Date

22 Apr 2020

Attendees

Goals

Interim progress on all our projects - project leads, please show up.
eThaler project - current status- there are many updates from the last meeting
Other projects- current status- Ron Quaranta may present on the regulatory matrix

Discussion items

Time	Item	Who	Notes
5 min	Anti-Trust & Code of Conduct	VB	Antitrust Policy. Code of Conduct.
25 min	Regulatory Matrix	RQ	prelim matrix
25 min	eThaler Status	MP & VB	status

The work on the survey of CBDC efforts that VB hoped to present will be deferred.

Recordings

Audio

Minutes

Anti-Trust & Code of Conduct

From ICMA page - also linked to H regulation page

Columns - guidance

Ron - EU only

Natalia - yes, EU, association where most EU banks pay a fee to be in the association for discussion, workshops for workstreams.

Has multiple sheets - says EU, EEA, Non-EU - Vipin looking for pages...

Similar to what we are attempting?

Ron: Organization itself is EU focused. Perhaps non-EU listings. Vipin sees the North America tab.

Level of granularity - agencies, requirements, etc.

Vipin notes it's a big job -

Ron: why uploaded and formatted as he did

Ron - contributed Global Legal Insights - drove information working to categorize. I wanted to break down into more granular columns. Important to look at taxation, securities laws (tokens), money transitioning, licensing (BIT license, NY, NJ). Meant to capture the universe of organizations we know - capital markets, tokens, blockchain. Open to better formatting ideas. Liberally, it comes from GLI research work - public-facing. Critical thing - like with what ICMA has done - a lot of this is evolving quickly. Securities and Exchange Commission digital enforcement page. Needs links to those documents to make this a nonstatic spreadsheet and framework. In Excel - open-source, happy for more input.

Link off of Capital Markets wiki? Available now, downloaded as Excel, opened in Libre Office. Link in Group Chat? On the regulation page. If you go to Projects > Regulation Page

US states have individual regulations - will start integrating states

Layers beyond Legislative perspective - here are the laws and, what's happening now?

ICMA - working on this full time. ICMA interesting page related to C-19. Dimension considering in terms of DLT.

Ravi: From this regulation - a regulation that talks about data protection?

Vipin: EU and other jurisdictions have data protection?

Ron: Do you mean personally identifiable info - a Privacy and PI column may make sense. Citing where applicable. Even at a state-level - CA CCPA for example.

Jim: also approved cryptography standards that vary by jurisdiction as well. Jim, like Sawtooth...

Vipin: interesting article today that linked to Forbes article by Ben Jessel (sp?) about CORDA being the one that meets the standards. It seems to be pretty narrow in...

Jim: Claiming NIST as federal libraries haven't reviewed libraries other than Java. In a sense, technically, the author was right. From a security perspective, they missed the bigger picture. Go Library for SHA256 hasn't been approved. SHA256 would past tests, not a big deal to certify. IBM has Fabric projects in the federal government today. The article failed to mention. Agencies felt not really an issue.

Ron: Ben would be open for a conversation about it.

Jim: What depth do you go into an article. Looking at the study someone else had done, the study went to a certain level of depth. Fine. The article accurately summarized what his report said.

What does that mean?? would have gone beyond what is stated.

It takes a lot to get things past NIST. Not for an article - Jim reached out to NIST with Golang library - looking for feedback from NIST on that item as a follow-up.

Sanjay: Not many people want to go into the details of how done; in business discussions, people will refer back to the article. A study was done and CORDA only platform. They need to get into details of facts as to how this happened.

Jim: Right that people will draw conclusions. Not technically inaccurate. But not full picture for a business sense.

==

	Creating as PoC from TTI framework. Token use behaviors they set up. Generating artifacts from that. Bridging to actual implementation in Besu. Chose 11 55, not a single token framework. Can create multiple variations of the same token. Meant as a CDBC. First, modeling wholesale CDBC. What that means is the Central Bank can issue and burn tokens (CDBC). They can also transfer to registered dealers. Presuming other end of the transfer will happen offchain. Dealers can transfer tokens to each other without going to the fed. Tokens have value because Fed minted. Stick to TTI TTF core principles - original goal of only involving Central Bank and dealers. Also making sure interactions are controlled by some amount of regulation - if CB wanted to suspend or pause tokens. Enough of CB to have control in situation of a volatile market. Multiple types of tokens under one framework. CDBC, commercial bank (issue own token for own clients), and more. For institutional marketplace.








	Fed can transfer to any registered account. Dealers can only transfer from his account to another. Subtle checks in place. Can check balances - a Dealer can check own balance and Fed can check the balance on any registered account. Token definition - parameters, number of decimals, tied to TTF specification (URL), what are characteristics of a token. URL can see details of specifications of tokens as approved by TTI.
	For example - function pause - no further minting possible. A mechanism by which you can handle unforeseen circumstances such as a bug in the code - a huge amount of volatility in the market beyond certain levels. It can only be called by Central Bank. Once paused, can't be minted, burned, or transferred. The only possible call after Pause is Resume. Operations start again.

