Category: Banking

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Australia Banking Blockchain Regulation Stablecoins

ANZ Bank Pushes Forward With Stablecoin A$DC, But Isn’t That Bullish On Crypto Yet

The Australian and New Zealand Banking Group (ANZ) wants to extend the usage of its cash-backed stablecoin, A$DC, amid demand for access to it from its institutional customers. It also seeks to target additional use cases through a pilot program with the federal government and extensive engagement with regulators.

A$DC was launched by ANZ in March and has so far been used primarily to ease crypto trading for one of its major corporate clients, Victor Smorgon Group. It’s a fully collateralised stablecoin, unlike the recently collapsed Terra-based UST which was an algorithmic stablecoin.

Stablecoin to be Extended to More Institutional Customers

Speaking to the Australian Financial Review, ANZ executive Nigel Dobson said the bank was looking to extend the use of A$DC to a wider number of institutional customers, driven largely by customer demand:

Are we going to extend it [the A$DC]? Yes, absolutely we will. And this will be based on our institutional customers’ demand, as they reveal, increasingly, their own tokenisation strategies.

Nigel Dobson, ANZ executive
ANZ executive Nigel Dobson. Source: financeasia.com

Increasingly, real-world assets, such as real estate and art, are being tokenised and traded on blockchains. Dobson believes this trend will continue and will provide several advantages over the way these assets have traditionally been traded:

“We believe that tokenised assets can be inexorably developed to deliver greater efficiency, speed, transparency, and value for customers over time,” Dobson said.

Pilot to Collect Excise Tax, Plans for Carbon Credits

A$DC is also being used in a pilot program, in cooperation with the federal government, designed to ease the collection of excise tax in the distilling industry. The program uses smart contracts to facilitate the collection of excise – according to KPMG, this single-use case could result in the recovery of at least A$45 million per year in lost tax revenue.

Another application on the horizon is the use of stablecoins to increase liquidity in carbon credit markets, an area in which ANZ sees huge potential for growth:

We think that’s going to have exponential growth over the next 10 years, and the elements of tokenisation that can be applied to that marketplace to make it much more efficient, more global and, frankly, more available to a wider range of consumers but certainly to institutional investors.

Nigel Dobson, ANZ Executive

As part of its push for increased usage of its stablecoin, ANZ has been working closely with several regulators, including the Australian Prudential Regulation Authority (APRA), the Securities and Investments Commission (ASIC) and financial intelligence agency AUSTRAC, to develop a framework for the use of stablecoins in the Australian economy. 

Dobson said that so far, the conversations with regulators have been positive, explaining that “it is nice to see APRA, ASIC and AUSTRAC all on the same virtual call together. We’ve got this kind of coalition of the curious going on at the moment, which I think is wonderful, and you know, the integrated interactions have been incredibly constructive.”

ANZ into NFTs, Crypto Not So Much

ANZ seems to be focused more on the potential of tokenised assets and NFTs rather than cryptocurrencies such as bitcoin. The bank sees its role primarily as providing a stablecoin that can streamline transactions and simplify the sale and purchase of assets.

“We believe stablecoins form a very important element of the settlement value and the settlement process,” Dobson said.

Initially A$DC will only be offered to institutional customers, but in the longer term, retail customers may well gain access to the coin to simplify crypto trading and the purchase of both metaverse-based digital assets and tokenised real-world assets:

We think that the growth area is not going to be so much in crypto, but in NFTs. NFTs are already in the market around sports memorabilia and [can extend to] anything digitally created. 

Nigel Dobson, ANZ Executive

ANZ Bank has had an interest in developing stablecoins and CBDCs for some time; last September, the bank was one of 15 finalists in the Monetary Authority of Singapore’s Global CBDC challenge, which attracted more than 300 submissions from 50 countries.

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Australia Banking Crypto News

Australia’s Big Banks Remain on the Crypto Sideline, For Now

Major banks down under are reportedly vulnerable to losing customers to global ‘super apps’, according to the Australian Financial Review (AFR).

