Month: February 2021

Kiffmeister’s #Fintech Daily Digest (02/11/2021)*

~ kiffmeister

Bitcoin jumped to a record high of $48,317 after Mastercard and Bank of New York Mellon moved to make it easier for customers to use crypto-assets. 

MasterCard announces support for crypto on its network

MasterCard announced plans to support cryptocurrencies in 2021, paving the way for its nearly one billion users to spend digital assets at more than 30 million merchants. MasterCard also noted it is “actively engaging with several major central banks around the world” to support central bank digital currency initiatives, or CBDCs. Last year, the firm released a “virtual sandbox” tool to demonstrate how a CBDC can be used to settle consumer purchases using MasterCard’s infrastructure.  

America’s oldest bank, BNY Mellon, will custody Bitcoin

Bank of New York Mellon announced plans to hold, transfer and issue Bitcoin (BTC) and other crypto-assets as an asset manager on behalf of its clients. 

Canadian universities propose designs for a central bank digital currency

The Bank of Canada engaged three independent university project teams to conduct CBDC exploratory design work with minimal direction from the Bank. All three design proposals were published. While the Bank is ramping up contingency planning for a central bank digital currency, it currently has no plans to issue one. The proposed designs are therefore not intended to be adopted by the Bank. Rather, the Bank will use these reports to inform its thinking and advance public conversation on a central bank digital currency design. 

Avalanche Developers Rush Client Patch as ‘Bug’ Slows Blockchain Transactions

The Avalanche network has come to a near halt after “a bug in the cross-chain functionality” code that enables the Avalanche protocol and the Ethereum Virtual Machine (EVM) to speak with each other failed under high loads. The release of Avalanche‘s newest decentralized finance (DeFi) product, money market Pangolin, snowballed into “insane load” for the network, which further “triggered a very low probability bug that produced a bad state in the network”. 

* 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.

Kiffmeister’s #Fintech Daily Digest (02/10/2021)*

~ kiffmeister

Payments innovation beyond the pandemic

The Bank of Canada’s work to prepare its contingency plan for launching a central bank digital currency (CBDC) has accelerated, driven by a sharp decline in the acceptance of cash. If this trend continues beyond the pandemic and/or private digital currencies take hold as means of payment, the Bank could be pushed over the edge. Meanwhile, the Bank has been researching and experimenting with different technologies, and engaged three university project teams to independently develop proposals for what a digital currency ecosystem could look like. Their reports will be published on February 11. 

The conversation on general-purpose central bank digital currency

According to a Minneapolis Fed article, “the benefits of a central bank digital currency (CBDC) in the United States are not immediately obvious. Largely due to the legal and regulatory framework supporting the payments infrastructure, an end user’s buying power and ability to trust in the integrity of a transaction are the same for banknotes and bank account balances. Because the banking sector facilitates the exchange of funds between parties, the absence of central bank-issued digital money for general purposes is not currently an issue for most Americans.” 

And check out the CBDC Navigator and its nice curated library of resources on central bank digital currency.

Grayscale’s Crypto-Assets under Management Reaches $36 Billion

The total value of Grayscale’s crypto-assets under management reached $36.5 billion, of which $30.1 was in the Bitcoin Trust and $5.3 in the Ethereum Trust. Grayscale bought 116,174 Ethereum during the last 4 weeks, and 12,450 worth nearly $22.5 million on February 9.  

And bitcoin futures open interest smashes $15 Billion.

JPMorgan Sees Tesla Bitcoin Bet as Too Bold for Others to Follow

“Don’t count on other large companies to emulate Tesla’s decision to add Bitcoin to its balance sheet, according to JP Morgan. Corporate treasury portfolios are typically stuffed with bank deposits, money market funds and short-dated bonds, meaning that annualized volatility — or the range of swings during the course of a year — hovers around 1%. Adding a 1% Bitcoin allocation’“would cause a big increase in the volatility of the overall portfolio,’ wrote the strategists. Such an allocation could mean the portfolio’s volatility rises to 8% due to Bitcoin’s 80% annualized volatility, they said. 

