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Indian central bank on track to launch retail CBDC pilot next month

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Indian central bank on track to launch retail CBDC pilot next month

Indian central bank on track to launch retail CBDC pilot next month Monika Ghosh · 12 hours ago · 2 min read

The retail e-rupee, which will be interoperable with existing payment methods, will be hosted by the National Payments Corporation of India.

2 min read

Updated: November 19, 2022 at 11:51 am

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Cover art/illustration via CryptoSlate

The Reserve Bank of India (RBI), the country’s central bank, is finalizing the rollout of the retail digital rupee pilot, the Economic Times of India (ETI) reported on Nov. 19.

The RBI initiated the wholesale central bank digital currency (CBDC) pilot on Nov. 1 to test its usage in settling transactions in government securities. At the time, the RBI had said that the retail digital rupee pilot would be launched within a month.

According to the ETI report, the digital rupee is meant to complement, rather than replace, existing payment methods. Additionally, the report noted that the retail CBDC had been designed to be interoperable with current payment systems, citing sources familiar with the matter.

The report noted that the CBDC platform will be hosted by the National Payments Corporation of India (NPCI) and will be similar to the NPCI’s unified payments interface (UPI) system.

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UPI has emerged as a popular payment method in India, enabling users to instantly transfer funds directly to and from bank accounts through a UPI address. The UPI addresses, similar to email addresses, are linked to the bank accounts.

An anonymous source with knowledge of the project told ETI:

“Just like we have a common library for UPI, the technology for CBDC is similar to that and it is being hosted by NPCI, it will be interoperable with the current payment platforms.

The e-rupee will be stored in a wallet, the denominations will be available as per the customer’s request, just like you request cash from an ATM. Banks are launching this only in select cities.”

The RBI wants each bank participating in the pilot to test the retail CBDC among 10,000 to 50,000 users, per the ETI report. The banks participating in the retail CBDC pilot include State Bank of India, Bank of Baroda, ICICI Bank, Union Bank of India, HDFC Bank, Kotak Mahindra Bank, Yes Bank, and IDFC First Bank. According to the report, the CBDC project will eventually be extended to the entire banking system.

The banks participating in the CBDC trial have partnered with last-mile payment service providers, including PayNearby and Bankit, to enable users to pay merchants with the digital rupee.

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The retail CBDC will be provided as a standalone product in the initial phase. However, the digital rupee will eventually be integrated with existing mobile and internet banking services.

Merchants and customers selected to participate in the pilot will be required to download a wallet application, which will be used to store the e-rupee, as per the report. In addition, users will need to request specific denominations of the e-rupee from their banks, which will be transferred to their CBDC wallet.

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Bitcoin’s current stability stems from market manipulation, ECP report

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Bitcoin’s current stability stems from market manipulation, ECP report

Bitcoin’s current stability stems from market manipulation, ECP report Richard Adrian · 3 hours ago · 2 min read

After reiterating the need for crypto regulation in the EU, the ECB is back at it with allegations of price manipulation.

2 min read

Updated: November 30, 2022 at 5:37 pm

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Cover art/illustration via CryptoSlate

According to a newly released report by the ECB, Bitcoin is in the final stages of becoming irrelevant due to its many shortcomings. The report stated that Bitcoin’s value stems from mere speculation, and its recent stability was the result of price manipulation. 

Despite being touted as a revolutionary payment system and an investment asset, the European Central Bank feels the long-term damage of promoting Bitcoin investments is not worth the risk. In fact, the statement went on to stress that Bitcoin’s road to irrelevancy began way before the FTX-instigated market turmoil. 

ECB’s Director General Ulrich Bindseil and Advisor Jürgen Schaff, the authors of the report also mentioned matters shaping the current regulation around cryptocurrencies and blamed innovative misconception as the key reason inhibiting tight regulations around Bitcoin. The duo noted a promising technology does not necessarily guarantee value addition or disruption.

