Selected Publications

Position on FSB Consultation on Stablecoin Arrangements (July 2020)

The Board has published on 14 April 2020 the paper "Addressing the regulatory, supervisory and oversight challenges raised by “global stablecoin” arrangements" in response to a call by the G20 to examine regulatory issues raised by “global stablecoin” arrangements and to advise on multilateral responses as appropriate, taking into account the perspective of emerging market and developing economies. The Board has sought the views of stakeholders on the issues and recommendations set out in the paper by 15 July 2020. In our position, we offer the Board, for consideration, ways to re-balance the risk analysis and to fine-tune the Recommendations. We also highlight a potential roadblock to the development of financial innovations such as stable coins.


Telegram, or the strategic importance of regulators (June 2020)

Foreword: METI Advisory wrote this report for SEBA Bank AG. Abstract: In May 2020, Telegram ended its cryptocurrency project, the Telegram Open Network (TON), and gave up fighting the U.S. Securities and Exchange Commission (SEC), which had halted the project last year. One month before, Facebook had re-issued its cryptocurrency project Libra under revised terms, following an implicit global regulatory halt last year. Several less prominent projects suffered a similar fate over the last three years (due to either enforcement or fear of it).

Promoters of cryptofinance and blockchain projects must consider upfront regulators as a key strategic element, not as a mere compliance variable. Traditional finance has learned this the hard way over the last 15 years.


COVID-19 pandemic places digital payment regulation at centre stage (May 2020)

Foreword: METI Advisory wrote this report for SEBA Bank AG. Abstract: During the coronavirus (COVID-19) pandemic, the literature on digital regulations has focused on digital payment solutions, particularly, Global Stablecoins (GSCs) and Central Bank Digital Currencies (CBDCs). It is reasonable to expect that the pandemic will lead to improved regulatory certainty, which would enable the speedy market entry of digital payment solutions. The advantages of contactless payments and digital banking solutions (web- or mobile phone-based) have emerged quite prominently in the current lockdown (characterised by limited mobility, social distancing, and contactless relationships). Yet, the fundamental opportunities for the development of GSC (i.e. inefficient cross-border payments and inclusion) and CBDC (i.e. de-materialisation of cash) have been recognised long before the pandemic. The renewed regulatory focus on digital payment solutions, due to the current pandemic, reminds us that such solutions depend on regulatory (or legal) certainty to see the light of day.


Crypto AML: a complex but worthy compliance effort (April 2020)

Foreword: METI Advisory wrote this report for SEBA Bank AG. Abstract: The Financial Action Task Force (FATF) will review in June 2020 the state of adoption and implementation of the anti-money laundering (AML) standard for virtual assets (VAs) and virtual asset service providers (VASPs) issued in June 2019. This includes the so-called Travel Rule, conceived to extend to VAs and VASPs the quality of transactional compliance achieved in the fiat transactions world with the SWIFT messaging system. The industry is currently dealing with the daunting task of creating the technology needed to enable full compliance. More time is needed to bring it to market and see it adopted. The regulators should be pragmatic during the transition phase and focus on creating a level playing field in order to minimise arbitrage opportunities. The industry will benefit materially from swift and seamless compliance because the Travel Rule establishes a distinction – in terms of compliance quality – between ubiquitously accepted fiat transactions and still largely mistrusted cryptofinance transactions.


USA once again rejects an ETF on bitcoin (March 2020)

Foreword: METI Advisory wrote this report for SEBA Bank AG. Abstract: The US Securities and Exchange Commission (SEC) has rejected the last outstanding Bitcoin (BTC) ETF proposal. It was the ninth rejection in a row. The decision taken by the SEC attests to the controversial decision-making process within the SEC, which contrasts with the pragmatic, inclusive and innovation-friendly approach taken by other jurisdictions such as Switzerland. Furthermore, it stifles financial innovation and delays the adoption of cryptocurrencies in the country, promoting an unregulated perimeter. The approval of the first BTC ETF emerged as a watershed moment for cryptofinance adoption in the USA.
During February 2020, regulators around the globe multiplied their pronouncements and initiatives in the area of stablecoins during February 2020. Stablecoins are seen as a promising way to enhance the cross-border payment system and remedy related inefficiencies. However, the pronouncements also indicate that the approval of any stablecoins will be subject to strict evaluation and approval criteria, including KYC and AML aspects.


CBDCs and asset tokenisation kick off digital regulation in 2020 (February 2020)

Foreword: METI Advisory wrote this report for SEBA Bank AG. Abstract: After much conceptual debate in late 2019, wholesale CBDCs are poised to become reality during 2020. This will concern monetary flows between commercial banks and the central bank (CB). The degree of centralisation or decentralisation of the underlying distributed ledger technology (DLT) will depend on each specific case. The introduction of CBDCs at retail payment level, on the other hand, is less likely, owing to the number of structural issues raised that hinder the governance of the monetary system.

