Category: Banking

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Banking Crime Crypto News Ethereum

ETH Developer Virgil Griffith Sentenced to 5 Years for North Korea Crypto Trip

A New York US Federal Court judge has sentenced former Ethereum developer Virgil Griffith to 63 months in prison and fined him $US100,000 for speaking at a 2019 crypto conference in North Korea and teaching North Koreans how to use crypto to evade US sanctions.

After initially protesting his innocence, Griffith eventually pleaded guilty to the charge of violating presidential executive orders designed to exclude the North Korean regime from the international banking system as punishment for repeatedly threatening to launch nuclear weapons against the US.

Following Early Support, Seriousness Becomes Clear

Many in the crypto community initially considered the charges against Griffith an overreaction. Ethereum founder Vitalik Buterin, for one, signed an online petition to free Griffith in 2019 and tweeted his support:

However, following a long investigation by the FBI it became clear that Griffith did more than illegally travel to North Korea and speak at a crypto conference – much of the evidence against him showed that he specifically sought to help the North Korean regime escape sanctions using crypto.

Images were uncovered showing Griffith wearing a North Korean military uniform standing next to a whiteboard where he’d drawn a happy face and written the words “No sanctions” and “yay”.  

The investigators also found Griffith had shared text messages with North Korean citizens assuring them he’d be able to help them get around US sanctions using crypto, in one message telling them that setting up an Ethereum node in North Korea will “make it possible to avoid sanctions on money transfers”.

North Korea Uses Crypto to Fund Illegal Activities

The actions of Griffith were treated so seriously by US authorities partly because the North Korean regime has been enthusiastic to use stolen crypto to skirt sanctions and fund its illegal weapons programs.

Through government-backed hacker groups such as the Lazarus Group, the North Korean regime steals huge amounts of crypto. According to Chainalysis, in 2021 alone it stole almost US$400 million worth of crypto, which is 2.4 percent of the nation’s total annual GDP.

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Australia Banking Investing Regulation

Commonwealth Bank’s Crypto App Delayed Due to Regulatory Hurdles

The Commonwealth Bank of Australia’s (CBA) plan to offer 10 popular cryptocurrencies to customers through its banking app has been delayed due to regulatory issues as the Australian Securities and Investments Commission (ASIC) ensures the offering complies with its new design and distribution rules.

CBA announced its intention to start selling crypto direct to retail customers in November 2021, marking the first offering of this kind by any Australian bank.

First Foray May Help Clarify Regulatory Approach

The main regulatory sticking points for ASIC relate to the product disclosure statement for the crypto products, the intended target market, and ensuring consumer protections. 

Speaking at this week’s Australian Financial Review Cryptocurrency Summit, ASIC commissioner Cathie Armour suggested CBA was having trouble ensuring its crypto products complied with the requirements of ASIC’s design and distribution rules:

We’re interested in any sort of new innovation where we think there [are] real benefits of innovation being within our regulatory regime. There are a bunch of rules there that you need to follow.

Cathie Armour, ASIC commissioner 

The delays CBA is facing now may clarify the regulatory landscape moving forward and encourage other banks and traditional financial organisations to start offering crypto products.

Partnership Means Investor Funds Held Offshore

To help create its crypto offerings, the CBA has partnered with US-based cryptocurrency exchange Gemini. Under the partnership, Gemini provides custody services, which means investor funds are held offshore under the jurisdiction of the New York State Department of Financial Services. 

Pro-crypto NSW Senator Andrew Bragg has described this arrangement as “not ideal”, suggesting he’d eventually like to see Australian-based custodial services: “I think there’ll be some moral pressure on organisations in Australian businesses.”

Despite the regulatory issues it has faced, CBA has said the initial pilot of its in-app crypto offering was highly successful and that it intends to invest heavily in more crypto-related services in the future.

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Banking CBDCs Crypto News

80% of Central Banks Are Considering Launching a CBDC

At least 80 percent of the world’s banks are considering launching a central bank digital currency (CBDC), according to a report from accounting firm PwC conducted in accordance with the firm’s annual index of CBDCs and stablecoins.

The index evaluates the current stage of CBDC projects in each country and the level of maturity of their respective central banks in developing a national digital currency.

The report, led by PwC’s blockchain specialist Haydn Jones, also taps into the role of stablecoins, calling them an “emerging complement to existing payment ecosystems”.

Other analysts have added that one important factor for stablecoins is transparency as the asset class continues to grow.

The role of the stablecoin in the crypto markets has and will continue to evolve as adoption of crypto increases, forcing a more prominent role of stablecoins across the larger financial ecosystem. Regulation will only strengthen the importance and give credence to the role that stablecoins will play.

PwC report

Retail CBDCs Have a Higher Level of Maturity

Retail CBDC projects refer to digital currencies designed for public use, whereas wholesale CBDCs are used by financial institutions with accounts on central banks.

Thailand and Hong Kong were leading the wholesale category for their joint partnership to launch mBridge – a multi-country CBDC project that seeks to create a common platform to enhance cross-border payments.

Overall, retail CBDC projects [digital currencies designed for public use] have reached greater maturity levels than wholesale projects, but the past year has seen progress on a number of successful wholesale pilots.

PwC report

Another example of wholesale CBDCs is the combined efforts of the central banks of Australia, Singapore, Malaysia and South Africa to launch Project Dunbar, which seeks to create two multi-CBDC platforms shared by multiple central banks to transact with each other using different digital currencies.

Retail CBDCs, however, have a far higher level of maturity compared to their counterparts, the report noted. For example, in October last year Nigeria became the first African country to launch its own retail CBDC, the eNaira, which received a score of 95 out of 100, making it the most developed project across both categories.