The apparent stabilisation of bitcoin’s value is likely to be an artificially induced last gasp before the crypto-asset embarks on a road to irrelevance. #TheECBblog looks at where bitcoin stands amid widespread volatility in the crypto markets.
Read more https://t.co/Hk1LuYX2de pic.twitter.com/I3Uidks8Xo

— European Central Bank (@ecb) November 30, 2022

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Twitter’s crypto community responded to the ECB report by making fun of a 2021 video in which the ECB President Christian Lagarde made a bold prediction that inflation would decline in 2022. A Twitter commentator reacted by commenting on the report with the video and captioning, “Their predictions are always in point”

If the ECB says so it must be true.😬 I mean they have clearly seen inflation coming and reacted in a timely manner. Their predictions are always in point. 👌https://t.co/ZIZ03wyk2D

— Jan Wüstenfeld (@JanWues) November 30, 2022

The ECB has remained a vocal cryptocurrency observer since outlining steps towards a digital euro during last year’s final quarter. However, the bank’s latest statement seems to dismiss Bitcoin as an investment asset after outlining its value as based on pure speculation. 

Lagarde has over time stressed the need for the watchdog to step up as a global regulator and address people’s growing interest in cryptocurrencies. While speaking during a Nov.28 hearing of the Committee on Economic and Monetary Affairs of the European Parliament,  Lagarde insisted the ECB was already ahead in terms of crypto regulation.

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BitGo to take custody of FTX assets in bankruptcy procedure

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BitGo to take custody of FTX assets in bankruptcy procedure

BitGo to take custody of FTX assets in bankruptcy procedure Liam ‘Akiba’ Wright · 3 hours ago · 3 min read

Crypto custodian, BitGo, has been selected by John Ray III, acting CEO at FTX to safeguard FTX’s assets amid bankruptcy proceedings.

3 min read

Updated: November 24, 2022 at 12:58 am

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Cover art/illustration via CryptoSlate

Crypto custodian BitGo has been nominated as the official custodian to safeguard the remaining funds at FTX. Acting CEO John Ray III selected BitGo to take custody of the assets of the crypto exchange for the duration of the bankruptcy proceedings.

FTX filed a motion to acquire a custodian in relation to the bankruptcy process on Nov. 23. A hearing is scheduled for Dec. 16 to confirm the appointment. Co-Founder of BitGo, Mike Belshe commented,

BitGo’s mission is to “deliver trust in digital assets” – and crypto needs that more than ever. By helping in this case, we intend to do our part to restore trust to our industry.”

Further, Belshe remarked, “when you break down FTX subsidiaries, the ones that used BitGo products are solvent and safe. The ones that didn’t, aren’t.”

BitGo custody services

BitGo is one of the major players within the crypto custody sector, holding assets on behalf of many institutional investors, banks, and crypto exchanges. Clients include Panterra Capital, Swissborg, Coinjar, Ripple, Nexo, and many others.

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As well as custody services, BitGo offers trading, staking, wallet services, portfolio management, and Bitcoin settlement. Further, it provides custody services for over 35% of all crypto exchanges.

It also has custody of the Mt. Gox Bitcoin, which was hacked in 2014, ceased trading, and filed for bankruptcy. Creditors selected BitGo as the sole custodian of Mt. Gox assets. The Bitcoins are being held on behalf of customers who had their Bitcoin locked into the exchange, a similar situation to the one currently ongoing at FTX.

BitGo’s Co-Founder had strong words about former FTX CEO Sam Bankman-Fried,

“SBF committed financial fraud, this is not a crypto issue but a market structure issue. Trading, financing, and custody need to be different. BitGo has been advocating that for years, and it’s time to start making it a reality for the good of crypto.”

CryptoSlate spoke with someone close to the company regarding the status of the crypto custodian amid widespread fear, uncertainty, and doubt in the crypto industry.

The company also has a ‘qualified custody’ license meaning that client assets are “bankruptcy remote.” The source remarked, “even if BitGo burns to the ground…it operates like a bank… it is never comingled and never moved unless you, as the owner, determine where it goes.”

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Comments shared with CryptoSlate from Belshe added,

“SBF proved that there is no such thing as a “safe” conflict of interest. Trading, financing, and custody need to be different. BitGo has been advocating that for years, and it’s time to start making it a reality for the good of crypto.”

Not all custody is created equal.

BitGo is licensed in South Dakota, New York, Switzerland, and Germany. A person familiar with the matter stated,

“Not all custody is created equal. There’s not another peer that is doing what BitGo is doing right now.”

They remarked that “BitGo is one of the most secure and reliable custodians for any institution” due to the qualified custodian status, multiple licenses, diligent internal risk management, and a lack of “conflict of interest.”

In a further seal of approval, BitGo is the custodian for wallets in El Salvador and has recently confirmed a partnership with Nike in relation to its new NFT initiative.

