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“It’s important to separate the genuine worries about Libra from the hyperbole. Facebook is a controversial company these days. But French monetary sovereignty is unlikely to fall at the hands of Libra. Let’s not forget that the existing payments networks — the MasterCard and Visa networks as well as the international correspondent banking system — don’t always provide consumers with low prices. Any new competition will help consumers get cheaper and better payments options.”
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“The nature of fixed versus variable costs in robo-advising is likely to democratize access to financial services. Big data is likely to reduce the impact of negative prejudice in the credit market but it could reduce the effectiveness of existing policies aimed at protecting minorities.
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According to the IMF’s Financial Access Survey, while mobile money continues to grow in its epicenter in Africa, it’s also taking off in Asia. The survey also provides a wealth of information on the access to and use of basic financial services, including breakdowns by gender.
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Blockchain-based utility Swiss Digital Exchange has organized a global consortium of financial institutions to back its initial digital offering slated for the middle of next year on the SDX platform.
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PayPal has become the first foreign company to acquire a payments licence in China, after buying a majority stake in a small Chinese online payments firm, Guofubao (NationPay).
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The Revolut payment app plans to expand beyond Europe and Australia, where it built its primary markets, and into the USA, as well as Japan, Brazil, and Russia.
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Crypto exchanges, including Coinbase and Kraken, have developed a system to rate which crypto-assets are likely to be securities. Crypto-assets are rated on a scale of 1 to 5, with the highest value signifying that a token is a security.
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The Central Bank of Egypt (CBE) has authorised 28 banks operating in the Egyptian market to provide mobile payment services, according to the CBE’s Governor Tarek Amer.tags: Fintech MobileMoney
Month: September 2019
Kiffmeister’s Fintech Daily Digest 09/29/2019
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“[I]t seems that we have integrated the [Libra investment] token into the Libra coin in some way such as to produce a return, which would then deem it [the Libra coin] to be a security.” (U.S. Rep. Al Green at a September 24 SEC oversight hearing)
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Custodial solutions are important for financial markets, whether traditional or innovative, and have been historically limited for Bitcoin. But why do institutional investors need custodial services, and what are the unique challenges of Bitcoin custody?
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In a June report, Gartner predicted that by 2021, more than 90% of current enterprise blockchain platform implementations will fail or need to be replaced in a 18 months period. This is due to a fragmented blockchain market and ‘unrealistic expectations’ by CIOs.tags: Fintech Blockchain
Kiffmeister’s Fintech Daily Digest 09/28/2019
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U.S. House Passes Bill Requiring Study Of Blockchain Technology
The US House of Representatives passed the “Advancing Innovation To Assist Law Enforcement Act” to require the Financial Crimes Enforcement Network to conduct a study on the use of blockchain, AI, and other technologies by the agency and provide a report to the House Financial Services Committee and the Senate Banking Committee.
tags: Blockchain Fintech
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The Economics of Cryptocurrencies—Bitcoin and Beyond
“We develop a general-equilibrium model of a cryptocurrency. We use the model to obtain a condition that rules out double spending and study the optimal design of cryptocurrencies. We also quantify the welfare costs of using a cryptocurrency as a payment instrument.”
tags: Fintech CryptoAssets
Kiffmeister’s Fintech Daily Digest 09/27/2019
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This IMF paper highlights the emerging supervisory practices that contribute to effective cybersecurity risk supervision, with an emphasis on how these practices can be adopted by those agencies that are at an early stage of developing a supervisory approach to strengthen cyber resilience.
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The bitcoin market bloodbath has continued, with BTC testing the $7750 support on Thursday (September 26). It all began on the 25th, with the spread widening on BitMEX and futures contracts getting continuously liquidated….
Kiffmeister’s Fintech Daily Digest 09/26/2019
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An IMF paper explores some of the insights that economics gives us to think about the implications of data proliferation, and what this means for modern data policies. Cooperation between regulators, both within and across countries, will be vital to tackle the challenges associated with the increased flow of data.
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According to findings from Arcane Research CME Group’s Bitcoin futures settlement dates, in particular, appear to negatively influence BTC markets. Analyzing price behavior from January 2018 to August 2019, the company found that 75% of the times immediately before CME issued payouts, Bitcoin fell.
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The recent Ether (ETH) price drop showed the reliability and weaknesses of the decentralized stablecoin built by MakerDAO, Dai (DAI), and the decentralized finance (DeFi) ecosystem built on top of it.
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Congress wants the Financial Crimes Enforcement Network (FinCEN) to up its internal blockchain game with a new bill to study how the technology could be adapted for law enforcement.
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Accumulated P2P loans in South Korea have surpassed 6 trillion won (US$5 billion). Outstanding P2P loans extended by 220 companies stood at 6.2 trillion won in June, compared with 4.7 trillion won at the end of last year, according to the data compiled by the Financial Supervisory Service.
Kiffmeister’s Fintech Daily Digest 09/25/2019
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“I’m often asked why we didn’t take a more traditional route of building a payment system on top of existing rails, instead of the more ambitious route we’ve chosen. I tried to find a good concise write-up about the advantages of a new core network to move money around, and couldn’t find one, so I thought it would be a good idea to take a stab at it.”
