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Gastkommentar: Aufstieg der On-Chain-Banken | BTC-ECHO

Tokenisierte Aktien auf der Blockchain.
Innovation im Banking – das wünscht man sich schon seit langem. Nach der Finanzkrise von 2008 waren es vor allem die Fintechs, welche durch das Aufbrechen der Wertschöpfungskette die traditionelle Bankenwelt etwas aufgerüttelt hatten. Sogenannte Neo-Banken wie Revolut, Transferwise oder N26 sorgten bei Nutzern hier und da für einen Aha-Moment.
 
Source: BTC-ECHO

Der Beitrag Aufstieg der On-Chain-Banken erschien zuerst auf BTC-ECHO.

Swiss Crypto Industry Demands Banking Services

Swiss crypto firms demand banking services

Switzerland’s crypto industry has evolved into prominence, thanks to crypto-friendly regulations. However, financial institutions in Switzerland remain unwilling to fund crypto-based businesses. The Swiss crypto industry is now insisting that financial institutions provide banking services to crypto-based firms.

As reported by Swissinfo, the blockchain industry in Switzerland, which consists of approximately 750 startups, fails to get enough funds from financial institutions or banks. Blockchain entrepreneur Herbert Sterchi stated that it is difficult for professionals in the crypto industry to get bank accounts, and they have to travel to Portugal and Estonia to do the same.

Daniel Haudenschild, President of the Crypto Valley Association (CVA), said:

“The hype and scam-era are over. We are now seeing products that have been building up for the last two to three years, reaching maturity. We are seeing the big tech players coming out of the shadows to drop anchor.”

The leaders of large scale cryptocurrency industry believe that the bearish run in 2018 managed to eliminate the fraudulent firms, which stifled the essence of innovation. One of the most eminent tech players, Facebook, jumped into the crypto space by registering its Libra Network in Geneva thereby establishing a more “mature” and viable crypto outfit in Switzerland. Haudenschild said that the fact that Facebook chose Geneva over any other place speaks volumes of the stability of the crypto industry in Switzerland.

Despite the evolution of the Swiss crypto firms and the efforts by the Swiss Bankers Association (SBA), basic banking services have been rendered unavailable to an industry which has time and again proven itself to be a major part of the global financial system.

As reported earlier, G7’s Financial Action Task Force (FATF) warned that crypto assets will not be allowed to become “the equivalent of secret numbered accounts” referring to the confidential accounts commonly offered in Switzerland. US Treasury Secretary, Steve Mnuchin, stated that this was FATF’s attempt to keep a check on crypto-related firms to implement anti money laundering laws and fight the financing of terrorism.

 

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Dysfunctional States And State Crypto

Dysfunctional States And State Crypto (1)

French Finance Minister Bruno Le Maire has said that cryptocurrency will never replace a government’s sovereign currency.

Le Maire’s comments were made in the light of growing concerns by regulators over Facebook’s intended launch of its own cryptocurrency in 2020. Mark Carney, Governor, Bank of England also said that the new digital currency will be under scrutiny to ensure it is not used for illegal purposes. Le Maire argued that financial sovereignty must come from government, commenting, “The aspect of sovereignty must stay in the hands of states and not private companies which respond to private interests.”

Looking at the three rogue states which have considered doing just that, he may well have a point. Venezuela remains the most prominent example of a misguided attempt by those in power to support the economy using a government-initiated cryptocurrency or state crypto. Russia and Iran have also dabbled in state crypto in attempts to overcome sanctions.

Both Venezuela’s Petro and Petro Gold, based on the South American country’s oil and gold reserves, have done little to stem the tide of hyperinflation which currently is running at a staggering 99,900% although down from 224,900% at the end of last year. Launched in February 2018, the Petro was supposed to be backed by the country’s oil and mineral reserves and was intended to supplement Venezuela’s plummeting bolívar fuerte currency (VEF), as a means of circumventing US sanctions and accessing international financing.

To illustrate the level of the country’s economic woes, Venezuela’s highest denomination, VEF 500, when initially issued in August 2018, was equal in value to USD 8.30. Today it is worth no more than seven cents. This week new 50,000 bolivar Soberano (VES) banknotes have been released (equal to USD 8.09 at time of writing) along with two other notes, in an attempt to stem the tide for at least the next few months.

The latest plan is to use the Petro, currently equal in value to VES 80,000, to prop up the currency. Venezuelan President Madura claims that linked to the Petro the new notes will hold their value, but among the population, such claims fall on deaf ears, with the average monthly income for most Venezuelan households now VES 40,000 (USD 6.55). To date, the Petro has been largely invisible.

