Citi Forecasts $5tn in Digital Money; FedNow is (not) a CBDC; Was Steve Jobs Satoshi Nakamoto - Recap - April 8, 2023
Kene Ezeji-Okoye
Redefining Finance at Millicent Labs // Onchain Financial Systems // Digital Assets // Digital Currencies // Tokenization
The week’s top stories:
Welcome to Reinvent Recap, your weekly TL;DR on everything digital currencies catching you up on a week’s worth of news covering regulation, CBDCs, stablecoins and the macro outlook in a just couple of minutes.
Citi: Blockchain Will See Billions of Users and Trillions of Dollars in Value “by the End of This Decade”
Citi released a report last week titled ‘Money, Tokens, and Games‘ stating that blockchain technology is approaching a “point of inflection” and will soon see “billions of users and trillions of dollars in value.”
Citi’s analysts suggest that the next wave of crypto adoption will be primarily driven by the rise of CBDCs and the tokenization of real-world assets, estimating that tokenization could grow by a factor of 80x in private markets by 2030.
The report cites disintermediation within financial markets, composability with cryptocurrencies, and a “shared golden-source infrastructure” as the key efficiencies associated with tokenization.
I can’t lie, given that I’m building in this space, I think this report is required reading for your Easter long weekend.
At the very least, watch this 6 minute video with Citi’s Future of Finance Global Head, Ronit Ghose.
U.S. Presidential Candidate: FedNow is a CBDC, Will Lead to Government Overreach
Robert F. Kennedy Jr, was just one of many voices on Twitter last-week decrying the incoming U.S FedNow real-time payment system as a CBDC, stating that it will “grease the slippery slope to financial slavery and political tyranny.”
On the other side of the argument were many, more rational, voices pointing out that FedNow is quite clearly in no way a CBDC, but simply an account-to-account instant payment system similar to the ones that have been implemented by countries around the world over the past 15 years.
Texas Lawmakers Propose Bill to Create State-Issued, Gold-Backed Stablecoin
Two republican state senators in Texas have introduced a bill proposing the creation of a state-issued, gold-backed digital currency that would be fully redeemable in cash or gold.
The legislation would require the state comptroller to establish a digital currency fully backed by physical gold reserves, held with the Texas Bullion Depository.
This move comes just a few weeks after U.S. Senator Ted Cruz (R-Texas) introduced federal legislation to prohibit the Federal Reserve from developing a retail CBDC which “could be used as a financial surveillance tool by the federal government”.
Last week, three US congressmen also introduced a ‘Gold Standard Bill’ to reverse Bretton-Woods and re-peg the dollar to a fixed-weight of gold bullion.
Tether and Circle Draw a Line in The Sand
Given increased regulator pressure on the crypto-asset space in the U.S., and Circle’s ‘stay-within-the-lines’ ethos, it’s not surprising to see the issuer of #2 stablecoin, USDC, has made a move to distance themselves from the wider industry, releasing a report titled “Payment versus trading stablecoins” in which they paint themselves as the former.
Never one to shy away from the spotlight, #1 stablecoin issuer, Tether — who have enjoyed a significant increase in market share since the U.S. bank runs — fired-back with a report of their own, “Why Tether will Lead in De-Fi”, painting the traditional banking system as the risker of the two industries.
Circle invests in Chinese yuan-pegged stablecoin issuer
Circle’s venture arm has invested in an offshore Chinese yuan-backed — but Cayman Islands-registered — stablecoin project, CNHC.
Currently, over 99% of the existing stablecoins are backed by USD, but Circle appears well-attuned to macro shifts, as last week it applied for regulatory approval in France to on-shore its Euro-backed stablecoin, EUROC.
Last week China also invested $39billion into Malaysia, prompting the Malaysian prime minister to state that there is no reason for Malaysia to continue to depend on the US dollar.
Chinese State-Owned Company Launches Two Crypto Funds in Hong Kong
Circle’s investment highlights the growing presence of Hong Kong in the digital asset space, where mainland China's third largest state-owned insurance institution has just launched a compliant blockchain venture capital fund as well as a Proof-of-Stake token income fund.
