Fintech Daily Digest

Seed SEF has launched user acceptance testing of its physically-settled bitcoin derivatives which will carry on through early August. Seed SEF, which has been licenced as a Swap Execution Facility by the CFTC since 2016, has opened its UAT environment, allowing customers to start trading on Seed SEF's matching platform.

The IMF's Dong He and Yan Liu talk about central bank digital currency: the current level of interest among central banks in issuing them, what concerns they need to address when designing them, and how commercial banks might be affected, depending on the design of the CBDC. We discuss how privacy could be built into such a currency while also fulfilling anti-money laundering and counter terrorist financial regulations and how a CBDC could affect the IMF's ability to achieve its goal of financial inclusion. Plus, we also cover how crypto assets being widely adopted could influence economies, as well as Facebook's Libra.

The Clearing House, owned by 24 large U.S. banks, is currently operating a real-time payments system.  An independent assessment found that the RTP network met all 36 criteria set by the FRB-sponsored Faster Payments Task Force. Those 24 banks have individually or collectively paid hundreds of millions of dollars to build that system.

The RTP network has a single price for all participants with no volume discounts, no volume commitments and no monthly minimums to ensure that financial institutions of all sizes participate on the same terms. Financial institutions pay only for the transactions they originate.

PayPal -owned payments app Venmo announced support for instant transfers to U.S. bank accounts. The feature is an optional alternative to Venmo's standard bank transfer service, which typically takes one to three business days to process transactions. With Instant Transfer, however, funds from your Venmo account can hit your bank account within minutes.

Hedera is a public ledger that uses hashgraph consensus, touted by the company as a faster, more secure alternative to blockchain consensus mechanisms. Hashgraph claims to achieve high-throughput with 10,000-plus cryptocurrency transactions per second, and low-latency finality in seconds from its "innovative gossip about gossip protocol" and virtual voting. Once consensus is reached, the data is added to the public ledger for everyone to see.

According to CipherTrace, outright thefts, scams and other kinds of misappropriation of funds from digital currency holders and trading platforms resulted in around $4.3 billion in losses throughout 2019.

The U.S. SEC has again delayed making a decision on three bitcoin exchange-traded fund proposals. The ETFs were proposed earlier this year by asset managers Bitwise Asset Management, VanEck/SolidX and Wilshire Phoenix, and filed with exchanges NYSE Arca and Cboe BZX.

"Australia, Canada, Germany and Sweden are close to abandoning cash payments and potentially accepting cryptocurrencies as a payment method."

"The central bank digital currency (CBDC) aims to replace M0 - cash in circulation - while maintaining the anonymity of cash. The digital currency will not have an impact on M2 - usually defined as M0 plus traveller's cheques, demand deposits, money market shares and savings deposits - as changing M2 could have an effect on monetary policy, Mu said."

"Only a lawyer could wholeheartedly believe a complex business problem can be solved by making contracts more convoluted. But that is what has been happening in the US market for corporate credit derivatives."

This report provides a detailed summary of our applied research based on data from six non-bank financial services providers - Accion, Brigit, Kabbage, LendUp, Oportun, and Petal - that have begun using cash-flow variables and scores in an effort to increase the provision of credit to consumers and small businesses who may have difficulty obtaining loans from traditional sources.

The expansion of mobile money services might be one of the most efficient ways of increasing the general collection of taxes-but probably not if you double-tax transactions first.

"SWIFT says that gpi is the new standard in cross-border payments. Well, after looking straight at the facts it seems that not only it is not the standard but it is far away from being that and unless they create a whole new and open network and system (which seems impossible), it will never be. The certain thing is that the banks that are in the top of SWIFT, are afraid of Ripple and they are doing everything to stop them or slow them down."

Parallel currencies have existed for as far back as trade has existed. Whether a bushel of wheat or a cryptocurrency, their legal status, or lack thereof has not inhibited their proliferation - instead practical reasons have either led to their growth or decline - it's not easy to bring a herd of a goat to trade for a few sacks of grain.

Crypto banks are banking institutions that engage in the standard range of money-related activities like deposits and withdrawals, savings, lending and borrowing, and investing in a wider range of instruments and markets. While this also describes a standard bank perfectly, crypto banks have integrated cryptocurrency into these financial functions. They've also gained legality in the eyes of local financial watchdogs.

"Essentially, Walmart's offering looks more or less the same as nineteenth-century scrip, issued to company employees who could spend it only in the company's stores. There is no word yet on whether Walmart employees will be paid in WalCoin, but it is a reminder that history has a habit of repeating itself, just with new people and new technologies."

"Even discounting the large number of unbanked adults who don't have formal ID or mobile internet, and whom Libra won't be able to reach in its initial stages, we estimate that Facebook's digital currency still has the potential to reach between 370 and 800 million unbanked people1 by providing access to financial services, cheap capital, and the open, instant, and low-cost movement of money."

Facebook's planned cyber currency, Libra, is little more than a glorified currency board - the failed arrangement that in 2001 caused the largest sovereign default the world had ever seen. A major risk is devaluation - and the problems don't stop there.

Facebook is getting into cryptocurrency because once they have a widely accepted payment method, their garden will be the largest in the world. Basically, a company is creating a walled garden when all of its apps, products, and services are interconnected with each other, and sometimes reliant on each other.