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The Eastern Caribbean Central Bank (ECCB), located in the country of Saint Christopher (St. Kitts) and Nevis, publicly went live with its central bank digital currency (CBDC) DCash on Wednesday.

Countries such as Russia, China, and Japan have been testing a central bank digital currency (CBDC) as part of a wider arc of development, as previously reported and explored in a past research report from The Block on the subject. To date, only one central bank has gone live with a CBDC: the Central Bank of the Bahamas’ Sand Dollar. 

The head of the Bank of International Settlements said Wednesday that if implemented correctly, CBDCs could help reduce “long-standing” issues in the payments sector.

The launch of the ECCB’s DCash is notable because it’s the first example of a central bank within a currency union to go live with a CBDC. A currency union is an agreement between two or more countries to maintain the same currency or to keep their currency prices similar. The Eastern Caribbean Currency Union (ECCU) comprises eight nations in the Caribbean, but DCash will only be available for use in four of them: St. Kitts and Nevis, Antigua and Barbuda, Grenada, and Saint Lucia.

The ECCB partnered with fintech firm Bitt to manage the infrastructure and operation of DCash. The CBDC can be used for consumer, e-commerce, business-to-business, and internal cash management with the DCash Merchant App. 

“The ECCB has been working in partnership with Bitt Inc for over two years to develop this digital version of the EC currency in an effort to increase financial inclusion, competitiveness and resilience for the people of the Eastern Caribbean Currency Union,” the central bank said in a statement published last week.

During the next year, ECCB and Bitt plan to integrate DCash into the financial systems of the four pilot countries, in addition to incorporating the other four ECCU members into the DCash ecosystem.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Fixed-rate lending protocol startup Element Finance has raised $4.4 million in new funding.

Andreessen Horowitz and Placeholder led the seed round, accompanied by SV Angel, A.Capital, Scalar Capital and Robot Ventures, according to a funding announcement.

The protocol touts fixed-rate yields for decentralized finance (DeFi) users, a process that enables users to purchase bitcoin, ether and USDC at a discount without locking buyers into a fixed term. This then allows them to swap between assets at any time. 

Interest rates in most DeFi markets move by demand, meaning a user can borrow an asset at a rate that could radically change over the time they’re holding it. Fixed-rate protocols like Element mitigate this by trading underlying assets at a discount until they mature. 

Yield was the first to do this with fyDai, or fixed yield Dai. Element achieves this in a similar way by splitting the base asset into two tokens: the principal token and the yield token. Users can sell their principal as a fixed-rate income position, allowing them to swap base assets at any time while the yield token matures.

Founders of other DeFi venues have already taken notice. Compound founder Robert Leshner, Gauntlet founder Tarun Chitra, Aave founder Stani Kulechov and Ethereum co-founder Joseph Lubin have all backed the protocol, among others. 

Element’s team said the protocol’s official release date is “imminent,” but did not disclose when exactly the launch will occur.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

After nearly three years in limbo, crypto trading platform Uphold has garnered approval from the Financial Industry Regulatory Authority (FINRA) for its acquisition of broker-dealer JNK Securities.

News of the acquisition was first circulated in June 2018. The approval makes Uphold one of the first firms to own a broker-dealer that can offer equities to retail traders on an omnibus basis. An omnibus account allows a broker to manage trades for more than one person within one account since the trades are made in the broker’s name. This means that JNK clients will have access to crypto to fiat trading pairs with a degree of anonymity. 

With the approval in hand, Uphold announced plans to launch fractional equities in the U.S. later this year “to pioneer seamless trading between cryptocurrencies, U.S. stocks, precious metals, carbon credits, FX products and other assets, all through a single interface.”

It also plans to market its crypto investment fund, Digital Asset Alpha, to hedge funds by way of JNK’s client base. 

Last year, CEO JP Thieriot sat down with The Scoop podcast to talk about competition in the crypto brokerage landscape. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Michelle Bond has been focused on financial regulation for decades, and a turn to crypto policy a few years ago led her to take the helm at the Association for Digital Assets Markets by the end of 2020.

ADAM is a trade association for crypto markets, featuring a code of conduct that requires its members to commit to operating with certain requirements of transparency and speed.

“ADAM is 100% a standards-setting body,” Bond said during the most recent episode of The Scoop. 

ADAM’s membership includes such industry players as Anchorage, Paxos and Genesis and the group functions as a collective voice for its members. The group’s ultimate goal is to provide for the crypto market what FINRA is to securities brokerages: an industry-spearheading body for self-regulation.