Ravi: Whitelisting of network participants? Considering in scope?

Vipin: Yes, this is a wholesale CDBC. If in a retail setting - two dimensions. The initial transfer may happen to an intermediary (bank). From there to a retail setting with some AML, KYC for initial interaction. As putting into play, in China, for example, can make small retail payments without KYC. That will be through wallet design. KYC may or may not operate. If you're paying for a pizza, coffee, etc. not going to KYC merchant. Possible extension - do have register function for this wholesale setting.

Ravi: How does it work? You're giving authority to one of the owners of the contract to permit someone to interact with the function?

Vipin: Registry function creates entry - attached to a token - public key of some entity. You're right, only the fed or owner of the contract can add those entities to that registry. Once they are in the registry, they can transfer. Can't mint or burn.

Ravi: Value-add for PoC. Another way of looking at whitelisting. Not typically KYC. A user permitted or owner permitted. Good included.

Vipin: PoC with simple characteristics. Most basic. When we analyze - we will add more of what features are needed toward a full-blown or better CDBC. The aim is to explore the space to find out limitations.

Second is we are also working on the other side - how to document the actual deployment, creation, control, all of this which has nothing to do with the functionality of the token itself. Operational aspects. Preparing something along those lines for the community to look at and respond. Another thing, publicity aspect. Blog posts, etc. People making this knows as project in the space completely conducted in the open. Learning can be shared across Hyperledger and in a larger world.

Ravi: Let's say comparing to open issuance - doing for CDBC use case - highlight what are the data that makes this a more compliant CDBC token. A token smart contract might have - that kind of classification.

Vipin: ERC1155 opens new ground - thin on ground = differentiator. Second differentiator - ideas DECP (Chinese CDBC) as possible option.

Mani: Choice of Besu private transfer manager - transfer between two parties Dealer A to B everyone sees. For compliance purposes, why this transfer happens, Besu private transaction - only parties approve. Compliance auditing - proof on Enterprise Ethereum version.

Vipin: Java angle - it will do more on the management of keys using passwords rather than private keys. LEI and roles into that infrastructure. More complex ideas - beyond the current few people Also want to say any input is appreciated. In terms of code; once the Java interface is out there. Need a UI that shows the basic functions and allows for a better demo because that's how we're planning to build. Mani has aspirational aspects such as integration with SWIFT.

Mani: After initial Java CLI, two weeks timeframe, a demo of how works using multiple windows. One Central Bank and two Dealers.

Vipin: Once integrate into Besu, using Zoom we can share multiple screens.

Mani: Then to GitHub Hyperledger

Vipin: Use Truffle and Ganache for text network to check out functions. Makes it public.

Ravi: Available to test. From Ravi Agrawal to Everyone: (07:48 AM)
 http://thetokenfactory.com/#/ sharing a simple interface that helps interact with the underlying smart contract, in case that may help

Sanjay: After putting this together, same processes can be used for any kind of token. CDBC or real estate or art-backed token?

Vipin: Meant to be fungible - If they are in different compartments because of 1155? Difference nonfungible or fungible - if you are tokenizing. One token interacting with another. Payment side off-ledger, can't be fungible with other kinds of tokens.

Mani: Commercial bank mints standard tokens with standard behavior similar to currency. As long as fungible - the same token infrastructure can be used. When you go into lifecycle events - it often happens outside of chain - such as a dividend or any token-level transformation. Ultimately, a series of transfer functions. A commercial bank, JPM token - simplified equity token on the same network using the same equity contract wd allow customers to transact with them. Lifecycle events can be captured, monetary value to be transferred, can be modeled. However, more complex like what happens to equity with a split, merger, acquisition, etc. more work involved.

Kirthi: Sit well with Treasure Bonds? If so, works well with primary and secondary markets?

Mani: Yes, simplest terms. Token represents Bond. If you keep coupon payment as an event, transfer in underlying payment aligns with coupon payment. The main reason chose 1155, banks can come up with any asset or liability ledger - token - help their customers with an interface. No need for new contract - with significant compliance. The intention is a one-time compliance check in the banking sector. Any financial transaction can be with tokens. Goldman Sachs token - their own version of token - a money market instrument. A certain amount of dividends periodically, easy to deploy. Or a utility token Citibank Bike Token - same thing, you're introducing token, defining parameters, dividend transfer happens on the blockchain.

Vipin: Interest bearing token, completely fungible, conceivable interest paid periodically using swelling of the account by a certain percentage. Possible to work that into this system where payment is not made outside of the system. Only the on and off-ramps, in case you want to convert, would happen in some kind of an off-chain or another chain - need to then talk about interop.

Kirthi: With a focus group, build on top of, applicable for Treasury Bond market. Would you be able to support it?

Vipin: We will put documents to operate, with a limited amount of support. We aren't yet a commercial venture.

Action items

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