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🔴 | Global Banking Standard Setter Approves Disclosure Framework for Crypto Exposures The Basel Committee's framework, based on responses to a December 2022 discussion paper, must be implemented by 2026. The Basel Committee on Banking Supervision approved a disclosure framework for banks' exposure to crypto that must be implemented by the start of 2026 as the world's central banks look to support market discipline and ensure sufficient information is available to evaluate risks. The committee, part of the Bank for International Settlements, will publish details later this month, it said in a Wednesday press release. It is the primary global standard setter for prudential banks. It also approved a set of targeted revisions to the crypto asset prudential standard. "These revisions aim to further promote a consistent understanding of the standard, particularly regarding the criteria for stablecoins to receive a preferential 'Group 1b' regulatory treatment," the committee said in the release. The updated version will be published later this month and must also be implemented by the start of 2026. https://lnkd.in/drkeaNQt

BDI - Commericial Bank Money Token  Source: https://lnkd.in/gKUeDMxU #commericial #bank #money #token #cbdc #deposittoken #stablecoin #cmbt Highlights: The CBMT has been designed to coexist with existing financial infrastructures, i.e. existing commercial bank money, while enabling the use of DLT. It is account based, mirroring existing deposits. Key design principles include interoperability, secure programmability, robust governance and regulatory compliance, ensuring that CBMT remains as closely within the current regulatory framework as possible while operating on different DLT platforms. It also relies on traditional interbank settlement, which allows the CBMT to operate in the absence of a wholesale Central Bank Digital Currency (wCBDC) or Unified Ledger on DLTs. A Technical Service Provider (TSP) provides shared services for participants, its roles and responsibilities are elaborated and will be further refined. The PoC demonstrates the technical feasibility of the CBMT and assesses its potential to serve as a transformative force within the financial ecosystem. Functional use cases, including basic money transfers and advanced corporate payments, were investigated in three different environments. Certain aspects, such as compliance considerations, were marked out-of-scope. Results confirm that the CBMT is viable and offers considerable potential. It provides a trusted means of payment, enabling the realisation of a variety of use cases across corporate functions. Results also showed that the CBMT is a versatile settlement instrument. It works across a variety of DLT platforms, has the potential to scale and should present no barrier to integration into existing systems via APIs. Further, tests led to the conclusion that engagement with regulators and supervisory authorities must continue. The ECB provided positive initial feedback in regards to the nature of the CBMT as a deposit in a different technical form. While highlighting the promising features of the CBMT, the PoC also identified areas requiring further exploration, such as privacy, bank and corporate integration, and further alignment with regulators and supervisory authorities. The next phase will focus on expanding the network of participants, refining the CBMT framework with special attention to the TSP and its governance, and pursuing formal approval from the supervisory authorities to conduct real money tests. The PoC has demonstrated that the CBMT has the potential to deliver meaningful benefits to industrial firms. It represents an important milestone in enabling on-chain payments using existing deposits, delivering new efficiencies, and paving the way for innovative new products. Continued collaboration among banks, corporates, regulators and further stakeholders will be crucial to realise the full potential of the CBMT and for banks to retain their role as trusted partners.

Russian banks to give opportunity to conduct transactions with digital ruble by July 2025 The Central Bank also plans to set deadlines for the mandatory acceptance of payments in digital rubles by trade and service companies, the press service said MOSCOW, September 12/ Major Russian banks will have to give their clients an opportunity to conduct transactions with digital rubles, including the opening of digital ruble accounts and depositing cash thereto, making funds transfers, as well as receiving digital rubles via relevant infrastructure, by July 1, 2025, the press service of the Bank of Russia said in a statement. "The regulator plans to launch a large-scale use of the digital national currency from that moment on. It is important that the digital ruble is available to both individuals and businesses and that they are able to use it freely, just like other ruble forms (physical money or bank deposits)," the statement reads. Other banks with a universal license have been given more time to adjust their systems until July 1, 2026, while other credit institutions have to make sure they comply with the requirement by July 1, 2027, the regulator added. The Central Bank also plans to set deadlines for the mandatory acceptance of payments in digital rubles by trade and service companies (TSCs), the press service said. This requirement is to be fulfilled by July 1, 2025 by companies with annual earnings of over 30 mln rubles, by July 1, 2026 by those with annual earnings of over 20 mln rubles, and by July 1, 2027 by all other companies. Following the large-scale launch of digital rubles, both banks and TSCs will be able to start accepting them as their relevant infrastructure is ready, including ahead of the deadlines proposed in the document, the regulator noted. Payments for purchases with digital rubles will be conducted using a universal QR code based on the National Payment Card System, which will help banks and TSCs avoid additional costs. Since August 15, 2023, the Bank of Russia has been conducting a pilot project with real digital rubles. The first stage of testing was held with the participation of about 600 individuals from among employees of 12 banks. They tested the opening and closing of digital wallets, their replenishment, transfers between individuals, and automatic payments. Starting September 1, 2024, the pilot has been expanded. The total number of participants increased several-fold as the new stage started. #business #finance #financialservices