It remains a disappointment to genuine cryptocurrency enthusiasts that rogue states use cryptocurrency as a go-to solution to tackle economic mismanagement or punitive sanctions. Both Russia and Iran are currently movers and shakers on the world stage for all the wrong reasons, both accused of government-sponsored acts of terrorism in the last 12 months. Both countries have strict laws prohibiting the use of cryptocurrencies but flirt with the technology at the state level.

Russia’s latest flirt with crypto is current research being undertaken by the Central Bank of Russia (CBR) to develop a gold backed cryptocurrency, an idea clearly finding its origins in Iran’s own proposed gold-backed cryptocurrency known as ‘PayMon’. Reports claim that four Iranian banks including Bank Melli, Parsian Bank, Bank Mellat and Bank Pasargad have joined hands with blockchain startup Kuknos for PayMon. Previously, in July 2018, reports came out claiming that Iran was looking to launch its own national cryptocurrency.

Iran sees cryptocurrencies as a mean to bypass new economic sanctions imposed on it by the US government. The new cryptocurrency is expected to back and tokenize Iran’s national fiat currency, the rial. Thereby, cross-border and domestic transactions will be facilitated.

Vladimir Gutenev, a member of the Russian State Duma, submitted plans for its own gold-backed cryptocurrency in August 2018; a plan which was subsequently shelved. Russia’s former Minister of Economics and Trade, Herman Gref, also spoke out last year in favor of cryptocurrencies and their transformational nature as a future threat to the financial sector’s status quo. It now appears Gutenev’s plan is back on the table. The Central Bank of Russia (CBR) is now looking at the proposal for a gold-backed stablecoin but makes it clear that it has no plans in the future to replace the rouble with an alternative state-run cryptocurrency.

To date, without any proven successes in state-run cryptocurrency, Le Maire’s suggestion that cryptocurrency will never replace government sovereign currencies seems to ring true, at least in the near future. The current example of Venezuela’s Petro adventure is not one to encourage finance ministers around the globe to anticipate any changes to the status quo, nor is the track record on the international stage of those that propose to do so. At least not yet, for now. It remains to be seen how well cryptocurrency fares in the hands of private companies who maintain that they are responding to private interests, and to that end, all eyes are on Facebook.

 

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Brazil’s President Bolsonaro and Central Bank Clearly Differ on Crypto Adoption

Brazil's President Bolsonaro and Central Bank Clearly Differ on Crypto Adoption (1)

Brazil’s cryptocurrency uptake may not have been helped by the country’s new president Jair Bolsonaro who seems to know absolutely nothing about crypto. But his head of banking clearly does.

“I don’t know. Is it a coin?” Brazil’s new leader recently asked, when Bitcoin was put to him. However, his administration has taken up previous president Michel Miguel Elias Temer’s lead, who, when in office, had proposed a cryptocurrency which could be used by Brazil’s unbanked indigenous population.

Although Temer was officially Brazil’s most unpopular president whose term presided over corruption, his proposed so-dubbed BNDES token seemed like a step in the right direction. On taking up his new office, far right winger President Bolsonara made his views crystal clear:

“We are cutting expenses. We were about to use 40 million Reales to teach natives to use bitcoin.”

That project, brainchild of the National Indian Foundation (Funai) and the Fluminese Federal University, was vetoed by Brazil’s Ministry of Human Rights, Family, and Women in January,

Roberto Campos, the Central Bank of Brazil’s number one has clearly, unlike Bolsorano, spent some time at least investigating cryptocurrencies and their functions, also commenting in a letter to the Brazilian Senate to suggest that this future market could well include blockchain and digital assets at some level:

One of the contributions I hope to bring to the Central Bank is to prepare the institution for the future market, where technologies advance exponentially, generating more rapid transformations.”

Earlier this month, the President of the Chamber of Deputies of Brazil issued an order to establish a commission that would study cryptocurrency regulation in the country. Last May, the Brazilian Internal Revenue Service put up new tax rules for crypto, which makes it mandatory to report transactions worth over BRL 30,000 (USD 7,600) every month.

 

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Research: Banks Holding Back on DLT Due to Collective Bitcoin Distrust Psyche

blockchain, bitcoin, banking

Retail banking continues to tread with caution before adopting blockchain, and it is Bitcoin’s 2017 rise and fall scenario which drives the distrust according to a recent report.

