Let’s start the first week of August with our tech weekly summary where we cover the most interesting and important headlines in biotech, fintech, regtech, telecom, and AI. This week, we will take a look at IMF’s stand on digital money, Neuralink’s fresh funding, Ericsson with an unexpected win over Nokia in China, BIS urging central banks and regulators to get a grip on big tech, new android malware, Australian banks negotiating with Apple, Swift expanding to the low value remittance market, Visa entering the BNPL sector, FDA surprisingly rejecting the innovative kidney drug, and the Canadian 5G auction and the questions it raised.
In a paper published on Thursday, the International Monetary Fund stressed it aims to “monitor, advise on, and help manage this far-reaching and complex transition” to digital money. The paper highlighted all the benefits of digital money including faster, cheaper, and more accessible transactions. At the same time, the IMF stressed that the transition must protect financial stability and the domestic economy.
“The Fund has a critical role to play to help its members harness the benefits and manage the risks of digital money,” the paper said. Digital money “must be regulated, designed, and provided so countries maintain control over monetary policy, financial conditions, capital account openness, and foreign exchange regimes,” it added.
While the IMF clearly states the differences between the central bank digital currencies (CBDCs), stablecoins, e-money, and crypto assets, it does not concentrate on the latter.
“While different types of digital money are considered, this paper does not take a stand on which form may predominate.”
The paper’s first version was published internally in March and discussed in April. It was only made public last week, however, it does outline how the IMF should structure the future collaboration with banks and financial institutions on the transition. “The Fund must rapidly strengthen, widen, and deepen its well-established work on digital money while coordinating and collaborating closely with other institutions within the confines of its mandate. The Fund must also rapidly ramp up its resources devoted to these topics.”
The topic of crypto assets was touched in a separate blog post last week, with the head of the IMF’s monetary and capital markets department and the director of its legal department stating that crypto assets used as a national currency is risky. While he pointed out the advantages, saying “the potential for cheaper and more inclusive financial services, should not be overlooked”, he also spoke about the various risks.
“Governments, however, need to step up to provide these services and leverage new digital forms of money while preserving stability, efficiency, equality, and environmental sustainability. Attempting to make crypto assets a national currency is an inadvisable shortcut.”
One of Elon Musk’s best-known ventures, the brain-chip startup Neuralink, has just raised $205 million in the latest funding round. The round was led by Dubai-based venture capital firm Vy Capital, with participation from Alphabet Inc’s (GOOGL.O) Google Ventures. Valor Equity Partners, Craft Ventures, and Founders Fund also participated in the Series C investment.
Among Neuralink’s long-term goals is implanting wireless chips to the human brain in order to cure neurological conditions such as Alzheimer’s or dementia, as well as fuse humans with AI capabilities.
Despite the belief that Nokia would be taking over Ericsson’s market share in China after the Swedish vendor struggled with tensions with the Chinese government and telecoms, it looks like Ericsson managed to secure a deal. According to the newest reports, the Swedish telecom maker just won a 3% share in a 5G radio contract from China Telecom and China Unicom.
After Sweden banned Chinese telecom equipment suppliers, China warned Ericsson it could be losing its market share that would subsequently be given to its biggest European competitor – Nokia. The Finnish telecom spoke out about the tender results in China, saying, “We respect the customers’ decision and remain committed to continuing to support China Telecom and China Unicom’s business in the future,” a spokesperson said.
In a recently published paper, the top officials from the Bank For International Settlements (BIS) have urged banks and financial regulators to manage the growing influence of Big Tech. With the big tech giants holding an unprecedented amount of data, BIS is concerned that players such as Facebook, Alibaba, or Google have the power to reshape finance and destabilize the banking system as a whole.
August Carstens who led the team creating the paper points out that in countries such as China, the two biggest big tech payment companies control nearly 95% of the mobile payments market. “The entry of big techs into financial services gives rise to new challenges surrounding the concentration of market power and data governance,” the BIS paper said.
