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The Mechanics of Market Manipulation
This column provides a visual blow-by-blow of what happened May 17 on BitStamp, and a risk/return estimate: if it was manipulation, how much it cost, and how much the manipulators earned. It shows how novel structures and thin markets could makes manipulation possible. It concludes with thoughts on the liquidity imbalance that caused it, and how it might happen again.
tags: Fintech CryptoAssets Liquidity
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Digital-First Challenger Banks from the UK- The List
In the UK, digital-first challenger banks have taken the banking industry by storm. In the next year, digital challenger banks will have a combined customer base of 35 million, tripling their customer bases of 13 million people today, according to a research by Accenture.
Month: November 2019
Kiffmeister’s Fintech Daily Digest 11/29/2019
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Valve, a game maker, has put an end to trade in various in-game items because “worldwide fraud networks” had been using these items to “liquidate” their gains. JP Koning explains hos this works.
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HSBC will be shifting $20 billion worth of assets to a new blockchain-based custody platform by March. This is a vast improvement of the previous system as the HSBC platform will digitize paper-based records of private placements.
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Because it’s fast and reliable, the ODL system provided by RippleNet is being used by MoneyGram International. MoneyGram clients are being offered lower costs, convenience, speed and reliability.
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At least five Chinese cryptocurrency exchanges have halted or chosen to terminate operations this month in response to a perceived redoubling of Beijing’s anti-crypto stance.
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Chinese cryptocurrency exchange IDAX has suspended deposits and withdrawals after its CEO allegedly disappeared. In a blog post on Nov. 29, IDAX, which earlier this week warned it was seeing a run on withdrawals, said the whereabouts of Lei Guorong were currently unknown.
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When Canadian blockchain whiz Gerald Cotten died unexpectedly last year, hundreds of millions of dollars in investor funds vanished into the crypto ether. But when the banks, the law, and the forces of Reddit tried to track down the cash, it turned out the young mogul may not have been who he purported to be.
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Fintech adoption within investment management is still comparatively low as the industry faces falling margins, increased competition and a low rate environment, according to the Asset Management and Investors Council of the International Capital Market Association.tags: Fintech
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In addition to companies, local governments and incorporated associations are now proceeding with special initiatives for issuing independent tokens within Japan.tags: Fintech CryptoAssets
Kiffmeister’s Fintech Daily Digest 11/28/2019
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We would argue that bitcoin is simply a diversifier. If a fund manager wants to put 1 per cent of his or her portfolio into crypto, that would certainly diversify it, though it would be a high-risk strategy. They could also choose to use 1 per cent of it for gambling, which can also sometimes bring in high returns, and which we would argue “investing” in crypto is more akin to.
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The Dubai Financial Services Authority and the Commission de Surveillance du Secteur Financier Luxembourg, entered into an agreement to cooperate in the development of FinTech.tags: Fintech
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Here’s a comprehensive list of all 235 stablecoin projects launched so far. “Launched” is an important distinction because the list includes closed projects (e.g., Basis). It also includes commodity-backed stablecoins (mostly gold) and private coins.
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The Crown Princes of Saudi Arabia and the United Arab Emirates (Mohammed bin Salman and Sheikh Mohamed bin Zayed) reached agreement to develop a digital currency to enable trading between banks in the two countries.
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Mastercard Send is an application that leverages the card network infrastructure to facilitate the secure availability of funds in real-time*. With Mastercard Send, PayPal users can transfer their account balances to eligible Mastercard cards seamlessly and conveniently, typically within seconds.tags: Fintech FastPayments
Kiffmeister’s Fintech Daily Digest 11/27/2019
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Ghana could issue a digital form of the nation’s currency, the cedi, in the “near future” and is in talks to develop a pilot project in a sandbox environment. https://www.bog.gov.gh/wp-content/uploads/2019/11/23rd-Annual-Banking-Conference_Speech_Governor_final.pdf
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Bitcoin mining consumed enough electricity last year to release carbon emissions on a par with Estonia, according to a study that suggests the climate change impact of the crypto-asset is not as bad as previously thought.
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U.K.-based remittance firm TransferGo is planning to move to Ripple’s payments solution On-Demand Liquidity that leverages XRP, the world’s third-largest cryptocurrency.
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To reduce the risk of any single stablecoin becoming systemically dominant (and simply replacing a fiat hegemon with a digital one), there should be an emphasis on interoperability and frictionless exchange across blockchains. Blockchain interoperability can increase economic and transactional scalability, speed and security.
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The bank of the future will need to think about people in a completely different way. This will require a customer-first approach that is deeply embedded in the process of how services are designed and delivered. It’s an approach that is digitally driven but at its core focused on solving our human problems and needs.tags: OpenBanking Fintech
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Upbit suspended its deposit and withdrawal service, saying that $48.5 million of Ethereum had been stolen from the Upbeat Ethereum hot wallet to a previously unknown wallet address.
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The Swiss federal government is passing to parliament a revised plan aimed to remove legal hurdles still holding up innovation based on blockchain and distributed ledger technology.
