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How are Central Banks Exploring Central Bank Digital Currencies?

At a time when enterprises are moving fast toward the adoption of blockchain technologies, central banks are exploring digital currencies as an alternative to replace their cash in circulation. A Central Bank Digital Currency (CBDC) is the digital form of fiat currency. Not to be confused with cryptocurrency, CBDCs are different in many ways as they are regulated by the …

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At a time when enterprises are moving fast toward the adoption of blockchain technologies, central banks are exploring digital currencies as an alternative to replace their cash in circulation. A Central Bank Digital Currency (CBDC) is the digital form of fiat currency. Not to be confused with cryptocurrency, CBDCs are different in many ways as they are regulated by the government, monetary authority, or law. As it is backed by the government, a central bank can establish a CBDC account instead of printing the money.

Implementation of CBDCs By Central Banks

There is an ongoing argument over cryptocurrency regulations, given that central banks need to develop their own digital currencies. Central banks are now assessing their strategy of testing and implementing CBDCs using the distributed ledger technology. As a result, the central banks have accelerated pilot testing, and research and development worldwide.

Pros & Cons of CBDCs

There is no denying that we are living in a world where electronic transactions are taking over the cash usage. Additionally, several possible threats involved with electronic transactions and global crisis like the Covid-19 pandemic have pushed central banks to develop their own digital currencies. We will discuss the pros and cons of CBDCs one-by-one.

Pros

  1. It will help central banks accelerate cash circulation amid financial crises.
  2. It will enable central banks to deal with the threats or challenges posed by cryptocurrency.
  3. It has the potential for becoming a fast and more efficient method of payment.
  4. It will enhance financial inclusion and transmission of monetary policy.
  5. CBDCs will allow central banks to retain complete monetary control.
  6. CBDCs will provide greater security due to its functioning on blockchain technology.
  7. It will enhance safety and stability of financial institutions.

Cons

  1. It will lead to disintermediation of commercial banks in case customers choose to move from bank account to CBDC account.
  2. It will increase competition between central banks and commercial banks in terms of deposits, interest rates, and loans.
  3. High demand for CBDCs will force central banks to provide additional liquidity to banks.
  4. Threats like cyberattacks could pose reputational risk for a central bank.
  5. CBDCs will endanger financial stability with high inflation and volatile exchange rates.
  6. CBDC could create privacy issues with a traceable digital footprint.

CBDCs As a Future of Payments

Technological advancement has given rise to the acceptance and adoption of digital currencies as payments method. Central banks are showing keen interest toward the adoption of CBDCs and so are actively pursuing a range of policies to implement them. What makes CBDC stand apart from other traditional payments system, is its ability to simplify and expedite the transactions greatly.

CBDCs could emerge as a next wave of payments system with individual privacy, greater monetary control, and enhanced security, unlike cryptocurrency and cash. This could not only reduce the incidents of financial crimes but also mitigate counterfeiting and tax evasion.

After a customer creates or switches to a CBDC account, they can track the performance of their digital currencies as well as earn profits from the volatility of their digital currencies by using the-crypt-ex.com, an automated digital currency trading software which uses cutting-edge technologies.

Central Banks Exploring CBDCs

From the initial response it is getting, it would not be wrong to say that CBDC holds the potential to change the electronic transaction methods. According to the Bank for International Settlements survey, almost 80% of central banks globally are exploring CBDCs at some level. This can be understood as follows:

  1. National Bank of Cambodia has piloted a quasi-form of CBDC for its national payments system.
  2. Central Bank of Uruguay and the Bank of Thailand are into their CBDC evaluation process.
  3. People’s Bank of China and the Eastern Caribbean Central Bank have decided to replace their cash in circulation with CBDC.

Conclusion

Central Banks have recognized the need for developing their own CBDCs with the changing payments landscape. Multiple central banks are exploring the financial and economic effects of implementing CBDCs on their monetary policy. Though implementing CBDC would have a profound impact on the banking industry, it will provide customers with an alternative and safer solution of depositing and transacting money.

Central banks have been embracing digital innovation to secure the payments system. With CBDCs, central banks will be able to continue their pivotal role in maintaining the safety, risk management, and integrity of the high-quality payments system.

Source: https://www.cryptonewsz.com/how-are-central-banks-exploring-central-bank-digital-currencies/

Blockchain

Ripple’s Garlinghouse to File Dismissal Motion Against the SEC Lawsuit Over XRP Sales

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Ripple’s Garlinghouse to File Dismissal Motion Against the SEC Lawsuit Over XRP Sales

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The CEO of Ripple, Brad Garlinghouse is filing for a motion to dismiss the SEC lawsuit against himself and Ripple. This is according to a copy of a letter written by Garlinghouse’s lawyer stating that he intends to file a dismissal motion for the case.

