The Bank for International Settlements (BIS) will heighten focus on experimenting with Central Bank Digital Currencies (CBDCs) this year via its research and development arm and will also launch a new project to monitor stablecoins.
On Feb. 7, the Switzerland-based so-called “bank for central banks” announced its Innovation Hub will "increase its focus" on CBDCs in 2023 to improve payment systems.
The bank added its work schedule for the year ahead also includes “Project Pyxtrial,” which it described as a new experiment being launched by the London branch of the BIS Innovation Hub to enable the “systemic monitoring of stablecoins.”
Pyxtrial will develop a platform to monitor the balance sheets of stablecoins. The bank noted that most central banks lack the tools to “systemically monitor stablecoins and avoid asset-liability mismatches,” before adding:
“The project will investigate various technological tools that may help supervisors and regulators to build policy frameworks based on integrated data.”
For its CBDC-related projects, the BIS will focus more on retail CBDCs such as the two-tiered system called Aurum that it piloted in Hong Kong in July 2022.
It stated that CBDCs and payment systems improvements accounted for 15 of the 26 projects that have been active in the last couple of years. It cited increased awareness from central banks as the primary driver.
“This emphasis reflects the interests and priorities of central banks and the G20 countries' programme to improve cross-border payments.”
It also plans to experiment with the distribution of a retail CBDC through an open API ecosystem in a joint experiment with the Bank of England (BOE) dubbed Rosalind.
In 2023, the #BISInnovationHub will increase its focus on improving payments systems and experimenting with #CBDCs; on shaping the future of financial regulation and supervision; and on greening and securing the financial sector. — Bank for International Settlements (@BIS_org) February 7, 2023
In September 2022, the BIS concluded a pilot for a platform called mBridge, short for Multiple CBDC Bridge. The central banks of Hong Kong, Thailand, China, and the United Arab Emirates took part in the pilot in addition to 20 commercial banks from the countries.
According to the Atlantic Council’s CBDC tracker, just 11 countries have fully launched a CBDC which are all located in the Caribbean aside from Nigeria.
There are 17 nations undergoing pilots, mostly in Asia, including China, Russia, Kazakhstan, India, South Korea, Thailand, and Malaysia.
The hunt for the controversial founder of the now-collapsed Terra ecosystem, Do Kwon, has intensified with South Korean officials reportedly confirming they sent at least two people to Serbia to track him down.
According to a Feb. 7 Bloomberg report, the prosecutor’s office in Seoul said the reports “aren’t false” regarding members of its team trekking out to the Balkan state to find Kwon.
It appears at least two state officials went — one from the prosecutor's office and the other being a senior member of South Korea’s Justice Ministry.
South Korean-based publication Chosun Media confirmed on Dec. 11 that a state intelligence official informed them that Kwon had based himself in Serbia.
There is currently no extradition treaty in effect between South Korea and Serbia.
This likely made Serbia a great hideout spot for Kwon, according to a recent opinion article from Minso Kim — a writer for the South Korean publication Chosun Media.
South Korea has however stripped Kwon of his passport which may make future travel more difficult.
Kwon has been accused of being on the run since Sept. 14 when South Korean prosecutors issued an arrest warrant against him, an accusation that he denied in October.
The 31-year-old fallen entrepreneur has also been accused of breaching capital markets laws.
While Kwon is known to be a prolific tweeter, he went nearly two months without tweeting or retweeting a single post — causing some to speculate what the controversial figure has been up to.
But Kwon recently responded to an evocative tweet targeted at him, stating that he hasn’t stolen any money and has never had any “secret cashouts.”
I find that Twitter is a good place for rumors but poor place to get facts
I've stolen no money and never had "secret cashouts" - happy to address specific allegations
In any case, good day to you — Do Kwon (@stablekwon) February 1, 2023
To date, Kwon denies any wrongdoing.
The collapse of the Terra ecosystem was in part triggered by the de-peg of its TerraClassicUSD (USTC) algorithmic stablecoin, Terra Classic (LUNC) was closely linked to the stablecoin with that too falling close to 100%.
Approximately $60 billion worth of value was wiped out of the ecosystem.
Cointelegraph reached out to Terraform Labs and the South Korean Prosecutor’s office for comment but did not receive an immediate response.
Crypto brokers and investment advisors offering or giving advice about cryptocurrencies will be put under the scope of the United States' securities watchdog this year.
A Feb. 7 statement from the Securities and Exchange Commission’s (SEC) Division of Examinations outlined its priorities for 2023, suggesting brokers and advisers dealing in crypto will need to be extra careful when offering, selling or making recommendations regarding digital assets.
It stated that SEC-registered brokers and advisors will be closely watched to see if they followed their “respective standards of care” when making recommendations, referrals and providing investment advice.
Today we announced the Division of Examinations 2023 priorities. The Division publishes its examination priorities annually to provide insights into its risk-based approach.
For more: — U.S. Securities and Exchange Commission (@SECGov) February 7, 2023
The SEC will also be examining whether these entities “routinely” review and update their procedures to ensure they meet “compliance, disclosure and risk management practices.”
This announcement was similar to the SEC’s priorities released in 2022, however it seems this year the regulator is putting more emphasis on standards of care and practices by brokers, rather than their consideration of unique risks presented by “emerging financial technologies” highlighted in 2022.
The most recent statement comes nearly two weeks after a report claimed the SEC has been investigating registered investment advisers that may be offering digital asset custody to its clients without proper qualifications.
The SEC’s investigation has reportedly been going on for several months but is now top of the priority list after the collapse of the crypto exchange FTX, according to a report from Reuters.
By law, investment advisory firms must be qualified to offer custody services to clients and comply with custodial safeguards set out in the Investment Advisers Act of 1940.
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