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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.
Month: November 2019
Kiffmeister’s Fintech Daily Digest 11/20/2019
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In a Nov. 19 letter responding to questions from lawmakers Rep. French Hill (R-Ark.) and Rep. Bill Foster (D-Ill.) in late September, Powell said the Fed has noted the efforts of other nations to explore a CBDC option, and that it continues to “carefully analyze the costs and benefits of pursuing such an initiative in the U.S.”cb
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The Monetary Authority of Singapore plans to bring crypto-asset futures traded on approved exchanges under its regulation in response to interest from international institutional investors.
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KPMG released its 2019 Fintech100 ranking, which lists the top 100 fintech firms in the world. The list saw a drop in Bitcoin-related companies but reinforced innovation in the payments industry.tags: Fintech
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Businesses are experimenting with going cashless, hoping to speed up transactions, combat theft and create a safer environment for their employees. Actually, though, physical currency is experiencing a resurgence. People in many of the world’s most advanced nations — including the United States, the euro area and Japan — are holding more of it than ever.
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Regulators in the U.S. might be hesitant to mandate an outright move toward open banking, but several factors are pushing the financial services industry in that direction. For starters, 65% of bankers viewed open banking as more of an opportunity than a threat, according to one survey. Respondents believed so strongly in the benefits that 90% expect open banking to boost organic growth by 10%. Opinions, however, diverge when it comes to execution and how financial institutions can best shape open banking to their advantage.
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The Vancouver-based Einstein Exchange, shut down in early November by the British Columbia Securities Commission, owes its clients $16 million but only has about $45,000 in “hard assets” remaining, according to a court-appointed receiver.
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Deutsche Boerse and Swisscom utilize different blockchain protocols to settle securities transactions by exchanging cash tokens for tokenized shares in a joint proof of concept involving R3’s Corda and IBM’s Hyperledger Fabric.
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Bitcoin is something you hodl. Ethereum is something you build on. At least that has long been the official narrative, with projects favoring dedicated smart contract networks over Bitcoin for spinning out dapps and second layer solutions. Like all crypto narratives, however, this one has started to shift, as projects reappraise the benefits of crafting censorship-resistant applications anchored to Bitcoin Core and Bitcoin Cash.
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Drawing on existing evidence, this paper surveys the main mechanisms through which digital innovations in payments, credit, savings and insurance could impact on welfare.tags: Fintech
Kiffmeister’s Fintech Daily Digest 11/19/2019
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The Basel Committee on Banking Supervision today published its Report on open banking and application programming interfaces (APIs). The report monitors the evolving trend of open banking observed in Basel Committee member jurisdictions and the use of APIs.
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“Libra could do to central banks what Uber and Lyft did to the taxi cartels—bust up their monopolies, or, to coin a phrase, give them a run for their money.”
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Fidelity has been granted a trust licence to offer trading and custody of bitcoin by the NY State Department of Financial Services, as the asset management group continues to woo cautious institutional investors into digital assets.”
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The U.S. SEC is reviewing its decision to reject the application for a Bitcoin ETF that was submitted by Bitwise Asset Management and NYSE Arca earlier this year.
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Grayscale Investments filed a Registration Statement on Form 10 with the U.S. SEC on behalf of Grayscale Bitcoin Trust. If the SEC deems the Form 10 filing effective, the Trust’s shares would be registered under the Exchange Act of 1934, potentially making it the first crypto-asset investment vehicle to become a reporting company. The shares are already publicly traded on an over-the-counter market, but reporting company status would improve transparency and liquidity for shareholders, which could potentially attract investors who are currently restricted from participating in any investment vehicles that aren’t SEC-regulated reporting companies.
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Venezuelan President Nicholas Maduro announced that the Christmas bonus of the country’s retirees and pensioners will be paid to them in the national cryptocurrency Petro.
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In what could be a death rattle for LIBOR, a competing index backed by two American companies announced it would be using the ethereum blockchain.