* 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.

Kiffmeister’s #Fintech Daily Digest (02/09/2021)*

~ kiffmeister

ECB’s Panetta Floats 3,000-Euro Limit on Digital Cash

Euro-area residents’ holdings of a future digital currency could be limited to 3,000 euros to prevent bank runs, European Central Bank Executive Board member Fabio Panetta suggested in an interview with Germany’s Spiegel.

ETH represented 80% of last week’s institutional crypto inflows

“Crypto asset manager CoinShares has reported that investment inflows into institutional cryptocurrency funds surged last week, and the majority of it was Ethereum. The report states that of the $245 million crypto inflow last week, 80% of it or $195 million was invested into Ethereum ahead of the launch of the Chicago Mercantile Exchange Ethereum futures contracts on February 8. Comparatively, Bitcoin had $41.9 million of the weekly flows, with a year-to-date total of $2.02 billion.”

BlockFi Officially Launches the Bitcoin Trust with Fidelity Digital Assets as Custodian

BlockFi launched its new Bitcoin Trust that was registered with the US Securities and Exchange Commission (SEC) late last month. The Trust will issue shares through private placements, and the value of the shares will reflect the value of BTC held by the trust (minus expenses and other liabilities). Initially, trust shares will be made available to global institutions and other qualified investors. Later on, access will be expanded to include accredited individual investors in the United States. https://blockfi.com/the-blockfi-bitcoin-trust-offers-a-new-way-to-invest-in-bitcoin

Introducing the TerraUSD U.S. dollar-pegged algorithmic stablecoin

In my recent monthly, I talked about how USD-pegged Empty Set Dollar (ESD), launched in September 2020 and one of the first algorithmic stablecoins to come to market, briefly held the #6 position in the stablecoin league table. (An algorithmic stablecoin adjusts its supply to maintain its peg.) However, ESD broke its peg massively in January, and is now trading down around $0.20 and has dropped down to #13.

However, another very viable-looking USD-pegged stablecoin, TerraUSD which sits at #8, has been brought to my attention by @CptDig. The peg isn’t absolutely perfect, as it has occasionally spiked down to nearly $0.96 and up to $1.04, but since it launched in October 2019 it has spent most of its time within a $0.98 – $1.02 band, which is better than any other algorithmic USD-pegged stablecoin I’ve seen. TerraUSD is also part of the Terra family of products that seem to be seeing real use cases. 

Terra is a delegated proof of stake system that uses the LUNA token as collateral for the stablecoins it issues and it has several active use cases underway:

  • The South Korean CHAI decentralized app-based mobile payments system runs on Terra’s payment rail. The rail is built on two the native stablecoin of Terra for funds across the networks and the Luna token for small transaction fees for miners. CHAI has partnered with 15+ major local banks to facilitate convenient fiat on/off ramps, recently crossed 2 million monthly active users. Terra’s network also integrates with MemePay, a Mongolian e-wallet utilized by 1.5% of the online population. 
  • Terra’s Mirror synthetic assets protocol tracks the price of U.S. stocks, futures, exchange-traded funds, and other traditional assets. The Mirror Wallet kicked off with 12 of the top American technology stocks. The target market is users outside of the United States who seek 24/7 exposure to and fractional ownership of synthetic assets. 

FYI besides TerraUSD there are eleven other Terra-based stablecoins (AUD, CAD, CHF, CNY, EUR, GBP, INR, JPY, HKD, KRW, and SGD).

* 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.

Kiffmeister’s #Fintech Daily Digest (02/08/2021)*

~ kiffmeister

Tesla Bets Big on Bitcoin, Plans to Accept Cryptocurrency

Tesla invested $1.5 billion in Bitcoin and signaled its intent to begin accepting the cryptocurrency as a form of payment, sending prices to a new record after the vote of confidence from the electric-car market leader. “In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity. As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future. Thereafter, we invested an aggregate $1.5 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term. Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.” 