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A confusion of theories have surfaced to explain the cause of the savage decline, yet a compelling one is that it was fuelled—perhaps not started—by a series of liquidations and margin calls on 100x leverage crypto derivatives giant BitMEX.
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The Bitcoin (BTC) network’s hash rate suffered a mysterious flash crash on Sept. 23, in a sudden intraday plummet from 98,000,000 TH/S to 57,700,000 TH/s. By press time, levels have recovered back to 92,800,295 TH/S— yet remain shy of their recent record of 102,848,135 on Sept. 18.
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According to Byte Tree, a transaction from a private wallet to an exchange worth $1.2 billion triggered the dip. The scale of funds at involved sparked a panic selling session.
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The lion’s share of Bitcoin derivatives trading volume is on unregulated exchanges that don’t operate as clearinghouses and offer leverage up to 100X.
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The U.S. SEC has begun proceedings to determine whether it should approve a proposed bitcoin ETF. It has begun evaluating the proposed rule change to allow NYSE Arca to list and trade shares of Wilshire Phoenix’s Bitcoin and Treasury Investment Trust.
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“All things considered, Libra has undoubtedly been a wakeup call for central banks and policymakers. Global “stablecoin” initiatives are the natural result of rapid technological progress, globalisation and shifting consumer preferences. The demand for fast, reliable and cheap cross-border payments is bound to grow further in coming years. Policymakers and central banks should respond to these challenges.”
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“Bitcoin is like backing Apple when it was on the edge of going bust: do you believe in the future or not? If you do, you hold forever and buy the dips. The only thing you mustn’t do with the position is let that put your finances at risk or hurt your sanity.”
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A key question for adherents of DLT is why it offers benefits beyond traditional settlement mechanisms. Whelan suggested “smart contracts” could be one answer – contracts written in computer code that can be fulfilled automatically when certain conditions are met. He said such contracts had proven “extremely powerful” in trials.
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The efforts are similar to the multi-level marketing programs involving supplements, cosmetics and kitchen items, where you recruit others to earn income rather than actually selling the products. While the programs have long raised eyebrows, they’re playing a greater role in the crypto world.
Kiffmeister’s Fintech Daily Digest 09/24/2019
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The Bitcoin network hash rate, which was reaching all-time highs a few weeks ago, has recently dropped around 40% yesterday. According to information from Coin.dance, the hash rate plummeted from 98 million to 57,7 million TH/s.
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“Volatility continues to wane for bitcoin and is now the lowest it’s been since April 1st, with a 30-day reading of 36% and a 60-day reading of 52%,” said analyst David Martin, citing figures provided by Blockforce Capital and Digital Assets Data.
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Intercontinental Exchange’s (ICE) Bakkt platform has traded 71 Bitcoin (BTC) futures contracts in the first 24 hours following its launch on Sept. 22.
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China has no specific launch date in mind for its digital currency, its central bank has said in fresh comments contradicting previous statements.
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Bitfinex has won an appeal in the New York Supreme Court, which means it won’t have to turn over documents pertaining to its use of the the cryptocurrency Tether.
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32% of all cryptocurrency projects failed to publish a single line of code in 2019. Based on a research of 2,000 startups by the Coincodecap project, 640 were completely inactive.tags: Fintech CryptoAssets
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As science-fictiony as it sounds, quantum computing is a threat that needs to be taken seriously in the world of blockchains. It may not be the kill switch that everyone imagines because of media hype, but it certainly something that should be on the radar for anyone involved in the ecosystem.
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SIX Group plans a full launch of its new SIX Digital Exchange trading platform using blockchain technology at the end of next year. It had originally intended to go live this year.
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Trading has started on the Boerse Stuttgart Digital Exchange. Selected users in Germany can connect directly to the trading venue, where they can trade the Bitcoin-Euro pair initially.
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Five of South Korea’s biggest banks have joined JPMorgan’s cross-border, blockchain-powered payments initiative, the Interbank Information Network. The network operates on Quorum, a platform based on the Ethereum blockchain.”tags: Fintech Blockchain
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“If Libra has its heart set on choosing an artificial currency unit as the basis for its global currency, it should have probably just go with the IMF’s SDR basket rather than brewing its own strange currency concoction.”
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The National Bank of Romania has launched a Fintech Innovation Hub, described as “a platform for dialogue with companies developing innovative public interest solutions in the area of payment and financial services.
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One of blockchain’s biggest problems is that it was approached badly. Rather than beginning with the challenges banks were trying to solve and then seeing whether blockchain could be applied to them, too many projects started with the technology, tried to discern how to make money from it, and worked from there.tags: Fintech Blockchain
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Wells Fargo, JPMorgan and Bank of America have seen their share of home loan origination fall from a peak of 49% in 2010 to just 19 per cent in the first half of this year. Quicken Loans became America’s largest mortgage lender last year.
Kiffmeister’s Fintech Daily Digest 09/23/2019
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The country that is first to introduce a digital currency that is more easily stored and used abroad than its physical counterpart will have “a first-mover advantage to greater currency use, though not necessarily to reserve currency use,” says the IMF’s Tommaso Mancini Griffoli.
