The Future of Money: The Developments You Need to Know this Week (Issue 10 - 5 September 2020)

Dear friends - welcome back to my weekly newsletter where I share some of the insightful developments on the future of money that you need to know!

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1. 2020: The Year of the CBDC?

2017 was the year of Bitcoin. 2019 was the year of Libra. And now 2020 is on track to be the year Central Bank Digital Currencies (CBDC) come to the forefront.

First, we can clearly see this trend when looking at Google search interest trends.

Source: BIS

The hockey stick on the CBDC curve is not surprisingly linked to Libra’s announcement by Facebook in June 2019. 

This not only generated widespread public interest, but also forced central banks around the world to put this topic on top of their agendas.

According to the Bank for International Settlements, the “club” of central banks, around 80% of surveyed central banks are engaging in research, experimentation on or development of CBDC. 

Source: BIS

In addition, the attitude of central bankers seems to have changed as well.

When you analyse speeches by central bankers, you realise that the general skepticism seen in 2017 and 2018 has since changed. 

Source: BIS

The data shows that since the end of 2018, the number of positive mentions of both wholesale and retail CBDCs has surpassed negative mentions. 

The change in the tone of certain central bankers’ speeches is very interesting. As we say in French, “juste les fous ne changent pas d'idée” (only fools don’t change their mind).

And last time I checked, central bankers were not fools.

Money Quote of the Week

If inflation continues to soar, you’re going to have to work like a dog just to live like one. 

George Gobel

2. Want to Commit a Crime? Don’t Use Bitcoin or You Will Get Caught!

Late last month, the U.S. Department of Justice announced the arrest of three individuals connected to a massive Twitter hack from earlier that month. 

The hackers took over the accounts of several prominent public figures, like Barack Obama, Joe Biden, and Elon Musk. 

Using those platforms and all of the followers that came attached, tweets were sent out promising that for every Bitcoin sent to a posted address, followers would receive double the amount in return. 

But unlike fiat money, most cryptocurrencies are traceable and allow law enforcement to see where the funds are moving in real time. 

Whilst there are some tools like mixers or scrupulous brokers that still allow criminals to launder their crypto without asking the required questions, the reality is that such activities are becoming increasingly difficult and risky.

So through careful blockchain analysis, investigators in this case were able to link each of the suspects together, analyzing the transactions of various Bitcoin addresses before connecting these fraudulent activities to accounts at two cryptocurrency exchanges, Coinbase and Binance. 

From there, law enforcement were able to get all the criminal’s KYC information, including their driver’s license, date of birth, and address.

Source: Chainalysis

If these suspects hadn’t used Bitcoin, the investigation would’ve likely been a whole lot more difficult, as there wouldn’t have been the same public footprint and traceability that Bitcoin transactions show through blockchain.

Moral of the story: If you are a criminal and you think you can use Bitcoin anonymously, think again.

3. The IRS is Coming After Crypto Taxes!

The taxman has been catching up on crypto as well. 

It was reported that the Internal Revenue Service (IRS) recently mailed out a large number of letters to an unknown number of taxpayers inquiring about unpaid or incorrectly filed crypto taxes.

In these letters, the IRS asked taxpayers to “file amended returns or delinquent returns” and warned that those who fail to accurately report their crypto transitions “may be subject to future civil and criminal enforcement activity.”

It is important to remember that U.S. tax forms have recently been amended to include a question on virtual currencies. 

In addition, the IRS has been filing subpoenas against crypto exchanges. 

For example, the IRS has previously requested the details of around 13,000 Coinbase clients including their taxpayer ID, name, birth date, address, and historical transaction records.

Moral of the story: if you trade crypto, make sure not to forget that when filing your tax return!

Funny Tweet of the Week

You gotta love these crypto memes...

My Latest Crypto Capsule

The best part is probably the surprise at the end! Stay tuned for more new Crypto Capsules coming this month!

My FinTech Capsule Interview This Week

Will all crypto exchanges end up being regulated? What role might DeFi play? What is the impact of the institutionalization of the crypto industry?

Find out in this virtual FinTech Capsule? interview with Tom Albright, the CEO of Bittrex Global.

My Upcoming (Virtual!) Speaking Engagements

16 September - CAIA Webinar: Latest Global Crypto Trends

18 September - Chainalysis Links - Central Bank Digital Currencies and Their Impact on the Future of Money

24 September - UBS Live Global Family Office Tech Connect Series

25 September - Global Monetary War Games 2020

6 October - Futurism Forum

Enjoyed this content? Make sure to subscribe or share it with a friend! A new Future of Money newsletter will be in your inbox each Saturday!

See you all next week!! 

Henri Arslanian

*Please note that this newsletter reflects Henri’s personal views and not those of any organisation he is involved with.

Who is Henri?

Passionate and focused on the future of finance and money, Henri Arslanian is the PwC Global Crypto Leader, the former Chairman of the FinTech Association of Hong Kong and an Adjunct Professor at the University of Hong Kong, where he teaches the first FinTech university course in Asia.

Henri advises many of the world’s leading crypto exchanges, investors, financial institutions and tech firms on their FinTech and crypto initiatives as well numerous governments, regulators and central banks on Fintech and crypto regulatory and policy matters.

 With over 500,000 LinkedIn followers, Henri is a TEDx and global keynote speaker, a best-selling published author and is regularly featured in global media, including Bloomberg, CNBC, CNN, the Wall Street Journal and the Financial Times.

Henri was named by LinkedIn as one of the global Top Voices in Economy & Finance and is the host of the FinTechCapsules? and CryptoCapsules? social media series.

Henri was recently named by Onalytica as the #1 most influential individual on Finance globally on LinkedIn out of 50k+ individuals working at the top professional services and management consulting firms in the world. 

Chambers Global also named Henri the “highest profile FinTech consultant in Hong Kong” and Asian Private Banker awarded him the “FinTech Changemaker of the Year” award.

Henri’s latest book, The Future of Finance: The Impact of FinTech, AI and Crypto on Financial Services, published by Palgrave Macmillan, was ranked as one of Amazon’s global top 10 best-sellers in financial services and was recognized as one of the “Best FinTech Books of All Time” by Bookauthority.

Before joining PwC, Henri was with a FinTech start-up and previously spent many years with UBS Investment Bank in Hong Kong. Henri started his career as a financial markets and funds lawyer in Canada and Hong Kong.

You can learn more about Henri on his website (www.henriarslanian.com) and you can reach him at [email protected]