The potential of blockchain is being missed according to an earlier report which claims that Bitcoin lost its credibility with banks after its rise and fall in 2017. The possibility of using blockchain technology for cross border payments, saving banks as much as USD 4 billion a year, is still being overlooked due to lingering concerns over Bitcoin’s stability.

That report also points to further savings of USD 9 billion annually due to blockchain implementation cutting down on fraud. However, the poor uptake of blockchain in the banking sector is not reflected elsewhere, with governments seemingly taking blockchain on board with great vigor and enthusiasm.

Another consideration for the banking community is regulation, according to a McKinsey report. Although G20 nations are currently attempting to forge agreements spanning international borders when it comes to blockchain and cryptocurrency, there is clearly still much to do, with the UK’s Financial Conduct Authority still yet to release its awaited conclusive report on cryptocurrency and the SEC continuing to stall on ETFs.

The report also highlights some of the practical challenges which banks will be forced to address using DLT, particularly those of security, also citing other considerations which banks will need to address in adopting blockchain such as competitiveness:

“Banks must create large networks to achieve benefits at scale, requiring data standardization and collaboration. Finally, there is the question of whether any bank would be willing to take the lead on creating a utility that offers no competitive advantage—the so-called coopetition paradox.”

A University lecturer in Switzerland Matthias Weissl has recently suggested traditional banks are being easy prey for fintech companies, by being slow and unhelpful in crucial financial services such as settlement times, access and adoption of change. Clearly, the scope for change is there if banks can remove memories of Bitcoin’s rise and fall from traditional banking’s collective psyche and look at Blockchain for what it can offer, not its associations and origins which banks clearly distrust.

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Coinbase Adds 6 More Countries to Debit Card Scheme

Coinbase Adds 6 More Countries to its Debit Card Scheme

Coinbase is extending its crypto debit card empire from the UK to six more European countries as of today.

The new cards for Coinbase account holders will now be available from 12 June for users in France, Germany, Italy, Ireland, Spain, and the Netherlands.

The Coinbase card is to simplify payments for all products to put the crypto on a par with cash according to Coinbase UK CEO Zeeshan Feroz, claiming, “You can buy groceries on Bitcoin and then coffee on Litecoin right after.”

If this as simple as Coinbase maintains, then this is partly due to the growing popularity of cards and apps which can be used to withdraw cash from ATMs or pay over the counter using cryptocurrency. Other players now include Binance, one of the world’s largest exchanges, and UK startup Revolut. Currently, Coinbase allows payments using its Coinbase Card in Bitcoin, Ethereum and Litecoin after a limited number of free cards had been issued to UK users recently.

The Coinbase card is another move designed to keep its European clients happy in a growing competitive market where major exchanges are pushing for new clientele. The card is authorized by Paysafe Financial Services Limited and by powered by customers’ Coinbase account crypto balances.

The call now is for a US-based Coinbase Card, which has already been hinted at. The company has suggested that it is currently working on the introduction of a debit card for cryptocurrency users in the United States, although a date launch has yet to be announced.

 

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Ripple Opens Brazil Office

Blockchain and cryptocurrency project Ripple has established itself in Latin America with the opening of its new office in Brazil, as reported by Cointelegraph Brazil today. The official announcement will actually be made tomorrow at a big fintech and banking event in the capital, CIAB Febraban.

The former CEO of Brazil subsidiary of The Warranty Group, Luiz Antonio Sacco, has been named to lead the new office, just three months after joining Ripple.

Sacco has made public the company’s intentions to bring in more clients onto its payment network, RippleNet, starting with Brazil but also spreading its feelers across the entire continent of South America. The network already has its solution adopted by three major Brazilian financial institutions: Santander Brasil, BeeTech Global and Banco Rendimento.

He said [translated]:

 “We are excited to expand our ecosystem in the region and bring more financial institutions connected to RippleNet, which will contribute to the greater efficiency of global payments and, above all, a better experience for its customers. and Ripple has differentiated itself in this sector because it offers proven solutions to solve real problems, opening the way to the rest of the South American continent.”

In addition to bringing in the benefits of faster and cheaper payments, Ripple has also expressed intentions to collaborate with major local universities in the country to launch educational and training programs. These partners already include the University of São Paulo and Fundação Getúlio Vargas. The latter had already launched a Bitcoin masters program last year, while the former also added a Cryptocurrencies module to its Derivatives course.