Discussions about asset tokenisation have traditionally focused on the benefits and consequences for the financial markets. The Organisation for Economic Co-operation and Development (OECD) has put forward a systematic analysis of the regulatory issues connected with widespread asset tokenisation. Allowing, supporting and accompanying asset tokenisation will require substantial regulatory upgrading work. First-mover jurisdictions that follow a principle-based approach to regulation, such as Switzerland, enjoy a material advantage over other countries.

Other noteworthy developments in the digital space at the beginning of 2020 further legitimate DLT on a global scale and underline the leading position of Singapore as a cryptofinance hub.


Our position on the BCBS discussion paper on prudential crypto-assets standard (January 2020)

The Basel Committee on Banking Supervision (BCBS) issued a discussion paper on prudential crypto-assets standard on 12 December 2019 and solicited comments until 13 March 2020.

In our paper we explain why although the initiative is laudable, the preliminary direction is misguided in our view.

The text was first published by Bank SEBA on 16 January 2020 in the form of a research paper authored by METI Advisory in its capacity as external regulatory analyst.


Switzerland boosts DLT/blockchain framework conditions (Dec 2019)

Foreword: METI Advisory wrote this report for SEBA Bank AG. Abstract: On 27 November 2019 the Swiss Federal Council adopted the dispatch on the framework conditions for DLT/blockchain that aims to increase legal certainty, remove barriers to entry for applications based on DLT/blockchain and reduce the risk of abuse. This step provides Switzerland with a very advanced, fundamental and comprehensive legal framework, achieved by adapting existing laws instead of introducing a specific technology-related law. The dispatch proposes specific amendments to nine federal acts, covering civil securities, insolvency and financial market laws. The Swiss Parliament is expected to examine the proposal for the first time in early 2020. Other noteworthy regulatory developments include the Basel Committee on Banking Supervision (BCBS) anticipating work on the prudential treatment of crypto assets (of obvious relevance to emerging crypto banks and banks dealing with crypto assets), the likelihood that in Germany, banks will be given authorisation to offer the sale and storage of cryptocurrencies (poised to boost cryptofinance in Germany), growing crypto legal certainty in England (demonstrating the regulatory commitment to crypto) and the prospect that in Singapore, cryptocurrency-based derivatives will be listed on the regulated exchange (which would further consolidate the country’s position as a prime cryptofinance hub).


International regulators tackle the issues of stable coins and digital money (Nov 2019)

Foreword: METI Advisory wrote this report for SEBA Bank AG. Abstract: Libra was a wake-up call for international regulators last summer. They realized that cryptocurrencies could rapidly become systemically relevant if they were to substitute national currencies to some extent. Analyses by the G7, Financial Stability Board (FSB) and the Bank for International Settlements (BIS) led to the introduction last October of a new category of token, the GSC, and to the formulation of strict authorization requirements. As a consequence, no such coin will be issued in the short term. The official sector has also been quite clear about the ineluctability of CBDCs and has initiated work to integrate CBDCs into a Distributed Ledger Technology (DLT) infrastructure. Reportedly, China has positioned itself as a potential first CBDC mover. Depending on who starts the innovation process and on the degree of international influence of its currency, the current international monetary system based on the USD as a global payment currency could be challenged. Irrespective of conjectures, the intense regulatory focus has enhanced trust in digital and crypto finance. The last few weeks has been rich of other noteworthy developments. Confirmation has been given in the US that the Bitcoin (BTC) and Ether (ETH) are not securities – and therefore fall outside the remit of securities law; that Liechtenstein has written history by becoming the first state to provide a comprehensive set of rules for a digital asset ecosystem; that China has unveiled plans to become a leading blockchain jurisdiction, and that Japan and Hong Kong have introduced guidelines for crypto fund managers.


FiCAS AG: Adding alpha potential to your cryptoasset investment (November 2019)

FICAS AG (www.ficas.com) is a new kid in the cryptovalley town. It offers actively managed cryptocurrencies investment products to qualifying investors based on a clear investment strategy that allowed its founder, Ali Mizani, to consistently generate material alpha over the past handful of years in the context of private portfolios management. FiCAS allows investors to benefit from (active) risk management, lower the dependency on market price development, and unlock alpha potential. From an industry perspective. FiCAS brings the integration of cryptofinance and traditional finance a step further, broadens the cryptoinvestment offering in a complementary way and demonstrates once again the fertility of crypto valley.


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