In collaboration with the Italian Banking Association Innovation Lab (ABI Lab) and eight of its banking partners, the Banque de France conducted several automated wholesale payments on its DL3S platform using a tokenized representation of central bank money (CeBM). These payments were instructed by ABI Lab’s Leonidas Distributed Ledger Technology (DLT) platform. Leonidas, an extension of the successful Spunta project launched by ABI Lab in 2020—which currently handles 200 million transactions annually—focuses on calculating and settling liquid balances between participating banks and experimenting with settlement in central bank money. A similar experiment was carried out with JP Morgan S.E. using its ONYX DLT platform. In these experiments, Leonidas and DL3S, as well as ONYX and DL3S, exchanged instructions to lock and release funds in commercial bank money, representing claims and receivables between parties in Leonidas, automated tokenized payments issued by JP Morgan S.E. between its clients on ONYX, and CeBM in DL3S. This process utilized the Hash Time Locked Contract (HTLC)1 interoperability protocol. #tokenizedmoney #cbdc #tokenization #cbdc #digitalassets Bank for International Settlements – BIS Banque de France J.P. Morgan ABI - Italian Banking Association Prasanna Lohar FSV Capital FSV Labs https://lnkd.in/d6S-4mzH

Pt 1. An important document by the Basel Committee on Banking Supervision on cryptoasset standard amendments - essentially, the legal framework required for banks to assess their ability to issue and hold cryptoassets, such as stablecoins. Some interesting takeaways; ✅ Stablecoins are cryptocurrencies that peg their market value to a currency, commodity or financial instrument with the objective of preventing high volatility exchange ✅ The Cryptoasset Standard sets out the capital requirements that apply to bank's holdings of cryptoassets, including stablecoins ✅ Under The Cryptoasset Standard stablecoins need to meet a set of conditions to be included in Group 1b category, if they do not meet all the conditions they are included in Group 2 and subject to new highly conservative capital treatment ✅ An additional topic that was reviewed was focused on determining whether 'The risks posed by cryptoassets that use permisssionless blockchains can be sufficiently mitigated to allow for their inclusion in group 1" ✅ The Basel Committee decided that the use of permissionless blockchains gives rise to a number of unique risks, some of which cannot be mitigated at present; as banks are dependent on 3rd parties to carry out basic operations when using a permissionless blockchain- limiting their ability to conduct DD ✅ The Basel Committee concludes to; "not propose any adjustments to the cryptoasset standard to allow for the inclusion of cryptoassets that use permissionless blockchains in Group 1." Conclusion: The costs of holding tokenized securities, RWAs, or even stablecoins issued on permissionless blockchains are prohibitively high for financial institutions, as they require a capital charge of at least 100%. Only assets tokenized on permissioned blockchains could fall under Group 1 and thus be subject to the same rules as their traditional counterparts. ✅ Digital Asset's Canton Network is the logical solution for banks looking to drive tokenisation without the risk of additional capital charges #Permissionedblockchain #digitalassets #basel #stablecoins

