LATEST ARTICLES | CRYPTO
When Michael Hsu became acting U.S. Comptroller of the Currency earlier this month, banking industry experts predicted a shift away from the aggressive innovation pushed by fintech-friendly Brian Brooks, who resigned as the Biden administration prepared to take the reins. But nobody knew how quickly that shift would occur. The answer? Fast—very fast. We explain below some of the legal implications for the fintech and DeFi markets.What HappenedThere are significant changes coming to the Office of the Comptroller of the Currency (OCC), and that creates new challenges for fintechs, cryptocurrency regulation and decentralized finance (or DeFi).
Governments always seek ways to make their economies more efficient. And with the rapid growth of the cryptocurrency market, they turned their eyes to this field in search of new solutions.With the continuous advancement of crypto acceptance by traditional companies, we can now observe the trend where central banks across the world are increasingly looking into the matter of digital currencies backed by a state – namely, CBDCs (central bank digital currencies).The question many of them are trying to unravel is how central bank digital currencies could influence their economies, help them transform and progress? What benefits are there to adopting CBDCs?
The Division of Swap Dealer and Intermediary Oversight (DSIO) of the Commodity Futures Trading Commission today issued an advisory to futures commission merchants (FCMs) regarding the holding of virtual currency in segregated accounts.
NowCP, Paris, and european primary placement facility (eppf), Luxembourg, have launched a new co-operation to provide issuers with the full value chain of financial instruments from the short-end commercial paper to long-dated bonds.The cooperation will be fully automated starting with NowCP’s marketplace as the primary and secondary market trading venue.
When they burst into public view in 2009, the market for digital currencies was the Wild West. Bitcoin – and the many imitators that it spawned – was a fringe novelty that captured the attention of technologists and those looking for an alternative to mainstream financial services. In that early surge of activity and Utopian optimism, the digital currency market was certainly marked by innovation, but also by misunderstanding, volatility, fraud and minimal oversight.
The Bank of Japan will begin central bank digital currency (CBDC) experiments early next year but says it still does not yet have any plans to issue its own digital yen.Central banks around the world have been grappling for years with the pros and cons of creating their own digital currencies.
During the ‘Retail Payments Strategy’ webinar held Wednesday , the European Commission’s Eric Ducoulombier, head of retail financial services and payment unit, spoke to the subject of digital currencies and the future of a digital euro.In light of the ECB’s recent discussions and launch of a public consultation on the possible creation of a digital euro, Ducoulombier emphasised the role the private sector should play.
CrossTower, a new exchange operator, has been granted a license to operate in Bermuda by the Bermuda Monetary Authority (BMA) under the Digital Asset Business Act (DABA).The license provided is a “Class M”, which makes CrossTower one of the first major cryptocurrency exchanges to receive such a permit from the authority.
The FCA has published final rules banning the sale of derivatives and exchange traded notes (ETNs) that reference certain types of cryptoassets to retail consumers.The FCA considers these products to be ill-suited for retail consumers due to the harm they pose. These products cannot be reliably valued by retail consumers because of the:
BNP Paribas Securities Services has partnered with cloud-based digital asset security infrastructure Curv to transfer security tokens securely between market participants.The security token was transferred using Curv’s multi-party computation solution to ensure the security of the private keys.The proof of concept, which was successfully completed, helped to demonstrate that tokenised securities can be transferred quickly, safely and transparently on the blockchain.
Talos, a technology provider for the institutional trading of digital assets, today announced the public launch of its platform that connects the diverse group of participants involved in today’s crypto-asset market structure — institutional investors, prime brokers, exchanges, OTC desks, lenders and custodians. The Talos platform, which has been live for the last year, delivers a suite of solutions that supports clients through the full trading lifecycle — from price discovery to execution through clearing and settlement, across spot, futures and FX markets.
The European Central bank is to conduct a public consultation on the possible creation of a digital euro, after a high-level taskforce sketched out possible scenarios that would require central banks to mint their own cryptocurrency.The Eurosystem task force, bringing together experts from the ECB and 19 national central banks of the euro area, reported that an increased demand for electronic payments in the euro area could require a European risk-free digital means of payment.
The prevalence of renewable energy in cryptocurrency mining is being driven by hydroelectricity, according to a study by the Cambridge Centre for Alternative Finance (CCAF), but APAC’s cheap coal-powered energy is what sets it apart from other regions.The CCAF’s research finds that 76% of ‘hashers’ use renewable energy to power their activities, with hydropower the number one source at 62%. Wind and solar energy meanwhile are used by 17% and 15% respectively.
The world is in the midst of a global climate crisis—one that is impossible to ignore.To avert the worst-case climate scenarios, countries around the world have committed to reach carbon net-zero by 2050. Addressing sustainability across all industries is a worldwide priority, and global finance is no exception.
Divided opinion on the perceived risk of cryptocurrency including the links between cryptocurrency and illicit purposes were among the key findings of a global survey -- the second commissioned by RUSI and ACAMS in partnership with YouGov – and based on 566 unique responses from across the global financial and cryptocurrency industries, including cryptocurrency exchanges, financial regulators and financial intelligence units.