This comes as National Australia Bank (NAB) and Australia and New Zealand Banking Group (ANZ) declare they won’t permit their customers to trade crypto, and the Commonwealth Bank (CBA) admits to facing challenges with its crypto project.

‘Big Four’ Need to Get in the Game

This week’s AFR banking summit has left three of Australia’s ‘Big Four’ banks with some food for thought. Simon Cant, co-founder of venture capital firm Reinventure Group, suggested during the summit that the biggest threat to Aussie banks will be the arrival of ‘super apps’. Customers could potentially find an app for all their financial needs, from everyday banking and taking out loans to getting paid, trading crypto, and investing.

One such example of super-app providers is US-based tech giant Square, which has recently acquired Afterpay and has plans to go global with its Cash App. Dom Pym, co-founder of Up – an Aussie neobank – has also encouraged the big banks to investigate human resources software, social media giants, and gaming apps.

https://dompym.com/

This is where people are using technology, and so they’re going to use finance and banking through that … that’s where the next generation of banking customers are.

Dom Pym, co-founder, Up

Traditional financial institutions delaying or denying progress in the crypto sector could be shooting themselves in the foot. NAB’s spokesperson has stated the company is taking a “wait and see” approach to the retail use of crypto, instead focusing on underlying blockchain technology. CBA also seems to be monitoring the market with its CEO, Matt Comyn, stating that “crypto, clearly, is a polarising topic”, despite believing that the industry will be a continuing source of innovation over the coming decade:

CBA’s Crypto Trial Still on Hold

The Commonwealth Bank has been working on bringing crypto to its customers for several months now. In late 2021, CBA began developing methods for customers to earn interest on crypto. To do so the bank entered a partnership with Gemini, a crypto custodian and exchange.

However, last month CBA halted its trading pilot due to impending regulation and market turmoil. There has been no mention of when the pilot might restart, with the trading of those trialling it at the time put on hold.

Categories
Banking Bitcoin Crypto News Payments

Stripe and OpenNode Join Forces to Bring BTC Payments to Millions of Merchants

Stripe, one of the world’s largest payment processors, is partnering with OpenNode to allow instant fiat-to-bitcoin conversions for a host of businesses. The new OpenNode app will launch on the Stripe App Marketplace in coming weeks:

Choice of Auto or Manual Set Amounts

To instantly convert all or portions of incoming payments to bitcoin, businesses will have the choice of setting an automatic amount or manually converting any amount they wish.  

According to OpenNode’s head of strategy, Josh Held, “The app gives businesses a simple and secure way to convert incoming payments to bitcoin in real-time, automatically or on-demand.” The functionality will be available via a new app from Bitcoin Lightning Network infrastructure provider OpenNode on Stripe’s new app marketplace within the next couple of weeks.

Businesses will be able to see their bitcoin wallets and conversion rates within the apps, as seen below:

Source: Stripe Marketplace

Direct Link to Bank Accounts

The app will also allow businesses to connect directly with their bank accounts, thereby enabling accessible bitcoin conversions from fiat at any time.

The automatic conversion from fiat to bitcoin will be accomplished through a split-payment feature located in the app, which businesses will be prompted through when undertaking the initial setup process. If businesses choose not to set up split conversion initially, they can return to the app’s setting and enable the feature at any time.

Categories
Australia Banking Crypto News

Commonwealth Bank of Australia Halts Crypto Trading Pilot Amid Market Turmoil

The Commonwealth Bank of Australia (CBA) announced this week that it will be halting its rollout of the upcoming in-app crypto trading facility, due to the current market turmoil.

For those who were trialling the pilot, trading has been put on hold with no mention of when it might be set to restart.

Australia's Commonwealth Bank Accused of Massive Money-Laundering ... https://www.nbcnews.com/news/world/australia-s-commonwealth-bank-accused-massive-money-laundering-breaches-n789181
CBA pauses in-app crypto trading trial.

