Banking and CBDC Weekly Roundup: 25/11/2024

For all the key details of new Distributed Ledger Technology (DLT) projects in the banking world, real-world asset (RWA) tokenization, stablecoins, and central bank digital currency (CBDC) updates, the Observers 'Banking and CBDC Roundup' weekly has you covered.

CBDC Updates

'Urgency' Required in Digital Euro Rollout

A senior official within the European Central Bank has warned the trading bloc risks falling behind rivals in the race to launch a CBDC.

Evelien Witlox, who is leading the digital euro project, told Euronews that EU institutions must "keep sufficient pace" to ensure it is launched, adding:

"If you look at the current landscape, we see a fragmentation of payment solutions, and the ones that come closest to covering the whole of Europe are non-European."

Witlox has also touched upon the main pain point of the digital euro design – the privacy of transactions. She confirmed that since all transactions of the digital euro will go through the same banking system, those would be subject to the same screening policies. The offline option, however, will not be processed through these networks and will provide privacy levels comparable with the banknotes.

Founder of China's CBDC Ousted from Power

Yao Qian, who played an instrumental role in establishing the digital yuan, has been expelled from the Chinese Communist Party.

A blistering report in a local newspaper said:

"Yao Qian had abandoned his original mission, was not political, coveted fame, regarded himself as a financial technology expert, spared no effort to support specific technology service providers for his own selfishness, and was willing to be the 'key training target' of the hunters."

It's alleged he "used virtual currency to trade power for money" — and accepted "extremely huge" bribes, including luxury banquets, alcohol and property.

India Cautious on Expanding CBDC Pilot

The Reserve Bank of India has announced that it's establishing mobile payment links with nearby countries.

An agreement has been established with Sri Lanka, "some arrangements" with Bhutan and Nepal, and negotiations are underway with the UAE.

All of this comes as work continues with central banks in the region to develop a cross-border payments platform for immediate transactions.

But when it comes to CBDCs, which remain at a pilot phase in India, Governor Shaktikanta Das told Bloomberg:

"We are in no hurry to roll it out immediately. Once we have some visibility of what the outcome or impact will be, we’ll roll it out. We don’t keep a specific timeline for that."

Tokenization Updates

CFTC Paves the Way for Adoption

Tokenized assets could soon be used as collateral in traditional derivatives markets — potentially adding another use case for blockchain-based money market funds such as BlackRock's BUIDL. Commissioner Caroline Pham announced:

"All over the world, there have been successful and proven commercial use cases for tokenization of assets, such as digital government bond issuances in Europe and Asia, over $1.5 trillion notional volume in institutional repo and payments transactions on enterprise blockchain platforms, and more efficient collateral and treasury management."

All Change at Goldman's Digital Assets Platform

Meanwhile, Goldman Sachs has revealed it's planning to spin out its digital asset platform by the middle of 2026 — and make it industry owned.

The U.S. investment bank's head of digital assets, Mathew McDermott, told Bloomberg that it would be "in the best interest of the market."

It's hoped the move would help Wall Street embrace the tokenization of funds, as well as blockchain technology, more widely.

Canton Fitzgerald to Collateralize Bitcoin with Tether

Canton Fitzgerald, a financial services firm currently run by Donald Trump's pick for the next Commerce Secretary, Howard Lutnick is in talks with Tether to launch a $2 billion lending facility against bitcoin collateral, Bloomberg reports.

The project aims to add earning options for bitcoin holders and, if it succeeds, might potentially bring the $2 trillion asset's liquidity to DeFi.