Kiffmeister’s #Fintech Daily Digest (02/04/2021)*

China’s SWIFT joint venture shows Beijing eyeing global digital currency use, to internationalize yuan

The People’s Bank of China (PBoC) China National Clearing Center (CNCC) and its Digital Currency Research Institute (DCRI) has partnered with SWIFT to launch a new financial payment service, Finance Gateway Information Service Limited. No further details on the functions or scope of the funding were offered on the registration document. SWIFT owns 55% of the incorporation contribution, CNCC owns 34%, DCRI 3%, CNCC’s subsidiary Cross-border Interbank Payments and Settlement Limited (5%), and the Clearing Association of China (3%). 

Gas fee proposal could create ‘positive feedback loop’ for ETH price: Grayscale

Grayscale Investments believes the introduction of the proposed EIP-1559 fee and burn mechanism could create “a positive feedback loop for Ether’s price” should network activity continue to increase on Ethereum. That’s because the proposal could result in Ether being burned at a rate exceeding the creation of new supply, leading to an increase in the unit price of Ether because each unit would need to satisfy a greater proportion of economic activity.  

Meanwhile, Ethereum’s gas fees are spiking to record highs once again, rendering many DeFi protocols practically unusable for traders. Average ETH transaction fees are now at a record $17.67. As many DeFi projects require the execution of complex smart contracts, some reports show that fees associated with using these protocols now exceed $1,000. A single large transaction on the Synthetix Network was estimated at above $1,100, while even simple swaps using Uniswap and SushiSwap cost anywhere from $40 to $75. Ethereum is not alone when it comes to soaring transaction fees, with Bitcoin’s average transaction costing over $14 at the moment. EIP-1559 may reduce this fee volatility. 

Grayscale has accelerated its accumulation of Ethereum and has more than 3 million Ethereum with a total value of $4.9 billion. The total value of the company’s digital assets under management is nearly $30 billion according to data. 

NYDIG Sees Institutional Order Books Pushing BTC Holdings to $25B by Year-End

NYDIG is a fund management firm that operates as the crypto-facing subsidiary of Stone Ridge Holdings Group LLC. The company provides an avenue for large investors to improve their crypto exposure. Last year, it helped facilitate the purchase of $100 million by MassMutual. NYDIG currently has $6 billion assets under management, and the firm has seen enough institutional investors’ commitment to push the figure past the $25 billion mark. 

PayPal’s Revenue Surges in Strong Finish to Blockbuster Year

PayPal said consumers flocked to its service in the final months of the year as they hurried to finish their holiday shopping and started using the company’s wallets to buy and sell cryptocurrency. The firm added a record 72.7 million active accounts in 2020, with the addition of 16 million accounts in the fourth quarter alone. Venmo, PayPal’s P2P service, processed $47 billion in payments, up 60% from a year earlier. 

Zelle closes 2020 with record $307 billion sent on 1.2 billion transactions

Zelle’s payment volumes and values increased 58% (to 1.2 billion transactions) and 62% ($307 billion sent) and 457 new financial institutions joined its Network in 2020, bringing the total number to nearly 7,000. Most consumers experience Zelle through the mobile banking apps of their banks and credit unions, rather than Zelle mobile app. Also, according to Zelle research, more than 85% of consumers either use or plan to use P2P services.  

* The views expressed herein are those of the author and should not be attributed to the International Monetary Fund, its Executive Board or its management.