“Any impact on the integrity of the monetary system arising from the emergence of dominant platforms ought to be a key concern for the central bank,” the paper added.
BIS claims that financial institutions and watchdogs must expect any developments and quickly formulate new and adjust the existing scenarios.
“Central banks and financial regulators should invest with urgency in monitoring and understanding these developments” it added. “In this way, they can be prepared to act quickly when needed.”
The newly documented Android-based remote access trojan (RAT) has been shown to use the feature of screen recording to obtain sensitive information such as banking credentials. RAT has been called “Vultur”, referring to its use of the Virtual Network Computing (VNC)’s remote screen-sharing technology.
The malware was actually distributed through Android’s official Google Play Store, using the “Protection Guard” name that led to more than 5000 installations. The target for cybercriminals was mainly Italian, Australian, and Spanish banking and crypto-wallet information.
“For the first time, we are seeing an Android banking trojan that has screen recording and keylogging as the main strategy to harvest login credentials in an automated and scalable way,” researchers from ThreatFabric said. “The actors chose to steer away from the common HTML overlay development we usually see in other Android banking Trojans: this approach usually requires a larger time and effort investment from the actors to create multiple overlays capable of tricking the user. Instead, they chose to simply record what is shown on the screen, effectively obtaining the same end result.”
“The story of Vultur shows one more time how actors shift from using rented Trojans (MaaS) that are sold on underground markets towards proprietary/private malware tailored to the needs of this group,” the researchers concluded. “These attacks are scalable and automated since the actions to perform fraud can be scripted on the malware backend and sent in the form of commands sequence, making it easy for the actor(s) to hit-and-run.”
Lately, Australian banks have been in the battle with Apple, trying to gain access to the NFC chip using Apple’s mobile wallet. In a written submission to a parliamentary inquiry on mobile payments reform, the banks claim that Apple is slowing down innovation and raising transaction costs by restricting access to the NFC chip.
In a request for evidence from Apple, the Committee wrote: “These submissions argue that this practice has triggered regulatory intervention and antitrust investigations in some international jurisdictions, including Germany, the Netherlands, the UK, and the EU.
“Whilst Apple’s own submission points out that banking apps and digital wallet providers in Australia are able to initiate NFC payments on iOS devices, these transactions must still be routed through the Apple Wallet and the Apple Pay platform, thereby potentially incurring additional costs for merchants and card issuers.”
Swift launched its newest service – Swift Go, targeting the low-value remittance market. With the new services, individual consumers, as well as small companies, will be able to send real-time payments anywhere in the world, directly from their bank accounts.
Seven global banks – BBVA; Bank of New York Mellon; DNB; MYBank; Sberbank; Société Générale, and UniCredit are already using the service.
Stephen Gilderdale, chief product officer, at Swift, says: “Swift Go is a direct response to the needs of small businesses and consumers for fast, easy, predictable, secure, and competitively priced cross-border payments. Our new service will allow banks to compete effectively in one of the fastest-growing segments of the payments market, delivering a seamless experience for their customers.”
Upon the launch, Swift is promoting competitive prices and full transparency.
Isabel Schmidt, head of direct clearing and asset account services products, Bank of New York Mellon, comments: “It’s no secret that for many years consumers and small businesses have been running into varying pain points when transacting international payments. These challenges have included opaque costs and a lack of certainty on how quickly funds are delivered to the final beneficiary. This is why BNY Mellon is pleased to be the first US bank to go live with Swift Go, a new service that overcomes all of these challenges and assists financial institutions in delivering a competitive, seamless, fast, and predictable payment experience to their customers.”
Visa just became another major name to join the BNPL craze, rolling out APIs that allow customers to offer installment payment products. A new website has been launched, where Visa provides the credit card issuing partners with APIs that allow them to develop and manage installment payment programs. The partners can customize the duration of loans, participating merchants, interest, and fees.
