Since yesterday, everyone is talking about the same thing: Elon Musk sending dogecoin and bitcoin on a wild ride, with both cryptocurrencies falling sharply after his comments and tweets. The second hotspot topic is CBDC and what central banks around the globe will decide to issue one. While some countries, like China, are already on a straight line to launching their digital currencies, the majority is still in a research phase and there are several countries that emphasize the dangers of CBDCs. We will also look at India, trying to urge lenders to cut all ties with crypto exchanges, as the country may soon propose some of the most rigid crypto regulations around the globe. For these and more FinTech news, take a look at our newest weekly highlights.
On Friday, Bitcoin fell to its lowest in more than two months, heading for its worst week since February. At the same time, dogecoin decreased by as much as a fifth. Reason for crypto performing so much worse is simple, Elon Musk.
Musk’s tweets and quotes have been sending crypto on wild rides this year, including a dogecoin rally that nobody saw coming from crypto that started as a meme. Now, there is a U-turn.
Since last week, Dogecoin has suffered, after Musk has described the meme crypto it as a “hustle” on Saturday Night Live. This week, Musk announced that Tesla stopped accepting bitcoin payments due to environmental reasons that have resulted in such a fall for bitcoin that investors keep pointing out the danger of Musk’s influence on crypto.
“Dogecoin remains a lesson in greater fool theory,” said David Kimberley, an analyst at investing app Freetrade. “It’s being pumped by people that want to get rich quick (and Elon Musk),” he said.
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DBS Group announced today that their private banking unit has started to offer trust services for cryptocurrencies. On Friday, South Asia’s largest bank said that private banking clients are offered help with storing and managing digital assets for cryptocurrencies.
“International regulations and protocols are still nascent in the digital asset space, which could give rise to complications or unnecessary confusion if proper measures are not in place to prevent them,” said Lee Woon Shiu, regional head of family office, wealth planning, and insurance solutions at DBS Private Bank, in a statement.
Several sources told Reuters that India’s central bank is informally urging lenders to cut ties with crypto exchanges and traders, although a Supreme Court ruling allows banks to work with the industry.
India is currently working on regulations that will ban cryptocurrencies and lead to hefty penalties for anybody not complying and dealing in crypto. However, nobody knows for sure when the pill may, in fact, be passed. So far, the business remains as usual and the demand for digital assets grows. Moreover, as India’s supreme court overturned the ban previously introduced by The Reserve Bank of India (RBI), forbidding banks from dealing in crypto transactions, financial institutions can now extend their services to crypto.
“The regulator has been unofficially asking us that why are we dealing in such business when it is ultra speculative. A lot of money flows overseas via this trade which the RBI is not comfortable with as it may lead to money laundering,” said a senior executive at one of the banks which was contacted.
“Even though the discussions are informal that is enough. No one wants to go against the regulator,” said another source.
RBI did not respond to a request for comment.
One of the most up-and-coming fintech, Aspire, has reached $1 billion in annualized transaction volumes, only a year after the launch of its business accounts.
Aspire has also reported a fresh launch, introducing a Bill Pay feature that automates the invoice payment processes. Now, company owners can forward their invoices to the AI assistant that will identify the payment details and date. After it is performed, the user will get a notification to do a final check and approve the payment.
Aspire currently serves thousands of businesses in Asia.
Andrea Baronchelli, the Founder & CEO said: “We are filling a $150 billion demand gap for better, faster, and cheaper financial services for businesses in Southeast Asia. And we will continue to release innovative products targeting growing businesses, such as Bill Pay, to help founders save time and money, and use those resources to grow their business instead”.
The Bank of Israel will shortly open public consultation on the idea of a digital shekel. As more and more countries are eyeing the possibility of issuing their digital currency, the Bank of Israel now decided to accelerate its preparation for a possible future launch of a digital shekel.
A committee established by the bank has issued a report that emphasizes potential benefits, a draft model, and issues that must be addressed. The draft model illustrates a two-tier framework, meaning that the central bank would provide digital shekels to private-sector payment providers that would serve as a middle man between the central bank and the public. Currently, Israel’s central bank wants to provide minimal infrastructure, using either DLT or centralized ledgers.
“The draft model is the basis for a discussion and for examination of alternatives by the work teams involved in the matter at the Bank of Israel,” states the central bank. “Following the publication of this document, it will also serve as the basis for discussion within the professional community in Israel regarding the necessary characteristics of a digital shekel.”
The consultation will close on 31 July.
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Central bankers continue a debate on CBDCs, with very different conclusions. While more than half of central banks around the world are currently researching the possibility of CBDCs, others are already on a way to a full lunch, China being the best example.
Bank of England Deputy Governor, Jon Cunliffe, has this week given the public a strong indication that the UK will try to launch a Britcoin in a near future.
“We may not be there yet, but it looks probable in this country that if we want to retain public money capable of general use, and available to all citizens, the state will need to issue public digital money,” Cunliffe told his audience.
However, other central bankers are much less enthusiastic about the topic and with the possibility of CBDCs with caution and skepticism. Boston Federal Reserve President, Eric Rosengran, said:
“It is important to understand what problems a central bank digital currency is being designed to solve, and whether other technologies could more cheaply or efficiently address those problems,”
Rosengren did point out he sees the upsides to CBDCs but has also stressed risks such as financial stability.
On Tuesday, Revolut announced it would be integrating with Elliptic, the leader in crypto-asset risk management and blockchain analytics. Due to the partnership, Revolut will be able to expand its cryptocurrency offering. Currently, Revolut’s customers can withdraw cryptocurrencies, with their transactions being recorded on the blockchain.
Revolut will use Elliptic Lens, Navigator, and Forensics to detect risk and be able to block high-risk crypto-asset transactions.
“Elliptic’s reputation as the global leader in crypto-asset risk management made them the clear choice as Revolut’s compliance partner in the UK to support us as we continue to grow at pace and enhance our offering”, says Ed Cooper, Head of Crypto, on why Revolut chose to work with Elliptic. “Their services provide us with an integrated, automated compliance solution that is tailored to our risk appetite and enables us to meet FCA requirements and other regulatory standards. Elliptics’s asset-agnostic scoring capabilities, configurable risk rules, as well as the extensive selection of cryptocurrencies supported, are crucial for Revolut’s compliance operations and broadened cryptocurrency offering.”
Simone Maini, CEO of Elliptic adds “Elliptic’s blockchain analytics capability lets Revolut offer a broader range of crypto assets services more safely. This is a landmark partnership between two companies at the forefront of financial services.”
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The newest whitepaper published by Broadridge Financial Solution shows that companies are shifting toward mutualization models for their tech and operations. In the mutualization models, the participants can access emerging technologies quicker, while saving time and money. They are also characterized by scalability.
“Implementation of a mutualized model allows firms to increase operational productivity, resiliency, and efficiency that are the hallmarks of a modern, modular approach to service delivery,” said Michael Tae, Chief Transformation Officer at Broadridge. “We developed this report after many conversations with clients who shared their interest in mutualization but felt uncertain about where to begin updating their technology functions. This whitepaper serves as both a useful guide to those interested in expansion and an informational tool to firms that are just beginning their technology journey.”
Some of the highlights that the paper includes are:
- The four forces driving mutualization: margin and cost pressures, regulatory change, digitization and infrastructure shocks
- The long-term benefits of mutualization: cost savings, regulatory compliance, operational productivity, and resiliency and innovation at scale
- The elements needed to establish a new model of mutualized service delivery
- The key questions every financial services executive should ask as they embark on the path towards mutualized service delivery