risks and improving accuracy.

Virtual classrooms can enable students and teachers to visualize abstract subjects or simulate scientific experiments without taking any risks.

Challenges

Web 4.0 and virtual worlds also present several challenges, including issues related to awareness, access to trustworthy information, digital skills, user acceptance, and trust in new technologies. There are also broader challenges related to fundamental rights and business challenges such as ecosystem fragmentation and access to finance.

EU Strategy

The European Commission has launched a strategy for Web 4.0 and virtual worlds to steer the next technological transition and ensure an open, secure, trustworthy, fair, and inclusive digital environment for EU citizens, businesses, and public administrations.

The strategy aims to empower people and reinforce skills, support a European Web 4.0 industrial ecosystem, support societal progress and virtual public services, and shape global standards for open and interoperable virtual worlds and Web 4.0.

Image source: Shutterstock

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Northern Trust Partners with NUS to Advance Blockchain for Institutional Investors

by Blockchain News

Nasdaq listed company Northern Trust (NTRS), the National University of Singapore’s School of Computing (NUS Computing), and the Asian Institute of Digital Finance (NUS AIDF) have announced a series of initiatives aimed at shaping the future of blockchain for institutional investors.

Northern Trust, a leading provider of wealth management, asset servicing, asset management, and banking services, has a global presence with offices in 25 U.S. states and Washington, D.C., and across 23 locations in Canada, Europe, the Middle East, and the Asia-Pacific region.

On 23 June 2022, Northern Trust established a new group, the Digital Assets and Financial Markets group, to support the rapidly growing digital asset markets and traditional securities services markets. The group, led by Justin Chapman, aims to address the evolving needs of both digital and traditional marketplaces.

As of March 31, 2023, Northern Trust had assets under custody/administration of US$14.2 trillion, and assets under management of US$1.3 trillion.

The strategic partnership comprises a joint research project titled “Custody in the age of digital assets.” This project explores various methods for maintaining control and possession of digital assets on third-party blockchains, and strategies for clients to achieve a real-time view of assets across digital and traditional markets. The research is part of the Singapore Blockchain Innovation Programme (SBIP), a national-level partnership anchored at NUS Computing, which investigates the institutional use of blockchain and the application of new technology in the banking industry.

The collaboration also includes a Memorandum of Understanding (MoU) with NUS AIDF, signifying Northern Trust’s commitment to fostering the Fintech ecosystem in Singapore. Northern Trust is currently mentoring Insightic, a RegTech start-up incubated at AIDF, focusing on risk assessment for Web 3.0-based virtual asset service providers. With its expertise in blockchain, Northern Trust is assisting the start-up in refining their product-market fit and go-to-market strategies.

Additionally, Northern Trust and NUS Computing have agreed to offer an industry-linked internship opportunity to a student in the Master of Digital Fintech program. This five-month program will expose the intern to the critical market advocacy and digital development work that Northern Trust is leading in the Asia-Pacific region.

Justin Chapman, Global Head of Digital Assets and Financial Markets at Northern Trust, stated that the partnership with NUS is a significant step in their strategy to provide thought leadership and develop future leaders who will shape the industry.

Northern Trust’s Digital Assets and Financial Markets is the bank’s single group unifying digital and traditional market functions. It focuses on helping clients navigate the rapidly evolving digital markets and the challenges of investing in digital assets alongside allocations to more traditional asset classes.

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