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The potential of blockchain, DLT and smart contracts to transform the financial markets has been discussed for several years now, but with limited tangible “real world” outcomes. Greater certainty on the legal and settlement frameworks will do much to sweep away cynicism and drive forward the construction – at last – of efficient financial markets that can deliver to investors and issuers throughout the 21st century.
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In a world where fully-reserved digital stablecoins reign supreme banks would have to pre-fund (by liquidating assets first), increasing the relative amount of liquid cash float the whole system needs to operate. The cash float being what it is (mostly government-debt backed), that amounts to even greater sums of guaranteed funding for the government instead of the private sector. That inevitably crowds out private investment simply because of who controls go-to “potential claims” on the economy.
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“Globally, fintech deals rebounded slightly in Q3’19, but will likely fall short of 2018’s record. This short-fall is due in part to the continued pull back in early-stage investing. Early -stage (seed/angel and Series A) deals fell to an eleven-quarter low and funding hit a seven-quarter low.”tags: Fintech
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CryptoCompare has revised its exchange rankings and the world’s largest crypto exchange by traded volumes. The top ten crypto exchanges are Gemini, Paxos’ itBit, Coinbase, Kraken, Bitstamp, Liquid, OKEx, Poloniex, bitFlyer and Bitfinex.
Kiffmeister’s Fintech Daily Digest 11/18/2019
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“A bond-backed currency would overcome problems created by incomplete monetary union”
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The MakerDAO project launches its upgraded multi-collateral Dai stablecoin today. To the relief of many, it will not include traditional assets as accepted forms of collateral just yet. Cryptocurrency Exchange, Coinbase, has already announced support for the upgraded token from 2nd December.
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“The release of Multi-Collateral Dai (MCD) is only 10 days away and will mark a huge milestone reached for the MakerDAO project. MCD will introduce exciting new features to the Maker Protocol, including the much-anticipated Dai Savings Rate (DSR) and, of course, additional collateral asset types. “
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Dai, launched in 2017, seeks to dodge such concerns by giving up control of the ethereum coins its value is tied to, locking them instead in the blockchain contracts run by algorithms. That, supporters say, offers the benefits of stablecoins – instant transactions and steady value – while avoiding governance risks.
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CBDC can be designed with attributes similar to cash or deposits, and can be interest-bearing: a CBDC that closely competes with deposits depresses bank credit and output, while a cash-like CBDC may lead to the disappearance of cash. Then, the optimal CBDC design trades off bank intermediation against the social value of maintaining diverse payment instruments. When network effects matter, an interest-bearing CBDC alleviates the central bank’s tradeoff.
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Visa has developed a blockchain system called LucidiTEE that could upend how banks transfer customer transaction data to consumer financial applications like Mint and Credit Karma.
Kiffmeister’s Fintech Daily Digest 11/17/2019
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Sivergate Bank is planning a big push into the USD-backed stablecoin space, focusing on those backed on a one-to-one basis offered by regulated institutions who agree to third-party audits.
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Silvergate Bank specializes in reaching debanked bitcoiners, joining several other financial institutions including Metropolitan Bank, Signature Bank, and Cross River Bank in catering to the financial needs of the growing cryptocurrency space. Silvergate’s crypto clients include Gemini, Kraken, Bit Flyer, Paxos, trueUSD, Coinbase, Polychain Capital, and Bitstamp.
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Last week California-based Silvergate Bank’s parent went public on the New York Stock Exchange. It was a small IPO, raising about $40M and it’s a small bank (about $250M market capitalization and $2.2M of assets).
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“The real challenge for the United States isn’t Facebook’s proposed Libra; it’s government-backed digital currencies like the one planned by China.”
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Ever since Microsoft bought Github for 7.5 billion dollars in June 2018 there have been multiple cases of censorship. For example, developers from Iran, Syria and Crimea have been blocked from the platform.
