WEEKLY CRYPTO POLICY ROUNDUP NOVEMBER 26, 2021

Every week we bring you the latest cryptocurrency policy developments from around the world.

Japanese Consortium to Test Private Digital Currency

A group of leading Japanese banks and corporations (the Japanese Digital Currency Forum) have published a white paper outlining the plan to test a private digital currency, which for the time being is called the “DCJPY”.

The Digital Currency Forum includes some of the most prominent Japanese Banks, including MUFG Bank, Mizuho Bank, and Japan Post Bank.

The white paper notes that the platform it will “not necessarily be limited to yen-denominated currencies”.

The paper also notes that currency will be minted as commercial bank liabilities. In simple terms, if a user deposits traditional fiat with the commercial bank, they will receive an equivalent amount of the digital currency.

For a detailed overview of the proposed architecture for the digital currency, you can read the white paper.

El Salvador to issue Bitcoin Bond in 2022 to build ‘Bitcoin City’

The first nation to adopt Bitcoin as a national currency is now planning at some point in 2022 to issue $1 billion Bitcoin-backed bonds and use half of the funds to build a ‘Bitcoin City’ and mining operation in the Gulf of Fonseca, while the other half will be used to purchase more Bitcoin.

Read our full coverage of the bitcoin bond news here.

Republic of Palau to use XRP ledger for Stablecoin

The Republic of Palau, consisting of over 500 islands in the western Pacific and which uses the US dollar as its currency, has partnered with Ripple to test using the XRP Ledger to create the very first government-issued USD-backed digital stablecoin in 2022.

The XRP Ledger allows for full settlement of transactions for fractions of a cent in just 3-5 seconds. More than 5,400 currencies have been issued and traded on the XRP Ledger.

Read the press release from Ripple here.

European Council agrees to MiCA and DORA

On 24 November 2021 the European Council adopted its position on the Regulation on Markets in Crypto Assets (MiCA) and the Digital Operational Resilience Act (DORA).

These legislative proposals will now go to the This agreement forms the Council’s negotiating mandate for trilogue negotiations with the European Parliament. 

In contrast to the current uncertainty in the US, MiCA attempts to create the EU’s regulatory framework for crypto-assets market that supports innovation, financial stability and protects investors but has been criticized for its lack of clarity on definitions, burdensome treatment of DeFi, high proposed costs of regulation, and for leading to a tantamount ban on private stablecoins in the European Union.

DORA seeks to create the EU’s regulatory framework on digital operational resilience to prevent and mitigate cyber threats.

The proposed legislation will be negotiated between the European Commission who proposed it, the European Council, and the European Parliament. MiCA is expected to be in effect in late 2023 or during 2024. You can follow the ‘legislative train’ for MiCA here.

See the press release here.

Reserve Bank of Australia considering wholesale Aussie CBDC, unsure of need for Aussie retail CBDC, doesn’t think crypto is a means of payment

Assistant governor of the Reserve Bank of Australia (RBA) Michele Bullock has stated that the RBA is considering whether to introduce a CBDC for wholesale users (i.e. banks and financial institutions) aka Project Atom.

The RBA continues to work with the Bank of International Settlements, Malaysia, Singapore and South Africa a wholesale CBDC pilot project aimed at reducing cross-border payments between multiple CBDCs, the so-called Project Dunbar.

Meanwhile, the RBA’s head of payments, Tony Richards opined that he didn’t see crypto as a good means of payment.

Government Minister Jane Hume was not convinced of Mr Richards skepticism, stated that crypto isn’t going away and said:

“Don’t be the person who thought the iPhone would never take off because people would prefer to have their music and telephone on separate devices. Don’t be the person in 1995 who said the internet was just a place for geeks and criminals and would never become mainstream. And don’t be the person who argued that email was a passing fad.”

The Commonwealth Bank announced earlier this month that it would allow customers to buy and sell up to 10 crypto assets through its banking app, in a trial launch in 2022.

See the speech by the RBA’s Head of Payments Policy here.

US Infrastructure Bill “broker” rules become law 

President Joe Biden signed the Infrastructure Investment and Jobs Act into law on 15 November 2021. The Act greatly increases the tax reporting obligations of those facilitating crypto transactions by greatly expanding the definition of a “broker” to essentially include anyone conceivably involved in a crypto transaction and even miners whose’ facilitation’ of a crypto transaction is dubious at best. 

The obligations will apply for 2023 with transactions to be reported in 2024 but the Act has drawn criticism as many “brokers” will have incomplete information in order to make the required filings.