Fintech Daily Digest

A brief outage Tuesday morning at 10:00AM Eastern took down a number of crypto information and trading sites including Coinbase and CoinMarketCap. The issues cleared up around 10:18AM and most sites seem to be running again.

Fresh from the Financial Conduct Authority on Wednesday: a proposal to ban the sale, marketing and distribution of derivatives and exchange traded notes linked to "cryptoassets" for retail consumers.

The backlash against Facebook's Libra project has begun. The House of Representatives' Committee on Financial Services has written to Mark Zuckerberg, Sheryl Sandberg, and the chief executive of Calibra, David Marcus, asking for a moratorium on the development of both Libra Coin itself and Facebook's bespoke wallet, Calibra.

The real problem with our existing currencies and financial arrangements, which serve as a means of payment as well as a store of value, is the lack of competition among, and regulation of, the companies that control transactions. As a result, consumers - especially in the US - pay a multiple of what payments should cost, lining the pockets of Visa, Mastercard,

What is the future of this system in China and globally? Will it replace the bankcard-based system that launched in America and took over the world? What does it mean to have a payment system migrate from the banks to tech?

Xpring's Ripple initative invests in, incubates, acquires and provides grants to companies that use XRP and the XRP Ledger. Since the May 2018 launch, Xpring has committed $500M in support of over 20 companies.

Bitfinex borrowed as much as $700 million from the stablecoin issuer through a line of credit in early 2019. The exchange needed the cash to make up for an $850 million hole which resulted from its payment processor, Crypto Capital, having its funds seized by authorities in three separate nations. On Tuesday, the exchange said it had transferred $100 million from its account to Tether's.

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.

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

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.

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

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.

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.

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.

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.

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.

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.

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.

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.