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A new data protection law in Kenya is setting a high standard for the rest of the continent. As the country looks to engender more safeguards in the collection, handling and sharing of data, Kenya’s president Uhuru Kenyatta has approved legislation which complies with the European Union’s General Data Protection Regulation.
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Forty wallets, tools and block explorers plus 1,700 GitHub commits have how now been built on its blockchain testnet that’s seen 51,000 mock transactions in the past two months. Libra nodes that process transactions are now being run by Coinbase, Uber, BisonTrails, Iliad, Xapo, Anchorage and Facebook’s Calibra. Six more nodes are being established, plus there are 8 more getting set up from members who lack technical teams, meaning all 21 members have nodes running or in the works.
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Decentralized Identifiers (DIDs) have recently gained more attention for being one of blockchain’s most exciting use cases, and the hype is well founded. In concept, DIDs aim to use cutting-edge cryptography and unique identifiers to enable users to validate themselves online, while still dictating when and how that identity data is used. Put simply, Decentralized IDs have the potential to help internet users around the world wrest back control of their data from the corporations that presently control it.
Kiffmeister’s Fintech Daily Digest 11/16/2019
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Federal Reserve Board Financial Stability Report on Stablecoin Ecosystems:
“A global stablecoin network, if poorly designed and unregulated, could pose risks to financial stability. The failure of a stablecoin to operate as expected could disrupt other parts of the financial system. For example, the inability to convert stablecoins into domestic currency on demand or to settle payments on time could create credit and liquidity dislocations in the economy. If a stablecoin’s credit, liquidity, market, and operational risks are managed ineffectively, it could face a loss of confidence. This loss of confidence could lead to a run, where many holders attempt to liquidate their stablecoins at the same time. In an extreme scenario, holders may be unable to do so, with potentially severe consequences for domestic or international economic activity, asset prices, or financial stability.”
tags: Fintech CryptoAssets Stablecoins
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The PBOC’s imminent CBDC is going to have a feature called controllable anonymity. None of the news articles have made much of an effort to explain What that means. But we’ve actually known about this feature for quite some time. Back in 2018, the project’s head, Yao Qian, provided a short description of it. It’s not as Orwellian as it seems.
tags: CryptoAssets Fintech Privacy CBDC
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Baton Systems and J.P. Morgan Develop Industry Solution to Automate Derivatives Margin Payments
JPMorgan has developed a new blockchain-based solution for derivatives designed to speed up cash and collateral transfers. The tool was developed in partnership with California-based fintech firm Baton Systems and aims to enable the real-time movement of transfers to multiple clearinghouses.
tags: Fintech Plumbing Derivatives Blockchain
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How important is it for a nation to have a payment system?
A working group at Norges Bank has looked more closely at the purpose and relevant forms of a central bank digital currency. The group finds that a central bank digital currency could function as a back-up solution in the event of a disruption in banks’ payment systems. This contingency aspect may gain importance if banks’ systems become more international. Moreover, a central bank digital currency may help to maintain competition in the payments market and offer the characteristics of legal tender.
tags: CBDC Fintech CryptoAssets
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Wyoming’s New Crypto Banking Law Could Defang New York’s BitLicense
There’s a way cryptocurrency businesses can get around New York’s notoriously hard-to-get BitLicense, and it runs through Wyoming. At least, so say members of the team that drafted the 13 crypto-friendly laws enacted by the Western state this year. One of those laws allows Wyoming to charter Special Purpose Depository Institutions (SPDIs), a new type of fully-reserved fiat bank that can also custody crypto assets. With an SPDI, crypto exchanges and other startups could operate in New York without going through the state’s licensing rigmarole, under the same legal principles that exempt banks from needing state money transmitter licenses, Wyoming advocates said.