Talking about the current market climate, the source asserted that “BitGo has a very healthy balance sheet.” However, a recent Forbes article claimed that BitGo was seeking investment amid market turmoil and a failed acquisition from Galaxy.

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CryptoSlate’s source confirmed that the reason for the breakdown in the Galaxy deal was solely due to a decision by the SEC not to allow Galaxy to be listed on the New York stock exchange. It was nothing to do with the business practices at BitGo. Further, they remarked, “Galaxy is still an investor in BitGo and has access to all of the financials.”

“The truth of the matter is since we are BitGo is no longer in talks with Galaxy it is now open to pursuing other opportunities. This started in August.”

Retail facing custody

In an exciting announcement for non-institutional investors, the source confirmed that “BitGo is looking to scale operationally to make products available to investors who hold less than 1BTC.”

Custodial services of the nature of BitGo are not usually accessible to ordinary investors. Therefore, the news of BitGo opening institutional-grade custodial services for retail crypto holders will be welcomed by those whose faith has been rocked by recent events.

UPDATE 11 PM GMT: Another document filed by FTX requested a motion to pay “critical vendors” up to $8.5 million. 

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Binance to start proof-of-reserves; CZ proposes all crypto exchanges follow suit

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Binance to start proof-of-reserves; CZ proposes all crypto exchanges follow suit

Binance to start proof-of-reserves; CZ proposes all crypto exchanges follow suit Soumen Datta · 7 hours ago · 1 min read

CZ also suggested that all cryptocurrency exchanges do merkle-tree proof-of-reserves. According to the CEO, fractional reserves are suited to traditional banks and not crypto companies.

1 min read

Updated: November 9, 2022 at 3:42 am

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Cover art/illustration via CryptoSlate

Binance CEO Changpeng Zhao, or CZ, recently announced that Binance will start proof-of-reserves to support “full transparency.” 

CZ also suggested that all cryptocurrency exchanges do merkle-tree proof-of-reserves. According to the CEO, fractional reserves are suited to traditional banks and not crypto companies.

All crypto exchanges should do merkle-tree proof-of-reserves.

Banks run on fractional reserves.
Crypto exchanges should [email protected] will start to do proof-of-reserves soon. Full transparency.

— CZ 🔶 Binance (@cz_binance) November 8, 2022

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Worth noting that fractional reserves represent only a portion of a bank’s demand deposits that are kept in reserve and are immediately available for withdrawal. Some crypto influencers believe centralized exchanges still consider fractional reserves, which makes it “worse” for crypto. 

Part of the reason why crypto exists is to get rid of fractional reserve. Now CEXs make it worse by recreating fractional reserve without the Fed backstop. Insanely bullish for DeFi. Also regulations should require CEXs to implement proofs of reserve, possibly using ZK proofs.

— Dominator008💎🟢🔶🦙⚛️🎇 (@Dominator0081) November 7, 2022

The recent revelation for starting proof-of-reserve came after CZ announced that Binance would acquire FTX. Earlier, the exchange, led by Sam Bankman Fried, was experiencing massive withdrawals of assets, rapidly depleting its treasury. 

The native token was also down by more than 70% in just a few days as a result. Thus there were fears of insolvency of the exchange. 

If the acquisition is completed, Binance will oversee a massive portion of the cryptocurrency market. 

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How can proof-of-reserves enhance the transparency of crypto assets?

Using Proof of Reserves (PoR), users of crypto assets can verify that the balances they hold on exchanges are backed by real assets. This process uses an advanced cryptographic accounting procedure based on the Merkle tree, a data structure explicitly designed to maintain privacy.

The PoR becomes more necessary since point-in-time attestations are easy to manipulate, and simple cash flow analysis does not account for everything (such as unaccounted liabilities). By providing an accurate picture of held balances, it helps crypto exchanges gain users’ trust.

Earlier, there were talks that FTX is running a fractional reserve banking, but users may enjoy full transparency after the recent acquisition. As influencer Dan Ashmore believes FTX could have avoided all the discussions about its insolvency if it had some sort of on-chain proof of reserves.

Would all the insolvency chat not be solved if FTX had some sort of on-chain proof of reserves?

Seems ironic in the crypto industry that we are all talking about whether or not FTX are good for it. Is it not meant to be transparent in crypto ?

— Dan Ashmore (@DanniiAshmore) November 7, 2022

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