Snippings

Christopher Waller, a member of the Fed’s Board of Governors and a Trump nominee, commented on the potential impact of a digital dollar on commercial banks saying that “it might hit bank profit margins but that he wouldn’t have an issue with that”.

One of the key discussions to be had around the subject of payments in general, and central bank digital currency in particular, is about anonymity and privacy. This is part of a wider and more multi-faceted debate about data in the post-industrial economy, of course, but it has a specific context when it comes to the issue of payments. This is because of cash. One of the advantages of cash, to some people, is its anonymity. Hence, these people might say, digital cash should exhibit the same fundamental characteristic.But, as the Financial Times noted, there are limitations on the use of cash for criminal enterprises of one form or another. It is impractical (and dangerous) to hoard large amounts of banknotes.

As is obvious, though, physical limits do not apply to digital dosh. This why it is wrong to draw a parallel between the anonymity of physical cash and the anonymity of digital cash. Other than the word itself, these are wholly different properties and it is a category error to measure one against the other.

The historically most-favoured instrument of money launderers around the world, the $100, is anonymous in practice. Every $100 bill has a unique serial number and could in principal be tracked, traced and monitored on its journey from Hollywood to Medellin. In practice, however, it is too complicated and time-consuming and expensive to do this. And, it has to be said, and a great many of the intermediaries have no incentive to comply with monitoring mechanisms of any kind.

Nonetheless, it is expensive and inconvenient to transports suitcases full of cash around the world. Plus, if you do transport suitcases full of cash around the world, you might get caught.

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Tara Hanlon, 30, of Pelham Court, Leeds, pleaded guilty at Isleworth Crown Court in June to money laundering offences worth more than £5m.
She was arrested as she tried to board a flight to Dubai on 3 October 2020 with more than £1.9m in cash.

From Tara Hanlon jailed for over £5m money laundering offences – BBC News:

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Putting the cash in your underwear doesn’t help either.

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Drug-dealing scientist was caught with cannabis and £480 cash stashed in her underwear by cops

 

From Drug-dealing scientist was caught with cannabis and £480 cash stashed in her underwear by cops – Wales Online:

 

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Laundering wads of notes is expensive, and while we might look at a tax on criminal activity as justified, it is of no benefit to society if that tax is paid to other criminal enterprises.

In contrast, anonymous digital cash is a tax dodger’s dream. The rich and powerful can whizz limitless wonga around the world at the press of a button and what residual democratic control we might have over their activities evaporates into the ether. Unfettered criminal enterprise, not to mention state-sponsored economic terrorism, is made cost-effective to the point of being irresistible.

The German Banking Industry Committee (GBIC) is the voice of the leading German banking-sector associations. These are the National Association of German Cooperative Banks (BVR), the Association of German Banks (BdB), the Association of German Public Banks (VÖB), the German Savings Banks Association (DSGV), and the Association of German Pfandbrief Banks (vdp).

In the opinion of the experts from Germany’s five national banking associations, issuing money should remain the responsibility of credit institutions in the proven two-tier banking system, even if the digital euro becomes legal tender like cash. For this reason, the ecosystem of digital money which they propose is made up of three key elements:

retail CBDC for private use
wholesale CBDC for commercial and savings banks
tokenised commercial bank money for use in industry
Retail CBDC issued by the central bank is to be used by private individuals in the euro area in the same way as cash for everyday payments, e.g. to retailers or government agencies. It should be possible to use the digital euro like cash, anonymously and offline. For this purpose, credit institutions will provide consumers in Europe with “CBDC wallets”, i.e. electronic wallets.

Wholesale CBDC issued by the central bank is to be used for the capital markets and interbank transfers. The GBIC’s experts are calling for this special form of the digital euro partly because, by adopting this approach, the ECB would be able to include further digitalisation of central bank accounts in its project. The ultimate aim is to achieve improvements which can benefit consumers, enterprises and also the banking sector.

Tokenised commercial bank money, which will be made available by commercial and savings banks, is to complement the two forms of digital central bank money, in particular to meet corporate demand arising from Industry 4.0 and the Internet of Things. Tokenised commercial bank money could facilitate transactions based on “smart” – i.e. automated – contracts and thus increase process efficiency.

From Press Contact for the Deutsche Kreditwirtschaft.

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Fintech was once a business model unto itself. Now, companies across industries are embedding pre-built fintech solutions into their software, delivered via modern APIs.

 

Embeddable fintech is a fast-growing market, expected to reach nearly $230 billion in revenue by 2025 in the U.S. alone—up from $22.5 billion in 2020.

From Four Trends In Fintech And How They’re Modernizing The Consumer Experience:

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PayPal announced a partnership with the left-wing Southern Poverty Law Center to “investigate” the role of “white supremacists” and propagators of “anti-government” rhetoric, subjective labels that potentially could impact a large number of groups or people using their service. PayPal says the collected information will be shared with other financial firms and politicians. Facebook is taking similar measures, recently introducing messages that ask users to snitch on their potentially “extremist” friends, which considering the platform’s bias seems mainly to target the political right. At the same time, Facebook and Microsoft are working with several other web giants and the United Nations on a database to block potential extremist content.

The actions of these major companies may seem logical in an internet riddled with scams and crime. After all, nobody will defend far-right militias or white supremacist groups using these platforms for their odious goals. However, the same issue with government censorship exists with corporate censorship: If there is a line, who draws it?

From Coming soon: America’s own social credit system | TheHill:

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In his speech Tuesday, Mr. Gensler highlighted a range of areas in which the SEC could expand its purview.

One of them is decentralized finance, or DeFi, software applications that allow users to borrow, lend, earn interest and trade assets and derivatives. Some DeFi developers say the technology shouldn’t face federal oversight because the automated programs aren’t controlled by people or companies and don’t hold traders’ assets. The services are often used by people seeking to borrow against their cryptocurrency holdings to place larger bets.

From Crypto ‘Wild West’ Needs Stronger Investor Protection, SEC Chief Says – WSJ:

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Calling the asset class rife with “fraud, scams and abuse,” Mr. Gensler signaled the SEC is likely to become more active in policing crypto trading and lending platforms, as well as so-called stablecoins.

From Crypto ‘Wild West’ Needs Stronger Investor Protection, SEC Chief Says – WSJ:

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The biggest losses would fall on those who bought less than a year ago, at an average price of $37,000. That would include most institutions exposed to crypto, including hedge funds, university endowments, mutual funds and some companies.

From What if bitcoin went to zero? | The Economist:

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Facebook is reportedly looking into analyzing the content of encrypted data without having to decrypt it. The company is recruiting artificial intelligence researchers to study the matter, according to The Information. Their research could pave the way for Facebook to target ads based on encrypted WhatsApp messages. Facebook could also use the findings to encrypt user data without affecting its ad targeting approaches.

This area of research is called “homomorphic encryption,” which relies heavily on mathematics.

From Facebook is reportedly trying to analyze encrypted data without deciphering it:

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In a study published with the Columbia Law Review Forum in November 2020, the academics Barton Beebe and Jeanne Fromer examined a subset of trademark filings from Chinese applicants with the USPTO in 2017 and found that a significant proportion were faking documents in their applications. How many? They discovered that more than two-thirds of the trademark applications they examined included “fraudulent specimens” — and almost 40% of them were granted trademarks by the USPTO.

From Fraudulent Trademarks From China Swamping USPTO, Amazon, Businesses.

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