The letter claims that the case was nothing but a regulatory overreach as the company’s sale of XRP did not involve any contract and the proceeds were not pooled with other buyers in a common enterprise. Its price also fluctuates in line with other digital assets such as Bitcoin and Ethereum.

“But Mr. Garlinghouse’s XRP sales involved no contract of any kind with the buyers, as his sales were done anonymously over an exchange. Nor were the proceeds of Mr. Garlinghouse’s sales pooled with other buyers in a common enterprise. And XRP’s value historically has not been correlated with Ripple’s actions, results, or public announcements, but instead with changes in the value of other digital assets, such as bitcoin and ether, that the SEC has publicly declared are not securities”, the letter read.

Ripple and its top executives have been in court since the SEC filed a lawsuit against them alleging that they illegally sold a security (XRP) and made profits of over $1 billion. Garlinghouse has however maintained his position that XRP is not a security.

This could be because other countries such as the UK hold XRP in high regard. Garlinghouse had last year indicated his intention to move Ripple headquarters over to the UK before the SEC lawsuit. In early February of this year, the company filed a defense for the suit which has led to a few more lawsuits.

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In 2015 and 2020, both the Department of Justice and the Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) declared XRP to be a “virtual currency”. The two departments even asked Ripple to implement anti-laundering in place, a requirement that Ripple claims securities are not expected to meet.

The outcome of Ripple’s case with the SEC could be a big determinant of future regulations in the cryptocurrency industry and the entire space awaits the outcome.


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The views expressed in the article are wholly those of the author and do not represent those of, nor should they be attributed to, ZyCrypto. This article is not meant to give financial advice. Please carry out your own research before investing in any of the various cryptocurrencies available.

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Source: https://zycrypto.com/ripples-garlinghouse-to-file-dismissal-motion-against-the-sec-lawsuit-over-xrp-sales/

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Crypto fund KR1 makes investment in blockchain data protocol LazyLedger

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KR1, a crypto & blockchain asset investment company, had announced that it has invested a total of USD $75,000 into Strange Loop Labs AG, doing business as LazyLedger Labs.

The investment company took part in LazyLedger’s seed funding round alongside Cosmos’ Interchain Foundation, Binance, Dokia Capital,  Maven 11, and other investors.

LazyLedger is a pluggable consensus and data availability layer to enable anyone to quickly deploy a decentralized blockchain; without the overhead of bootstrapping a new consensus network.

“LazyLedger is a great project and an opportunity to bring better data availability to blockchains; which reduces bloat and increases performance. We believe that LazyLedger is going to play a big role in the next generation of scalable blockchain architectures.”
– Keld van Schreven, Managing Director and Co-Founder of KR1

LazyLedger’s founding team are highly respected decentralized systems engineers and researchers; who were part of the founding team of Chainspace, a blockchain project acquired by Facebook, as well as contributors to Ethereum 2.0 and Cosmos’ Tendermint.

“I’m excited about KR1 supporting LazyLedger as they have been around from day one and the experience they bring is invaluable as one of the oldest funds in the crypto space.”
– Mustafa Al-Bassam, Co-Founder of LazyLedger

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Source: https://www.cryptoninjas.net/2021/03/04/crypto-fund-kr1-makes-investment-in-blockchain-data-protocol-lazyledger/

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DeFi yield optimization protocol ETHA Lend closes $1.6M funding round

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ETHA Lend, a yield optimizer protocol for DeFi, today announced it has closed a $1.6 million initial funding round from lead investors Digital Finance Group (DFG), AU21 Capital, and Privcode Capital.

Other investors include: Vector Capital, Chain Capital, PNYX Venture, Lancer Capital, Oasis Capital, TRG Capital, Candaq Capital, Dealean Capital, Inclusion Capital, Origin Capital, ZB Capital, YBB Foundation, AC Capital, Hotbit.

Designed to provide automated yield allocation across Ethereum and Polkadot DeFi ecosystems; ETHA Lend will be governed by ETHA token holders. The protocol’s algorithm is constructed to understand the precise circumstances of a liquidity provider and supply events; protecting users from high transaction costs, market limitations, and asset volatility.

 “We are excited to have some of the most reputable names in the crypto investment and DeFi funding market on board. Our protocol hosts unique integrations of the DeFi space that shall let users dabble with yield farming with unseen simplicity, cross-chain independence, and progressive yield optimization opportunities. You can look forward to a time when the sector shall be free of the haunting tribalism and intimidations both for new and expert users.”
– Chester Bella, Founder of ETHA LEND

The close of this funding round will enable ETHA Lend to accelerate development towards its mainnet launch, currently scheduled for Q2 2021. ETHA Lend’s smart contracts are being inspected by Certik; one of the most highly reputed blockchain security auditors.

Source: ethalend.org

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Source: https://www.cryptoninjas.net/2021/03/04/defi-yield-optimization-protocol-etha-lend-closes-1-6m-funding-round/

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