CBA’s chief executive, Matt Comyn, has described the crypto market as “a very volatile sector that remains an enormous amount of interest [for CBA]”. However, the company’s focus seems to be on ensuring customer wellbeing and aligning itself with the proper regulations.

https://www.commbank.com.au/guidance/newsroom/matt-comyn-cba-ceo-201801.html

We want to continue to play a leading role in providing input into that and shaping the most appropriate regulatory outcome … Our intention at this stage is to restart the pilot, but there are still a couple of things that we want to work through on a regulatory front to make sure that that is most appropriate.

Matt Comyn, chief executive, Commonwealth Bank of Australia

Australia’s Federal Treasury is currently meeting to discuss these matters, with submissions remaining open until May 27. The result of this weekend’s election will also hold sway over how this regulation might look.

Earlier last month, CBA was experiencing delays with its upcoming crypto app due to regulatory speed bumps. This came as the Australian Securities and Investments Commission worked to ensure that CBA’s offering would comply with design and distribution rules. Plans for the app were announced in November last year, and CBA has met multiple challenges in bringing it to fruition.

CommBank’s Scam Alert

Just a month ago, the Commonwealth Bank issued a scam alert on the discovery of a false crypto platform partnership report. The fake article had been doing the rounds on social media platforms, misrepresenting the CBA brand and trying to entice Aussies to engage with the scammer’s website. CBA was a logical target for the scammers considering the bank’s prior engagement with the crypto industry.

Categories
Banking Bitcoin Crypto News Ethereum Trading

Brazil’s Largest Digital Bank Nubank Launches BTC and ETH Trading

Nubank, Brazil’s biggest digital bank by market volume, now allows customers to buy and sell bitcoin and ethereum on its Paxos-supported trading platform, as per a May 11 announcement.

The fintech will allocate one percent of its equity to bitcoin through its parent company, Nu Holdings Inc, which is listed on the New York Stock Exchange. Nubank said the move seeks to “strengthen the company’s conviction in the current and future potential of bitcoin in disrupting financial services”.

Deal Gives BTC Exposure to Warren Buffett

Nubank’s treasury allocation to bitcoin gives indirect BTC exposure to old-school investor and Bitcoin critic Warren Buffett, chairman and CEO of Berkshire Hathaway. The US holding company reportedly invested US$500 million in Nubank in June 2021, acquired 30 million shares for another $250 million as it went public in December, and recently doubled-down with a $1 billion investment in Brazilian fintech.

According to Paxos, users will be able to buy and sell crypto with Brazilian reals, but initially won’t be able to withdraw or deposit crypto. Until now, Nubank allowed users to invest in crypto only through exchange-traded funds available through its investment unit, NuInvest.

Brazil Experiencing Major Crypto Adoption Growth

Last month, Brazil edged closer to a regulatory framework for cryptocurrencies and along with neighbouring South American country Peru is looking to introduce a CBDC this year. And in March, Coinbase was reportedly on the verge of closing a deal to acquire 2TM, owner of Mercado Bitcoin, Brazil’s largest cryptocurrency exchange.

There is no doubt that crypto is a growing trend in Latin America, one that we have been following closely and believe will have a transformational impact on the region. Yet the trading experience is still very niche as customers either lack information to feel confident to enter this new market or just get frustrated by complex experiences.

David Vélez, CEO and co-founder, Nubank

In general, Brazil is experiencing major crypto adoption growth. Between January and November of 2021, locals reportedly traded US$11.4 billion in stablecoins, almost triple the amount traded the previous year.

In his capacity as Nubank boss, Vélez is clearly intent on demystifying crypto trading for the average Brazilian bank customer.

Categories
Banking CBDCs Economics Payments

90% of Central Banks are Exploring CBDCs: BIS Report

A survey by the Bank For International Settlements (BIS) has found that nine out of 10 of the central banks surveyed are exploring central bank digital currencies (CBDCs), and over 50 percent are actively developing CBDCs or running concrete experiments.

The survey found more central banks were working on retail CBDCs, which are designed for domestic consumer use, compared to wholesale CBDCs, which are designed for institutional uses such as cross-border payments between banks:

Central Bank Interest in CBDCs Increasing Globally

The report, released on May 6 by the BIS Monetary and Economic division, detailed the results of the survey conducted in October-December 2021 which involved 81 central banks, representing 76 percent of the world’s population, including 25 advanced economies.

