Month: August 2020

Kiffmeister’s #Fintech Daily Digest (08/31/2020)

~ kiffmeister

ECCB preparing for CBDC pilot launch

The Eastern Caribbean Central Bank (ECCB) is inviting merchants to participate in its digital EC currency (DCash) pilot on Antigua and Barbuda, Grenada, Saint Kitts and Nevis, or Saint Lucia. 

PayPal Introduces Interest-Free Buy Now Pay Later Installment Solution

Paypal launched Pay in 4, an interest-free short-term “buy now, pay later” installment payment service for its customers in the United States. Merchants get paid upfront while customers pay for purchases between $30 and $600 in four instalments over a six-week period. Pay in 4 is included in the merchant’s existing PayPal pricing, so merchants don’t pay any additional fees to enable it for their customers. Pay in 4 will be available to consumers on qualifying purchases in early Q4 2020, but merchant sign-up is now in progress. 

2019 CPMI quantitative review of correspondent banking data

The 2019 data confirm that correspondent banking relationships continue to contract in number. Despite the worldwide decline, they continue to play a pivotal role for cross-border payments. The statistics cover monthly payment message data for more than 200 countries and jurisdictions from 2011 to 2019. It found that the number of active correspondent banks worldwide fell by about 3% in 2019 and about 22% between 2011 and 2019. However, the volume and value of cross-border payments continued to grow over the last eight years, suggesting a higher concentration in payment flows. 

A Guide to Payment Regulations Across Asia Pacific

ASEAN Plus Group has released a comprehensive guide to Asia-Pacific payment services regulations. For each country, it gives an overview of the current state of the domestic payment industry, the regulators in charge of overseeing the sector, the different types of licenses available, the licensing requirements, the state of cryptoassets regulations, intellectual property laws in place, as well as anti-money laundering and counter-terrorism financing (AML/CTF), tech risk, and data privacy requirements, among other key topics. 

Posted from Diigo: https://www.diigo.com/user/kiffmeister/Fintech

Kiffmeister’s #Fintech Daily Digest (08/30/2020)

~ kiffmeister

Chinese Bank Disables Digital Yuan Wallet After Soft Launch Draws Wide Attention

State-owned China Construction Bank (CCB) reportedly opened up registration for wallets using the country’s central bank digital currency (CBDC) for a few hours. The wallet’s services included payment, redemption, transfer, and credit card recharge, and there were four levels of wallet with varying balance (500,000, 300,000, 50,000 and 10,000 yuan) and payment limits. The bank was issuing each wallet with a unique identification number linked to the customer’s information, including their name, password, mobile phone number, email address, customer number, and bank card number. However, CCB quickly disabled the feature from public users.

China’s Digital Currency Will Rise but Not Rule

According to Brookings Institution Senior Fellow Eswar Prasad, for all the hype about its central bank digital currency (CBDC), China’s Cross-Border Interbank Payment System (CIPS) is a more important innovation because it makes it easier to use the renminbi for international transactions. Although China’s CBDC may eventually be linked up to cross-border payments systems, this by itself will not elevate the renminbi’s reserve currency status. However, the CIPS is able to bypass the Western-dominated SWIFT system for international payments and thus circumvent U.S. financial sanctions. Nevertheless, elevating the renminbi’s reserve currency status will require more fundamental changes, like the continuation of financial markets reforms and the removal of capital flow restrictions.  

Reuters FACTBOX: China’s onshore yuan clearing and settlement system CIPS

Backed by the People’s Bank of China (PBOC), China launched the Cross-Border Interbank Payment System (CIPS) cross-border clearing and settlement services system in 2015 to internationalise yuan use. It allows global banks to clear cross-border yuan transactions directly onshore, instead of through clearing banks in offshore yuan hubs. For now, CIPS still largely relies on SWIFT for cross-border financial messaging but it has the potential to operate independently and have its own direct communication line between financial organisations. For Chinese banks and corporates, CIPS can serve as a messaging system without the risk of exposing transaction information to the United States. 

China’s global yuan push makes inroads in Asia and Africa

As of the end of July, 984 financial institutions from 97 countries and regions were part of China’s Cross-Border Interbank Payment System (CIPS). The system was created in 2015 to help globalize the yuan, by providing an easier way for participants to settle and clear yuan-denominated payments. Members can choose to either take part in CIPS directly, meaning they maintain their own accounts within the system, or indirectly, meaning they work through direct members. More than 70% of participants are in Asia, followed by 124 in Europe, 40 in the Americas, and 37 in Africa. The African presence is due to China’s economic clout in the region, especially with its Belt and Road infrastructure-building initiative. 

