Fintech Daily Digest

The University of Georgia (UGA) published a summary of a paper that investigated the associations between social media usage and crypto investment behavior. It found that The study found that about half of social media users surveyed have invested in digital currencies. And the more social media platforms a user was active on, the more likely they were to invest.. Meanwhile, only 10% of non-social media users had invested in crypto. YouTube, Reddit, Twitter and Clubhouse users were the most likely to invest in crypto. Instagram users weren't as keen on crypto. The researchers found men and those with a higher risk tolerance were more likely to invest in crypto, but people with a higher education level and older people were less likely to invest in crypto.

By reviewing terminologies, this SUERF policy brief by Ulrich Bindseil and colleagues clarifies the essence of new technologies in the field of payments to facilitate ongoing discussions about their eventual merits and use cases. This is a shortened version of the following paper:

Financial Innovation published a paper that presents an all-inclusive analysis of the literature on the augmentation of financial inclusion through fintech. Ninety-six papers were selected from the 2951 articles in the Web of Science, Scopus, and EBSCO databases. This study uses bibliometric and content analysis techniques to illuminate the underexplored aspects of fintech's impact on financial inclusion. Unlike previous studies, this study consolidates a significant amount of the literature on financial inclusion by systematically contextualizing theories and viewpoints from the fintech sector. The key findings include the identification of three main research clusters: (1) the advent of novel services, (2) the transformation of the market landscape, and (3) the roles of stakeholders in the fintech ecosystem. The analysis reveals gaps in the existing research, such as the need for more studies on the tangible impact of fintech on financial inclusion and regulation.

Thailand's Ministry of Finance reportedly plans to issue 10 billion baht stablecoins backed by government bonds, initially newly issued ones, in October, 2025. However, it isn't clear whether these will be baht-pegged, or float with the value of the underlying bonds. If it is the latter, this is more like a tokenized bond, rather than a digital currency, scheme. From the press reports, it sounds more like the former, as the Minister of Finance reportedly spoke of them allowing a wider range of individuals to invest, and not just financial institutions or large investors. Also, he said that a central platform for secondary market trading is also being developed to facilitate easier buying and selling of the stablecoin, increasing market liquidity. https://www.nationthailand.com/business/economy/40045739

[November 1, 2024] Chinese telecommunications company Huawei inegrated the digital yuan central bank digital currency (CBDC) into its HarmonyOS NEXT operating system. The integration will make the digital currency more accessible and easier to use for up to 1 billion smartphone owners. For example, users will not need to download the digital yuan app to use the CBDC. Huawei developed HarmonyOS after Google "banned" the company in 2019 due to sanctions imposed by the US government.

Indian fintech app CRED is reportedly beta testing support for the digital rupee as part of India's central bank digital currency (CBDC) trials. Another app, MobiKwik, is fully in production for Android users. Yes Bank is acting as sponsor bank for both fintechs to enable access to the CBDC. Both wallets also support India's UPI instant payment system. Transaction limits for the CBDC are currently Rupee 10,000 ($115.50) and Rupee 50,000 ($578) per month. Other apps planning to support the digital rupee include Walmart-backed PhonePe, Google Pay and Amazon Pay. PhonePe and Google Pay dominate consumer UPI payments with market shares of 49% and 37% respectively at the end of last year.

"Cash plays an important role in the community as a means of payment, store of value and a backup to electronic payment methods. Because of this, the RBA places a high priority on Australians continuing to have reasonable access to cash services. Since 2017, the closure of bank branches and bank-owned ATMs has led to increased distances to access cash services provided by banks, particularly in regional and remote areas. However, despite the significant reduction in bank-owned cash access points since 2017, the distance that most Australians have to travel to reach the nearest cash withdrawal point has not changed markedly in recent years. This is mainly because of the strong geographic coverage of Bank@Post and independently owned ATMs. As the number of locations where people can access cash has declined, some communities are vulnerable to a further withdrawal of cash services."

The IMF published a paper that introduces a taxonomy and a conceptual framework centered on market inefficiencies to evaluate the potential of tokenization for financial markets. It finds that some inefficiencies could decline across the asset life cycle. Others would remain, however, and new ones could emerge. Issuing, servicing, and redeeming assets might involve fewer intermediaries and thus become cheaper. The costs of trading assets may also decrease as tokenization lowers some counterparty risks and search frictions and offers flexibility in settlement. Additionally, greater competition among brokers could lower transaction fees. However, tokenization may amplify shocks if it induces institutions to become more interconnected and hold lower liquidity buffers or higher leverage, potentially jeopardizing financial stability. Programs themselves may introduce new risks related to strings of contingent contracts or faulty code. While competition may grow among financial intermediaries, the provision of market infrastructure could become more concentrated due to network effects.

Just as the invention of APIs enabled software by allowing systems to communicate and operate autonomously, stablecoins are becoming the financial APIs of artificial intelligence. APIs enable software to seamlessly exchange data and execute tasks without human intervention. Similarly, stablecoins provide the liquidity, programmability and efficiency AI agents need to exchange value and execute transactions in a fully autonomous world. Stablecoins like USDC bring instant, secure and programmable money into the workflows of AI systems. Autonomous agents, operating on behalf of individuals or businesses, rely on fast and efficient monetary systems to optimize their performance. Together, AI and stablecoins are creating a foundation for "self-driving economies," where value moves as seamlessly as data does today.