Hardware wallet for digital yuan debuts in Xiong’an New Area

The Xiong’an branch of the Agricultural Bank of China in Hebei has reportedly produced the first hardware wallet designed for the digital yuan. The product was developed by the Party Working Committee of the Xiongan New Area and the People’s Bank of China branch in Shijiazhuang. The new hardware wallet supports dual offline payments without an internet connection. The digital yuan wallet also features payments without the use of mobile phones.  

With Beijing onboard, China has so far issued $17 million in digital yuan tests

With Beijing being the next city joining the digital yuan test, China has now issued a total of 110 million (worth $17 million) of its central bank digital currency. Beijing will reportedly be distributing 10 million digital yuan to 50,000 local residents via a lottery. Similar to previous tests, lottery-winners will be able to spend the free digital yuan in offline and online merchants that support the DC/EP payment method. 

Bank of Korea: CBDCs Are Fiat Currency Not Virtual Assets

The Bank of Korea has published the results of research it conducted last year on the legal issues surrounding central bank digital currency (CBDC). It concludes that the Bank of Korea Act would need to be amended to accommodate the issuance of a digital currency, because the act only accounts for notes and coins at present. However, CBDC would meet the requirements of currency legislation and could be freely exchanged with cash as the two share the same legal status. Therefore it would be reasonable to treat a CBDC in the same way as cash deposits held by financial institutions.  

Ethereum Futures Are Now Trading on CME

The Chicago Mercantile Exchange (CME) launched its ethereum futures contract, with the February one being the most active and registering an opening price of $1,669.75 when the spot price stood at around $1,600. 

* 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.

Kiffmeister’s #Fintech Daily Digest (02/07/2021)*

~ kiffmeister

Grayscale’s Crypto Assets Under Management Soar Past $30 Billion — ‘Institutions Are Here‘

Grayscale’s net total crypto assets under management now stands at $30.4 billion, with Grayscale Bitcoin Trust at $24.3 billion and Ethereum Trust at $5.0 billion. and in the seven days since re-opening the Ethereum Trust on February 1, after being closed since December 21, 2020, Grayscale added 104,990 ETH, worth $180 million.

Rock Legend Gene Simmons Talks Bitcoin: Musician Believes China Is Behind the Ripple Lawsuit, Dollars Are Based on Nothing

The American musician, co-lead singer, and bassist for the rock band Kiss, Gene Simmons, has been very talkative about cryptocurrencies during the last two weeks. And both he and Rapper Snoop Dogg have been expressing their support for the “Doge Army” over the weekend alongside Tesla CEO Elon Musk. The price of  dogecoin (DOGE) soared more than 36% after the three tweeted a meme of a Shiba Inu, the dog breed that represents the DOGE token.

* 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.

Kiffmeister’s #Fintech Daily Digest (02/06/2021)*

~ kiffmeister

Venmo’s Debt-Collection Practices Probed by CFPB

PayPal has received a Civil Investigative Demand (“CID”) from the Consumer Financial Protection Bureau (“CFPB”) related to Venmo’s unauthorized funds transfers and collections processes, and related matters. The CID requests the production of documents and answers to written questions. From the Wall Street Journal: “Venmo’s debt-collection tactics have come under scrutiny in the past. The company has threatened to dispatch debt collectors on users who overdraw their accounts, even when those users are victims of scams. Venmo also previously amended its user agreement to give itself the power to recover money its customers owe by seizing it from their other accounts at PayPal.” 