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The ongoing digital revolution may lead to a radical departure from the traditional model of monetary exchange. We may see an unbundling of the separate roles of money, creating fiercer competition among specialized currencies. On the other hand, digital currencies associated with large platform ecosystems may lead to a re-bundling of money in which payment services are packaged with an array of data services, encouraging differentiation but discouraging interoperability between platforms. Digital currencies may also cause an upheaval of the international monetary system: countries that are socially or digitally integrated with their neighbors may face digital dollarization, and the prevalence of systemically important platforms could lead to the emergence of digital currency areas that transcend national borders. Central bank digital currency ensures that public money remains a relevant unit of account.
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The physically delivered Bitcoin futures by ICE–backed Bakkt has been finally launched. However, in the first 30 minutes of listing only 3 BTC has been traded, although after about 12 hours 28 BTC had been traded.
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The Riksbank plans to start work on a pilot ‘proof-of-concept’ for a retail CBDC next year. To-date, no decision appears to have been reached for the technology likely to be used for the pilot or any subsequent launch.
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The International Financial Reporting Interpretations Committee has ruled that crypto-assets are “not cash nor an equity instrument of another entity,” but rather “intangible assets” — defined as “identifiable non-monetary assets without physical substance.”
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New FIS report finds 54 countries now have active real-time payment programs, up from 40 in 2018 and nearly four times as many as 2014. India remains the global leader in real-time payments usage with 10-fold increase in value and eight-fold increase in transaction volumes driven through its national system over the last year.
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Virtual asset service providers may have to make quick decisions about how they will comply with the FATF.
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P2P lending industry faces threat of economic slowdown just as underwriting skills show improvement
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The extensive uptake of mobile money in recent years and the subsequent creation of transactional data has spurred access to short-term loans for individuals who had been previously excluded from formal credit markets. By offering instant loans and advances, these products can help individuals and MSMEs (micro, small and medium-sized enterprises) to meet their household needs, handle financial shocks and capitalise on business opportunities.tags: Fintech
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According to the Blockchain Transparency Institute’s 5th market surveillance report the cleanest exchanges are Kraken, Coinbase, Poloniex, and Upbit. Since the start of 2019, global wash trading has reduced by 35.7% among the real Top-40 exchanges.
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Maker will also possibly add KYC to its onboarding process, once again defeating the purpose of decentralized finance to offer low barriers to entry. This extends the troubles with Maker, including the very high participation fee, which is, in essence, its interest rate for lending.
Kiffmeister’s Fintech Daily Digest 09/22/2019
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Half of all Tether trading volume happens on one obscure exchange
In August, BTC/USDT represented 71.23% of total volume traded into both fiat and stablecoin. Despite controversies, USDT continues to be the most popular stablecoin for Bitcoin trading, followed by USDC, PAX, and TUSD. Bitmax, a trans-fee mining exchange, constituted roughly half of all USDT trading volume across all exchanges. Unlike regular cryptocurrency exchanges, trans-fee mining exchanges refund the fees paid by traders in the form of the exchange’s native token. While popular with traders, these exchanges have faced criticism from industry experts and were often compared to Ponzi schemes. These exchanges also incentivize wash trading.
tags: Fintech CryptoAssets Liquidity Bitcoin AltCoins Stablecoins Tether
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Cross-border Payment systems: SWIFT, RippleNet or BWW?
Nice overview of the current cross-border payments systems landscape.
tags: Fintech Blockchain CrossBorder PaymentSystems Ripple Stellar SWIFT
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SEC Chair Clayton: Bitcoin Needs ‘Better Regulation’ Before Major Exchange Listing
US SEC Chairman Jay Clayton said they better regulation is needed around bitcoin markets before they can be traded on major exchanges, and that investors are “sorely mistaken” if they think that cryptos undergo the same price discovery practices as products on top exchanges.
tags: Fintech ETFs Liquidity CryptoAssets
Kiffmeister’s Fintech Daily Digest 09/21/2019
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Stablecoins can be broken down into 3 categories: asset-backed, crypto-backed, and non-backed. To this we need to include 3 additional dimensions; pegged, collateralized and redeemable.
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Tibado is a fiat-backed stablecoin micropayment system based on an Autonomous Finite State Machine (AFSM) which controls a live coin ledger. The transactions are not known to the cash box which means there are no transaction fees and the user’s privacy is preserved.
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The Algorand platform is explicitly designed with the idea of catering to large scale payment processing, enterprise uses, mainstream user adoption, and a vision of a “borderless economy” from scratch.
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Wells Fargo says its blockchain for internal cross-border money transfers is faster and more efficient than SWIFT, the global messaging system used by over 11,000 financial institutions.
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According to a calendar notice on the House of Representatives’ website, the committee will hold a one-panel hearing with SEC Chairman Jay Clayton, as well as Commissioners Robert Jackson, Elad Roisman, Allison Lee and “Crypto Mom” Hester Pierce on Sept. 24 in the Rayburn House Office Building.”