BitOoda Regulatory Analysis, 2/12/21: Global Roundup — continued worldwide focus on tokenization and CBDCs
It has been awhile since our last global roundup, and we wanted to provide a quick overview of a few of the more notable developments from around the world in the past month.
Not surprisingly, many of these highlights focus on the development of Central Bank Digital Currencies (CBDCs), underscored by a recent BIS survey finding that the vast majority of central banks are exploring CBDCs. We are already working with some of our partners across the industry to begin to conceptualize financial products and services that could emerge as opportunities in the CBDC era (particularly as the U.S. Federal Reserve continues to make progress toward a Digital Dollar).
Another major trend we’re seeing overseas — which directly mirrors one of our areas of emphasis at BitOoda — is the continued evolution of tokenization, with a new Swiss law formally recognizing tokenized securities as an asset with defined legal certainty. As one of a handful of U.S. firms approved to advise and act as a placement agent on private primary offerings of digital securities and broker secondary-market transactions for SAFTs and other digital securities, we are excited about advancing the tokenization landscape here in the U.S., and encourage clients and potential partners to contact us to discuss our plans and regulatory foundation.
· China continued to make steady progress on the development of the digital yuan, expanding its pilot programs and classifying the digital currency as M0.
· South Korea’s central bank concluded that a CBDC should be classified as a form of fiat currency, not another form of digital assets. This legal ruling has implications not only how a CBDC would be treated under a particular country’s laws, but also the particular types of financial activities and instruments that will be available to investors and consumers once a CBDC is launched (e.g., what we have started to think of as “Digital FX”).
· In the latest example of a national-level effort to adhere to the FATF global AML standards, the Philippines central bank issued new guidelines for digital asset firms, requiring them to apply for a license and adhere to rules regarding risk, internal control, consumer protection, and AML.
· India is considering a bill that would ban private cryptocurrencies while leaving the door open for the creation of a national digital currency.
· Switzerland continued to cement its positions as the EU’s crypto pioneer, with a new law allowing tokenized securities to trade on a blockchain with the same legal standing as traditional assets.
· European Central Bank President Christine Lagarde continues to make statements emphasizing the risks and illicit uses of bitcoin, while remaining open to the prospect of a digital euro. Meanwhile, France’s central bank continues to press ahead with CBDC experiments associated with the digital euro.
Middle East & Africa
· Nigeria’s central bank ordered all banks to close any accounts transacting in cryptocurrencies, prompting Binance, Bundle Africa, and others to immediately suspend deposits in the country.
· Iran has continued to periodically criticize and shut down miners, blaming them for instability in the nation’s power grid and tightening the restrictions on domestic mining operations as a means of controlling the revenue stream mining could represent for the country.
· Canada’s central bank opined that the coronavirus pandemic may force the acceleration of the country’s decision to develop a CBDC.
· The Bank of International Settlements (BIS) published the results of its third survey on CBDCs, stating that 86% of central banks worldwide are exploring CBDCs, many progressing from conceptual research to practical experimentation. While the survey indicated that most central banks are unlikely to officially issue CBDCs in the near term, “central banks collectively representing a fifth of the world’s population are likely to launch retail CBDCs in the next three years.”