tags: Fintech CryptoAssets Regulation
Kiffmeister’s Fintech Daily Digest 11/15/2019
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People’s Bank of China (PBoC) Pilots Restrictions on Large-Scale Cash Transactions
The PBOC is looking to combat money-related criminal activities with a new restriction. The restriction, which will first be piloted for two years, will restrict large-scale cash transactions for three specific regions within the country – the Hebei Province, Zhejiang Province, and Shenzhen City. One expert believes that this decision is meant to help with the launch of the Renminbi token (RMB), which has yet to be released.
tags: CBDC Fintech CryptoAssets
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China Is Poised for Another Crypto Trading Crackdown as Speculative Fever Returns
Financial regulators in China appear set to crack down on cryptocurrency trading again after President Xi Jinping’s praise for blockchain technology revived speculation in the sector.
tags: CryptoAssets Fintech
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Will Blockchain survive Google’s quantum supremacy threat?
The biggest threat to blockchain technology from quantum computing is its ability to break the traditional encryption. However, the sword of Quantum computing is not hanging on Blockchain only but on every platform that is protected with encryption. This would potentially include almost all of the Internet and Digital world we know today.
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BRICS Nations Discuss Creation of New Crypto For Unified Payment System
The BRICS nations — Brazil, Russia, India, China and South Africa — are reportedly planning to develop a single payment transaction system between the member countries, which could be carried out in a still-to-be-developed “BRICS” cryptocurrency.
Kiffmeister’s Fintech Daily Digest 11/14/2019
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The International Securities Services Association DLT Working Group has published a paper on best practice development of crypto-asset platforms (issuance, settlement, safekeeping, asset servicing and regulation).
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The Association for Financial Markets in Europe has published a paper setting out five recommendations to deliver supervisory convergence on the regulation of crypto-assets in Europe.
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Coinbase has added support for five new crypto options to its visa debit card, and also expanded availability to 10 more European nations.
Kiffmeister’s Fintech Daily Digest 11/13/2019
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The People’s Bank of China has officially said that it is “still in the process of research and testing” its digital yuan, but that news reports stating that the central bank has issued its digital currency are “fraudulent.” (http://www.pbc.gov.cn/rmyh/105208/3919880/index.html)
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This paper by a Reserve Bank of Australia (RBA) staffer sheds light on Australia’s fast real-time retail payments system, the New Payments Platform (NPP). It concludes that there is no strong case for the RBA to issue a retail central bank digital currency given that the NPP and the safer Next Generation Banknote series.
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The Turkish government government has confirmed that it is testing a new blockchain-based version of the lira to be issued by the country’s central bank. https://decrypt.co/11109/turkey-finalizing-plans-launch-state-backed-digital-currency
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The Monetary Authority of Singapore (MAS) and the Bank for International Settlements (BIS) today launched the BIS Innovation Hub Centre in Singapore. This is the BIS’s first expansion of its global footprint in 17 years.tags: Fintech
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Topics under consideration for the work agenda include central bank digital currencies, global stablecoins, payment innovations, the impact of big tech on financial intermediation, regtech and suptech, fast-paced electronic markets, and digitalisation of trade finance.tags: Fintech
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Payments innovation is moving at a dizzying pace. Some ideas may fail to get off the ground, while others may need to pivot to become commercially viable. Other issues, like market dominance or cyber-security risks, will undoubtedly become more prominent in policy debates. On balance, however, the economic and social benefits of a frictionless, fraud-free, and trusted global payments system will likely outweigh the risks.
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Google will offer checking accounts next year, according to a source familiar with the company’s plans, representing Big Tech’s boldest move yet into the consumer banking business.
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Data trends also show that blockchain’s been losing its fizz. In a big turnaround from years prior, the flow of cash into blockchain start-ups has dropped, according to data compiled by CB Insights. Businesses focusing on blockchain are on pace to draw $1.6 billion this year, down from a record $4.1 billion in 2018, the firm said recently.tags: Fintech Blockchain
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British-based digital banking app Revolut is in talks with investors to raise at least $500 million next year to fund a global hiring spree as it expands in markets including the United States and Japan.tags: Fintech VirtualBanking
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Debit cards linked to crypto wallets have been a useful payment tool for users who want to be able to spend their crypto-assets almost anywhere. Here’s a list of crypto cards that currently support at least 10 cryptocurrencies.
