Two Congressmen Recommend Development of Digital US Dollar

Two U.S. lawmakers, Representative French Hill (R-Arkansas) and Rep. Bill Foster (D-Illinois), proposed to the Federal Reserve, the country’s central bank, to consider developing a digital dollar.

In a letter to Fed Chairman Jerome Powell, Hill and Foster said that the “nature of money is changing,” and the Fed has the ability and the natural role to develop a “national digital currency.”

The Congressmen outlined concerns that the U.S. dollar could be in “long-term jeopardy” from the wide adoption of digital fiat currencies. Citing a study from the Bank for International Settlements (BIS), where data shows that 40 countries have developed or are looking into developing a digital currency. Moreover, China’s central bank, is expected to launch a digital version of the yuan later this year or in early 2020, they added.

“With the potential for digital currencies to further take on the characteristics and utility of paper money, it may become increasingly imperative that the Federal Reserve take up the project of developing a U.S. dollar digital currency,” said the Congressmen. (Neutral)

Morningstar Develops Blockchain Platform for Debt Securities

The credit rating arm of financial services giant Morningstar is developing a blockchain platform for the $117 trillion debt securities industry.

Michael Brawer, COO at Morningstar Credit Ratings, stated that the firm is working with a number of blockchain-oriented firms who are seeking to issue debt instruments on a blockchain. 

According to Forbes, Morningstar rates a wide range of assets based on their past returns to investors on a scale of one to five. The company reportedly started working with blockchain technology in June 2018, when Morningstar published a report on how firms like Bank of America, Apple and Walmart are using blockchain tech, and how it might affect credit ratings agencies’ coverage.

Two major blockchain efforts in debt securities

So far, Morningstar has been working on two major blockchain-based efforts in the debt securities industry. One of them intends to put Morningstar’s system for rating bonds directly on the Ethereum blockchain via a technology called an oracle, the report notes. 

Oracles move data onto a blockchain in a way that ensures the data is not manipulated and therefore makes it eligible to be used in a smart contract.

The second project involves making quantitative rating models for debt securities available on a blockchain. Credit agencies use said models to determine the credit worthiness of different types of debt securities.

According to Brawer, the smart oracles project could be ready as soon as the end of 2019, but the blockchain modeling project might not be ready for launch until the end of 2020. (Positive)

SIX Stock Exchange Launches Crypto ETP in Swiss Franc

Another crypto-based financial product is coming to the Swiss stock exchange SIX.

On September 3, fintech firm Amun and crypto service Bitcoin Suisse announced the launch of its Swiss franc denominated Amun Bitcoin Suisse BTC/ETH exchange-traded product (ETP) under the ABBA ticker. Nine parts bitcoin and one part ether, the ETP captures some 75 percent of the total cryptocurrency market cap in one listed product.

In an interview, Amun CEO Hany Rashwan said the ETP serves as an important financial hedge. Based on the two largest cryptocurrencies by market cap and denominated in Swiss francs, Rashwan said the product is uniquely Swiss.

Unlike exchange-traded notes (ETNs), ETPs are legally obligated to be backed one-to-one by reserves. Amun says the ETP is fully collateralized with bitcoin and ether custodied in Switzerland by Bitcoin Suisse. The firm’s first ETP since its founding in 2013, Bitcoin Suisse currently holds some $1 billion. (Positive)

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