Fintech Daily Digest

Fujitsu is developing a digital identity exchange technology that uses blockchain to prove reputation and improve trust in validating a user. It makes it possible for individual users and service businesses involved in online transactions to confirm the identity of the other parties.

"What the Libra discussion totally misses is how consumers are going to get value into the Libra system in the first place.  If I have cash, how do I put funds on Libra?  I'm going to need to go through a bank or other financial institution, and it's not going to be free.  Same if I want to take money out of Libra."

My best guess is that Libra is meant to be like a mutual funds share, redeemable (by authorized resellers, not by the public directly) at the net asset value of a low-risk mutual fund diversified across several fiat currencies. The public can buy and sell Libra "coins" in exchange for existing fiat money. Also, unlike an ordinary mutual fund, which allows members of the public to buy shares directly and sell them directly back to the fund at their current net asset value, Libra only allows Resellers to interact directly with the Libra Reserve.

Digital ID holds the promise of enabling economic value creation for each of these three groups by fostering increased inclusion, which provides greater access to goods and services; by increasing formalization, which helps reduce fraud, protects rights, and increases transparency; and by promoting digitization, which drives efficiencies and ease of use.

Good digital ID requires the following four attributes: it can be verified and authenticated to a high degree of assurance, it is unique, it is established with individual consent, and it protects user privacy and ensures control over personal data.

With an estimated population of 110 million, and an average age of 18, Africa's second most populous country, Ethiopia has been the continent's sleeping giant on the tech scene. However, Ethiopia's first ever tech event, 'Startup Ethiopia', and the 'Innovate Ethiopia' week around it, showcased the country's brimming potential and seems to be a harbinger of things to come.

Riksbank's Hanna Armelius: Central banks need to consider issuing digital currencies or leave citizens vulnerable to market power. Cashless societies could leave payment systems vulnerable to "increasing monopoly power … if there's no sort of competition from central bank money."

The Cambridge Centre for Alternative Finance has launched the CBECI. The index provides a real-time estimate of the total annual electricity usage of the Bitcoin network and enables live comparisons with alternative electricity uses in order to put numbers into perspective.

Exactly what kind of money will Libra be? The white papers under-specify the core mechanism that is supposed to control the value and quantity of Libra. Is the Libra Reserve really like a currency board? Or is Libra meant to be like a mutual funds share, redeemable (by authorized resellers, not by the public directly) at the net asset value of a low-risk mutual fund diversified across several fiat currencies?

Markus Brunnermeier et al., argue that new kinds of currency areas will emerge, held together by digital interconnectedness, and cutting across borders, increasing currency competition and, in the process, possibly redefining the international monetary system.

IBM, in partnership with four Australian financial services companies, has launched an eight-week pilot for a blockchain-powered platform designed to streamline bank guarantee process. Lygon is a blockchain-based platform that digitizes the issuance and management of bank guarantees in the retail property lease sector. Per the release, digitizing the process will reduce the risk of fraud, decrease potential of errors, as well as increase transparency and security.

IBM, in partnership with four Australian financial services companies, has launched an eight-week pilot for a blockchain-powered platform designed to streamline bank guarantee process. Lygon is a blockchain-based platform that digitizes the issuance and management of bank guarantees in the retail property lease sector. Per the release, digitizing the process will reduce the risk of fraud, decrease potential of errors, as well as increase transparency and security.

Facebook's blockchain head, David Marcus, wrote a blog post trying to clear up some common questions about Libra. Among the points: Facebook won't control the currency, and it's meant primarily to help unbanked and underbanked people participate in the financial system. If Facebook benefits, it will be because people find it easier to transfer money using Facebook products.

In June, CME bitcoin futures set a new record for open interest amid a surge of new account sign-ups. More than 2,960 accounts have traded their bitcoin futures since launch, and more than 950 new accounts have created in 2019. In addition, the there are now 49 entities that hold contracts worth at least 25 BTC.

CipherTrace and Shyft have launched a blockchain-based identity and attestation platform aimed to help crypto firms meet the new FATF "travel rule" while still maintaining user privacy. The firms will build KYC and AML ecosystem in which participating exchanges can securely transfer Proof of Knowledge without disclosing personally identifying information.

Compared with Bitwise, which released a follow-up fake volume report in May 2019, Alameda thinks more crypto volume is real. For large exchanges like OKEx and Huobi, which were founded in China, Alameda estimates about 70% of their transactions are authentic. Bitwise is much more skeptical, as is the Blockchain Transparency Institute, which has estimated that more than 60% of Huobi's volume is fake and more than 90% of OKEx's volume is fabricated.

Prime Factor Capital is the first crypto hedge fund approved as a full-scope alternative investment fund manager by the UK FCA. The firm will abide by European regulations under which the firm will be allowed to hold more than EUR 100 million in assets under management.

In recent months, some cryptocurrency firms have begun touting structured products linked to the price of bitcoin, with complex formulas determining how much they pay out. It is still a small market, and the firms say their products aren't aimed at mom-and-pop investors. But the trend is raising red flags among some market veterans.

Luxembourg-based Argento has launched a series of bitcoin (BTC) bonds. Various durations are available, conspicuously named after crypto-specific phenomena such as FOMO, HODL and MOON.

Cuba's Communist government said on Tuesday it was studying the potential use of cryptocurrency as part of a series of measures to boost its economy amid a deepening crisis exacerbated by U.S. sanctions.