Gemini has fully expanded in the UK, providing individuals and institutions with cryptocurrency exchange and custody services in pounds sterling.The launch comes after the Financial Conduct Authority (FCA) granted Gemini an electronic money institution license.It also received approval from the FCA as part of its Fifth Money Laundering Directive crypto asset registration process.
Cryptocurrency exchange Kraken has secured a bank license, getting approval from the State of Wyoming to create a special purpose depository institution (SPDI).Headquartered in Cheyenne, Wyoming, the new Kraken Financial unit will be the first digital asset company in US history to receive a bank charter recognised under federal and state law.
In ShortThe Situation: The requirement for a paper‑based note for issuing securities under the German law has been an obstacle for the use of security tokens in Germany. With the release of a draft bill (the “Bill”) permitting the issuance of electronic bearer bonds under German law, Germany is paving the way for digitalizing its financial markets.The Result: The Bill now proposes to remove the global note requirement. It sets out a legal framework for the issuance of electronic bearer bonds including those issued as security tokens on a blockchain. The Bill is another milestone in the provision of legal certainty for blockchain‑based securities in Germany after the introduction of the crypto custody license as of January 1, 2020.Looking Ahead: The Bill will provide legal certainty to issuers and institutional investors and boost the use of distributed ledger technology (“DLT”) for the issuance of blockchain‑based security tokens under German law. Permitting the exchange of existing traditional securities into electronic securities (“e-Securities”) (and vice versa) and the consolidation of both types of securities will open up the market for institutional investors. This legislation comes ahead of an expected EU‑wide legislative initiative on crypto assets toward the end of 2020.BackgroundUnder German civil law,...
Over the last 50 plus years, technology has taken over financial services and is now a crucial part of how the industry continues to progress and succeed. In fact, over the course of a few short months, we’ve seen firsthand how technology has enabled success through our collective workforces’ ability to effectively work remotely. This recent shift to remote working is an important reminder of the value of consistently assessing and evolving technology approaches within organizations.As the financial services industry moves toward an ever-greater dependence on technology, we must always keep an eye on the future to ensure that any new technological advancement or implementation delivers the same, if not better, benefits and risk management capabilities.
Blockchain technology continues to mature and gain acceptance for a wide range of potentially disruptive financial and commercial uses. In the wake of COVID-19, we have seen an increased focus on the research and development of blockchain technology, as well as an increased deployment of the technology for both financial and non-financial use cases. Growth of Stablecoins Stablecoins may be the first “killer app” for blockchain. A “stablecoin” is an asset-backed digital asset. The term “stable” in the name refers to the goal to maintain a peg with the underlying asset or a set value, most commonly one U.S. dollar. While the majority of stablecoins are backed (or reportedly backed) one-for-one with respect to the asset they represent (for instance, a stablecoin representing one U.S. dollar typically represents a claim on one U.S. dollar held in custody by the issuer), others, such as Dai, are created by overcollateralizing non-stable assets, such as ether, and borrowing against that position. We expect to see new variations of stablecoins enter the market as their use case grows.
Todd McDonald, co-founder of enterprise blockchain software firm R3 , said the use of blockchain in capital markets is on the cusp of some really exciting developments.In April Nasdaq announced a long-term collaboration agreement with R3. The exchange’s Market Technology business will use Corda, R3’s enterprise blockchain software, to build full trade lifecycle solutions for digital assets marketplaces.McDonald told Markets Media: “We need to ensure the technology is simple to use for institutional investors and that its why the collaboration with Nasdaq is important. They have experience running a regulated exchange and we are providing something additive to what is out there already.”
Still trying to get a grip on what is going on in the finance space when it comes to digital ledger technology (DLT)? This senior panel at the recent Ethereum in the Enterprise conference may help map the landscape.Could DLT cut transaction costs around private securities? Well, according to Artem Korenyuk, head of business innovation and fintech strategy at DTCC, his organisation is betting on it. The half-hour “Ethereum in finance” panel within the Ethereum in the Enterprise conference last week saw him describing the rationale for Project Whitney (which we have previously written about here).
In 2008, Satoshi Nakamoto essentially solved the infamous computational issue called the “Byzantine generals’ problem” or the “Byzantine Fault.”Throughout the history of man, people used ledgers to record economic transactions and property ownership. A ledger is often referred to as the “principal book,” and entries can be recorded in stone, parchment, wood, metal, and with software as well. Ledgers were used for centuries, but the shared ledger system became really popular in 1538 when the church kept records.
If equities, bonds, and OTC derivatives have identification codes why shouldn’t digital assets?That’s the premise Etrading Software and the team of Bloomberg and Kaiko are betting on by recently throwing their hats in the ring to provide ID codes as the new registration authority for digital token identifiers (DTIs) expected to go live sometime next year. The decision on which of the two contenders will nab the role is now in the hands of two committees of the standards-setting body International Organization for Standardization (ISO) which provides a process by which to designate a legal entity — known as registration authority– to maintain identification standards.
Historically, financial regulatory agencies were anything but centers of innovation and were assumed to be a step or two behind the institutions they supervised, particularly when it came to technology. That has changed drastically over the past half decade, both in terms of regulators' understanding and application of increasingly accessible and affordable advances in such areas as cloud computing and machine learning, and their accommodation and encouragement of fintech systems and services, whether in established firms or entrepreneurial start‐ups.