Japanese Government Greenlights Web3 Growth
The Web3 project team of Japan’s ruling Liberal Democratic Party has released a whitepaper containing suggestions for expanding the country’s industry, which has been incorporated into the national strategy by Prime Minister Fumio Kishida’s administration.
The paper notes that opportunities such as the G7 summit will enable Japan to take a leading role in driving global conversations around how digital assets are handled, adding “After crypto winter, Japan may be the first to welcome spring”.
Japan’s State-Owned NTT Docomo is All-In on Web3
The company will collaborate with Astar Foundation, the developer of the public blockchain Astar Network, and Accenture to speed up Web3 adoption, setting up a consortium that allows individuals and corporations to utilize tokens for governance.
Japan's government owns one third of the stock of NTT Docomo’s parent company, NTT.
Japanese Tech Alliance Uses Public Blockchain Tooling for Stablecoin & CBDC Interoperability
Datachain, Mitsubishi UFJ Trust and Banking Corporation, and SORAMITSU are using Datachain’s numerous implementations of the Cosmos ecosystem’s Inter-Blockchain Communication (IBC) module to perform atomic cross-chain FX swaps between heterogenous blockchains, namely R3’s Corda (home to Mitsubishi UFJ’s yen-denominated Programat Coin) and Hyperledger Iroha (built by SORAMITSU, used for the Cambodian CBDC).
Datachain was also awarded a grant from Cosmos’ Interchain Foundation last week to continue their work on the Solidity implementation of IBC, opening up production-ready opportunities for both public and enterprise flavors of Ethereum.
This kind of open and rapid ecosystem development is exactly the reason my firm, Millicent Labs, is also building with the Cosmos SDK.
What the Bank of England’s Stablecoins Regime Could Look Like
The Bank of England's upcoming crypto regime aims to ensure that funds are returned to customers when certain crypto firms enter a crisis.
I added my 2 pence as to the potential ripple effects a failed stablecoin could have.
U.S. Department of the Treasury Publishes Illicit Finance Risk Assessment of DeFi
The report highlights that "The primary vulnerability that illicit actors exploit stems from non-compliance by DeFi services with AML/CFT and sanctions obligations", warning that even decentralized services engaged in regulated activities could be within the scope of AML/CFT regulations.
The report also highlights the transparency of the blockchain as a critical tool in combating fin crime, and acknowledges that illicit activity is a subset of overall activity with the DeFi space and that DeFi itself occupies a minor position within the overall digital asset ecosystem.
Swiss Government-Owned Bank PostFinance to Offer Customers Crypto Services
PostFinance, Switzerland’s fifth-largest financial services firm, will begin offering its 2.5 million customers access to buy, store and sell bitcoin and ether in partnership with Switzerland’s crypto-friendly Sygnum Bank.
“Digital assets have become an integral part of the financial world, and our customers want access to this market at PostFinance, their trusted principal bank,” said PostFinance Chief Investment Officer Philipp Merkt in a statement.
The Bitcoin Whitepaper Is Hidden in Every Modern Copy of macOS
A Mac user accidentally discovered last week that a PDF copy of Satoshi Nakamoto’s Bitcoin whitepaper has been shipped with every copy of macOS since Mojave in 2018.
If you’re on a Mac, you can check yourself by opening Terminal and typing the following command:
open /System/Library/Image\
Capture/Devices/VirtualScanner.app/Contents/Resources/simpledoc.pdf
In the Image Capture utility, the Bitcoin whitepaper is used as a sample document for a device called “Virtual Scanner II,” which is either hidden or not installed for everyone by default.
It’s not clear why it’s hidden for some or what exactly it’s used for, and even less clear why the Bitcoin whitepaper was chosen to be stored in it.
Apparently, Free Money is Still Out There
Despite the era of sky-high valuations in the tech space and virtually-free money being thrown at anyone with an idea and a pitch deck, a crypto project last week raised $1.7m in ETH, but due to an error in the way they coded their smart contract, the funds are permanently locked and inaccessible.
Meme of The Week
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