Summary
- This week in crypto policy news, people in Singapore can now pay bills in crypto. Payment platform AXS partnered with the cryptocurrency payment firm Triple-A, to allow users to settle bills, fines, taxes, and student fees using digital currencies.
- The UK has the results of its CBDC consultation, as the UK government has assured that future legislation on the digital pound will protect privacy and control of money.
- The European Commission has launched an AI innovation package aimed at bolstering AI startups and SMEs in alignment with EU values and regulations.
- For those who want to share this update, view the crypto policy news roundup on LinkedIn and Twitter.
The Bank for International Settlements (BIS) has reported that central banks were early adopters of machine learning techniques, utilizing them in various areas such as statistics, macroeconomic analysis, payment systems oversight, and supervision. These applications have yielded significant success.
While Artificial intelligence (AI) presents many opportunities in support of central bank mandates, it also presents various challenges, both general and specific to the context of central banks.
The application of machine learning techniques is highly fitting for central banking, considering the accessibility of both structured and unstructured data, along with the need for analysis to support policy. Collaboration among central banks, achieved through knowledge-sharing and the pooling of expertise, has significant potential to keep them at the forefront of advancements in AI.
In the realm of payment systems, machine learning has been instrumental in identifying abnormal transactions that might require closer scrutiny by the payment system’s oversight team. This has enhanced the stability of the financial system, which is fundamental to the functioning of payment systems.
The BIS bulletin highlights that the synergies between machine learning and core central banking disciplines such as economics, statistics, and econometrics are likely to place central banks at the forefront of advances in AI.
EU’s AI Innovation Package
The European Commission has launched an AI innovation package aimed at bolstering AI startups and Small and Medium-sized Enterprises (SMEs) in alignment with EU values and regulations. The initiative follows the political agreement on the EU AI Act in December 2023, which is the first comprehensive law on AI globally, designed to ensure the development of ethical AI within the EU.
The package includes a range of measures to support AI innovation, such as amendments to the EuroHPC Regulation to establish AI Factories and a decision to create an AI Office within the Commission. The AI Office, housed within the Directorate-General for Communications Networks, Content and Technology (DG CNECT), will support the enforcement of AI rules, primarily focusing on general-purpose AI models and systems. It will also promote innovation ecosystems, collaborate with public and private entities, and monitor initiatives like GenAI4EU.
The AI innovation package is set to provide privileged access to supercomputers for AI startups and SMEs, financial support through Horizon Europe and the Digital Europe program, initiatives to strengthen the EU’s AI talent pool, and encourage public and private investments in AI startups and scaleups. Additionally, it aims to accelerate the deployment of Common European Data Spaces for the AI community.
AML Agency Ready To Host City Candidates
The European Parliament is gearing up for a joint hearing of candidates for the seat of the Anti-Money Laundering (AML) Agency. This marathon 12-hour session, scheduled for 30 January 2024, will see finance ministers from the nine competing countries present their cases.
The nine applicants vying to host the EU’s future watchdog on fighting money laundering and terrorist financing will present their candidacies in a public hearing at the European Parliament in Brussels. This is the first time that public hearings are part of the process of selecting the seat of a new EU agency, following an EU Court judgment that Parliament an equal say with the Council in determining the host cities of future agencies.
The candidates will present in the following order: Italy (Rome), Austria (Vienna), Lithuania (Vilnius), Latvia (Riga) Germany (Frankfurt), Ireland (Dublin), Spain (Madrid), France (Paris), and Belgium (Brussels).
A joint vote of Parliament and Council will determine the seat of the agency. This comes as part of a package of measures against money laundering and terrorist financing, which are expected to be formally adopted before the EU elections in June 2024.
UK’s Digital Pound Consultation
The Bank of England and HM Treasury have released the results of their consultation on the digital pound, a proposed central bank digital currency (CBDC) for the UK. The consultation received over 50,000 responses and was part of a broader conversation on the future of money in the UK.
The UK government has assured that future legislation on the digital pound will protect privacy and control of money. This comes in response to concerns raised by respondents about the implications of a digital pound for access to cash, users’ privacy, and control of their money. The government and the Bank of England have confirmed that neither institution would have access to users’ data.
Despite the progress, the UK is taking a cautious approach to introducing the digital pound. No final decision has been made to pursue a digital pound, and any potential launch would occur no earlier than 2025.
