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The UK FCA Issues Guidance on Regulation for Bitcoin and Crypto Assets. Most of the rules were proposed in a January consultation paper. As widely expected, the final guidance does not drastically alter the regulatory landscape, instead specifying when certain types of crypto assets fall under existing categories.
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PBOC officials have released more information about a CBDC which is still at the research stage. It will be backed by a reserve fund, according to Mu Changchun, deputy director of the PBOC payments department.
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Chinese authorities have spoken out about accelerating the development of a CBDC. The country has greenlit the next stage of the PBOC digital currency program, said Wang Xin, director of the PBOC Research Bureau.
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The PBOC is urging individuals and companies to not refuse or discriminate against cash payment, asking people to dial down what it calls an “overhype” of a cashless society comes as mobile payment volumes continue to soar to new heights.
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Swedish banknotes and coins in circulation rose 7% last year, to 62.2 billion krona, according to the European Central Bank. It was the first yearly increase since 2007; the value of cash in circulation has dropped by around 45% over that period.
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LedgerX launched the first physically-settled bitcoin futures contracts in the U.S., beating ICE’s Bakkt and TD Ameritrade-backed ErisX to the punch. It will be available to both institutional and retail investors.
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However, Bakkt is seeking a license to operate as a trust, while LedgerX went the route of DCM and DCO licenses, which some have said means its contracts are likely to be fully collateralized, so traders can’t legally trade them on margin.
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Crypto exchange Kraken has acquired Interchange, an accounting, reconciliation and reporting service provider that it says offers an “institutional-grade” service.
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Bitfinex publishes real-time liquidation updates to prepare for its 100x leverage derivative productBitfinex started publishing real-time liquidation updates in preparation for the rollout of its new derivative product with up to 100x leverage, which is not uncommon, with BitMEX also offering it.
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WhatsApp and other encrypted messaging services face pressure to hand over access to encrypted chats after a meeting between the “Five Eyes” nations which share intelligence this week. “The Five Eyes are united that tech firms should not develop their systems and services, including end-to-end encryption, in ways that empower criminals or put vulnerable people at risk.”
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Insurtech start-up B3i has launched its first product on R3’s Corda platform, v1.0 of its Property Catastrophe Excess of Loss Reinsurance product. The new Cat XoL product will allowing insurers, brokers and reinsurers to “interact, negotiate and place risk more securely and efficiently.”
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Crypto payments and banking services provider, Bitwala, has raised EUR 13m in Series A funding. Bitwala currently offers accounts for retail customers across all 31 European Economic Area countries via Berlin-based SolarisBank.
Month: July 2019
Kiffmeister’s Fintech Daily Digest 07/30/2019
- Millions in Crypto Is Crossing the Russia-China Border Daily. There, Tether Is King. Chinese importers in Russia are buying up to $30 million a day of tether from Moscow’s OTC trading desks. They use the cryptocurrency to send large sums back to their home country, which has strict capital controls. Previously the merchants used bitcoin for this, but when the market crashed in 2018 they switched to tether. Despite longstanding questions about USDT’s collateral, in this market “nobody actually cares if tether is backed or not,” says one Moscow trader.
- Was Tether the Unknown Bitcoin Whale Behind Monday’s $2.27 Billion Transfer? The massive $2.27 billion bitcoin transfer that occurred on Monday has led to the emergence of fanciful theories that Tether might be creating a private dark pool for future USDT issuance.
- Bitcoin’s Largest Wallet Blockchain Just Launched Its First Crypto Exchange. Bitcoin wallet and blockchain explorer provider Blockchain just launched its first custodial exchange platform, called The PIT, that can connect to non-custodial Blockchain wallets for nearly instant transfers.
- Zuckerberg Plans to Wiretap Whatsapp. He’ll Do the Same to Libra. Mark Zuckerberg’s Facebook is reportedly working on a back-door content-scanner for WhatsApp, tantamount to a wiretapping algorithm. If the reports are correct, Facebook will scan your messages before you send them and report anything suspicious.