Distributional Effects of Payment Card Pricing and Merchant Cost Pass-through in Canada and the United States

U.S. and Canadian merchants generally do not differentiate prices based on payment methods. They pass through their total costs of accepting payment methods evenly to all customers through higher retail prices. However, credit cards are more expensive for merchants to accept than debit cards or cash. These pecuniary costs include merchants’ costs of accepting payments that are passed on to customers, fees paid by consumers to financial institutions, and consumer rewards received for credit or debit card use. Using data from the two countries, this Bank of Canada paper finds that lower-income consumers incur a disproportionally greater net pecuniary cost than higher-income consumers. Card rewards and consumer fees paid to financial institutions may also benefit higher-income individuals more than those with lower incomes. 

The Bitcoin Trading Gender Disparity Is Still Massive: Study

“Just 15% of Bitcoin investors are women, according to new data from the brokerage company eToro. As skewed as that sounds, it’s actually an improvement over last year’s numbers—at the end of January 2020, just 10% of all Bitcoin investors were women.” 

* 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.

Kiffmeister’s #Fintech Daily Digest (02/05/2021)*

~ kiffmeister

Blockchain Service Network – Key to Digital Currency Interoperability?

The IMF’s Sonja Davidovic has posted the first topical piece on our new Global Fintech Intelligencer blog. As central banks advance their work on central bank digital currency (CBDC), they are faced with questions on how to ensure interoperability with other digital assets. To unravel the interoperability conundrum and provide a robust digital ecosystem for the economy, China has launched the Blockchain Service Network (BSN). Although in its early stages, the BSN remains a unique attempt to build a global interoperability network that connects digital assets both across borders and networks. 

Also, the BSN plans to offer blockchain analytics and financial auditing services for Ethereum developers in its network through a new partnership with Big Four auditor Ernst & Young. 

Bitfinex says it has repaid Tether the remaining loan balance of $550 million

Bitfinex has repaid its sister company Tether the remaining loan balance of $550 million. In 2018, Tether opened a credit line worth $900 million for Bitfinex, of which $750 million was used by the exchange. Bitfinex repaid $100 million each in 2019 and 2020. That loan is at the heart of an ongoing legal dispute with New York’s Attorney General. 

Protego Becomes Second Crypto Firm to Win Bank Charter From OCC

Seattle-based Protego Trust Bank received conditional approval for a trust charter from the Office of the Comptroller of the Currency (OCC) to custody digital assets. Protego is the second applicant to receive conditional approval from the OCC, following Anchorage. The newly chartered trust bank will also offer a trading platform for clients, a service for issuing new digital assets and a peer-to-peer lending platform for its clients.

ADA Price Surges to $0.50 as Cardano Inches Closer to DeFi with Mary Hard Fork

Cardano has been gaining huge traction in the crypto sphere as it inches closer to launching smart contracts on its blockchain to properly enter the DeFi space, following the blockchain’s successful Mary hard fork upgrade. The Mary hard fork is a major upgrade that unlocks new opportunities to the Cardano community and the businesses and institutions using the blockchain. This will effectively transform the Cardano testnet into a truly multi-asset network, enabling users to issue and distribute their own tokens on the Cardano blockchain. 

DeFi’s Yearn.Finance Protocol Suffers $2.8 Million Flash Loan Attack

Yearn.Finance DeFi protocol has announced that one of its DAI stablecoin lending pools has been exploited, leading to the loss of $2.8 million. The suspect is said to have used an Aave flash loan to trigger the vault draining, thus getting away with $2.8 million and the vault losing $11 million. Yearn.Finance facilitates “yield farming” in which users lock up cryptocurrencies in the DeFi protocol so as to earn more crypto-assets. However, such protocols have become a nightmare for some crypto users who have been robbed and conned of millions of dollars in valuable digital assets. 

DeFi boom pushes Universal Market Access (UMA), SwissBorg and Siacoin (SC) higher

Universal Market Access (UMA) plans to offer traders an opportunity to trade Bitcoin price volatility in a decentralized way. For that, the protocol plans to launch a uVol-BTC product that will be settled at the end of the month. Traders could use the token to speculate on the increase or decrease in volatility, or hedge their Bitcoin positions they do not want to sell during sharp corrections. If the product turns out to be successful, a uVOL-ETH token is also planned in the future.

