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Regulation

NYDFS hosts crypto industry competition to get real-time data on Bitlicensees

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New York’s financial regulator is asking for new tools to gather real-time financial data. 

On Thursday, the New York Department of Financial Services announced new details of its coming “techsprint” competition:

“The objective of the techsprint is to achieve creative and collaborative prototyping as a step toward smarter regulatory reporting in virtual currency.”

Namely, the DFS is using the two-week competition to get better access to data from crypto companies in real time. It’s first question reads:

“How can DFS achieve real-time or more frequent access to company financial data from virtual currency licensees and receive early warning signs of financial risks to the companies or their customers?”

The DFS is particularly interested in the analytical potential of “natural language processing, machine learning, and artificial intelligence,” which have become top priority technological capabilities for regulators around the world seeking to cope with overwhelming inputs of high-volume industry data. 

It’s taken centuries for regulators to get a grip on data inflows in traditional markets, and periodically someone finds new and exciting ways to falsify data. For crypto exchanges looking to fight market manipulation, it’s been an accelerated process — its own techsprint.

The DFS, presiding as it does over Wall Street, is often at the front line of the world’s sub-national financial regulators. For crypto, specifically, the DFS issues and administers the coveted “Bitlicense,” which has put it in particularly close touch with a roster of the biggest players in crypto. 

The competition will take place in the first two weeks of March. The winners will receive no monetary prizes, though it seems likely that the competition is a good spot to show off potential tech tools and pick up government contracts. Registration is due by Jan. 26. 

Competitions like this techsprint are a popular means for government organizations to check out new technologies from the private sector. In the fall, the Commodity Futures Trading Commission held its first science competition, “Project Streetlamp,” which focused on new analytical tools for identifying unregistered offerings in the U.S. The winner was crypto analytics firm Inca Digital’s “Nakamoto Terminal” platform. 

DFS did not immediately respond to Cointelegraph’s request for comment. 



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Regulation

Central bank digital currency a mixed blessing, says RBI

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India’s central bank has recognized the potential benefits of central bank digital currencies but not without including a few pitfalls.

The Reserve Bank of India offered its assessment of CBDCs as part of its report on currency and finance issued on Feb. 28.

As part of the report, the RBI noted that several countries are exploring the creation of their own sovereign national digital currency.

According to the central bank’s report, CBDCs can help to promote financial inclusion and transactional transparency. The RBI also stated that national digital currencies could be useful as an instrument of monetary transmission by helping to engineer public consumption towards specific categories of products and services.

Detailing the benefits of CBDCs, the RBI also remarked that digital counterparts to sovereign fiat currency could be used by central banks to pump “helicopter money.”

In its analysis, the RBI also expressed concerns about the potential negative impacts of CBDCs on the legacy financial system, noting:

“CBDC is, however, not an unmixed blessing — it poses a risk of disintermediation of the banking system, more so if the commercial banking system is perceived to be fragile.”

For countries with significant credit markets, the RBI argued that CBDCs could threaten the primacy of commercial banks as the primary channel for the transmission of monetary policy.

As previously reported by Cointelegraph, India is looking to emulate China in creating its own CBDC. According to RBI governor Shaktikanta Das, the central bank is “very much in the game” of developing a digital rupee.

However, the RBI report did not include any details about the central bank’s digital rupee project. In another portion of the document, the central bank did concede that internationalization of the rupee was inevitable but added that such a move would complicate monetary policy formulation and implementation.

With several countries looking to create their own sovereign digital currencies, CBDC interoperability is becoming a concern among stakeholders. Meanwhile, reports indicate that China’s digital yuan will have a more domestic focus.