Key findings include:

  • 90 percent of central banks are exploring CDBCs;
  • 26 percent are currently running CDBC pilots; and
  • more than 60 percent are conducting proof-of-concept work.

The survey also also found the percentage of central banks exploring CDBCs is up from the 2020 figure of 83 percent. BIS suggests that this increase was driven partially by the Covid-19 pandemic and the emergence of stablecoins, particularly in advanced economies. 

Retail CBDCs a Priority 

In many countries, work on retail CBDCs is more advanced than on wholesale CBDCs, with the report finding that:

Globally, more than two-thirds of central banks consider that they are likely to or might possibly issue a retail CBDC in either the short or medium term.

2021 BIS survey on CBDCs

That’s not to suggest there’s no enthusiasm for wholesale CBDCs, however, with the report finding that cross-border transfer times and complexity are key drivers of wholesale CBDC development:

“Work on wholesale CBDCs is increasingly driven by reasons related to cross-border payments efficiency,” the survey found. “Central banks consider CBDCs capable of alleviating key pain points such as the limited operating hours of current payment systems and the length of current transaction chains.”

In Australia, CBDC exploration is well and truly under way, with the central bank having last September launched Project Dunbar, a multi-CBDC project run in partnership with the central banks of Singapore, Malaysia and South Africa and the BIS. The results of Project Dunbar found that while multi-CBDCs are technically viable, there are significant regulatory and jurisdictional hurdles to overcome.

Categories
Banking Bitcoin Crypto News

Goldman Sachs Makes its First Bitcoin-Backed Loan

Wall Street titan Goldman Sachs Group Inc (GS) has further legitimised Bitcoin as a global macro asset class by making its entrance into the world of bitcoin-backed lending.

BTC-Backed Loans Gaining Momentum

According to a report by Bloomberg, GS has offered its first-ever lending facility backed by bitcoin. While similar products are already available from several international crypto-focused businesses, GS’s move is been seen as a significant step towards major US banks embracing Bitcoin lending products.

Borrowing against bitcoin is becoming increasingly popular among Bitcoiners who are looking for liquidity – whether for household expenditure, to put down a deposit on a home, or to buy more BTC – but who do not wish to sell.

This attractive proposition is rather simple in practice – the investor posts some BTC as collateral, then borrows fiat currency and as the price of bitcoin rises, refinances ad infinitum. Of course, if the price moves in the opposite direction, you would need to post more collateral, reduce the liability or otherwise have a portion of collateral liquidated.

How a BTC backed loan works. Source: Zephyrnet

When employed successfully, this strategy allows for HODLers to keep their hard-earned stack without the worry of capital gains tax, which is payable on the sale of digital assets.

Goldman Becoming Bitcoin-Friendly

As recently as 2020, GS was telling its clients to steer clear of BTC. However, on the back of client demand, it has gradually softened its position and can these days be seen as somewhat of a Bitcoin bull.

Last year, GS filed for a Bitcoin exchange traded fund (ETF) and in January it released a report saying BTC was taking gold’s market share, commenting that it could hit US$100,000 by year end. And then last month, GS made history by becoming the first major US bank to facilitate an over-the-counter (OTC) bitcoin options trade:

Despite all these positive signals from a Wall Street mainstay, most Bitcoiners would be justifiably cautious since GS’s embrace of Bitcoin is undoubtedly driven by profits, and not an ideological desire to fundamentally alter the financial system.

Categories
Australia Banking Crypto News Cryptocurrency Law Regulation Scams

AUSTRAC Releases Guide to Detect and Prevent Illicit Crypto Activity

The Australian Transaction Reports and Analysis Centre (AUSTRAC) published two guides this week with hopes of helping Aussies detect and prevent illicit crypto activity.  

Focus on Ransomware, Debanking

AUSTRAC is helping companies identify when their customers are being forced to take part in paying ransomware creators or illicitly engaging with crypto. This assistance comes in the form of two guides and a warning that debanking customers without evidence is a harmful practice.