- Facebook warns investors that Libra may never see the light of day. Facebook says in the risk factors section of its latest quarterly report that it can’t guarantee Libra “will be made available in a timely manner, or at all.”
- Go Slow On Libra. Speed Up On Faster Payments. The ability to move money safely, securely, cheaply and quickly is of vital national importance. It touches everyone and every part of our economy. It should be considered a critical component of our national infrastructure, just as cash is today, and deployed in the broad public interest.
- Bitcoin Whale Transfers $468 Million for ‘Low Dollar Fee’. On Monday, Whale Alert, a cryptocurrency transaction tracking bot, tweeted that a Bitcoin whale known as ‘Unknown Owner 26’ moved $468.5 million worth of Bitcoin (49,756) for just $374.98.
- Court Declares Bitcoin Legal in China as a ‘Virtual Property’. The latest order by Hangzhou Internet Court suggests that owning bitcoin is not illegal in China as it gave the flagship cryptocurrency the status of a “virtual property.
- MFSA issues a Consultation Paper on Security Tokens Offering. The Malta Financial Services Authority issued a consultation document aimed at adopting a supervisory approach relating to Security Token Offerings, where introduced a further classification into Traditional STOs (TSTOs) and Other STOs (OSTOs) – a digital representation sharing some qualities of traditional transferable securities.
- Coinbase Is in Talks to Launch Its Own Insurance Company. Coinbase is exploring plans to set up its own “captive” insurance company. At the start of this year, insurance broker Aon began establishing captive companies in the Cayman Islands, working with a handful of cryptocurrency firms. Aon says a captive structure can help firms get access to additional coverage at more reasonable prices.
- Philippines’ UnionBank Launches Payments-Focused Stablecoin. Philippines-based UnionBank has launched a payments-focused stablecoin pegged to the Philippine peso, dubbed PHX, that is being implemented on UnionBank’s i2i platform.
- Chile-Based Remittance and Payment Firm CurrencyBird Joins RippleNet. Chile-based peer-to-peer remittance company CurrencyBird has joined RippleNet, Ripple’s global blockchain-based network of payment providers.
- Taiwan joins Asia digital banking push with three new online licenses. Taiwan issued its first virtual banking licenses to three consortiums led by Taiwan and Japanese investors, its financial authorities said on Tuesday, following moves by regulators in other Asian markets to issue such licenses.
- How regulators are working towards an enabling framework for mobile money in Vietnam. “It is evident that the government and regulatory push in Vietnam towards mobile money as a means of increasing financial inclusion and enhancing digital society is unwavering.”
Kiffmeister’s Fintech Daily Digest 07/29/2019
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Telegram’s plans for GRAM look very like Facebook’s plans for Libra — a large network runs a token as a private interchange currency, with completely private issuance, with questionable backing.
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“To the extent permitted by applicable law, Governmental Authorities, and technology and mobile platforms, the Parent shall use its reasonable endeavours to facilitate the use of Tokens as the principal currency used on Telegram Messenger by building TON Wallets into Telegram Messenger.”
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“Cambodia launched the pilot of a blockchain-powered payment system this week, as the South-east Asian country aims to reduce money transfer costs and improve financial inclusion. The application, know as the Bakong Project, connects financial institutions and payment providers, enabling users to pay and make transactions in real time without fees, according to Cambodia’s central bank.”
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Even though the bitcoin market has evolved significantly over the last two years, a majority of BTC is owned by a small number of individuals. They can exert pressure on the markets to form patterns and lure unsuspecting traders to take their bait.
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Ping An built an empire around safe and staid products like life insurance. Now it’s betting its future on inventive uses of big data—and gearing up to do battle with fast-growing tech giants like Alibaba.
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“We urge you to support regulation that does not disadvantage U.S. companies using these technologies to innovate responsibly, and classifies digital currencies in a way that recognizes their fundamental differences — not painting them with a broad brush.”
