Fintech Daily Digest

Financial institutions are increasingly outsourcing information technology to the cloud, motivated by efficiency, security, and cost. This column argues that the consequence is likely to be short- and medium-term stability at the cost of the increased likelihood of catastrophic systemic events. Cloud providers are systemically important and should be regulated as such.

This Bank of Japan report published in September delves into the main legal issues related to the issuance of CBDC in Japan. It concluded that under current legislation, banknotes are considered tangible whereas so the current law would need to be revised in order to grant legal tender status to CBDC.

Beginning next year, banks in Germany will be permitted to provide the sale and storage of digital currencies of money under the new legislation. The bill has just been passed by the German federal parliament, the Bundestag, and is anticipated to be signed off by the country's 16 states.

The South African Reserve Bank is purportedly planning to bring new laws controlling the digital currencies to stop their usage to evade currency controls.

People in China are now required to have their faces scanned when registering new mobile phone services, as the authorities seek to verify the identities of the country's hundreds of millions of internet users.

After a well-received technical talk to a keen audience on the other side of the world, Ethereum Foundation developer Virgil Griffith is on the short list for a new contract with the US Government - who will even pay his room and board for the duration!

This column provides a visual blow-by-blow of what happened May 17 on BitStamp, and a risk/return estimate: if it was manipulation, how much it cost, and how much the manipulators earned. It shows how novel structures and thin markets could makes manipulation possible. It concludes with thoughts on the liquidity imbalance that caused it, and how it might happen again.

In the UK, digital-first challenger banks have taken the banking industry by storm. In the next year, digital challenger banks will have a combined customer base of 35 million, tripling their customer bases of 13 million people today, according to a research by Accenture.

HSBC will be shifting $20 billion worth of assets to a new blockchain-based custody platform by March. This is a vast improvement of the previous system as the HSBC platform will digitize paper-based records of private placements.

Chinese cryptocurrency exchange IDAX has suspended deposits and withdrawals after its CEO allegedly disappeared. In a blog post on Nov. 29, IDAX, which earlier this week warned it was seeing a run on withdrawals, said the whereabouts of Lei Guorong were currently unknown.

In addition to companies, local governments and incorporated associations are now proceeding with special initiatives for issuing independent tokens within Japan.

Because it's fast and reliable, the ODL system provided by RippleNet is being used by MoneyGram International. MoneyGram clients are being offered lower costs, convenience, speed and reliability.

At least five Chinese cryptocurrency exchanges have halted or chosen to terminate operations this month in response to a perceived redoubling of Beijing's anti-crypto stance.

When Canadian blockchain whiz Gerald Cotten died unexpectedly last year, hundreds of millions of dollars in investor funds vanished into the crypto ether. But when the banks, the law, and the forces of Reddit tried to track down the cash, it turned out the young mogul may not have been who he purported to be.

Valve, a game maker, has put an end to trade in various in-game items because "worldwide fraud networks" had been using these items to "liquidate" their gains. JP Koning explains hos this works.

Fintech adoption within investment management is still comparatively low as the industry faces falling margins, increased competition and a low rate environment, according to the Asset Management and Investors Council of the International Capital Market Association.

We would argue that bitcoin is simply a diversifier. If a fund manager wants to put 1 per cent of his or her portfolio into crypto, that would certainly diversify it, though it would be a high-risk strategy. They could also choose to use 1 per cent of it for gambling, which can also sometimes bring in high returns, and which we would argue "investing" in crypto is more akin to.

The Dubai Financial Services Authority and the Commission de Surveillance du Secteur Financier Luxembourg, entered into an agreement to cooperate in the development of FinTech.

Here's a comprehensive list of all 235 stablecoin projects launched so far. "Launched" is an important distinction because the list includes closed projects (e.g., Basis). It also includes commodity-backed stablecoins (mostly gold) and private coins.

The Crown Princes of Saudi Arabia and the United Arab Emirates (Mohammed bin Salman and Sheikh Mohamed bin Zayed) reached agreement to develop a digital currency to enable trading between banks in the two countries.