Posted from Diigo: https://www.diigo.com/user/kiffmeister/Fintech

Kiffmeister’s #Fintech Daily Digest (08/29/2020)

~ kiffmeister

Fidelity Files For New Bitcoin Fund

Fidelity has filed paperwork with the U.S. Securities and Exchange Commission informing them of a new fund dedicated to bitcoin. The Wise Origin Bitcoin Index Fund I, LP was incorporated this year and is being run from the Fidelity’s Boston headquarters. The early documentation provides little in the way of details about the fund, and shows that zero investors have currently participated. But the minimum investment to join the pooled investment fund is $100,000, indicating this is likely only for institutional and accredited investors. 

SC Inks Fintech Cooperation Agreement with OJK, Expanding Collaboration Between Malaysia and Indonesia

The Securities Commission Malaysia and Indonesia’s Otoritas Jasa Keuangan established a collaborative framework to develop the fintech ecosystem in both markets. It aims to facilitate information sharing on emerging fintech trends and regulatory developments, provide joint innovation project opportunities and facilitate referrals of fintech businesses seeking to operate in each other’s jurisdiction. 

Posted from Diigo: https://www.diigo.com/user/kiffmeister/Fintech

Kiffmeister’s #Fintech Daily Digest (08/28/2020)

~ kiffmeister

In world first, bank-issued stablecoin used at online retailer

The Sygnum Digital Swiss Franc (DCHF), which is pegged on a 1:1 basis with the fiat currency, was used to complete a payment for an Apple iPad at Digitec Galaxus, Switzerland’s largest online retailer. Coinify, a digital currency platform provider, enabled the sale to take place. Sygnum said its offering stands out against other stablecoin issuers such as Tether because it is a regulated bank—meaning one Swiss franc is verifiably held as collateral for every DCHF that is in circulation. 

Posted from Diigo: https://www.diigo.com/user/kiffmeister/Fintech

Kiffmeister’s #Fintech Daily Digest (08/27/2020)

~ kiffmeister

Historical Context and Key Features of Digital Money Tokens

Barclays is pushing a new taxonomy for describing and distinguishing between cryptocurrencies and other digital assets which it hopes can serve as the basis for a global standard. In a recently published paper, they present a new “money tree” which places the concept of digital money tokens into a historical context by illustrating their evolution from more traditional forms of money. It identifies key features of digital money tokens with options and examples. The paper has already sparked some debate, some of which have been summarized in this article.  

Regulating fintech financing: digital banks and fintech platforms

This BIS paper explores how fintech financing is regulated based on an extensive desktop review of regulations and related documents, and an early-2019 Financial Stability Institute survey. It found that for digital banking, most jurisdictions apply existing banking laws and regulations to banks within their remit. In the few jurisdictions that had set specific digital bank regulatory frameworks, the main licencing and ongoing requirements were similar to those for traditional banks. However, digital banks typically faced restrictions on their physical presence and, in some cases, the market segments they were allowed to serve, and their fit and proper requirements tended to be more prescriptive. 

Libra replaces general counsel Robert Werner after 3 months

Former U.S. Homeland Security Department general counsel, Stevan Bunnel, has been appointed as Libra’s general counsel. Since leaving the Homeland Security Department in 2017, Bunnell co-chaired the data privacy-focused legal practice O’Melveny & Myers until joining the Libra Association this month. The association’s former general counsel, Robert Werner is departing from the position after it became clear it meant he would have to relinquish an existing position on the boards of directors for Deutsche Bank Trust Co. 

‘Gasless’ Technical Update Brings USDC One Step Closer to Venmo

Dubbed USDC 2.0, USD Coin (USDC) has integrated what are called “meta transactions” natively to the dollar stablecoin platform. Now, users do not have to pre-fund their USDC-bearing wallets with ether (ETH) in order to send a transaction. Meta transactions allow USDC wallets and compatible applications to act as virtual “gas stations” by paying the associated mining fee that accompanies every Ethereum blockchain transaction. This [update] enables people to fund their non-custodial wallets with USDC and start using DeFi/dapps without also having to own ETH.  

Posted from Diigo: https://www.diigo.com/user/kiffmeister/Fintech

Kiffmeister’s #Fintech Daily Digest (08/26/2020)

~ kiffmeister

Tether tops Paypal and Bitcoin for average daily transfer value

The average daily transfer value for Tether has surpassed that of Bitcoin and PayPal. According to CoinMetrics, Tether’s 7-day average adjusted transfer value reached over $3.55 billion as of August 20. This is around 20% more than that for Bitcoin which was a reported $2.94 billion. According to PayPal’s Q2 report, the daily average transfer value of the online payments giant was also less than Tether’s at $2.94 billion. 

