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There are several ways to streamline and universalize an American national payment system. One easy way would be to build on the existing network of TreasuryDirect accounts. Any citizen or legal resident of the U.S., including any business, can open a digital account with the Treasury through which to transact with it. Accounts take five minutes to open and begin using. All the country would need to add is peer-to-peer connectivity between accounts, and then allow dollars to flow over the network.
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These days, by far the fastest and most efficient way of delivering money is via smartphones and mobile devices. The U.S. government should simply provide a general portal to a wide range of payment delivery mechanisms. Visa and Mastercard are easily capable of handling these payments, especially as their normal transaction volumes have fallen significantly due to the shutdown. But the government should also work with platforms such as Venmo, Zelle, Square Cash, Paypal, Apple Pay and Google Pay [Chime, a San Francisco fintech startup, says it’s piloted a way to distribute the $1200]. And it could also offer payment in cryptocurrency as an option.
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Although the BoE has said crypto-assets don’t meet the necessary criteria to be considered money, CBDC analyst Ben Dyson said, “that doesn’t mean that it’s impossible for somebody to improve upon that technology and create something that much better fulfills the qualities of money… We’ve seen proposals over the last year from large technology firms, for example, to build payments systems and crypto-assets that could function more as stable money.”
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The main marketplace banks – Revolut, N26, Starling, and Monzo – have barely begun to lend, instead relying predominantly on interchange fees, which makes them vulnerable to sudden economic shocks. Unlike loan interest that has been deferred, sometimes at double-digit interest rates, interchange fees are simply lost, intensifying cash flow problems and continuing the net losses these banks have been making.
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Crypto trading company Coinhouse has become the first crypto company to be registered with France’s Financial Markets Authority (AMF).
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While more than 40 banks have reportedly expressed interest in Germany’s new crypto custody license, those firms may still have to put up with an anti-crypto sentiment among German banks.
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Blockchain is the ideal technology to ensure that data on performance and risk, which underpin all supply chain finance transactions, can be shared in an authenticated manner with financiers and other parties to a transaction, even when there is no direct relationship between them.
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The 2.0 upgrade, often called Serenity, promises higher transaction throughput and a new security model under proof-of-stake (PoS). Eth 2.0 has been in development since 2015 but had failed to gain traction due to the highly technical expertise required to pursue it, until now.
Kiffmeister’s Fintech Daily Digest 04/07/2020
