Fintech Daily Digest

For the first time in the US, in 2018, cash was not the most frequently used means of payment, a new Fed report finds. The report shows that consumers used cash for 26% of payments last year, four percentage points lower than 2017. Cash now sits just under debit cards, which rose from 26% in 2017 to 28% last year. On average, consumers last year made 11 cash payments per month, down from 12 in 2017, while total payments increased from 41 to 43 transactions per month.

Many are trying to solve the problems associated with the remittance market today. Ripple is one of the best platforms in this sector but has a major competitor in PayPal who have launched their international money transfer app Xoom.

With 21% of adults in the region having a mobile money account, Sub-Saharan Africa is the global leader in the use of mobile money. This correlates with GSMA supply-side data on mobile money, which shows that Sub-Saharan Africa plays host to almost half of all mobile money registered accounts i.e. 396 million - of which 37% are active on a 90-day basis.

"If the ultimate outcome of a private market for money is a monopoly, does it make much difference whether the monopoly is run by a private company versus a public entity? While the former case could lead to economic exploitation based on a market advantage, the threat of potential competition would inhibit this tendency. The latter case, however, invites a more sinister abuse of government power - even tyranny - as government precludes market entry to alternative issuers."

"Bitcoin's average transaction volume is topping $3 billion per day, data from crypto analytics site Coinmetrics.io reveals as of July 16."

Georgetown Law Professor Chris Brummer's written statement on Facebook's cryptocurrency, Libra, will be delivered at 10am, on Wednesday, July 16, 2019.  His testimony is entitled " 99 Problems."

"For a panel about a proposed cryptocurrency, Tuesday's Senate Banking Committee hearing was notably light on crypto talk. Bitcoin was barely mentioned during the two-hour session and most of the lawmakers seemed far less concerned with the technology than with who was planning to leverage it: Facebook."

Facebook's David Marcus faced a cacophony of fear, uncertainty and doubt surrounding the social media giant's plan to launch its digital currency Libra during a Senate hearing Tuesday, following criticisms from a wide range of regulators and lawmakers around the globe.

Simply put, the Libra Masterplan is borrowing pages from the Bitcoin playbook and the WeChat playbook both at once. If successful, it makes the Libra accessible to everyone on the planet while offloading the regulatory burden of operating the on- and off-ramps to other business.

"Cryptocurrencies have given rise to an entire new criminal industry, comprising unregulated offshore exchanges, paid propagandists, and an army of scammers looking to fleece retail investors. Yet, despite the overwhelming evidence of rampant fraud and abuse, financial regulators and law-enforcement agencies remain asleep at the wheel."

The authors warn of several financial stability risks that digital currencies pose. Many of their points echo recent comments by two senior Chinese central bank officials. The authors suggest central banks take the first step towards their own digital currency by offering settlement services to e-money providers.

Libra is put in perspective by comparing it to like financial instruments, new and old, shedding some light on the purpose, intended user, regulatory issues - and more important, on the path Libra must follow to achieve success. The article also exposes the vast gaping holes in Facebook's description of Libra.

The World Economic Forum released a guide for the evaluation of the benefits of blockchain applications. The document delves into how to apply blockchain technology, providing six recommendations for companies.

For many mobile is the primary - or only - way to get online. Last year alone, almost 300 million further people connected to mobile internet. The extent and progress of mobile internet connectivity is explored in detail in the GSMA's State of Mobile Internet Connectivity Report.

Perhaps the most useful thing that disruptive technologies such as cryptocurrencies have done is to kick existing payments providers out of their complacency. Two days after Facebook announced its One Cryptocurrency To Rule Them All, the international messaging service SWIFT announced its own plan for world domination.

This paper defines fintech as an innovation enabled by one or more technological 'triggers' that have potential to provide value through enablement or disruption in the financial services industry. It proposes a framework to understand fintech in terms of customer type, industry subsector and enabling technology.

For cryptocurrencies to be broadly accepted forms of digital money they will need consumer trust and confidence. Building consumer confidence in new digital currencies will require participation of intermediary institutions and a much greater level of regulation than currently exists. In response to concerns about existing forms of cryptocurrencies, governments are likely to investigate or implement their own digital currencies to prevent disruption to sovereign money and the ability to manage the wider economy.

As currently proposed, the Libra Reserve, in essence, is a pooled investment vehicle that should at a minimum, be regulated by the SEC, with the Libra Association registering as an investment advisor.

In its latest paper "The Rise of Digital Money" that marks the launch of a new series Fintech notes, IMF analyses how technology companies are stepping up the competition to credit card companies and large banks.

The International Monetary Fund (IMF) has argued that network effects could spark the blaze for the mass adoption of new digital monies.