DeFi surpasses $7B in locked funds, but just six projects hold 90% of capital

Aave currently comprises the largest DeFi project, with $1.51 billion locked, followed by MakerDAO with $1.42 billion, Curve Finance with $1.15 billion, yEarn Finance with $845 million, Synthetic with $851 million and Compound representing $797 million. 

Aave granted an Electronic Money Institution license by the U.K. Financial Conduct Authority

Decentralized finance (DeFi) protocol Aave’s U.K. business entity has been issued an Electronic Money Institution (EMI) license by the Financial Conduct Authority to offer services such as issuing digital cash alternatives and providing payment services. An EMI is the same authorization that Coinbase and Revolut has in Europe. It will mostly support on-boarding new users into the Aave Ecosystem and to the decentralized protocol over time.  

Posted from Diigo: https://www.diigo.com/user/kiffmeister/Fintech

Kiffmeister’s #Fintech Daily Digest (08/25/2020)

~ kiffmeister

Not a strong public-policy case for CBDC issuance in Australia

The Reserve Bank of Australia still considers that at present there is not a strong public-policy case for central bank digital currency (CBDC) issuance, given that the electronic payments system in Australia compares very favourably with those in many other countries and access to cash remains good. Nonetheless, they will continue to closely watch the experience of other jurisdictions. They are also continuing to research the technological and policy implications of a wholesale form of CBDC and work to develop a proof-of-concept with external parties to explore aspects of wholesale CBDC, building on research they did in their Innovation Lab last year. 

Aave takes number one slot in total value locked, beats MakerDAO

Decentralized lending and borrowing protocol Aave has taken the number one slot in total value locked (TVL), snatching that position from MakerDAO. Aave’s TVL, or the total amount of crypto-assets deposited into the protocol for lending and borrowing purposes, is now $1.45 billion, according to tracker DeFi Pulse. Aave is the second project to beat MakerDAO in TVL. On June 20, Compound overtook the DAI stablecoin issuer, with about $500 million in TVL at the time as compared to MakerDAO’s $486 million. The yield farming craze in recent weeks has shot up the TVL of almost all DeFi protocols, to currently stand at over $6.9 billion. In February, that amount was only $1 billion. 

Under lockdown UK open banking payments surged 800%

Financial API provider TrueLayer has recorded an eight fold increase in U.K. consumers using Payment Initiation (PI) to pay for goods and services online between March and July. PI is a new form of online payment enabled under the second European Union Payment Services Directive (PSD2) that allows customers to make payments directly through online banking. 88% of the growth was from people with bank accounts held at traditional financial institutions, with account holders at challenger banks such as Monzo and Revolut accounting for 12%. 

UK FCA wants to include crypto firms in financial crime reporting rules

The U.K. Financial Conduct Authority (FCA) proposed broadening annual financial crime reporting obligations to include all crypto-asset exchanges and custodian wallet providers. The regulator says that by extending its reporting rules to a wider range of firms, it will be able to deepen its understanding of which firms may have intrinsic money laundering risks due to their activities.  

ConsenSys Acquires J.P. Morgan’s Quorum to Advance Enterprise Blockchain Adoption

JP Morgan and ConsenSys announced that the Quorum open source project would be acquired and managed by ConsenSys as part of a strategic investment by JPM. ConsenSys Quorum is an open source protocol layer that serves as a foundation for businesses to build public or private Ethereum-based enterprise solutions. 

Posted from Diigo: https://www.diigo.com/user/kiffmeister/Fintech

Kiffmeister’s #Fintech Daily Digest (08/24/2020)

~ kiffmeister

Banco Central do Brasil creates study group on issuing digital currency

The Banco Central do Brasil (BCB) has formed a working group to study the possibility of issuing digital currency (CBDC). The 12-member group is tasked with investigating CBDC security risks, economic implications and societal benefits against Brazil’s existing payments landscape. It will also assess whether a CBDC can complement benefits associated with the Pix instant payment system to be launched in November. The group will also evaluate CBDC issuance and propose an issuance model for Brazil. A final report is due in in six months.

Rise of the central bank digital currencies: drivers, approaches and technologies

A new BIS paper sets out a database of central bank digital currency (CBDC) technical approaches and policy stances on issuance. Most projects are found in digitised economies with a high capacity for innovation. Work on retail CBDCs is more advanced where the informal economy is larger. More and more central banks are considering retail CBDC architectures in which the CBDC is a direct cash-like claim on the central bank, but where the private sector handles all customer-facing activity. It concludes with an in-depth description of three distinct CBDC approaches by the central banks of China, Sweden and Canada. 