How Elon Musk’s Twitter activity moves cryptocurrency markets

The paper looks at six occasions when Elon Musk tweeted about cryptocurrency and attempts to measure the resultant impact on the trading volume and spot price of the coins in question. Of the six tweets, four were related to Dogecoin and two were related to Bitcoin. The paper concludes that all six events had an impact on the trading activity of both cryptocurrencies, specifically their trade volume. Not every tweet sent out by Musk affected the price of Doge or Bitcoin, but two did result in significant “cumulative abnormal returns.”

Central Bank of Nigeria bans banks from servicing crypto exchanges

The Central Bank of Nigeria (CBN) reportedly banned all regulated financial institutions from providing services to crypto exchanges in the country. The CBN warned of stiff penalties to any bank or financial institution that fails to comply with the directive.

RBI MPC meet: ‘Working on digital currency model, decision very soon‘

Deputy Governor Kanungo reportedly said  that an internal committee within the Reserve Bank of India is taking a close look at the model of the central bank’s digital currency and will come out with its decision “very soon”. 

Venmo to gain crypto, budgeting, bill pay, and Honey integrations this year

In the next few months, Venmo users will gain the ability to buy, hold and sell crypto inside the Venmo mobile app, along with other “investment alternatives.” 

* 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.

Blockchain Service Network – Key to Digital Currency Interoperability?

~ kiffmeister

As central banks advance their work on central bank digital currency (CBDC), they are faced with questions on how to ensure interoperability with other digital assets. To unravel the interoperability conundrum and provide a robust digital ecosystem for the economy, China has launched the Blockchain Service Network (BSN). Although in its early stages, the BSN remains a unique attempt to build a global interoperability network that connects digital assets both across borders and networks.

Many central banks are exploring central bank digital currency (CBDC), but China is at the cutting edge of exploring interoperating their e-CNY with other digital currencies and payment systems. The Blockchain Service Network (BSN) is a government-backed infrastructure network that bridges various distributed ledger technology-based networks. It was founded in April 2020 by Red Date Technology, a Beijing-based software company, and six other private and public sector agencies, including China UnionPay, China Mobile and the State Information Center. For regulatory compliance purposes, the governance of the BSN was split up into BSN China (for private permissioned blockchains) and BSN International (for public permissionless networks) while preserving a certain level of interoperability.

BSN International is expected to launch a Universal Digital Payment Network (UDPN) and integrate CBDCs and stablecoins from various countries in collaboration with international banks and technology companies in 2021. The payment network is supposed to introduce a standardized digital currency transfer method and payment procedure for various information systems. Ultimately, banking and insurance mobile applications will be able to initiate digital currency transaction payment processes using UDPN.

BSN China is expected to serve as a domestic public infrastructure network that will facilitate the development, deployment, operations, maintenance, and regulation of low-cost consortium blockchain applications. (Consortium blockchains grant assess only to selected participants, whereas private blockchains keep write permissions to one entity, although read permissions may be more open, whereas with public blockchains, access and interaction with the network is unrestricted and the identity of its participants is semi-anonymous.)

Rather than starting from scratch, developers can leverage the BSN to build their applications efficiently by choosing desired components from a broad menu of integrated systems. Developers would be able to deploy their distributed applications (dapps) with a single private key across different networks, while servers running on the BSN are designed to be compatible with the blockchains of any participating member.

A network of public city nodes that are linked via the internet form a nationwide (and in the future, worldwide) physical city node blockchain service network. In effect, public city nodes serve as BSN data servers that developers can deploy their applications to using a dedicated channel for transaction processing, data communication, and storage. These disparate channels are supposed to ensure “absolute privacy” of each application while allowing data allocations across multiple channels. Participants and end-users can access those applications at no cost. Currently, the BSN spans various cloud environments and portals, including 108 public city nodes, connecting over 80 cities across mainland China and eight public city nodes in other countries around the world.