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The new hardware wallet comes from YOUNIQX Identity, a subsidiary of the Vienna-based Oesterreichische Staatsdruckerei. Called Chainlock, the device is a 100% offline wallet offers private key generation in a high-security enclave that OeSD said means the keys cannot be viewed by any outside party – even YOUNIQX or OeSD employees.tags: Fintech CryptoAssets
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A new generation of technology companies, called govtech, is using new technologies applied to public services, and designed for local and central governments. These tech-enabled solutions promise greater efficiency and transparency in the way the citizens engage with the administration, transforming the way nations distribute welfare, keep citizens safe, provide healthcare, and deliver key public services.
Kiffmeister’s Fintech Daily Digest 07/28/2019
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Ripple Acquires its First Partner in Chile as Currency Bird Joins RippleNet
Currency Bird is the first transfer company in Chile to join the global network of Ripple, of which recognized institutions like MoneyGram, American Express, Banco Santander, Standard Chartered Bank, and Banco Itaú are already part of.
Kiffmeister’s Fintech Daily Digest 07/27/2019
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The Internal Revenue Service has begun sending letters to more than 10,000 cryptocurrency holders, warning they may have broken federal tax laws.
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The result might be a modern version of the type of price volatility that private currencies caused in the US back in the 1830s. Bullard predicts that today’s consumers and businesses won’t like exchange-rate chaos any more today than people did then. He says that system’s unpopularity factored into the government’s decision a few decades later to replace it with a national banking system. Out of that chaos, the dollar was able to rule.
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MIT’s Alex Lipton says there is a key design problem with Libra in that it would be issued in a non-immunized fashion against financial paper. Libra will need to buy high-grade paper to back the coin, so the owner of the paper will receive money from Libra (which it collected from consumers in return for Libra) and this money will start to circulate in the system. As such, there would be twice as much money in the system, with all the negative consequences.
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Sound familiar? “We propose a practical mechanism combining novel technological breakthroughs with well-established hedging techniques for building an asset-backed transactional oriented cryptocurrency, which we call the digital trade coin (DTC). We show that in its mature state, the DTC can serve as a much-needed counterpoint to fiat reserve currencies of today.”
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“Our solution boils down to assembling a pool of assets (contributed by sponsors), appointing an administrator (who provides enforcement of policies in extreme situations), digitizing the ownership rights on this pool, and building a special purpose narrow bank to facilitate activities of the administrator. This solution was published a year ago in both Scientific American and the Royal Society under the name Tradecoin.”
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Binance is now offering a block trading option makes it possible to traders to collect more digital assets without the need for an order book, reaching over 10 Bitcoin in value. This is good for traders that want to avoid potential loss, based on the price slippage that happens with large orders being logged.
Kiffmeister’s Fintech Daily Digest 07/26/2019
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WhatsApp will launch an in-app payment service later this year, with the service to initially be rolled out in India. A pilot trial of the payments service that is conducted on UPI standards is already underway.
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ICE-backed Bakkt is apparently gearing up to announce a Q3 launch date. It is still waiting on approval from the NY DFS to operate Bakkt Warehouse, the custodian for the bitcoin that underpins its physically delivered futures. However, some are arguing that Bakkt’s guaranty fund will be too small, which Bakkt itself seems to acknowledge with plans to increase the guaranty fund over time, after the launch.
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Monex Group, the Japan-based online brokerage firm that also owns cryptocurrency exchange Coincheck, has submitted an application to join Facebook’s Libra project.
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The New York Department of Financial Services (NYDFS) has granted virtual currency licenses to two subsidiaries of aspiring crypto derivatives provider Seed CX.