“We would like to, one day, become a self-regulatory organization. We believe that that is not something that is decreed, that is earned. At the current moment, we’re setting the standards,” said Bond.

Among major issues of the day, Bond noted that industry participants are awaiting a response from the Treasury’s FinCEN office on the recently closed comments on its proposal to monitor rules. 

Less publicized but still critical is custody. Financial regulators in Washington, Bond said, “are 1,000% asking questions and grappling with custody.”

As always, writing up such policies for crypto finance entails a combination of technological and legal savvy. This is where self-regulation comes in. Though Bond, like much of the industry, lamented the lack of coherent frameworks from financial watchdogs like her former workplace, the SEC, she identified the situation as fairly standard:

“Regulators will never come right out and endorse anything. That will never happen. And that makes sense; that’s not their job.”

But by presenting a code for how to operate in today’s fast-moving crypto market, ADAM aims to accomplish what regulators have not. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Asset management giant BlackRock revealed Wednesday that one of its funds held some bitcoin futures as of the end of January. 

Per the March 31 filing, the BlackRock Global Allocation fund held 37 units of CME’s March 2021 bitcoin futures, an amount worth approximately $360,000. The filing indicates that the contracts expired on March 26. CoinDesk first reported the news. 

The development comes months after two BlackRock funds, including the Blackrock Global Allocation Fund, indicated in regulatory filings that they would potentially obtain exposure to crypto markets by way of CME’s bitcoin futures product. Based on the timing of those twin filings, dated January 20, the actual purchases of the CME bitcoin futures would have occurred soon after. Because the filings only provide a financial picture up to January 31, it’s unclear whether BlackRock funds continue to maintain CME bitcoin futures exposure. 

In mid-February, BlackRock CIO Rick Rieder said that the firm was “starting to dabble” in bitcoin during an appearance on CNBC. 

“My sense is the technology has evolved and the regulation has evolved to the point where a number of people find it should be part of the portfolio, so that’s what’s driving the price up,” he remarked at the time. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Amid what one might call the proverbial Blinding Lights of Beeple’s historic non-fungible token (NFT) sale and a wave of creatives capitalizing on the burgeoning crypto art space, a new musician is getting Acquainted with the scene. 

Grammy Award-winning singer and songwriter The Weeknd is launching his first non-fungible token (NFT) drop, the artist announced on Wednesday. 

According to the announcement, the collection will feature new music and limited edition art The Weeknd developed with media production company Strange Loop Studios. The announcement comes five days after the artist hinted he would release an upcoming song with an accompanying NFT. 

Per the announcement, the drop will take place on Saturday and will be hosted via the NFT marketplace Nifty Gateway. The sale is set to start at 2 PM EST. 

Excited to announce that my first NFT drop is taking place on Saturday at 2:00 pm EST on @niftygateway. The collection will feature new music and limited edition art. I developed the artwork with Strange Loop Studios pic.twitter.com/627BO4JekK

— The Weeknd (@theweeknd) March 31, 2021

More broadly, the news is the latest indication that performing artists and musicians are eyeing NFTs as a way to promote their work or expand to new audiences. NFTs are essentially digital certificates tied to a unique piece of data or token on a blockchain and have emerged as a kind of collectible piece of merchandise alongside a music release.

Musical group Kings of Leon undertook a similar initiative earlier this month when they released three NFTs alongside an album, as previously reported.

Photograph from billboard.com.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

The US Department of Justice announced today that Tal Prihar, who ran DeepDotWeb, pleaded guilty to conspiracy to commit money laundering.

According to the DOJ’s charges, Prihar used the news site DeepDotWeb to run ads directing readers to various darknet marketplaces. They say Prihar made approximately 8,155 Bitcoin on kickbacks for such ads, based on customers who clicked through to the marketplaces. Prihar then laundered those proceeds through a nexus of crypto wallets and shell companies, according to the DOJ.

Prihar was arrested in 2019. He now faces up to 20 years, with sentencing scheduled for August 2. Prihar has also agreed to return $8,414,173, which is based on the value of his earned BTC over the course of DeepDotWeb’s 6 years of operation before the FBI seized the site in 2019.

The DOJ did not say how much of the 8,155 Bitcoin Prihar has left. At current prices, the total amount would be worth nearly half a billion dollars. 

