Kiffmeister’s Fintech Daily Digest 10/22/2019

  • Cash accumulation can go only so far as a sign of trust in government. After all, governments in the developed world would typically like to see more electronic payments. Getting rid of cash can have a lot of benefits: It can help deter crime, reduce tax evasion and give central banks more power to stimulate the economy. But people have to believe that electronic money will be safe from mismanagement, man-made disasters, hackers and even confiscation. So far, neither the denizens nor the overseers of the financial system have done a great job of earning that trust.
  • This could logically mean a new enhanced role for the BIS, which coincidentally relies on a primitive kind of “stablecoin”: the BIS’s vast reserves, accounting for close to 7 per cent of the world’s total currency, are held via a BIS unit of account denominated in IMF special drawing rights, which in turn are pegged to a basket of convertible currencies. It would be a small step to ensure there is life after Libra, albeit with central banks in charge.
  • A Russian government official says the nation will ban Facebook if the US decides to block the company’s Libra cryptocurrency.
  • The Financial Action Task Force (FATF) has agreed on how it will assess whether countries have taken the necessary steps to implement the crypto-related requirements. “Given the global nature of the virtual asset industry, it is essential that countries implement these requirements swiftly,” the FATF emphasized.
  • After the PBoC ICO/exchange ban, the most convenient way to buy cryptos in China, is to buy stable coins like USDT first using OTC, and then trade it into any cryptos you want in exchanges.
  • In a draft bill published Tuesday, Rep. Sylvia Garcia (D-Texas) introduced legislation to the House Financial Services Committee to regulate stablecoins under the Securities Act of 1933, seeking to provide clarity in an area the bill suggests lacks regulatory guidance.
  • Ripple has expanded, opening offices in Washington, DC – the first major blockchain company with a dedicated global regulatory team in the US capitol. But this doesn’t come alone: Ripple is joining the Blockchain Association with Michelle Bond, Ripple’s Global Head of Government Relations, seated at the board, and even further, Craig Phillips, former Counselor to the Secretary at the U.S. Treasury Department, has joined Ripple’s Board of Directors.
  • Bitfinex, the controversial Hong Kong based exchange at the heart of ongoing investigations against Tether, has been one of the biggest cryptocurrency exchanges in the world since its launch in 2012. But recently there are signs that its market share may finally be slipping.
  • Bittrex has announced that it is moving headquarters from Malta to Liechtenstein. Interestingly, Malta’s financial regulator has recently said that it will “actively monitor” licensed cryptocurrency businesses in the country to prevent money laundering.
  • As more transactions flow through digital startups instead of traditional banks, fintech firms represent increasingly important partnerships for the card networks. These startups could also prove vital for the card networks’ continued grip on payments, as physical cards become less important and transactions become more digital. Four-year-old Revolut offers foreign exchange and stock and crypto brokerage as well as peer-to-peer payments. It says it has 8 million customers, and more than 1 million of them use its services every day.
    tags: Fintech
  • Last month, the Nigerian monetary authorities announced that they will be rolling out a national tax on cash. When Nigerian individuals or businesses deposit large amounts of cash at a bank, they will have to pay up to 3% in fees. And when they withdraw cash they will have to pay as much as 5% in fees. Nigeria joins a number of other emerging nations that have adopted policies that try to restrict domestic cash usage.
  • The results of PwC’s Global Fintech report – conducted by PwC Research – have been released. The survey gathers the opinions of over 500 global business leaders to explore the current fintech landscape, the factors that will determine likely future winners and losers, and the steps that organisations can take to put them in the best position to lead.
    tags: Fintech
  • In many countries, the gender gap is lower with mobile money than with traditional financial services and mobile money is helping with closing the gender gap[25]. Globally, 65% of women have an account compared with 72% of men. This means that women are 10% less likely than men to have a financial account. This number reaches 24% in Sub-Saharan Africa and South Asia. However, in many, the gender gap in mobile money account ownership is lower than the gender gap in bank account ownership.
  • Chinese police are investigating financial technology firm 51 Credit Card Inc for allegedly hiring debt collectors that used intimidation and harassment, part of a broader crackdown on the peer-to-peer lending (P2P) sector.
    tags: Fintech P2P
  • National Bank of Cambodia Assistant Governor Serey Chea said that the National Bank of Cambodia has experimented with domestic blockchain payments for retail, but the main interest is testing them for cross-border transactions. She noted that the institution has been collaborating with Malaysian bank Maybank.
  • When bitcoin advocates claim adoption is surging in developing countries, particularly during periods of political unrest or economic turmoil, their go-to source for evidence is often the LocalBitcoins P2P exchange. But a closer look at the way this data is collected shows substantial noise mixed in with the signals, undermining the claims of growing crypto use empowering the downtrodden.
  • To achieve the potential compliance, accounting, and legal automation that blockchain could provide, it will be vital that businesses and their advisors understand, review, and plan for the associated risks of using blockchain technology.
  • New Wharton research shows that getting the initial coin offering design structure right is a key ingredient for success. However, it found that even the best design has flaws. “ICOs have the advantage of being a low-risk means of financing for firms… but this comes at a cost of lower production quantity, lower profit and limited flexibility in terms of product margin.”
  • Sumitomo Mitsui Banking is set to begin utilizing R3’s Marco Polo trade finance blockchain on a commercial basis by the end of the year. A cross-border proof-of-concept test was successfully completed involving Mitsui & Co, a Japanese general trading company, Indorama Ventures, a Thai company in the intermediate petrochemicals business, and Bangkok Bank.
  • While trustless sidechains on Bitcoin may still be quite a few years away, there are other layer-two protocols, such as federated sidechains and the Lightning Network, that allow Bitcoin to gain the features of the most popular altcoins right now – albeit usually with security trade-offs. These additional protocol layers will likely become relatively trustless eventually, as advancements in cryptography are made over time.
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