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In a filing to the district court of the Southern District of New York Telegram broke down and refuted all the allegations made by the SEC in its case, barring some fundamentals such as the nature of the company and its team and uncontested details of its fundraise.
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Bitcoin futures market Bakkt intends to expand from its current physically-settled offerings to cash-settled futures before 2020.
Kiffmeister’s Fintech Daily Digest 11/12/2019
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In a sweeping rejection the Central Bank of Tunisia quashed “unfounded” rumors that it had become the first monetary authority to issue a central bank digital currency, asserting instead that an unaffiliated proof of concept project was taken out of context.
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Following rumors about the adoption by the Central Bank of Tunisia (BCT) of a digital money solution and its commitment with a foreign company for the implementation of this solution, the BCT refutes all these allegations and unfounded information.
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China’s proposed central bank digital currency is not a bid to gain full control of information belonging to the general public, according to the PBOC’s Mu Changchun. The aim is to find the right balance between the ‘controllable anonymity’ and financial integrity requirements.
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Today an MOU was signed between the subsidiaries of Hong Kong Interbank Clearing Limited and Institute of Digital Currency of the PBoC to conduct a Proof-of-Concept trial, which aims to connect eTradeConnect1 and the PBoC Trade Finance Platform.
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As a follow-up to the MoU signed between the HKMA and the Bank of Thailand in May 2019, the two authorities are conducting a joint research project named Project LionRock-Inthanon to study the application of Central Bank Digital Currency (CBDC) to cross-border payments, with a view to facilitating HKD-THB payment-versus-payment (PvP) among banks in Hong Kong and Thailand. A joint report is scheduled to be released in Q1 2020.
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The Bank of Thailand launched the Project Inthanon and Project DLT scripless bond initiatives in 2018. Project Inthanon is a proof-of-concept for wholesale domestic and cross-border funds transfer using central bank digital currency. The Project DLT scripless bond is an initiative to increase efficiency for the saving bond registration and sales processes.
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Facebook is launching Facebook Pay to facilitate payments across its Facebook, Messenger, Instagram, and WhatsApp apps. It’s built on existing financial infrastructure and partnerships, and will be separate from Calibra and Libra network.
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Derivatives exchange CME Group has announced it will launch options on its bitcoin futures contracts in January. As long as it gets the green light from regulators, the options will go live on Jan. 13, 2020.
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Ant Financial has started testing its Ant Blockchain Open Alliance enterprise blockchain platform. The platform aims to support small and medium-sized businesses by allowing them to cut costs and expand their reach.tags: Fintech Blockchain
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Digital transactions in India increased by 55% last year, compared with 48% in China and 23% in Indonesia. By comparison, cashless payments grew about 10% in the UK, a developed market where card transactions are already entrenched.tags: Fintech PaymentSystems
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Cryptocurrency data provider CoinMarketCap has launched a new metric dubbed “Liquidity,” aiming to combat fake trading volumes. The new metric replaces “Volume” and serves as the default standard for ranking cryptocurrency pairs and exchanges on its website.
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Cyber risk rating firms are helping companies keep track of the cyber resilience of their vendors. Firms such as SecurityScorecard and RiskRecon offer a cyber score based on information scraped from the internet. These services can be integrated into firms’ vendor vetting processes to continuously monitor third and fourth parties, bypassing costly site visits and questionnaires.
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Binance became the first crypto exchange to implement the fiat gateway of stablecoin operator Paxos. The Paxos Fiat Gateway allows its users to swap between dollars and stablecoins on a one-to-one basis.