Fintech Daily Digest

Global central banks may have to issue their own digital currencies sooner than expected, the general manager of the Bank for International Settlements has said, after Facebook recently unveiled plans to create its own stablecoin.

Facebook's proposed digital currency, Libra, will cause immediate tax problems for users in Europe that will hamper its mainstream adoption, according to leading tax lawyers. The tax problem stems from Facebook's idea to peg the value of Libra to a basket of currencies globally rather than fix it in value against its users' domestic currency.

Former deputy governor at the Banque de France Jean-Pierre Landau argues that central banks should issue digital currencies of their own to protect financial stability, monetary policy and access to public money.

In the past, Bitfinex representatives have insisted to Alphaville that the expansion of tether supply is entirely linked to authentic buying interest. In some cases, however, tethers are also originated into reserves in anticipation of demand as well.

Cryptocurrency exchange Bitfinex is ready to ship a derivatives product with up to 100 times leverage, CTO Paolo Ardoino told The Block.

Libra's partners signed nonbinding agreements to join the effort partly because they knew they weren't obliged to use or promote the digital token and could easily back out if they didn't like where it was going.

ErisX announced that the CFTC granted it a derivatives clearing organization (DCO) license, acting as a secondary approval on top of an existing designated contract contract market (DCM) license that the exchange already held. The approvals mean the copmany can now launch crypto futures products under the auspices of the U.S. regulator.

We develop a theory of long-run equilibrium in blockchain-based financial systems. Our theory elucidates the key market design features that separate proof of work and proof of stake approaches in the long run. Under proof of work, wasteful computation is used to secure the system, and users' utility in equilibrium is determined by the threat of a fork. Under proof of stake, by contrast, users' utility in equilibrium is generally above the fork threat level because custodians can use relational contracts to incentivize a higher quality of service. Relational contracts under proof of stake rely only on local institutions - but combining them with cryptography can create a platform for formal global contracts.

All eyes have been on bitcoin recently as markets move into a consolidation phase following a flash crash last Thursday. What may have gone unnoticed is the issuance of more USDT as Tether market capitalization continues to crank higher.

The increased penetration of cryptocurrency in the digital payment arena appears to be affecting the landscape of cross-border remittances. Financial institutions and other mainstream establishments are now jostling with blockchain startups for control over an industry that could possibly experience massive growth over the next few years.

Although crypto speculation surely increased after the social media giant's announcement, bitcoin's recent rise might also have something to do with another digital token, Tether, a US dollar-pegged unit commonly used to trade bitcoin on exchanges that lack banking partners. Tether is issued and redeemed by a company of the same name.

Lemonade, one of the biggest among a wave of digital insurance companies, is to enter the German market in its first move outside the US. The company is one of the best-known examples of the "insurtech" companies hoping to shake up the industry with new technology and innovative business models.

Mastercard has teamed up with P27 Nordic Payments Platform to deliver fast, cross-border, multi-currency account to account payments across the Nordic region. The partners claim this is a world first in terms of a real-time and batch multi-currency platform, which will offer immediate payments with lower costs, higher security and increased competitiveness. P27 Nordic Payments Platform is owned by Danske Bank, Handelsbanken, Nordea, OP Financial Group, SEB and Swedbank.

But if Facebook introduces seamless international transactions for the general public, runs will become commonplace. Inevitably, governments will have to step in to introduce a new form of friction to the system. One partial solution is a small universal financial transaction tax of the type proposed 50 years ago by the Nobel laureate economist James Tobin.

Binance, the world's largest cryptocurrency exchange by trading volume, is soon to launch (up to 20 times leverage) margin and futures trading.

The likelihood of a Bitcoin exchange-traded fund gaining approval from the U.S. SEC has declined thanks to the cryptocurrency's wild price swings in June. The SEC has already shot down several ETF proposals, citing concerns over market manipulation in cryptocurrency markets.

BitMEX is preparing to launch bitcoin zero coupon bond in the next few weeks as the exchange expands into fixed income.

The Japan-based Ocean Network Express and Germany-based Hapag-Lloyd will join the TradeLens platform launched by Danish logistics conglomerate A.P. Moller-Maersk and tech behemoth IBM.