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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.
Month: July 2019
Kiffmeister’s Fintech Daily Digest 07/21/2019
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The Central Bank of Iran has approved the issuance of gold-backed crypto-asset designed to maximize the use of Iranian frozen bank assets, according to the CEO of Iranian Information and Communication Technology. In fact, a number of Iranian banks have been working with blockchain startup Kuknos Company on this “Paymon” project since January.
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“Because the (Libra) Association is headquartered in Geneva, it will be supervised by the Swiss Financial Markets Supervisory Authority (FINMA). We have had preliminary discussions with FINMA and expect to engage with them on an appropriate regulatory framework for the Libra Association.”
Kiffmeister’s Fintech Daily Digest 07/20/2019
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Facebook now seems to recognize its original vision was a non-starter with regulators. So this week Marcus sketched out a new vision for Libra—one in which the Libra Association will shoulder significant responsibility for ensuring compliance with laws relating to money laundering, terrorist financing, and other financial crimes.
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While Wyoming is perhaps the most notable state to court the crypto industry, others have also joined in. Montana passed a crypto-friendly securities law in May. In South Dakota, Anchorage is following in the footsteps of fellow crypto custodian BitGo, which got the green light from state regulators in 2018.
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Fidelity Digital Assets has officially applied to the New York Department of Financial Services for a Trust license. If its application is successful, Fidelity Digital Assets (FDAS) would be cleared to add New York to the handful of states in which it currently operates its custody business for digital assets.”
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This Cleveland Fed paper shows that while the decentralized nature of the Bitcoin network “democratizes” payments, it is not obvious that the approach increases the equity or efficiency of markets or that the costs of the decentralized control structure won’t outweigh the benefits in the long run.
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“Phone numbers and email addresses added as profile attributes, those provided for security purposes such as two-factor authentication, those provided to the Facebook Messenger app for the purpose of messaging, and those included in friends’ uploaded contact databases are all used by Facebook to allow advertisers to target users.”
Kiffmeister’s Fintech Daily Digest 07/19/2019
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There’s no real guarantee the Libra Reserve would be stable in practice, especially when broader conditions get rough. The problem, according to numerous experts, boils down to this: What looks safe on paper can hide unpredictable risks.
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“If Facebook had built an app that just allowed in-app, user friendly payments in USD, I could have gotten behind that. What has been proposed instead is a combination of a licensed version of Liberty Reserve with an ETF, which furthermore proposes to share transactional data with a veritable rogues’ gallery of privacy-abusing tech companies and the VC firms that funded their rise. “
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The use of cash as a means of payment in the Netherlands continued to decline in 2018, according to data released by the Netherlands Bank. Last year, Dutch consumers paid 37% of their purchases in cash, down from 41% in 2017. Cash also declined in transactions between consumers, falling to 59% of peer-to-peer transactions in 2018, down from 67% the previous year.
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Bank of Ghana deputy governor Maxwell Opoku-Afari stressed the large gains that Ghana has made in financial inclusion, mostly due to the growth of its mobile money sector. He said the number of mobile money accounts has grown from 3.8m in 2012 to 32.6m in 2018, which is greater than the population of Ghana (30.1 million).tags: Fintech MobileMoney
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The European subsidiary of Binance has launched a British pound-pegged stablecoin. Starting today, Binance Jersey has started offering a British pound-backed Binance called GBP Stablecoin (BGBP), The Block confirmed with Binance.
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The months-long CFTC probe is focused on whether BitMEX broke rules by allowing Americans to trade on the platform, which isn’t registered with the agency, said one of the people who asked not to be named discussing the investigation, which hasn’t been made public. The regulator considers virtual currencies like Bitcoin to be commodities, and it has jurisdiction over futures and other derivatives based on them.
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In March, the NY Fed hosted a research conference on FinTech to understand the implications of FinTech developments on issues that are relevant to the Fed’s mandates such as lending, payments, and regulation. This post summarizes the principal themes and findings of the conference.
Kiffmeister’s Fintech Daily Digest 07/18/2019
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Stablecoins such as Facebook’s Libra will need to be tightly regulated or they could destabilise the global economy and risk being used for money-laundering and the financing of terrorism, according to a working group consisting of senior officials from the G7 central banks as well as the International Monetary Fund, the Bank for International Settlements and the Financial Stability Board.
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Everyone says Libra should be heavily regulated. But nobody seems to know how—including Facebook. That much was clear in the often muddled questions of legislators who hauled in Facebook executive David Marcus to testify this week, as well as in Marcus’ frequent deflections.
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Ocasio-Cortez references previous instances of people being paid in corporate-controlled currency, known as “scrip” — a very dark history there.