In what can be considered another positive step the government is taking to embrace cryptocurrency, the financial watchdog has been prompted to act after a recent increase in ransomware-related attacks and cases of debanking.

https://www.linkedin.com/in/stevevallas/overlay/photo/

Open dialogue, pro-active guidance, and strong relationships between government and industry are necessary to ensure businesses can identify and report behaviour that puts Australians at risk of harm.

Steve Vallas, Blockchain Australia CEO

The release of these documents follows guides from the Australian Securities and Investments Commission (ASIC) and AUSTRAC’s critical infrastructure bill.

ASIC and AUSTRAC Go After Scammers and ‘Finfluencers’

AUSTRAC and ASIC began investigating scammers deceiving crypto investors in March 2021. The investigation discovered that British scammers were stealing millions of dollars of crypto from Aussies.

The latest AUSTRAC guides come only weeks after ASIC released its guide warning Australian ‘Finfluencers’ of impending tighter regulations.

Categories
Australia Banking Crypto News ETFs Regulation

Australian Regulator Lays Out Crypto Industry Regulatory Roadmap

The Australian Prudential Regulation Authority (APRA) this week revealed its preliminary risk management expectations for regulated entities dealing with crypto assets, along with a policy roadmap for the next three years.

The roadmap outlines plans to introduce operational risk standards by 2024 and, tentatively, crypto asset requirements and stored value facility standards by 2025. APRA also announced that it would be looking at “possible approaches to the prudential regulation of payment stablecoins, among others”.

Need For Due Diligence and Risk Assessments

APRA, which supervises Australian banking, insurance and superannuation institutions, stressed the need for due diligence and risk assessments in a letter from chairman Wayne Byres.

APRA chairman Wayne Byres. Source: theislanderonline.com.au

In the letter, APRA specifies that regulated entities:

  • consider the principles and requirements of prudential standards when relying on a third party in conducting activities involving crypto assets; and
  • apply clear accountabilities and relevant reporting to the board on the key risks associated with new ventures.

Financial Watchdog Also Bares Its Teeth

Along with APRA’s prescription, the Australian Transaction Reports and Analysis Centre (AUSTRAC) – the country’s financial watchdog – released its own set of guidelines on preventing the criminal abuse of digital currencies. 

This follows a statement released late last year by AUSTRAC in which it directed Australian banks to adopt better systems to deal with assessing risk rather than simply debanking customers. “Businesses vulnerable to exploitation should not automatically have their accounts closed simply to avoid managing risk,” AUSTRAC said at the time.

And in July 2021, the Australian Securities and Investments Commission (ASIC) set out a range of proposals relating to the inclusion of cryptos in exchange-traded products (ETPs), seeking market participants’ input to shape its position within the regulatory landscape.

This week also saw ETF issuer 21Shares announce Australia’s first spot exchange-traded funds.

Categories
Australia Banking Scams Social media

Commonwealth Bank Issues Scam Alert Over False Crypto Platform Partnership Report

The Commonwealth Bank of Australia (CBA) issued a scam alert this week to notify the public about a false article circulating on social media sites such as Facebook that claims the bank has partnered with a crypto trading platform. 

CBA emphasises that the claims made in the story are “totally false and untrue”.

The fake story purports to be from the Australian Broadcasting Corporation (ABC) and is designed to exploit people’s trust in, and familiarity with, CBA’s brand and convince them to click through to the scammer’s website. Once on the scammer’s website, users are asked to enter personal information and transfer money.

CBA encourages anyone who receives the scam article through any channel – be it social media, email or text message – not to respond or click on any associated links.

In addition to warning its customers directly, the CBA has reported the scam to all relevant authorities and has asked social media sites to remove the story from their platforms.

CBA’s Genuine Interest in Crypto May Confuse Readers

The scammers may have chosen to use the CBA brand in their fake news story partly because the bank has been particularly enthusiastic about crypto of late.

Last month, CBA said it intended to invest heavily in crypto-related services and just weeks ago its crypto trading app, the first offered by an Australian bank, was delayed due to regulatory hurdles following a successful beta.