The Federal Reserve is expected to outline how it intends to monitor FinTech innovations today in a research paper, according to a report from The Wall Street Journal.
Even though the Fed has been visiting FinTech startups to understand what it is they do, the research is unlikely to hold any definitive decisions now.
It is reported that the Federal Reserve is looking into banks’ decisions when they engage with FinTech firms to determine fraud or money laundering.
The Bank of England’s RSCoin, the Bank of Canada’s CAD-Coin, and Senegal’s eCFA digital currency in partnership with the regional bank Banque Régionale de Marchés (BRM) and eCurrency Mint Limited, are just a few of the countries that are experimenting the issuance of their own digital currency versions.
While the Federal Reserve is exploring the potential of a digital dollar, it has yet to make these ideas known.
However, Adam Ludwin, co-founder and CEO of Chain, a blockchain provider, said that every central bank was looking into the potential of their own digital currency.
Without central banks issuing currency on a blockchain, the technology may not reach its full potential, partly because it wouldn’t offer instant settlement on all transactions involving cash.
He adds that if the U.S. dollar was issued on a blockchain, transactions would be settled quicker.
San Francisco-based Coinbase is one organization that has met with the Fed to discuss its business model. While the licensed to engage in money transmission in 36 states it is still in the process of receiving its BitLicense from the New York State.
The WSJ reports that the Federal Reserve also met with the R3 Consortium.
R3 believe that blockchain technology can change the way companies do business.
Only recently, R3 demonstrated the potential of blockchain’s ability in Bermuda. By doing so, it could transform the way the island nation and the businesses incorporated there operate.
In October, 12 R3 member banks undertook cross-border payments with Ripple’s XRP over its blockchain. By doing so, they were able to demonstrate cost-cutting and increased efficiency of cross-border payments using Ripple’s ‘digital asset’.
Unsurprisingly, the Fed isn’t the only organization monitoring FinTech developments.
According to the WSJ, the Office of the Comptroller of the Currency (OCC) has been researching how FinTech is being implemented into the banking system.
Thomas Curry, Comptroller of the Currency, said in a speech, that the regulator will begin issuing bank charters for FinTech firms. This would permit them to do business more easily under one license as opposed to a state-by-state basis.
Featured image from Shutterstock.
Last modified: May 21, 2020 10:11 AM UTC