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According to the survey, over one-third of Americans are interested in buying into bitcoin, but issues such as hacks and lack of regulation are keeping cryptocurrencies from reaching a broader audience. 75% of all investors and 65% of those interested in investing in bitcoin say crime is their paramount fear.tags: CryptoAssets Fintech
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The purpose of this paper is to identify and examine the existing regulations in Nigeria’s FinTech industry and to canvass for a cohesive and comprehensive legislation for Fintech in Nigeria.tags: Fintech Regulation
Kiffmeister’s Fintech Daily Digest 07/25/2019
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Cash, Card or Crypto? — Platform Helps Stores Accept Digital Payments
Through Elipay, merchants can accept Bitcoin Cash, Bitcoin, Ether and ELI tokens (its native currency) via a platform that can be integrated into their existing infrastructure. Settlements occur immediately — and the company claims its technology eliminates the delays seen when credit card payments are being cleared. To address concerns over volatility, businesses that accept digital currencies can opt to receive revenue in their local currency, meaning no in-depth crypto knowledge is required.
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On Crypto Exchanges, the Trades Don’t Always Add Up
Regulators and companies are scrambling to address rampant fraud on cryptocurrency exchanges; many services that sort through exchange data are now available.
tags: Liquidity Fintech CryptoAssets
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Need for speed – How is the race towards instant payments shaping the world of compliance?
As demand for speedier cross-border payments continues to grow, so too does the burden on banks to keep these payments compliant and secure. Heather Lee, financial crime compliance, sanctions strategy at Swift, explores how industry collaboration can satisfy the needs of both business and regulators
tags: CrossBorder PaymentSystems Fintech
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What are the odds Facebook’s Libra launches on time?
“Ten years after Bitcoin began operating, we are still trying to understand it and regulators have not figured out what to do about it,” said Angela Walch. “In the end, Facebook and Libra are entering the high-stakes domain of money and finance—they should expect to carry a heavy regulatory burden just as others operating in this space do.”
tags: Regulation AltCoins Facebook Stablecoins CryptoAssets Fintech
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NY DFS Superintendent Linda Lacewell Announces Newly Created Research and Innovation Division
The New York State Department of Financial Services has created a new Research and Innovation Division that will oversee the licensing of cryptocurrency firms. The division will be responsible for “licensing and supervising virtual currencies,” such as BitLicense, address financial inclusion, as well as protect consumer data rights.
tags: Fintech CryptoAssets Regulation
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German Crypto Businesses Will Need a BaFin License In 2020
Cryptocurrency companies operating in Germany will need to apply for licenses if they intend to keep working legally in the country next year.
tags: Fintech CryptoAssets AMLCFT Regulation
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Whitepaper Deep Dive — Move: Facebook Libra Blockchain’s New Programming Language
Key characteristics of Move and How it differentiates with Ethereum from a developer’s perspective…
Kiffmeister’s Fintech Daily Digest 07/24/2019
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The much-awaited Government of India report on blockchain and virtual currencies promises a massive boost to the blockchain sector in India, but delivers a fatal blow to bitcoin, Ripple XRP, ethereum, and other crypto-currencies through the proposed “Banning of Cryptocurrency & Regulation of Official Digital Currency Bill, 2019”.
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While Libra project supposedly has 28 founding partners, according to Visa, who is one of them, only nonbinding letters of intent to join Libra have been signed, so no one has yet officially joined. I’ve read elsewhere that also, no one has anted up the $10m minimum stake.
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After surveying 1,799 U.S. adults, a Civic Science study found only 5% of expressed some level of interest in Libra.
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The Swiss Confederation has much clearer crypto regulations than the United States, which has done little since the birth of Bitcoin to simplify the regulatory complexities lying in wait to bite any company looking to establish a crypto or crypto-related business within its confines.
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In testimony before the Senate Banking, Housing and Urban Affairs Committee, Facebook subsidiary Calibra CEO David Marcus stated that consumers would be provided with the necessary tools to report their taxes, but added that Calibra does not currently have processes in place to directly provide that information to the IRS. However, Mr. Marcus noted, Facebook “would be happy” to work with the IRS to ease the consumer burden.
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Libra has not responded to an information request by the Swiss Federal Data Protection and Information Commissioner, looking for more details to help define its oversight role over the proposed digital currency.
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Despite all of the advances in digital custody, the industry will need to wait for the appropriate legislation to define what digital custody is and what it entails.