Cryptoconvert: Why A 168-Year Old Banknote Printer Will Soon Be Churning Out Digital Drachmas For Central Banks

In 2019, German banknote printer Giesecke & Devrient (G&D) unveiled its Filia distributed ledger technology-based central bank digital currency (CBDC) issuance platform. Already six of G&D’s central bank clients are in negotiations about using Filia to issue CBDC. More recently, G&D led a $17 million Series A into Metaco, a Swiss startup providing crypto-asset custody services via its Silo software. Silo, is a user-interface between banks’ human operators and the distributed ledgers powering the crypto-assets for which they act as custodians. 

Visa invests in MagicCube as part of next wave of contactless payments

Visa is investing in MagicCube, a payments-security fintech focused on enabling devices like smartphones to accept payments. In lieu of buying checkout hardware, merchants could use smartphones to read contactless cards while securely capturing financial PIN and other verification methods, including biometrics. The solution provides end-to-end functionality, security, and modern acceptance capabilities previously limited to hardware-based terminals. The entirely software-based solution offers a plug-and-play, fully contained module that can fit into the current flows of any modern acquiring bank or merchant acceptance solution. 

Machine Learning: Considerations for Fairly and Transparently Expanding Access to Credit

Discover Financial Services, BLDS LLC, and H2O.ai issued a white paper on the use of machine learning in credit underwriting. The authors suggested that shifting to machine learning will offer a significant opportunity to improve how credit is offered. Specifically, it has the opportunity to improve accessibility by expanding access to credit for those underserved by mainstream lending practices. The white paper also dispels some of the myths related to machine learning and provides a thorough discussion of key definitions to consider when using machine learning within the lending context. Most importantly, it shows how machine learning is well-suited to combat discrimination within financial institutions by ensuring that credit decisions are based on more reliable predictive analysis. 

Posted from Diigo: https://www.diigo.com/user/kiffmeister/Fintech

Kiffmeister’s #Fintech Daily Digest (08/23/2020)

~ kiffmeister

How to fix the Covid stimulus payment problem: Accounts, information, and infrastructure

To improve its ability to deliver economic impact payments to individuals, the federal government should:

  • Require all financial institutions to offer no/low-cost basic banking services, similar to the Bank On initiative and the FDIC’s Safe Account programs. 
  • Empower consumers and regulators to vet the “do not bank” list to enhance access (a list comprised of people who have had accounts flagged for money laundering or fraud violations). Offering universal accounts will not help those who are blackballed.  
  • Connect existing information between silos to effectuate payments, gathering and retaining information where it is lacking.
  • Require immediate funds availability for all Treasury payments. A real-time payment system is not essential to put such a requirement in place.

Bitcoin Whale Sold at $12,000 BTC Price After HODLing for 2 Years

A Bitcoin (BTC) whale took profit after two years. Data from Whalemap suggests the whale purchased nearly 9,000 BTC in the third quarter of 2018. The whale held on to the BTC for nearly 22 months, through two major capitulation phases. Bitcoin dropped to sub-$4,000 level twice, first in January 2019 and second in March 2020. The investor waited through both periods, ultimately selling at around $12,000. 

Posted from Diigo: https://www.diigo.com/user/kiffmeister/Fintech

Kiffmeister’s #Fintech Daily Digest (08/22/2020)

~ kiffmeister
The case for banning gold mining
Banning gold production has merits and warts. In theory, the idea makes a lot of sense. If something is indestructible, and we only want dollar amounts of it rather than ounces, why the devil are we wasting time and resources producing it? Banning gold production won’t hurt society and we don’t need more of the stuff, and we’d be getting rid of an activity that hurts the environment. As long as we can successfully shift gold mining communities to other forms of employment, then ending global gold production makes a lot of sense.

Crypto forefather David Chaum issues new digital currency
At the August 19 Official Monetary and Financial Institutions Forum central bank digital currency webinar, Thomas Moser from the Swiss National Bank mention a forthcoming joint paper with David Chaum, the inventor of eCash and considered to be a crypto-asset forefather. I haven’t been able to find any public information on that linkage, but it looks like it might be via Chaum’s “xx coin” project, based on the Praxxis and Elixxir platforms, and slated to launch later this year. Here’s a link to the Praxxis white paper: https://xx.network/praxxis-technical-paper-v1.pdf

Posted from Diigo: https://www.diigo.com/user/kiffmeister/Fintech