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Gotbit inflates trading volumes on obscure cryptocurrency exchanges for a fee and has about 30 token projects as clients. The firm programs bots to trade tokens back and forth with each other, creating the illusion of active markets so the assets can get listed on CoinMarketCap. Its co-founder says exchanges are aware of this manipulation but are not interested in stopping it.
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Chainalysis’s business today is split between crime fighting and regulatory compliance. Half the company’s revenue still comes from working with state governments and regulators including the IRS and the FBI to provide investigation software.
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France’s Financial Markets Authority is poised to approve a first tranche of crypto-related companies under new rules on digital coins. Under the rules, set to come into force late this month, crypto-related firms will voluntarily abide by standards on capital requirements and consumer protection and pay tax in France, in exchange for approval from the regulator.
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Companies are investing billions of dollars to find uses for blockchain, but a review of 33 projects involving large companies announced over the past four years and interviews with more than a dozen executives involved with them show the technology has yet to deliver on its promise. At least a dozen of these projects, have not gone beyond the testing phase, the review shows. Those that have made it past that stage are yet to see extensive usage.tags: Fintech Blockchain
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SWIFT has concluded a trial to integrate its “global payment initiative” with Singapore’s Fast And Secure Transfers (FAST) domestic instant payment service, that linked 17 banks across seven countries. It said all payments in the trial were settled within between 13 and 25 seconds.
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The European Banking Authority published today the findings of its analysis on the regulatory framework applicable to FinTech firms when accessing the market. The Report illustrates the developments on the regulatory perimeter across the EU, the regulatory status of FinTech firms, and the approaches followed by competent authorities when granting authorisation for banking and payment services.tags: Fintech Regulation
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Japan’s government is leading a global push to set up an international network for cryptocurrency payments, similar to the SWIFT network used by banks, in an effort to fight money laundering. a source familiar with the effort as saying that the network is aimed to combat money laundering and was approved last month by the FATF.
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In our last post, we explored mobile money as the driving force for financial inclusion in Sub-Saharan Africa, and the increasing digitisation of use cases across different sectors – many of which were not imagined in the early days of mobile money. This post focuses on the future of mobile money. Looking ahead, we see three key areas of future growth in mobile money across Sub-Saharan Africa.
Kiffmeister’s Fintech Daily Digest 07/17/2019
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Rep. Alexandria Ocasio-Cortez (D-N.Y.) brought an interesting bit of monetary history into the discussion. She suggested that the Libra currency would be a digital version of scrip, a type of private money that corporations once used to pay employees. (Coal miners and loggers, for instance, were paid in scrip they could use to buy goods at the company store.)
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Ocasio-Cortez suggests that Libra being “controlled by an undemocratically selected coalition of largely massive corporations” is problematic because a nation’s currency is a “public good” that should be under the purview of a government.
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Georgetown Law Professor Chris Brummer’s written statement on Facebook’s cryptocurrency, Libra, will be delivered at 10am, on Wednesday, July 16, 2019. His testimony is entitled ” 99 Problems.”
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Grayscale Investments Releases Q2 2019 Digital Asset Investment Report Digital currency asset manager Grayscale’s assets under management nearly tripled from $926 million to $2.7 billion in Q2 2019 on inflows of $85 million, the rest being asset price appreciation. Institutional investors comprised the 84% of Q2 inflows (75% over 12 months).
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For the first time in the US, in 2018, cash was not the most frequently used means of payment, a new Fed report finds. The report shows that consumers used cash for 26% of payments last year, four percentage points lower than 2017. Cash now sits just under debit cards, which rose from 26% in 2017 to 28% last year. On average, consumers last year made 11 cash payments per month, down from 12 in 2017, while total payments increased from 41 to 43 transactions per month.
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Many are trying to solve the problems associated with the remittance market today. Ripple is one of the best platforms in this sector but has a major competitor in PayPal who have launched their international money transfer app Xoom.
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With 21% of adults in the region having a mobile money account, Sub-Saharan Africa is the global leader in the use of mobile money. This correlates with GSMA supply-side data on mobile money, which shows that Sub-Saharan Africa plays host to almost half of all mobile money registered accounts i.e. 396 million – of which 37% are active on a 90-day basis.tags: Fintech MobileMoney
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“If the ultimate outcome of a private market for money is a monopoly, does it make much difference whether the monopoly is run by a private company versus a public entity? While the former case could lead to economic exploitation based on a market advantage, the threat of potential competition would inhibit this tendency. The latter case, however, invites a more sinister abuse of government power – even tyranny – as government precludes market entry to alternative issuers.”
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“Bitcoin’s average transaction volume is topping $3 billion per day, data from crypto analytics site Coinmetrics.io reveals as of July 16.”