Visa stated that BNPL is not only beneficial for the consumer, but for merchants, financial institutions, and acquirers all.
FDA rejected the kidney disease treatment by Ardelyx, as it wishes to see more evidence and the clinical effects. So far, in clinical trials, the drug called tenapanor has shown a significant ability to lower phosphorous levels in patients with chronic kidney disease. However, FDA believes that there are still several “deficiencies” before the drug could be approved. Now, Ardelyx needs to focus on a new clinical trial that can solve FDA’s doubts in order to get the drug approved. The analysts believe the fact that FDA requested another trial gives the company a “silver of hope”, as quoted by Jefferies analyst Chris Howerton.
“We think this is a decent outcome … given the circumstance,” Howerton wrote in a note to clients, “but it is unlikely that [Ardelyx] will have a short path to approval because tenapanor’s efficacy appears to be in question.”
“We do not agree with the FDA’s subjective assessment on the clinical relevance of the treatment effect of tenapanor in our studies which met all clinical endpoints agreed upon by the FDA,” said Mike Raab, Ardelyx’s CEO, in a statement. “In our view, the serum phosphorus lowering data generated with tenapanor in all of our clinical studies is meaningful and clinically significant.”
The Centers for Disease Control and Prevention estimates that 15% of adult US citizen (which amount to roughly 37 million people) are struggling from chronic kidney diseases, with the majority undiagnosed.
“Despite our best efforts with currently available therapies, managing phosphorus remains a significant challenge. We need new tools,” said Arnold Silva, director of Clinical Research at Boise Kidney and Hypertension Institute, in the statement from Ardelyx.
“I’ve closely followed the extensive clinical development of tenapanor, not only as an interested nephrologist, but also as a clinical investigator,” Silva added. “I’ve seen the clinical benefits of tenapanor first-hand in my patients and I’m stunned that the FDA is not granting approval.”
Canadian 5G Auction Raises Questions About Competition
Canada has just announced the results from its latest 5G auction that managed to raise $7.1 billion. Out of the amount raised, the three biggest Canadian operators (Bell Mobility, Rogers, and Telus) have accounted for the majority of this amount amounting to $5.9 billion that translates to more than 82% of the total auction spend.
“The 3500 MHz auction is a key step in our government’s plan to promote competition in the telecom sector, improve rural connectivity, and ensure Canadians benefit from 5G technologies and services,” said Minister of Innovation, Science and Industry, François-Philippe Champagne. “As intended, small and regional providers have gained access to significantly more spectrum, meaning that Canadians can expect better wireless services at more competitive prices, which has never been more important for working, online learning, and staying connected with loved ones,” the minister added.
However, many have noted that the competitive landscape cannot really be challenged in the face of the three big players winning the spectrum. At the same time, out of 23 total participants in the auction, 15 managed to win some spectrum. The biggest spent came from Rogers ($2.7 billion), followed by Bell Mobility and Telus that spent $1.7 billion and $1.5 billion respectively.
“This investment in 5G spectrum will build on our existing 5G assets and enable us to deliver the world-class connectivity Canada needs to increase productivity, fuel innovation, create jobs, and compete in a global economy for decades to come,” said Joe Natale, CEO of Rogers Communications.
While Bell and Telus have issued very similar statements, Telus have also used the occasion to criticize the spectrum costs in Canada. According to Telus, the $2.63 per MHz/pop cost is 2.8 times higher than what operators have pain at the most recent FCC auction in the US.
“Canada’s position as a global leader in broadband networks is vulnerable to burdensome regulations governing access to spectrum,” said chief executive Darren Entwistle. “Going forward, if we are to truly benefit all Canadians, accelerate the government’s innovation and affordability agendas, and transition successfully into a 5G digital world, we need a responsible, forward-looking and predictable regulatory policy that ensures affordable, fair, and expeditious access to this national asset so we can continue building our world-leading networks,” he said.