The BSN has been integrating public blockchains into the network based on unique capabilities they offer with a focus on building ecosystems with strong use cases. Several public blockchains such as Ethereum, EOSIO, Tezos, Neo, Nervos, IrisNet, and most recently Consensys Quorum have already been onboarded there. The BSN aims to integrate with 30 to 40 public blockchain networks by June 2021. Collaboration with interchain protocols COSMOS and Polkadot are focused on developing an Interchain Communications Hub.

Through the hub users can tap into data generated by outside applications while getting cross-chain services between blockchains adapted in the network. For example, an Ethereum-based dapp would be authorized to access real-time logistics data generated by a dapp built on Hyperledger and processed through the Interchain Hub. The BSN envisions this becoming a standard protocol for dapps from different blockchains, allowing them to call each other with just a few lines of code.

This aim of this collaboration was to provide developers outside China with a standardized development environment to build and run dapps on public blockchains. The public blockchains are supposed to be adapted to the Chinese market with public blockchain nodes that are installed on top of the BSN, so that Chinese developers can access all nodes from all public blockchains via one gateway and one simple monthly plan.

In the localized version for the Chinese market, the network will convert the decentralized public blockchains into permissioned ones, while replacing their native tokens with direct payment by the Chinese currency renminbi to cover transaction fees on these blockchains. This is considered to be the most direct and effective way to ensure regulatory and supervisory compliance and encourage adoption among users within China. Unlike the localized version, the global version of the BSN will allow public decentralized blockchains.

According to industry experts, the BSN is supposed to serve as the backbone of China’s Digital Silk Road ambitions. Others argue that the BSN will encourage the development of digital currencies, stimulate internationalization of digital assets, and expand Chinese developers’ access to the global crypto industry. Regardless of the underlying motivation, thus far, the BSN is the only large-scale network that aims for seamless interoperability between international digital assets and applications across public and private blockchain networks.

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

~ kiffmeister

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 Bybt.com 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.

Kiffmeister’s #Fintech Daily Digest (02/03/2021)*

~ kiffmeister

Futures Debut to Test Ether’s Bitcoin-Beating Rise to Record

An eightfold rally in Ethereum (ETH) over the past year to a record faces possible turbulence from the impending launch of CME ETH futures. The contracts set to debut on February 8 evoke memories of 2017, when the start of Bitcoin futures coincided with a peak in the leading digital asset ahead of a spectacular bust. A Federal Reserve Bank of San Francisco analysis posits the derivatives opened the door for bearish investors. A successful launch of ethereum futures this month is likely to be followed by options on ethereum futures, perhaps as early as 2022, in a similar manner to the launch of options on bitcoin futures in the first quarter of 2020.

Visa Signals Further Crypto Ambitions With API Pilot for Bank Customers to Buy Bitcoin

Visa is piloting a suite of application programming interfaces (APIs) that will allow banks to offer bitcoin services. The Visa Crypto APIs pilot program will let clients “easily connect into the infrastructure provided by Visa’s partner, Anchorage, a federally chartered digital asset bank, to allow their customers to buy and sell digital assets such as Bitcoin as an investment within their existing consumer experiences.” Visa will partner with First Boulevard, a digital bank focused on “building generational wealth” for the Black community, to test test the new suite of crypto APIs. Visa is already working with crypto companies to issue bank cards and has partnered with 35 crypto firms to date, but this is the first time the company has offered crypto services to banks. 

Ant Reaches Agreement With China Regulators on Overhaul

Ant Group and Chinese regulators have reportedly agreed on a restructuring plan that will turn Ant into a financial holding company, making it subject to capital requirements similar to those for banks. The plan calls for putting all of Ant’s businesses into the holding company, including its technology offerings in areas like blockchain and food delivery. One of Ant’s early proposals to regulators had envisioned putting only financial operations into the new structure. 

* 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.