The country is among several in the region now moving itself towards some form of blockchain adoption, with the government ordering the establishment of a Committee for Cryptocurrency Regulation back in March.

 

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McKinsey: Retail Banking Slow to Adopt Blockchain

McKinsey: Retail Banking Slow to Adopt Blockchain

A Bloomberg report has quoted management consultancy firm McKinsey & Company, who says that retail banks are slower to adopt blockchain technology thanks to restrictive regulations and conservative consumer environment on their side.

According to the article, retail banks were even characterized as “nervous and cautious” about the emerging technology, when compared to their investment banking counterparts, who had bigger risk appetites.

The authors of the report did see some silver linings, including the potential for retail banks to come up with big gains from blockchain integration across several applications such as KYC compliance, remittance, fraud prevention and risk assessments. Cost efficiencies stand out as the critical benefit of blockchain in streamlining retail bank expenses:

“Almost all of their attention, especially in developed markets, is on cost reduction. And where cost reduction is front and center they are prepared to look at petty much any opportunity.”

McKinsey has put an estimation of USD 4 billion in annual savings simply by adopting blockchain solutions to use in cross-border payments. New clients and their onboarding costs could save an additional USD 1 billion every year. One step further in fraud prevention and blockchain applications could rein in a hefty savings of up to USD 9 billion.

Even with all that, co-author Atakan Hilal says: “It’s rather difficult in retail banking to change consumer behavior.”

 

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US-China Trade War Could See Bitcoin at All-Time High in 6 Months

US China Trade War Could See Bitcoin At All time High in 6 Months

With analysts putting reputations on the line once more regarding the march of Bitcoin, one analyst has gone one further suggesting Bitcoin could surpass its high of 2017 in only six months.

“I believe Bitcoin has the potential to hit USD 25,000 by the end of 2019 or early 2020,” claims prominent Bitcoin analyst Oliver Isaacs, adding:

“There are multiple drivers behind the recent resurgence. There are geopolitical, technological and regulatory drivers. The net effect of the trade war between the US and China has led to a sudden interest in bitcoin as a hedge on investments.”

China’s central bank holds about USD 2 trillion out of a total of USD 3 trillion of foreign exchange reserves causing some analysts to suggest that China could dump the bonds, throwing the US economy into recession due to the rising cost in US borrowing if this scenario unfolds.

Billionaire investor Tim Draper sees Bitcoin reaching USD 250,000 by 2023, but he has continued to back the currency to the hilt with unshakable conviction over a period of years. “It’s a better currency, it’s decentralized, open [and] transparent – everybody knows what happens on the blockchain,” he continues to maintain.

The Transaction Amount to Active Addresses Ratio (TAAR) a model which measures how much each active address spends in transactions per day on average indicates that Bitcoin’s upward price movement is set to continue, given sporadic corrections. TAAR based on a six-year model also shows an increase in Bitcoin’s network activity not seen in several months regardless of its connection to prices.

Currently, the drop in Bitcoin’s price over the past days is a sign of buyer exhaustion on-chain analyst and Adaptive Fund partner Willy Woo sees organic buyers waiting for the next big buy-in:

“This a quant fund driven short squeeze devoid of any true investor volume… I’m awaiting this exchange driven pump to blow off, a proper retrace, and only then do I think real investor flows will come in and drive the true organic bull market.”

 

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Israel Supreme Court Rules in Favor of Crypto Exchange vs Bank

Israel Supreme Court Rules in Favor of Crypto Exchange vs Bank

The Supreme Court in Israel has ruled that local cryptocurrency exchange Bits of Gold was in the right in a legal battle between the company and an Israeli bank over the rights to maintain access to banking services.

As reported by CoinDesk, the decision that arrived yesterday resulted in an order for Bank Leumi to resume access of its services to Bits of Gold. Earlier, the bank had barred the accounts of the exchange, deeming crypto-related businesses as gambling companies.

A few months ago in February, the Supreme Court had made a temporary injunction, so the firm was in fact still able to use the bank’s services since then, although now this legal victory will mean that it can operate freely and permanently.

Bits of Gold CEO Yuval Roash welcomed the decision and called it an “exciting moment” for the exchange:

“We worked hard to set up a company, which met regulatory requirements, in a new industry, and those efforts paid off. I am proud to be a part of this flourishing industry and push it towards the right regulation”.

This event will be seen as a watershed moment in Israel for the recognition of cryptocurrency enterprise. Just last week, the Middle Eastern nation had declared that Bitcoin and other crypto were assets, and not currency.

 

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