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Bankable, the global provider of “Banking as a Service” solutions, and Visa today announced a strategic collaboration within the Central and Eastern Europe, Middle East and Africa region. Bankable aims to work with Visa to accelerate the digital capabilities of financial institutions’, build and launch digital banks, reduce cash usage and increase Fintech sponsorship in CEMEA.tags: Fintech
Kiffmeister’s Fintech Daily Digest 11/26/2019
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“[A central bank digital currency] could take a variety of forms, the benefits and costs of which the ECB and other central banks are currently investigating, being mindful of their broader consequences on financial intermediation.”
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Exchanges remain the most popular choice for cryptoasset storage amongst Binance’s institutional and VIP clients at 92.1%. When moving to self-storage, cold wallets are the second most favored choice, given their improved safety and control. Third-party custody services were the least popular option at 2.6%.
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Bakkt has a partnership with Starbucks and it will be launching its mass consumer-facing product next year. Starbucks is one of the merchants that it is working with, to reduce payments and allow consumers to more easily spend digital assets. Bakkt wants to make payments faster, cheaper, and more global.
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Bank of New York Mellon has joined the Marco Polo trade finance consortium running on R3’s Corda, becoming the 28th bank to do so.
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The Reserve Bank of India announced fresh steps to push digital payments in India, including removing charges on online fund transfer system National Electronic Funds Transfer, introducing interoperable system such that FASTags can be used to pay parking fees, fuel, among other measures.tags: Fintech PaymentSystems
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MoneyGram will use Ripple’s On-Demand Liquidity (ODL) solution in Australia, Europe and other important markets.
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The Monetary Authority of Singapore is working with financial industry partners to create a framework for financial institutions to promote the responsible adoption of Artificial Intelligence and Data Analytics.
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South Korea’s National Assembly is progressing a bill that will provide a legal basis for cryptocurrencies in the country. The bill categorizes virtual currencies as digital assets and intends to bring regulatory clarity and transparency to crypto markets in South Korea.
Kiffmeister’s Fintech Daily Digest 11/25/2019
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The National Bank of Ukraine has been doing some serious work on central bank digital currency, including a limited pilot!
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The potential role of a DLT-based wholesale CBDC is in worth considering if not desirable according to the Banque de France’s Denis Beau, and the central bank is quite open for experiments in that direction, together with the ECB and other central banks of the Eurosystem.
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A Binance survey has revealed that over 90% of the participants keep their digital assets with 3rd parties like crypto exchanges as opposed to cold wallets. This is despite a high risk associated with the security of digital currency exchange platforms.
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MakerDAO is a protocol behind the stable coin DAI — a cryptocurrency that maintains a 1:1 peg to the USD. Think of 1 DAI as $1. What makes it unique is each DAI is backed by Ether instead of a 3rd party claiming to have the required collateral. Since Ether is volatile this poses some interesting challenges to maintain the peg.
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MakerDAO has launched the multi-collateral version of its DAI stablecoin. But despite the rapid growth of the sector and the diversification of assets involved, DeFi is still influenced by a handful of central players: Namely, Polychain Capital, a16z, 1confirmation, and unknown MKR whales. With governance decisions largely influenced by those with the largest stakes to lose, some crypto veterans are pushing for a closer examination of MakerDAO’s marketing directives.
Kiffmeister’s Fintech Daily Digest 11/24/2019
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From unknown wallet to unknown wallet
“How long will regulators allow pseudonymous usage of stablecoins to continue? FATF regulations are supposed to be technology-neutral. So far FATF hasn’t had much to say on stablecoins. But you can be sure that something is in the works, and it isn’t likely to be good for stablecoin operators. The problem is that granting permissioned-pseudonymity to stablecoin operators contradict technology-neutrality. It sets one set of standards for bank accounts and another for stablecoins.”
tags: Fintech CryptoAssets Stablecoins AMLCFT
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KYC in Stablecoins – Permissioned Pseudonymity
Issuers of today’s fiat-backed stablecoins (such as PAX, USDC and TUSD) need to identify (or KYC) only those users who convert between bank account money and stablecoin, not all holders.”
tags: Fintech CryptoAssets Stablecoins AMLCFT
Kiffmeister’s Fintech Daily Digest 11/23/2019
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Bakkt’s bitcoin core futures contract saw saw 2,728 contracts traded ($20 million) and $1.75 million in open interest outpacing the record of 1,179 contracts on October 25, as the spot market price of BTC plummeted under $7,000 on November 22.
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The U.S. Financial Crimes Enforcement Network views all stablecoins, whether backed by a currency, a commodity, or even an algorithm, as falling under their remit to protect “money transmission services, and all stablecoin administrators must register as a Money Services Business with FinCEN.
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U.S. Congresspersons Sylvia Garcia and Lance Gooden introduced the Managed Stablecoins are Securities Act of 2019. The bill would clarify that “managed stablecoins” are securities under the Security Exchange Act of 1934 and thus regulated by the SEC.
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Grayscale Investments is launching its Digital Large Cap Fund (GDLCF), a diversified crypto investment product for public trading. It includes five major cryptos including Bitcoin and Ether, and will trade on the OTCQX Best Market platform.
