Seeds of Wisdom RV and Economic Updates Friday Afternoon 10-25-24
Good Afternoon Dinar Recaps,
BRICS+ EXPANDS PLANS FROM DLT PAYMENTS TO DLT CLEARING AND DEPOSITARY
Following this week’s BRICS+ meetings in Kazan, Russia, the group published a 136-page statement, with a small part of it touching on payments (see below). Plans for a new cross border payment system, BRICS Bridge, have been discussed for some time. Additionally, Russia is now pushing for a BRICS-based securities system to provide clearing and a depositary, reportedly also DLT-based.
In January BRICS expanded its membership from the original five members — Brazil, Russia, India, China, and South Africa — with the addition of Iran, the UAE, Ethiopia and Egypt. While Saudi Arabia was expected to be one of the new joiners, it has not officially signed up. Instead, it is a BRICS ‘partner’.
BRICS Pay
Before the main meetings, BRICS Pay cards loaded with 500 Rubles ($5.20) were distributed to visitors at the BRICS Business Forum in Moscow. Egyptian and South African news outlets describe the cards as a symbolic promotional gesture rather than suggesting that a live system exists.
However, this is a reminder of another initiative – to interconnect domestic payment systems – which has not gained traction, according to a recent Forbes Russia report.
Discussions about a BRICS common basket currency have also faded, mainly because that’s viewed as extremely difficult. However, the BRICS+ statement referenced exploring ‘payment instruments and platforms’, which could include either a basket or more likely local currency CBDCs.
BRICS Bridge
In recent times the main focus has been on the DLT-based BRICS Bridge as a way to enable local currency transactions, potentially with CBDCs.
The use of the word Bridge is a nod to mBridge the cross border payment system co-developed by some of the BRICS members, that has reached the minimum viable product stage.
Notably, the group is in the process of open sourcing the mBridge code, which might make it easier for BRICS members to adopt. Unlike BRICS Pay, mBridge is more of a backend payment infrastructure that links to existing banking systems.
However, in the short term the aim is to use local currency settlement as part of the existing correspondent banking network. That’s emphasized in the official joint BRICS+ statement (see below).
Meanwhile, IMF managing director Kristalina Georgieva wants to know more about the plans for the payment system.
“The idea of having a payments system of a group of countries is not new,” she said, according to Reuters.
“What we need to see is more details,” she added. “What is it in this idea? How that may translate into reality? And then we will be able to assess it.”
BRICS Clear
The statement also included a paragraph on the study of a “BRICS Securities Depository and Settlement Infrastructure” which would be an alternative to Western infrastructures like the DTCC, Euroclear and Clearstream.
This was previously floated as an idea in a Russian paper circulated before the meetings. Bloomberg reported that some view this as an initiative from Russia and Iran, while other BRICS members might have less appetite for it.
BRICS statement
Below are the relevant excerpts from the joint BRICS statement:
We reaffirm our commitment to strengthening BRICS financial cooperation. We recognize that a fast, low-cost, efficient, transparent, secure and inclusive cross-border payment system based on the principle of minimization of trade barriers and non-discriminatory access has broad benefits.
We welcome the use of local currencies by BRICS countries and their trading partners in financial transactions.
We encourage the strengthening of the BRICS correspondent banking network and the promotion of local currency settlement under the voluntary and non-binding BRICS Cross-Border Payments Initiative, and look forward to further discussions on this under the BRICS Payments Working Group and other mechanisms.
We authorize the BRICS Finance Ministers and Central Bank Governors to continue their study on local currency cooperation, payment instruments and platforms as appropriate and to submit a report during the next BRICS Presidency.
We recognize the importance of exploring the feasibility of interconnecting the financial market infrastructure of BRICS countries, and agree to discuss and study the feasibility of establishing a “BRICS Securities Depository and Settlement Infrastructure” on a voluntary basis to supplement the existing financial market infrastructure.
In addition, we will explore the establishment of BRICS (re)insurance companies on a voluntary basis to enhance the independent reinsurance capacity of BRICS countries.
@ Newshounds News™
Source: Ledger Insights
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REGULATORY UNCERTAINTY IS A BARRIER TO THE INSTITUTIONAL ADOPTION OF TOKENIZED MONEY MARKET FUNDS: ANALYST
▪️According to an analyst, the potential for adverse regulatory intervention remains a major obstacle to the broader adoption of tokenized money market funds among institutional investors.
▪️The analyst added that while there is growing institutional interest in using tokenized assets like BlackRock’s BUIDL as collateral in crypto derivatives trading, adoption hinges on regulatory clarity and developing foundational infrastructure.
The risk of adverse regulatory intervention remains a major obstacle to the broader adoption of tokenized money market funds among institutional players, an analyst said.
"Tokenized money market funds are under constant threat of adverse regulatory action, curbing investors’ appetite," Rho Labs founder Alex Ryvkin told The Block.
"And, as someone with first-hand experience implementing blockchain-compatible infrastructure for the incumbents, I can confirm that widespread tokenized RWA-readiness is, although inevitable, still a couple of years away."
Ryvkin explained that while awareness and interest in tokenized real-world assets have grown, progress on regulatory clarity and infrastructure development will be necessary before these products achieve mass adoption.