Banque de France - Eurosystem exploratory work on settlement in central bank money using new technologies: first batch of experiments successfully completed by the Banque de France with DL3S extended functionalities on automated wholesale payments Source: https://lnkd.in/dqe6pcqG #france #euro #digitalmoney #exploratory #work #settlement #centralbank #money #dlt #newtechnologies #experiment #extended #functionalities #automated #wholesale #payments Highlights: In collaboration with the Italian Banking Association Innovation Lab (ABI Lab) and 8 of its banking partners, the Banque de France settled, in its DL3S platform and in a tokenised representation of central bank money (CeBM), several automated wholesale payments instructed by ABI Lab’s Leonidas DLT (Distributed Ledger Technology) platform. As part of these experiments, Leonidas and DL3S in the former, and ONYX and DL3S in the latter, exchanged instructions to lock and release funds in commercial bank money representing claims and receivables between the parties in Leonidas, automated tokenised payments issued by JP Morgan S.E. between JP Morgan’s clients in ONYX, and CeBM in DL3S, using the Hash Time Locked Contract (HTLC) interoperability protocol. This was the first experiment in the Eurosystem exploratory work combining settlement in tokenised commercial bank money (so-called tokenised deposits) and central bank money in a tokenised form. This achievement complements the success of several other experimentations carried out since May and leveraging the other functionalities, with: •   the Austrian Central Bank (Oesterreichische Nationalbank – OenB) and BNP Paribas on the settlement of securities through delivery versus payment mechanisms (DvP) using HTLC; •   the Hong Kong Monetary Authority (HKMA) on Payment versus Payment (PvP) operations, using a Swift enabled interoperability mechanism; •    Cboe Clear Europe N.V. and ABN AMRO Clearing Bank N.V. on the settlement of margin calls through Payment and Power of Attorney mechanisms The Eurosystem exploratory work launched by the European Central Bank has gathered huge interest from the market, and demonstrates the appetite for using central bank money to settle financial transactions for emerging tokenised assets, natively issued or replicated on DLTs. The Banque de France solution now offers the possibility to settle in a tokenised form of central bank money DVP, PVP and automated wholesale payments, on DL3S, an in-house built platform developed and experimented since 2020. The Banque de France will experiment with several financial institutions (banks, CCPs, CSDs, market infrastructures, Fintechs) until November, to contribute to the Eurosystem ongoing assessment of the potential benefits brought by new technologies to financial markets.

World Bank explores interoperability between #CBDC and faster payment systems The World Bank Group’s ITS Technology and Innovation lab (#ITSTI) recently published a report exploring interoperability between central bank digital currency (CBDC) systems and faster payment systems. While the most obvious application would be the sender using a retail CBDC and the recipient using a bank account (or vice versa), that was only one scenario considered. It also explored a wholesale CBDC (wCBDC) for interbank settlement of a faster payment system. Remember that faster payment systems involve two steps – payment by the end user and settlement between banks. With a wCBDC, the core functioning of the faster payment system is unchanged. It describes the primary benefit of a wCBDC for interbank settlement as 24/7 availability. However, it still assumes net settlement. https://lnkd.in/eRDrbq5C

German Banks Push For Bankless Payments, What Is The Catch? "The committee, representing more than 1,700 banks, published the report on the Commercial Bank Money Token, acknowledging that “traditional forms of money and payment systems have reached their limit.” The report highlights the growing shift toward peer-to-peer and machine-to-machine payment transactions, which makes bank intermediation less relevant and, at times, a hindrance. Instead of relinquishing control, banks are experimenting with an "account-based" system that mirrors existing deposits. This approach allows them to capitalize on blockchain’s efficiencies while maintaining centralized control over access and preserving their deposit-based funding model." https://lnkd.in/ggNHpB8G

#DigitalEuro and what it implies for EU banking landscape. ECB has explored as part of #projectstella the opportunities of using DLT for financial market infrastructures. DLT, or Distributed Ledger Technology, offers a fresh perspective on banking systems, with several advantages: 1. #Efficiency and Speed 🚀: DLT can streamline processes and boost automation, reducing risks in current processes. It's particularly beneficial for back-end processes like settlement and reconciliation. 2. #Security 🔒: DLT is more resilient to cyber-attacks than traditional centralized databases because it's distributed. There's no single point of attack, making hacking attempts too costly and futile. 3. #Transparency and #Accessibility 👀: DLT allows simultaneous access, validation, and record updating across a networked database. Users can view any changes and who made them, ensuring data reliability. 4. #Cost and #Risk Management 💰: DLT can impact the calculation of risk-weighted assets (RWA), potentially reducing RWA and affecting how banks operate. 5. #ImprovedCustomerExperience 😊: DLT can enable much faster workflows with transactions taking place atomically (and instantaneously) on the client side. 6. #Integration with Legacy Infrastructure 🔄: Despite the challenge of integrating DLT with existing legacy infrastructure, it can create benefits if other market participants join the new infrastructure and achieve sufficient scale. However, there are challenges to widespread adoption of DLT in the financial sector, including regulatory and legal clarity, integration with existing legacy infrastructure, and achieving network effects. Despite these challenges, DLT holds significant potential to transform traditional banking systems. 🌐 the next #Vision to come https://lnkd.in/e7xgeEEm