Kiffmeister’s Fintech Daily Digest 07/16/2019
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“For a panel about a proposed cryptocurrency, Tuesday’s Senate Banking Committee hearing was notably light on crypto talk. Bitcoin was barely mentioned during the two-hour session and most of the lawmakers seemed far less concerned with the technology than with who was planning to leverage it: Facebook.”
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Facebook’s David Marcus faced a cacophony of fear, uncertainty and doubt surrounding the social media giant’s plan to launch its digital currency Libra during a Senate hearing Tuesday, following criticisms from a wide range of regulators and lawmakers around the globe.
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Simply put, the Libra Masterplan is borrowing pages from the Bitcoin playbook and the WeChat playbook both at once. If successful, it makes the Libra accessible to everyone on the planet while offloading the regulatory burden of operating the on- and off-ramps to other business.
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As currently proposed, the Libra Reserve, in essence, is a pooled investment vehicle that should at a minimum, be regulated by the SEC, with the Libra Association registering as an investment advisor.
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“Cryptocurrencies have given rise to an entire new criminal industry, comprising unregulated offshore exchanges, paid propagandists, and an army of scammers looking to fleece retail investors. Yet, despite the overwhelming evidence of rampant fraud and abuse, financial regulators and law-enforcement agencies remain asleep at the wheel.”
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Libra is put in perspective by comparing it to like financial instruments, new and old, shedding some light on the purpose, intended user, regulatory issues – and more important, on the path Libra must follow to achieve success. The article also exposes the vast gaping holes in Facebook’s description of Libra.
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The authors warn of several financial stability risks that digital currencies pose. Many of their points echo recent comments by two senior Chinese central bank officials. The authors suggest central banks take the first step towards their own digital currency by offering settlement services to e-money providers.
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In its latest paper “The Rise of Digital Money” that marks the launch of a new series Fintech notes, IMF analyses how technology companies are stepping up the competition to credit card companies and large banks.
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The International Monetary Fund (IMF) has argued that network effects could spark the blaze for the mass adoption of new digital monies.
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BitMEX has finally released the unedited video of its CEO, Arthur Hayes, debating noted economist, Nouriel Roubini, at the Asia Blockchain Summit earlier this month. The 53-minute long discussion ventured into uncomfortable territories of both the bitcoin and mainstream finance. While Roubini kept his focus on the criminal nature of cryptocurrencies and their evangelists, Hayes projected them as a means to promote financial privacy.tags: CryptoAssets Fintech
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The World Economic Forum released a guide for the evaluation of the benefits of blockchain applications. The document delves into how to apply blockchain technology, providing six recommendations for companies.tags: Fintech Blockchain
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For many mobile is the primary – or only – way to get online. Last year alone, almost 300 million further people connected to mobile internet. The extent and progress of mobile internet connectivity is explored in detail in the GSMA’s State of Mobile Internet Connectivity Report.tags: Fintech MobileMoney
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Perhaps the most useful thing that disruptive technologies such as cryptocurrencies have done is to kick existing payments providers out of their complacency. Two days after Facebook announced its One Cryptocurrency To Rule Them All, the international messaging service SWIFT announced its own plan for world domination.
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This paper defines fintech as an innovation enabled by one or more technological ‘triggers’ that have potential to provide value through enablement or disruption in the financial services industry. It proposes a framework to understand fintech in terms of customer type, industry subsector and enabling technology.tags: Fintech
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For cryptocurrencies to be broadly accepted forms of digital money they will need consumer trust and confidence. Building consumer confidence in new digital currencies will require participation of intermediary institutions and a much greater level of regulation than currently exists. In response to concerns about existing forms of cryptocurrencies, governments are likely to investigate or implement their own digital currencies to prevent disruption to sovereign money and the ability to manage the wider economy.
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There have been significant pricing effects sourced from both fraudulent and regulatory unease within the industry. Bitcoin futures dominate price discovery relative to spot markets. CBOE futures are found to be the leading source of informational flow when compared directly to their CME equivalent
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PayPal launched Xoom—its international money transfer service—in 32 markets across Europe.
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The “Banning of Cryptocurrency and Regulation of Official Digital Currencies” bill, which proposes to ban or heavily restrict all cryptocurrency-related activity in India, was leaked this week.
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Scaling Ethereum without breaking it is a monumental task. Development roadmaps have regularly been delayed. Founder and Ethereum developer Vitalik Buterin thinks that the next era of Ethereum is at least a year off, but in the meantime, Bitcoin Cash may have all the properties needed to scale.
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What is still needed for institutional adoption to take place, say experts, is more cooperation among the rising number of firms that are jumping into the market, and a process of consolidation. How long all of that will take is a matter of some debate, but the market’s early adopters are acting as if it will be sooner than later.