He noted that the current adoption stage remains in the "experimentation phase," with the usage of tokenized money market products still lagging far behind their traditional finance counterparts.
"While we’ve seen some impressive shifts in RWA adoption, we’re still in that early experimentation phase. The outstanding interest in RWA products is dwarfed by similar trades in the tradfi space, and the adoption is mostly limited to institutional or qualified investor participation," Ryvkin added.
Tokenized MMFs used as collateral on crypto-derivative exchanges
Ryvkin highlighted some recent institutional moves in the space — including interest in using tokenized assets such as BlackRosk's BUIDL token as collateral on crypto derivatives exchanges, such as Deribit. "That’s good news and not just for BlackRock, as the development of crypto-liquidity backed by traditional securities as collateral, once the rails are widely established, would not stop," he said.
However, Ryvkin noted that although developments are promising, true adoption requires a foundational infrastructure that is still being built. Ryvkin then pointed to critical steps needed for products like BlackRock’s tokenized BUIDL fund to move beyond proof of concept and integrate broadly into capital markets.
@ Newshounds News™
Source: The Block
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PENNSYLVANIA HOUSE PASSES CRYPTO PROTECTION BILL IN BIPARTISAN VOTE
The Pennsylvania House of Representatives passed a bill protecting residents' rights to use and store cryptocurrency on October 22, 2024. The Digital Assets Authorization Act secured an overwhelming majority of 176-26 votes, backed by all 100 Republican members and 76 Democrats, according to the official Pennsylvania General Assembly voting record.
The strong bipartisan support for the bill reflects a broader trend in U.S. politics, where cryptocurrency regulation represents a rare unifying issue. Among crypto owners, 35% identify as Democrats, 33% as Republicans and 32% as independents or other according to a Grayscale report.
However, the House's voting pattern shows that some resistance remains among Democrats, with 26 voting against the bill while Republicans showed unanimous support.
Voters are paying close attention to crypto policy, with 51% of crypto-positive voters monitoring candidates' positions, while 48% of all voters express distrust towards politicians who interfere with crypto development, rising to 63% among crypto-positive voters, according to a recent DCG and Harris Poll survey of swing states, including Pennsylvania.
"This data shows crypto is top of mind for voters in swing Senate states and that a pro-crypto position is a net positive for policymakers and candidates," said Julie Stitzel, Senior Vice President of Policy at DCG in a press release statement.
Bill Specifics And Enforcement Plan
If enacted, this crypto legislation would establish clear protections for digital asset usage and custody rights across Pennsylvania, while maintaining existing regulatory frameworks.
@ Newshounds News™
Source: Forbes
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TETHER PROPOSES BOLD PLAN: BORON-BACKED TOKENS FOR TURKEY’S MARKET—HERE’S WHY
Tether Holdings Ltd., the issuer behind the world’s largest stablecoin USDT, has proposed an ambitious plan to Turkey’s government. The plan aims to “modernize” the country’s boron market using blockchain technology.
The proposal involves creating digital tokens backed by borate minerals, a key resource where Turkey controls over 70% of the global supply.
Further Details On The Proposal
As Bloomberg reported earlier today, citing individuals familiar with the matter, Tether pitched the idea to Turkish officials to tokenize boron, used in various industries such as ceramics, fertilizers, and glass production.
In addition to the tokenization proposal, the company has also raised the possibility of establishing a digital asset exchange in Istanbul, Turkey’s financial hub.
Tokenization is a growing trend within the digital asset space, where real-world commodities or assets are represented by digital tokens on a blockchain.
Bloomberg revealed that proponents argue that tokenization can improve market efficiency, liquidity, and transparency.
With Turkey projected to generate $1.3 billion in boron sales by 2024, the government may view Tether’s proposal as an opportunity to tap into innovative technologies and boost economic growth.
Turkey’s Growing Crypto Market And Tether’s Interest in Boron
Although the specific benefits of Tether’s proposal remain unclear, the company’s interest in Turkey is not entirely unexpected.
So far, Turkey has emerged as an attractive market for digital assets, particularly due to “high inflation and the declining value of the Turkish lira,” which has led to increased crypto adoption. Boron, a naturally abundant resource in Turkey, presents an intriguing choice for Tether’s tokenization efforts.
Turkey’s state-owned mining company Eti Maden Isletmeleri Genel Mudurlugu manages the country’s boron reserves, and the government’s control over this valuable resource could make it an ideal candidate for blockchain-based solutions.
While the Turkish government has not yet committed to the proposal, discussions are ongoing, with key meetings between Tether officials and senior Turkish figures, including Vice President Cevdet Yilmaz and Energy Minister Alparslan Bayraktar.
A Turkish government official has noted that the idea is still in its early stages and may not be implemented immediately. Additionally, a Turkey’s Energy Ministry representative confirmed that the discussions with Tether are ongoing, though no concrete plans have been confirmed yet.
Meanwhile, in a statement, Tether’s CEO Paolo Ardoino reaffirmed the company’s commitment to supporting innovation in Turkey’s digital-asset ecosystem. Ardoino noted:
Tether is] deeply committed to fostering innovation in Turkey’s digital-asset landscape and keen to continue exploring new opportunities for growth.
@ Newshounds News™
Source: Bitcoinist
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