15th October 2021 > > Central Bank Digital Currencies (CBDCs).

tl;dr

There is one positive aspect to CBDCs.

Market Snap

Market Wrap

Bloomberg has reported that the SEC is very close to approving the first futures based BTC exchange traded fund (ETF) in the US, possibly as early as next week.

The consequent spike in BTC didn’t go quite as far as breaching $60k.

The CCC remains sceptical that a futures-based ETF has anywhere near the same attractiveness and popularity for the investor base, especially for institutions, as compared to a physical ETF. That might mean that the actual approval and launch – rather than market speculation about potential approval and launch – could perversely result in a sell-off.

I do hope on this point I am proved wrong, which as we all know, is an incredibly rare event.

Fortunately, despite a temporary and large uplift in perpetual futures funding rates yesterday morning, we are back to a neutral position in the leveraged market.

Any sell-off will not be met with excessive waves of liquidations that would lead to a long squeeze.

Occasional Series – A short interregnum

What with Greg and Kreon staying for the weekend – planned so that Greg can watch his beloved Liverpool lose 3-0 again at Vicarage Road with me – and a Sancho Panza boat party, and an afters at Equus, the CCC is taking the weekend off.

Occasional Series – Jamie Dimon, CEO of J.P. Morgan

After recently claiming BTC is “worthless”, Dimon now questions whether the limit of 21 million BTC to be minted is real or not:

“I’ll just challenge the group to one other thing: how do you know it ends at 21 million? You all read the algorithms? You guys all believe that? I don’t know, I’ve always been a skeptic of stuff like that.”

Erik Voorhes, Shapeshift founder, replied:

“Never attribute to malice that which is adequately explained by stupidity.”

Curious Cryptos’ Commentary – Nigeria and the eNaira

The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has announced that Nigeria is just days away from launching its own Central Bank Digital Currency (CBDC), named eNaira.

Regular readers know that CBDCs are not – and never will be – cryptos. CBDCs do not really have a place in the CCC but given the general confusion about their status (particularly in all the popular news and media outlets), I feel forced to comment on them.

…

In a statement the CBN claimed that this new digital currency will accelerate financial inclusion and enable cheaper and faster remittance inflows.

Nigeria has a very small band of its population who are extremely wealthy and a very large band of its population who are extremely poor. I believe that there is a significant in-flow of fx remittances from the Nigerian diaspora employed overseas.

I suspect if you go to one of those shops, or barbers, or cafes that advertise a service to transfer funds from the UK to Nigeria that the costs of doing so are material.

So, the CBN has a valid point here. Using eNaira for the transfer – hence cutting out several middlemen – will make the remittance process far cheaper and better for everyone concerned. Except for those middlemen.

…

The CCC has been a long-standing critic of CBDCs, and I maintain that my criticism is still valid and fair.

However, in the interests of balance, I concede that this specific application of CBDCs that will materially increase the remittances from overseas to some of the poorest individuals in Nigeria is very positive and very welcome.

There you go, I have said something good about CBDCs. I bet you thought this day would never come.