Kiffmeister’s Fintech Daily Digest 07/15/2019
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Facebook will not launch the cryptocurrency Libra until it has “fully addressed regulatory concerns,” according to David Marcus, the head of Facebook’s Calibra. The remarks are prepared testimony he plans to give tomorrow, in front of the US Senate Banking Committee.
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Facebook’s proposed creation of Libra is a wake-up call. It makes inescapable the need for rapid, international coordination of financial regulation. Without mechanisms to ensure consistent application of coherent global rules, we may find ourselves in a world full of “low-quality finance havens” that exist to evade financial regulations—just like “tax havens” that exist merely to evade taxes.
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The Senate Banking Committee staff reached out to Caitlin Long pursuant to her recent Forbes article on Libra. Here is her formal written testimony.
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“A large platform utility may not establish, maintain, or operate a digital asset that is intended to be widely used as medium of exchange, unit of account, store of value, or any other similar function, as defined by the Fed.”
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“The Canadian Securities Administrators (CSA) are focusing on understanding and regulating distributed ledger technology (DLT) and its related components. The Canadian securities regulatory agency included a section on DLT and crypto assets in its Business Plan 2019–2022 that was published on July 13. “
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Japanese authorities have set up a working group to discuss the impact Facebook’s proposed Libra digital coin could have on monetary policy and financial regulation, government sources said, ahead of a G7 finance leaders’ gathering where the topic will be high on the agenda.
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The UK Royal Mint will provide crypto custodial services for the first time everand is participating in the launch of new crypto-asset temtum. TEM is a zero-fee P2P crypto-asset aimed at creating a “new world of financial freedom away from centralised institutions.”
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The IMF is watching the growth of so-called stablecoins closely and today published a paper that identifies their benefits and risks, and highlights some regulatory issues that are likely to emerge.
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A “self-sovereign identity” system, in which consumers are able to protect their own data, is being developed by the participants for faster services. For instance, a student can be issued a new ID in less time as they won’t have to submit related papers in person, thanks to blockchain technology.
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Blockchain validation platform VeriBlock produced almost 25% of on-chain Bitcoin (BTC) transactions in 24 hours July 14, the company confirmed on social media
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The U.K. government has drawn up an action plan aimed to combat financial crimes that it says will include “action on cryptoassets.” The new Economic Crime Plan from H.M. Treasury and the Home Office is aimed to overhaul the the way economic crime is tackled, building better cooperation between government, law enforcement and the private sector.
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Ireland-based cryptocurrency exchange Bitsane disappeared without a trace last week, likely taking hundreds of thousands of users’ assets with it. Account holders told Forbes that attempts to withdraw bitcoin, XRP and other cryptocurrencies began failing in May, with Bitsane’s support team writing in emails that withdrawals were “temporarily disabled due to technical reasons.” By June 17, Bitsane’s website was offline and its Twitter and Facebook accounts were deleted.
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Japanese crypto exchange Bitpoint has become the latest exchange to suffer a major loss of funds. Its loss of $32 million—in five cryptocurrencies.
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In terms of settlement finality , subject to certain conditions, proof-of-work settlement is preferable to legal settlement finality. However, those conditions are not likely to be met as they pertain to the well-known drawbacks such as lack of scalability, excessive energy use and the 51% attack vulnerability. Future designs of new types of blockchains will need to consider these shortcomings in order to enable the regulated industry to benefit from this technology innovation.
Kiffmeister’s Fintech Daily Digest 07/14/2019
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Memo to the Members of the House Committee on Financial Services regarding the July 17, 2019 hearing entitled “Examining Facebook’s Proposed Cryptocurrency and Its Impact on Consumers, Investors, and the American Financial System.”
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Washington insiders and Waters’ memo: Here’s what Congress wants to know about Facebook’s Libra next week
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Staff at the US SEC are looking at whether Libra’s structure effectively makes it an exchange-traded fund, according to people familiar with the matter. If the SEC decided that Libra’s design makes it an ETF, Facebook would need the regulator’s approval to launch the project.
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A draft bill entitled “Keep Big Tech out of Finance” has surfaced online, allegedly deriving from within the United States House of Representatives Financial Services Committee. The document’s metadata dates it July 12.
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Trump Fed nominee Judy Shelton: “An approach that permits the issuance of virtual currencies in tandem with government-issued currencies, adapting legal tender laws to permit healthy currency competition—should be put forward.”
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The gold industry is perhaps unrivaled in its wastefulness. A producer has to dig up about 20 tonnes of ore for enough gold to make a wedding ring.
Kiffmeister’s Fintech Daily Digest 07/13/2019
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The SEC’s approval of live streaming platform YouNow’s Props token offering falls under Reg A+, which allows startups to raise up to $50 million in a public offering with fewer disclosures than a full IPO requires. Blockstack, a decentralized web platform for DApps, was the first blockchain firm approved under Reg A+.