In other news, CACEIS embraces machine learning, MayStreet launches a special API, and Wolters Kluwer & NYDIG collaborate.
A Biden Working Group Says Stablecoins Are Risky
Janet Yellen
Stablecoins lack good oversight, making them risky for users and financial markets, says Janet L. Yellen, secretary of the U.S. Treasury, in a prepared statement.
Yellen’s comments follow the release of a report from the President’s Working Group on Financial Markets (PWG), which is recommending that Congress consider new regulations to oversee the emerging digital asset class.
Stablecoins as “a type of digital asset generally designed to maintain a stable value relative to the U.S. dollar. While today stablecoins are primarily used to facilitate trading of other digital assets, stablecoins could be more widely used in the future as a means of payment by households and businesses,” according to PWG officials.
“Stablecoins that are well-designed and subject to appropriate oversight have the potential to support beneficial payments options. But the absence of appropriate oversight presents risks to users and the broader system,” Yellen says.
In fact, Yellen says that the current oversight of stablecoins is “inconsistent and fragmented, with some stablecoins effectively falling outside the regulatory perimeter. Treasury and the agencies involved in this report look forward to working with Members of Congress from both parties on this issue. While Congress considers action, regulators will continue to operate within their mandates to address the risks of these assets.”
In addition to Treasury officials, the PWG included the Federal Deposit Insurance Corp. (FDIC) and the Office of the Comptroller of the Currency (OCC) – and they are urging Congress “to enact legislation to ensure that payment stablecoins and payment stablecoin arrangements are subject to a federal framework on a consistent and comprehensive basis.”
Potential legislation from Congress would “complement existing authorities,” and would address the following issues:
- Stablecoin issuers would become insured depository institutions;
- The legislation would require custodial wallet providers to heed “appropriate federal oversight;”
- There would be a federal supervisor of a stablecoin issuer “with the authority to require any entity that performs activities that are critical to the functioning of the stablecoin arrangement to meet appropriate risk-management standards;”
- Stablecoin issuers would have limited affiliation with commercial entities;
- And supervisors would implement standards to promote interoperability among stablecoins.
“As discussed in the report, in addition to the risks noted above, stablecoins may also raise investor protection, market integrity, and illicit finance concerns,” according to the PWG. “To the extent activity related to digital assets falls under the jurisdiction of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), the SEC and CFTC have broad enforcement, rulemaking, and oversight authorities that may address certain of these concerns.”
Lastly, Treasury officials will continue leading efforts at the Financial Action Task Force (FATF) to encourage countries to implement international AML/CFT standards and pursue additional resources to support supervision of domestic AML/CFT regulations.
The full report can be found here: https://bit.ly/31jePXH
CACEIS Applies Machine Learning to Middle Office Wares
European asset servicing group CACEIS reports that it is implementing machine learning technology to reduce turnaround times for clients’ reports, officials say.
CACEIS offers middle-office outsourcing services such as securities and cash position reconciliation. The vendor offers software as a service (SaaS) or on-premise solutions for banks, asset managers, and trading firms.
Cardabel, a financial data analytics vendor, “has tailored its platform to automate reconciliation tasks that until now necessitated manual intervention by skilled staff. The new technology proposed significantly reduces processing times and enhances CACEIS’ reconciliation offering,” officials say.
MainStreet Launches API for ‘Order Book as a Service’
MayStreet, a market data technology and content provider, has launched the High Performance Query (HPQ) application programming interface (API) that helps the vendor offer a “complete order book as a service” via access MayStreet’s Market Data Lake, a cloud-based repository of global, cross-asset exchange data.
The new HPQ API complements MayStreet’s web-based Analytics Workbench and its existing APIs, officials say.
“With the HPQ API, clients can instantly stream near real-time and historical full-depth data at distinct time intervals of their choosing, resulting in significant bandwidth and compute resource savings by not having to pull down an entire day’s worth of market data,” MayStreet officials say.
“In addition to raw tick data, the new API also offers pre-configured calculations for TWAP, VWAP or Completion Time (i.e., the time at which a hypothetical order should have been filled based on historical market data),” officials add.
The vendor adds that the HPQ API can support several use cases such as total cost analysis (TCA), order routing analysis, volatility fitting, trade desk support and risk.
“By offering the complete order book as a service, users no longer have to download data, parse it, rebuild the book, store it in memory and then provide API access to their internal users. … It also offers significant TCO [total cost of ownership] savings around the processes that today’s most advanced market participants use to derive the analytics that power their businesses,” says Naftali Cohen, chief revenue officer for MayStreet, in a statement.
Wolters Kluwer & NYDIG Partner to Offer Bitcoin Support
Wolters Kluwer Compliance Solutions and NYDIG, a provider of Bitcoin platforms, are collaborating to bolster Wolters Kluwer’s efforts to be the exclusive vendor to “interested financial institutions seeking assistance in meeting their regulatory and compliance obligations as they explored and implement services for bitcoin programs,” officials say.
“Wolters Kluwer is positioned to provide regulatory compliance solutions and services that range from a deposit disclosure program to regulatory risk assessments for institutions looking to offer their customers access to bitcoin services provided by NYDIG,” officials say.
“This collaboration grants Wolters Kluwer rights as the exclusive provider of Bitcoin Deposit Disclosure Program-NYDIG Accounts of those financial institutions seeking deposit documents when their clients open a NYDIG account,” officials say.
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