Faced with a justice system that is getting better at tracking transactions, some darknet marketplaces and operators are abandoning more transparent blockchains in favor of privacy coins. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Quick take

• With the rise in popularity of DeFi applications, the Ethereum network has become increasingly congested, with common transactions costing up to $100 in gas.
• Early attempts at scaling on layer 2 struggled to gain traction, largely due to limited security and usability of previous implementations.
• Rollups can inherit security and usability almost completely from layer 1, and may be poised for significant adoption in 2021.

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this Genesis research on The Block.

Agustín Carstens, the general manager of the Bank for International Settlements, recently took the stage to promote central bank digital currency over other payments solutions. 

Speaking virtually before the Peterson Institute for International Economics on March 31, Carstens broke down the various solutions available for bringing international payments up to speed with the modern era.

The BIS has long served as a critical link between central banks. Recent years have seen that mission extend to heavy investment in new financial technologies, especially research into CBDCs.

Currently, payments between users in separate countries depend on transfers between their respective central banks, which, in turn, have to collateralize their own transactions heavily with their respective currencies and central bank money. The underlying settlement process is not that much faster than it was 40 years ago, despite various faster payments solutions (FPS) emerging.

On the subject, Carstens was optimistic that central bank digital currencies would prove better for retail users, despite surface similarities:

“From the user perspective, these solutions may look very similar. What distinguishes a retail FPS from a retail CBDC is that the latter is a central bank liability offering the unique features of central bank money, and this could be a key difference.”

Regarding inter-bank payments, often called wholesale payments, Carstens also noted that the current dependence on central bank money added complications that modern technology — namely, a CBDC — could streamline:

“In contrast, the same transaction in a CBDC-based payment system would be much simpler, as a payment only involves transferring direct claims on the central bank from one user to another. There is no credit risk: funds are not on the balance sheet of an intermediary, and transactions are settled directly in central bank money, on the central bank’s balance sheet, in real time.”

Central banks have reported increasing interest in CBDCs over the past year, which has commercial banks concerned. Banks generate money by shuttling money between central banks and end-users. In what is perhaps a nod to that dynamic, Carstens noted that “[b]anks should continue to play their intermediation role between savers and investors.”

The BIS executive was less clear on the actual technological nature of the proposed CBDC.

“Whether the CBDC is token- or account-based, the principle is the same,” he said. Such longstanding restraint from commitment to a single technology has been a feature at not just the BIS, but for all banks tinkering with CBDC proposals. 

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Blockchain development firm Enjin has raised $18.9 million to build a Polkadot-based blockchain network, especially for non-fungible tokens (NFTs).

The network, dubbed Efinity, will have its own token called Efinity Token (EFI), Enjin CTO Witek Radomski told The Block. And the funding has been secured via selling EFT tokens, said Radomski.

Crypto.com Capital, DFG Group, and Hashed Ventures led the funding round, with participation from BlockTower, Blockchain.com Ventures, Fenbushi Capital, Arrington XRP Capital, and several others.

Enjin is not new to the NFT space. It created the ERC-1155 standard for NFTs in 2017, and it is used by companies like Microsoft and Nike.

Microsoft uses ERC-1155 to reward the Azure developer community with “provably scarce, unique NFT badges based on their contributions and achievements,” Enjin’s VP of operations Bryana Kortendick told The Block. As for Nike, it has patented a system for tokenizing shoes on Ethereum using the ERC-1155 standard, said Kortendick.

The new Efinity blockchain will be purpose-built for NFTs and is being developed as a parachain on Polkadot, Radomski told The Block.

When asked how Efinity will be different from Ethereum and Dapper Labs’ Flow blockchain, Radomski said Efinity aims to resolve the friction points that users and developers hit with the two blockchains.

When interacting with Ethereum-based NFTs, frictions like “transaction fees, the requirement of ether (ETH), account security, disjointed applications, problematic multisig security” are present, said Radomski. While Flow is tackling some of these issues, they have built the blockchain from the ground-up, along with their own scripting language, which could pose challenges, according to Radomski.

“Flow may see challenges if they aren’t able to attract enough nodes to become sufficiently decentralized, and they might also face an uphill battle convincing developers to learn their proprietary language,” he said. “On Efinity and Polkadot, developers can use Rust which is a well-established language, and every parachain will benefit from the combined security of the entire Polkadot network.”

“Finally, each parachain can easily interact with other parachains using XCMP [Cross-chain Message Passing], which creates a powerful network effect,” Radomski told The Block.

Efinity’s Phase 1 is expected to launch around the end of this year or the beginning of 2022, said Radomski.

“After that point, we will continue our roadmap, adding more planned functionality to the blockchain through upgrades and decentralized governance,” he said.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.