The National Bank of Kazakhstan (NBK) published an update on the second phase of the Digital Tenge (DT) project, including reporting on testing of five government use case scenarios involving programmable payments. They involved controlling and monitoring the use of funds paid out or lent by the government to support various programs. Two involved payments out of the National Fund for infrastructure projects, and another, investment subsidies for the purchase of agricultural machinery and equipment. Another involved a government microlending program to support farmer livestock purchases, and the fifth one the collection of value-added taxes (VAT). No specific potential full launch dates were given, but 2025 will be the last year in terms of the DT's phased implementation.

Telematics and Informatics (TAI) published a paper on the adoption and continuance intentions of blockchain-based stablecoins for cross-border remittances. Relying on survey data from 866 U.S.-based adults engaged in remittance activities, its findings reveal that digital and financial literacy independently increase the likelihood of stablecoin adoption, while their interaction synergistically enhances predictive accuracy. Demographic analysis indicates that stablecoin remittance users tend to be younger, more educated, and involved in higher-value transactions. Among the 26% of remittance users who adopted stablecoins, continuance intentions are primarily driven by satisfaction and perceived usefulness. This points to a cyclical dynamic, where meeting user expectations leads to greater satisfaction, which in turn reinforces the perceived usefulness of stablecoins. The results underscore the importance of promoting both digital and financial literacy, improving user experience, and effectively communicating tangible benefits to encourage the continued adoption of stablecoins for remittance transactions.

The Central Bank of the Republic of Türkiye (CBRT) published an update on its central bank digital currency (CBDC) project launched in 2020 with proof-of-concept studies. The first phase, culminating in a pilot, was completed at the end of 2023. During Phase-2, beyond ongoing R&D activities, the legal, economic and security dimensions of the digital lira are being comprehensively addressed.

Sui is a layer-1 blockchain platform designed to emphasize scalability for its decentralized applications (dApps) and shorten the time it takes for smart contracts to execute. SUI offers several architectural ideas to boost its speed and scalability without compromising the blockchain's security, such as the Move smart contract programming language, parallel transaction processing, and the Sui consensus motor. Validators can stake the SUI cryptocurrency, the platform's native cryptocurrency, to verify transactions using Sui's delegated proof of stake (dPoS) network. Additionally, SUI connects the platform by serving as a means of trade, executing bespoke programs, and rewarding users who contribute to its advancement.

The Australian National Credit Code has been extended to buy now pay later (BNPL) contracts, following royal assent of the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Act 2024 on December 10, 2024. From June 10, 2025, the Australian Securities & Investments Commission (ASIC) will require BNPL contract providers to hold a credit licence that authorizes them to engage in credit activities as a credit provider. Providers who do not have their application accepted for lodgement by ASIC by then may be engaging in unlicensed conduct if they continue to operate. https://asic.gov.au/about-asic/news-centre/news-items/asic-alerts-buy-now-pay-later-providers-to-apply-for-a-licence-under-new-laws/

The global evolution of payments is changing the payments landscape of Trinidad and Tobago. The Central Bank of Trinidad and Tobago has seen new players offering new payment services and products. These new products and services, supported by fintech solutions, create new risks to the domestic payment systems that require management and control. The Bank has therefore embarked on a strategy to modernize Trinidad and Tobago's National Payment System by 1) developing comprehensive payment systems legislation, 2) enhancing its engagement with fintechs, and 3) examining cross-border payment activity consistent with the Financial Stability Board's (FSB) Recommendations...

"Globally, stablecoins are gaining momentum as both a medium of exchange and a store of value, addressing gaps left by traditional currencies - particularly in regions with monetary instability and/or limited access to the U.S. dollar (USD). Businesses, financial institutions (FIs), and individuals are leveraging stablecoins for use cases ranging from international payments, to liquidity management, to protection against currency fluctuations. The ability to facilitate swifter, more cost-effective transactions compared to those of traditional financial systems has accelerated the adoption of stablecoins across the world."

Bitcoin exchange-traded funds (ETFs) provide a simple way to obtain exposure to Bitcoin without physically owning it. These funds monitor performance, combining the advantages of traditional stock market investments with the promise of digital assets. Whether you are an experienced investor or a crypto novice, Bitcoin ETFs are a financial product to explore. This article will help you navigate the world of Bitcoin ETFs. You will learn what these funds are, how to make smart investing decisions and the steps to buy these ETFs.

[September 11, 2024] eCurrency was selected by Banky Foiben'i Madagasikara (BFM) to provide consulting services for the e-Ariary central bank digital currency (CBDC) project. BFM plans to move on to a potential pilot phase of the e-Ariary project, once the preparation is successfully completed. [Read more at Consumer World Report]

The University of Manchester published a Fintech white paper that provides insights that can influence policy and design for a successful Digital Pound implementation. Whilst the initial findings suggest that consumers may quickly understand the concept of a digital pound, it seems unlikely that the perceived usefulness of new CBDC use cases alone will drive widespread adoption. Instead, successful adoption will likely depend on the perceived ease of use of the Digital Pound, which can be achieved through effective consumer experience design and seamless integration into existing financial ecosystems, encouraged by nuanced government incentivization policies.

The U.S. Securities and Exchange Commission (SEC) rescinded Staff Accounting Bulletin (SAB) 121, which required companies to put digital assets under custody as an asset and a liability on their balance sheet. Usually, as common sense would suggest, these such assets don't go on the balance sheet because they belong to the client. This rule is especially problematic for U.S. banks because they are subject to capital requirements based on their balance sheet. The SEC had been exempting some banks from this requirement, but only for very specific assets. https://www.sec.gov/rules-regulations/staff-guidance/staff-accounting-bulletins/staff-accounting-bulletin-122