Kiffmeister’s #Fintech Daily Digest (12/22/2020)

The Coin Metrics State Of The Network 2020 Year In Review

Coin Metrics reviews crypto’s tumultuous 2020 run. In Q1 crypto markets showed  signs of becoming more intertwined with the external world as, for example, the correlation between bitcoin and the S&P 500 shot up to historic highs and crypto prices plummeted. In Q1 crypto markets bounced back as central bank money printing presses went into high gear and bitcoin underwent its third halving. Crypto markets continued to surge higher in Q3 on decentralized finance (DeFi) mania, and then Q4 brought increasing signs of a growing institutional investor base, as bitcoin’s price broke through to new record highs. 

Ripple to Face SEC Suit Over XRP Cryptocurrency

The U.S. Securities and Exchange Commission (SEC) intends to sue Ripple over its sale of XRP, with Ripple cofounder Chris Larsen and CEO Garlinghouse also named as defendants alongside the firm. The lawsuit revolves around whether XRP, a digital asset that the company launched in 2012, is actually a security that should have been registered with the SEC. In recent years, the SEC has ruled that Bitcoin and Ethereum are not securities, partly on the grounds they are decentralized with no person or company in control of them. By contrast, 100 billion units of XRP were issued in 2012 for Ripple Labs which has been selling them into the market in scheduled allotments.  

In its counter to the SEC lawsuit, Ripple alleges that Bitcoin and Ether are “two Chinese-controlled virtual currencies that the SEC has stated are not securities,” and that “innovation in the cryptocurrency industry will be fully ceded to China” should the potential lawsuit brought by the SEC be successful. 

In the past, Ripple Labs has claimed that XRP has nothing to do with Ripple Labs the company, that XRP pre-existed Ripple Labs the company and was gifted to it, and that the protocol that runs XRP is totally decentralized, à la Bitcoin. However, this blog comprehensively shows that this is untrue. 

Circle CEO: Treasury’s Crypto Wallet Rule is a Potential Next Level of Financial Surveillance Never Seen Before  

The Treasury’s proposed crypto-asset wallet rule takes financial surveillance to a level never seen before in America according to Circle CEO Jeremy Allaire. He says the new reporting requirements that include blockchain addresses, essentially give law enforcement a data feed that includes identity, blockchain addresses and the ability to monitor, in real-time, all of the that customer’s flows, without any consent.  

Coinbase Pre-IPO Tokens Pump to $296 After FTX Launch

FTX launched its Coinbase Pre-IPO tokens (CBSE) on December 22 as part of its Tokenized Stocks product line. Coinbase is currently valued at $8 billion, although the company itself has no actual shares on the market yet. The CBSE tokens will convert to the equivalent share prices at the end of Coinbase’s first day of public trading (market capitalization divided by 250 million – the total number of shares).  

Huobi Secures Nevada Trust Company License

Huobi Technology’s U.S. subsidiary, Huobi Trust Company, has gained a license from the Financial Institutions Division of the Department of Business and Industry in Nevada. It will enable Huobi to offer crypto-asset services in the United States. The company is expected to launch its custodial services in 2021.  

Reimagining identity ecosystems in Sub-Saharan Africa with mobile

This GSMA report explores the digital ID landscape in selected markets in Sub Saharan Africa, key actors, policy challenges and opportunities, and the potential role of mobile-enabled digital IDs in enhancing service delivery in a socially impactful manner. 

COVID-19 shows why we must build trust in digital financial services

According to this WEF report the pandemic has proved that digital financial inclusion is crucial – and that it cannot depend on cash-out services. Weak financial infrastructure makes digital transactions difficult – and people often mistrust digital financial services. Governments and financial institutions can earn that trust by building a resilient and inclusive financial system. 

Big Tech, Fintech, and the Future of Credit

In places where banks are not doing their jobs in allocating credit and not innovating, bigtechs face a huge opportunity. Their informational and network advantages allow them to make vast numbers of loans that boost access, productivity, and growth. Moreover, with low default rates, they can offer cheap credit and remain profitable. In advanced economies, where banks are producing and using information, as well as integrating new technologies into their businesses, the evolution of financial services providers could be very different. Big tech firms generally are still shying away from obtaining their own banking licenses. Instead, we see them creating partnerships in which banks exploit their expensive compliance systems and knowledge of regulation, while big tech firms provide the data and a flow of customers. Meanwhile, banks are investing in technology to provide additional services, as well as capture and process data. 

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