Kiffmeister’s Fintech Daily Digest 11/22/2019
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During a recent panel discussion, Stefan Ingves, the Governor of Sweden’s central bank, Sveriges Riksbank, laid out a six-step plan for the introduction of is central bank digital currency.
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Crypto exchanges operating illegally in China face a new threat after the PBOC announced it would take new steps to uphold its trading ban. The PBoC also underscored the official government position in favor of blockchain but against cryptocurrency more clearly than ever.
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The crypto industry took a setback recently with reports from China about raids in the offices of Binance and Bithumb’s Shanghai offices by the local authorities. However, both the exchanges came out to deny any such raids, claiming these as attempts to tarnish their reputation in the country.
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54% of bitcoin addresses are in the money at current price levels ($7,100) according to blockchain intelligence firm IntoTheBlock. Most of the in-the-money addresses purchased in the $900 to $4,180 range and significant number appear to have purchased at an average cost in the $4,180-$6,631 range.
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There are almost 2 million addresses with balances between $6600 and $7900 which indicates that there might be buy/sell activities within those ranges. Also $6600 seems to be a relevant level of support.
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This is the fourth part in an article series by the Human Rights Foundation on privacy and cryptocurrency. This part in the series will explore private methods for acquiring cryptocurrency and stablecoins in different areas of the world.
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This paper systematically discusses general stablecoin design, decompose existing stablecoins into various component design elements, explore their strengths and drawbacks, and identify future directions.
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SIX presents seven possible futures for money, in both its physical and digital form. The scenarios focus on Switzerland but continuing discussions will also take us beyond its borders. What is considered money, what form it takes, and how it is used, all look set to change dramatically in the near future.
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The European Investment Fund and the European Commission have put up €100 million for a dedicated investment scheme that will make capital available to AI and blockchain projects via VC funds or other investors.
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The UK Jurisdiction Taskforce published a legal statement on the status of crypto-assets and the enforceability of smart contracts under English private law. From this foundation, it is hoped that both regulators and the courts can build a framework which will support the development and use of crypto-assets and smart contracts.
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Bakkt confirmed its forthcoming launch of a cash-settled Bitcoin futures contract that will be listed on ICE Futures Singapore as of Dec. 9.
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The world continues to move towards open banking with some markets, including the European Union (EU), the UK and Australia, taking the lead by creating and passing favorable regulations, according to a new report by the Paypers. In a paper, titled Open Banking Report 2019 and released in September, the company explores the current open banking ecosystem and provides an analysis of the present global state of play of open banking.
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Morocco is looking to expand access to financial services through the integration of blockchain technology in the country’s financial sector.tags: Fintech
Kiffmeister’s Fintech Daily Digest 11/21/2019
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An ECB official confirmed its work on a digital Euro. The bank has explored it as both a retail and wholesale CBDC, and noted it has experimented with blockchain.
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PBOC VP Yifei Fan said the bank aims to better regulate new technologies applied across the financial industry. Blockchain is among 17 categories of financial technologies, including cloud services and artificial intelligence, to be regulated under the new standards.tags: Fintech Regulation
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Chainalysis laid off 39 employees Thursday, about 20 percent of its workforce, as the startup prioritizes turning a profit and bringing products to market.
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Protests in Hong Kong, Lebanon and Iran have forced cypherpunks to test censorship-resistant technologies in the wild. But protesters on the ground found they lack internet access during times of civil unrest. Bitcoin has mainly proven useful for receiving value from abroad to hold and privately store. Sources in Lebanon and Iran said there is scant liquidity, and since they are cut off from global exchange platforms, digital assets are rarely useful as currency.
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While PayPal’s de-risking of PornHub is unfortunate, there are many alternative payment options available to PornHub’s content providers. Competition saves the day. For now, at least.
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In a historically low interest rate environment, investors have looked toward high-yielding assets – wherever they can find them – in search of some form of yield. Meanwhile, over the past year, the number of digital currency-related products that bear an interest payment, or similar, have grown. Here, TradeBlock diagrams some of the highest yielding ‘passive’ income digital currency products and compares these assets to those offered in the traditional markets.tags: Fintech CryptoAssets
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“Libra may become an alternative for certain cross-border payments, but will probably not be used for payments in Sweden to any great extent. These are some of the conclusions drawn in a recent Riksbank Economic Commentary.”
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This report surveys the legal and policy landscape – regulation surrounding cryptocurrencies around the world, covering 130 countries as well as some regional organizations that have issued laws or policies on the subject.
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One way that banks are addressing the challenges associated with cross-border payments is by adopting the SWIFT gpi standard on the basis that they can make payments from one central location, rather than spreading liquidity among various correspondent banks across different countries. This central view gives banks a much more transparent view of their liquidity.
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Long summary: The Howey test is so vague, and cryptos are so new! Who could know anything, really? Also, the SEC messed us around. All this is so fundamentally unknowable that it violates constitutional due process, and you should throw it out. Short summary: f— you SEC, and see you in court.