China dominates Bitcoin hashrate despite mining ban

Solomon Islands partners with Soramitsu on CBDC pilotCentral bank digital currency (CBDC) development has been ongoing globally at a brisk pace in 2023 and smaller nations, like the Solomon Islands with a population of over 700,000, are no exception when it comes to that process with the introduction of Bokolo Cash.Photo by Gilly Tanabose on UnsplashIntroducing Bokolo CashSolomon Islands Central Bank (CBSI) has officially unveiled the proof-of-concept for its CBDC named Bokolo Cash, with support from Japanese blockchain firm Soramitsu. Bokolo Cash is pegged to the value of one Solomon Islands dollar.The proof-of-concept pilot was launched on Tuesday by way of a keynote speech given by Manasseh Sogavare, the prime minister of the archipelago. In that speech, Sogavare highlighted that the CBDC would lead to reduced transaction costs for citizens and businesses. Users can rely on transactions to be both secure and transparent, given that the network will be blockchain-based.The prime minister also articulated that the CBDC pilot project would be a catalyst for financial inclusion relative to the Island nation’s remotest communities.Pilot scheme use casesParticipants in the project will have the opportunity to use it in various scenarios. From retail transactions in the capital city, Honiara, to person-to-person transfers, the CBDC aims to demonstrate its versatility. The proof-of-concept will also assess wholesale transfers between commercial banks, simulate cross-border payments and examine remittances. To ensure security and compliance, users will undergo a “two-step” Know Your Customer (KYC) verification process, as outlined by Soramitsu.Operating on a customized blockchain based on Hyperledger’s Iroha, Bokolo Cash is designed for local use. However, it will also integrate with Soramitsu’s public Sora blockchain. This connectivity will enable users to engage in transfers using QR codes and the self-custody Fearless Wallet, a creation of Soramitsu.Legislative changeAlthough the project commenced at the beginning of November, the official announcement was made earlier this week. The legislation required to enable the CBSI to issue the CBDC — CBSI (Amendment) Act 2023 — was enacted on Nov. 3.The Solomon Islands, a collection of over 900 islands situated west of Papua New Guinea, now joins a group of island nations, including the Marshall Islands and Mauritius, actively experimenting with CBDC. Palau collaborated with Ripple Labs back in July to introduce the Palau Stablecoin (PSC). Interestingly, Tonga has contemplated adopting Bitcoin as legal tender, while Vanuatu hosts Satoshi Island, known for its Bitcoin-friendly environment. Meanwhile, Eastern Caribbean countries have already implemented an official CBDC called DCash.Soramitsu has been active in collaborating with central banks relative to the introduction of CBDCs, particularly in Asia. It has played a key role in facilitating the issuance of the Cambodian Bakong and the Lao DLak in Laos. Furthermore, it has initiated a project for regional cross-border payments using the Bakong and a stablecoin.In 2022, Soramitsu completed CBDC-related feasibility studies in conjunction with the relevant authorities in Vietnam and the Philippines. The Japanese fintech company has also participated with the Asian Development Bank and Tokyo-based global information technology solutions firm Fujitsu on a Web3 development project.