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Peru’s race to evolve its legal system and adapt to the challenges of a “crypto society” has only just begun. The country’s Superior Judge, Bonifacio Meneses Gonzales, has asked Congress to regulate crypto to combat money laundering.
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The US SEC and FINRA have left broker-dealers and the operators of digital asset trading platforms treading water with the joint guidance regarding the custody of digital assets the regulators released earlier this week.
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Genesis Global Capital, the lending arm of institutional OTC crypto trading firm Genesis Global Trading, added $746 million of crypto loans in the second quarter, bringing its total originations to $2.3 billion since launching the business in March 2018.
Kiffmeister’s Fintech Daily Digest 07/23/2019
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Central bank digital currencies (CBDCs) could solve the “competition issues” in the cryptocurrency sector, according to a study requested by the European Parliament Committee on Economic and Monetary Affairs.
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While Finance Watch is open to technological progress in this area, we have identified several specific concerns with the Libra proposal based on an initial analysis of the Libra White Paper.
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Berlin-based Fundament has received BaFIN’s approval to issue the first tokenized real-estate backed bond that can be widely offered to individual investors, a EUR 250m offering.
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“Our results show that effective governance institutions are associated with a less restrictive regulatory stance on cryptocurrency, whereas financial openness is not found to be significant. The results imply that a certain level of institutional quality may be necessary before opening up to new forms of financial technology. As cryptocurrency is recognized as a risky speculative financial instrument, its current state of many unknowns can prevent policy makers from conducting a thorough surveillance to avoid system-wide vulnerabilities.”
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ESMA has concluded that, based on the evidence gathered, that at present most innovative business models can operate within the existing EU rules,tags: Regulation Fintech
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Binance will list Binance GBP Stable Coin (BGBP) and open trading for a BGBP/USDC trading pair at 2019/07/23 4:00 AM (UTC).
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Palestinian Prime Minister Mohammad Shtayyeh recently announced that his government will use cryptocurrency to bypass sanctions levied by Israel.
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Union Bank of the Philippines recently became the first Philippine bank to successfully pilot blockchain-based remittance from Singapore to the Philippines. This was done in partnership with OCBC Bank, Singapore, using the Adhara liquidity management and international payments platform.
Kiffmeister’s Fintech Daily Digest 07/22/2019
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An Indian government panel has recommended banning all private cryptocurrencies and a jail term of up to 10 years and heavy fines for anyone dealing in digital currencies, which could signal the end of them in India.
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“The Committee is of the view that it would be advisable to have an open mind on the introduction of an official digital currency in India.”
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The proliferation of crypto assets may create a multicurrency environment prone to monetary and exchange rate volatility, warned St. Louis Fed President James Bullard. “Cryptocurrencies may unwittingly be pushing in the wrong direction in trying to solve an important social problem, which is how best to facilitate market-based exchange.”tags: Fintech CryptoAssets
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Due to mounting regulatory pressures in the United States, the Circle is moving the majority of its exchange operations to Bermuda, where it received a full Digital Assets Business Act license its crypto exchange Poloniex. 70% of Poloniex users hail from beyond the U.S.
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Facebook has seen an increase in the median number of comments, likes and ads clicked by users on the service from January to July. In the U.S., Facebook users increased their engagement from six comments, nine post likes and 13 ads clicked on Jan. 3 to eight comments, 13 post likes and 17 ads clicked on July 18.
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Hope lies in tools such as zero-knowledge proofs and in emerging “self-sovereign” identity concepts, as well as in a more open-minded regulatory model for curtailing crime – one that doesn’t depend on revealing people’s personal identifying information. But these are a ways off; they will require user adoption and; to a still large extent, belief in them by policymakers.
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In May 2019, IOSCO published “Issues, Risks and Regulatory Considerations Relating to Crypto-Asset Trading Platforms.” The focus of the report is on the secondary market trading of crypto-assets on CTPs, assuming that the regulatory authority has the legal authority to regulate those assets.