Meanwhile, other jurisdictions around the world, like the Bahamas and Nigeria, are already issuing CBDCs. The Bahamas was the first to issue a CBDC, the “Sand Dollar,” while Nigeria launched the “eNaira,” Africa’s first CBDC. These developments highlight the global interest in CBDCs, with more than 100 countries currently in the exploration stage.
APAC: Singapore, Hong Kong, China and UAE Pioneer Crypto Moves
Enhanced Crypto Payment Options in Singapore
Singapore’s payment platform, AXS, has partnered with the cryptocurrency payment firm Triple-A to allow users to settle bills, fines, taxes, and student fees using digital currencies. This marks a significant step towards expanding the use of digital currencies in the market.
Following the partnership, users can choose to pay in Bitcoin, Ether, tether, or USD Coin for 550 of the 600 AXS payment services. The payments are only available on AXS’s mobile app, also known as AXS m-station. However, the partnership aims to extend the service to the 650 AXS machines (AXS Stations) in Singapore.
This move by AXS creates many more ways to use such currencies for daily transactions, catering to the evolving preferences of its diverse user base.
UP Fintech’s Expansion into Crypto Trading
UP Fintech, the operator of the Tiger Trade online brokerage, has received approval from the Hong Kong Securities and Futures Commission to expand its license to include virtual assets trading. This development positions UP Fintech as one of the pioneering brokerages in Hong Kong to provide crypto trading services.
The approval to upgrade its license marks a significant milestone for UP Fintech, as it expands its services to cater to the growing demand for cryptocurrency trading in the region. This move aligns with the global trend of increased interest in digital assets and the broader adoption of cryptocurrencies in financial markets.
The inclusion of crypto trading services by UP Fintech is expected to provide Hong Kong investors with more diverse investment options. It also underscores the company’s commitment to innovation and its ability to adapt to the evolving needs of its customers in the dynamic financial landscape.
Crypto Investments in China
Despite the ban on crypto trading and mining in China since 2021, Chinese investors are finding innovative ways to own crypto assets. These investors view crypto as safer than investing in domestic stock and property markets, which have been experiencing volatility.
The crypto ban was implemented by the Chinese government due to concerns about financial stability, as well as the environmental impact of crypto mining. However, the allure of potential high returns from crypto, coupled with the perceived instability of traditional investment avenues, has led to a surge in interest in digital assets.
Chinese investors are using various methods to circumvent the ban, such as using VPNs, to access foreign crypto exchanges, and purchasing NFTs, as a form of indirect investment in crypto.
This trend underscores the global appeal of crypto and the challenges faced by governments in regulating these digital assets. It also highlights the resilience and adaptability of investors in response to regulatory changes.
Establishment of the AI And Advanced Technology Council in UAE
The President of UAR and the ruler of Abu Dhabi, Sheikh Mohamed bin Zayed, has announced the establishment of the AI and Advanced Technology Council (AIATC). This initiative is a testament to the country’s commitment to leading the way in AI and advanced tech. The AIATC will be responsible for developing and implementing policies and strategies related to research, infrastructure, and investments in AI and advanced tech in Abu Dhabi.
The council will collaborate with local and global partners to develop plans and research programs. This strategic initiative aligns with Abu Dhabi’s goal of positioning itself as a global hub for investments, partnerships, and talent in the AI sector.
This move is part of the UAE’s broader strategy to embrace technological advancements and promote AI and advanced tech, contributing significantly to the city’s post-hydrocarbon economy development and prosperity. It complements Abu Dhabi’s strategy to position the Emirates as a world-leading hub for investments, partnerships, and talent in the sector.
Africa: Nigeria Lifts Ban on Crypto Transactions
The Central Bank of Nigeria (CBN) has reversed its stance on crypto transactions, lifting a three-year ban and moving to regulate virtual assets in response to “current global trends” and industry demands for regulatory clarity. This shift in policy allows commercial banks to re-engage with crypto trading platforms under certain conditions, such as obtaining valid licensing from Nigeria’s Securities and Exchange Commission.
The CBN’s decision to regulate rather than ban crypto transactions reflects a broader trend in Africa towards providing clear guidance for the secure interaction between financial institutions and the digital asset ecosystem. This move is expected to pave the way for increased crypto partnerships and growth within the country’s financial sector.
Under the new regulations, banks are required to set prudent transaction limits and are prohibited from allowing cash withdrawals from crypto-related accounts. The policy change comes after the previous ban failed to curb crypto use in Nigeria, with citizens turning to peer-to-peer transaction features to bypass restrictions.