India Offers Suggestions in the Development of G20 Crypto GuidelinesIndia submitted its Presidency Note on Tuesday, contributing to the global framework for cryptocurrency regulation under the auspices of the G20, a forum comprising the world’s 20 largest economies.The document aligns itself with the guidance provided by prominent entities including the Financial Stability Board (FSB), the Financial Action Task Force (FATF), and the International Monetary Fund (IMF).Photo by Swapnil Deshpandey on UnsplashKey Summit topicMany months in advance of September’s G20 Summit in New Delhi, it was clear that crypto regulation would be a key subject for discussion. The FSB’s guidelines, released in July, offer a comprehensive framework for regulating various crypto assets, particularly stablecoins, based on existing standards and principles. These guidelines encompass crucial aspects such as governance, risk management, disclosure, supervision, and cross-border collaboration.In May, the FSB’s Regional Consultative Group for Asia met in Cebu, in the Philippines. During that meeting, the FSB highlighted the risks implicated by digital assets.Published in June, the FATF guidelines put forth a universally applicable set of rules to combat money laundering and counter the risks of terrorist financing linked to cryptocurrencies. One of the main provisions is the “travel rule,” compelling crypto service providers to share customer information when conducting fund transfers.While the IMF guidelines are expected to be unveiled in August, they will encompass a synthesis paper that offers a comprehensive roadmap for crypto regulation. This roadmap is designed to reflect input from multiple stakeholders and jurisdictions.India’s supplementary additionsAmidst endorsing these global crypto guidelines, India also proposes supplementary additions, particularly highlighting the challenges faced by developing economies in the crypto realm. The document underlines that these nations may grapple with capacity and resource constraints when implementing effective crypto regulation and supervision.Furthermore, they might require more extensive access to reliable data regarding crypto activities and associated risks. Developing economies are also at a heightened risk of falling victim to illicit crypto use, including money laundering, tax evasion, and cyber-crime.In light of these concerns, India advocates for the inclusion of developing economy-specific considerations in the FSB’s guidelines. The country also urges for technical assistance and capacity-building support to be extended to these nations. Additionally, it proposes a global outreach initiative to raise awareness of the risks, commencing with nations experiencing higher levels of crypto adoption.Broadening the scopeAnother noteworthy suggestion from India is an extension of the regulatory approach beyond the G20’s scope, encompassing the broader digital economy. While recognizing that crypto is merely one facet of the sweeping digital transformation reshaping multiple sectors, India’s document underscores the need for enhanced cooperation and coordination among various stakeholders and authorities at both national and international levels.In this vein, India proposes that the G20 contemplate formulating a comprehensive framework for the digital economy. This framework should encompass a wide array of concerns, including data governance, digital taxation, digital identity, digital inclusion, and fostering digital innovation, according to the document.India’s exploration of diverse aspects related to cryptocurrency — ranging from legal status to taxation implications, central bank digital currency (CBDC) potential, and innovation possibilities — further underlines its desire to see greater international cohesion in relation to the regulation of digital assets.

Qatar Criticized for Regulatory Inaction Against Crypto CompaniesThe Qatari Central Bank (QCB) has come under fire from the Financial Action Task Force (FATF) for its lack of efforts in enforcing regulations that prohibit virtual asset service providers.In a report released earlier this week, the global watchdog for money laundering and terrorist financing highlighted the need for Qatar to enhance its capabilities in effectively combating evolving forms of criminal activity, including taking action against virtual asset service providers.Photo by Akbar Nemati on PexelsContinuous improvement neededAlthough acknowledging “substantive improvements” applied to its control system, the FATF report emphasized that Qatar must further improve its understanding of more complex forms of money laundering and terrorist financing.While Qatar has shown positive progress in gathering beneficial ownership information through its unified register, which consolidates data on its citizens, the FATF report emphasized the need for stronger controls to ensure the accuracy and currency of the collected information. The report also criticized Qatar’s authorities for underutilizing their sophisticated analysis capabilities in identifying instances of money laundering.Lack of control despite VASP banDespite the Qatar Financial Centre Regulatory Authority’s (QFCRA) announcement in December 2019 that virtual asset service providers (VASPs) are not allowed within or from the Qatar Financial Centre, the country’s regulatory authority has made little progress in penalizing firms that facilitate or provide crypto asset services.Interestingly, while Qatar has banned virtual asset service providers, it has expressed interest in exploring the potential use cases of a central bank digital currency (CBDC). In June 2022, it was reported that the QCB is in the early stages of developing a CBDC.Sheikh Bandar bin Mohammed bin Saoud Al Thani, the governor of Qatar’s central bank, revealed that the QCB is evaluating the advantages and disadvantages of CBDCs and determining the appropriate technology and platform.As the country explores the potential of a CBDC, it must ensure that its regulatory framework aligns with international standards and best practices. By doing so, Qatar can strike a balance between fostering innovation in the digital currency space and safeguarding its financial system from illicit activities.Global coordinationThrough the Paris-based money-laundering watchdog, and calls from the G7, the European Central Bank, and others to regulate on a global basis, the official response to controlling digital assets and VASPs is becoming more globally coordinated. Central bankers and government officials have learned that decentralized finance has the ability to be borderless.FATF has been active in getting more countries on board. Effective from Thursday, Japan now implements FATF’s “travel rule” with respect to digital assets. That action was taken following a FATF finding that Japan wasn’t following best practice relative to anti-money laundering (AML) measures. Pakistan recently banned cryptocurrencies in an effort that appears to have been motivated by wanting to stay off the FATF’s gray list of non-compliant countries.While Pakistan managed to get itself off that list, the United Arab Emirates found itself on the gray list. The UAE’s Central Bank issued guidance on AML relative to virtual asset companies, in an effort to come back into FATF compliance.It remains to be seen how Qatar will respond to the FATF’s critique and whether it will take concrete actions to address the concerns raised. The international community will be closely monitoring Qatar’s efforts to combat financial crimes in the virtual asset sector and to establish a robust regulatory framework for its future CBDC endeavors.