The Bahamas, Jamaica and China Taking the Lead

Other countries with a high level of maturity include The Bahamas, the first country to launch a retail CBDC, the Sand Dollar. Thailand and Jamaica are also testing their CBDC projects, which were announced last year.

China was the first major economy to test a CBDC pilot, in 2020, and it is now fully running in 12 cities as of March 2022. What’s interesting is that China is also rolling out its own state-backed blockchain, BSN, which will support the creation of China’s own version of Non-Fungible Tokens (NFTs).

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Banking Coinbase Crypto News Crypto Wallets Ethereum Gas MetaMask Payments Stablecoins

MetaMask iOS Update Allows Users to Buy Crypto Using a Credit Card

MetaMask now allows iPhone and Apple Pay users to buy crypto using a debit or credit card through its mobile application, eliminating the need to transfer Ethereum from a centralised exchange such as Coinbase into the app.

And in response to popular demand, MetaMask has also introduced the Apple Dark Mode feature, which will automatically open in the app as long as a user’s iPhone operating system has dark mode enabled.

Daily Deposit Limit of 400 USD

Users can now deploy their Visas and Mastercards stored in Apple Pay to buy ETH and deposit a daily maximum of US$400 into their wallets, thanks to the Wyre API (MetaMask uses two payment gateways, Wyre and Transak, to support debit card and credit card transactions).

Gas fees are also said to be lower, and some transactions may even be gasless if done on a private blockchain or if a project pays for the gas on the user’s behalf. (When completing an ETH purchase, MetaMask discloses that it does not profit from gas fees.)

Buy Stablecoins and Make Bank Transfers in 60+ Currencies

Via Transak, users have been able to buy stablecoins such as USDT, USDC and DAI on the Ethereum mainnet in MetaMask for some time now, but the latest update also allows them to make bank transfers and use credit/debit cards to buy crypto using more than 60 global currencies.

Exact payment methods and fees vary depending on the location. Earlier this month, OpenSea and Metamask blocked users from countries including Iran and Venezuela after both platforms cited compliance issues. It was later confirmed that Ethereum’s Infura cut off users to separatist areas in Ukraine, accidentally blocking Venezuelan users as well.

Just this week, the EU Parliament announced its intention to extend checks to cover privately managed unhosted wallets, including MetaMask, despite fears that such rules could prove unenforceable.

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Australia Banking Crypto Exchange Crypto News

Mastercard Partners with Aussie Crypto Exchange in Effort to Tackle Debanking

Australian crypto exchange BTC Markets has entered a partnership with Mastercard, allowing it to accept card payments. This will mean more options for users and a positive step toward tackling debanking on Mastercard’s behalf.

Wider Range of Banking Options

Under the terms of the agreement, Aussies will be able to deposit and withdraw Australian dollars without fees via a broad range of means. Prepaid, direct debit and credit card payments will now be available on the exchange, whereas previously BTC Markets only permitted bank transfers:

The strategic merchant partnership is also about solving the issue of debanking, where a financial institution terminates, or denies, services to a client. While the practice is not illegal, a reason must be given for the termination. Typically, a bank will claim it seeks to mitigate risk by debanking a client, particularly in cryptocurrency-related cases.

Integrating traditional financial services with blockchain technology may be a remedy to this issue.

Past Debanking Cases in Australia

Allan Flynn, the owner of Australian exchange BitcoinCanberra, managed to settle a complaint against ANZ bank in October 2021 after being suddenly debanked. It took 20 months for Flynn to reach this outcome and appeared to be a turning point in the crypto industry’s fight against the practice.

Following this case, AUSTRAC – Australia’s anti-money laundering regulator – issued a warning to banks closing unsuspecting accounts. The financial watchdog stated that “businesses vulnerable to exploitation should not automatically have their accounts closed simply to avoid managing risk”.

Banks are expected to assess risks on a case-by-case basis, without bias towards crypto-related businesses.

Categories
Australia Banking CBDCs Crypto News

Australia Explores Multi-CBDC Platform For International Settlements

The central banks of Australia, Singapore, Malaysia and South Africa, in conjunction with the Bank for International Settlements (BIS), have released a report outlining the results of a project to create two prototype multi-CBDC platforms.

Project Dunbar, which was launched in September 2021, concluded that multi-CBDCs are technically viable but significant coordination, governance and jurisdictional challenges will need to be overcome before they can be fully implemented in real-world situations. 

What Did Project Dunbar Involve?

Project Dunbar involved the creation of two multi-CBDC platforms shared by multiple central banks to transact with each other using different digital currencies. The use of such systems could potentially reduce reliance on intermediaries and lead to significant reductions in the cost and time taken to complete international transactions between financial institutions.

Diagram illustrating multi-CBDC platform. Source: Project Dunbar report

The prototypes were built using two different technology platforms – one developed primarily by R3 on the Corda platform, the second developed on the Quorum platform.

The report found that financial institutions could successfully use these shared multi-CBDCs to directly transact with each other, stating that:

This initial phase of the project successfully developed working prototypes and demonstrated practicable solutions, achieving its aim of proving that the concept of multi-CBDCs was technically viable.

Project Dunbar report

Technically Viable But Hurdles Ahead

While the report found that shared multi-CBDCs are technically viable, it also identified governance, jurisdictional and trust issues that need to be solved before the tech can become truly viable.

The report identified three key questions that need to be addressed:

  1. Which entities should be allowed to hold the digital currencies and access the shared platform?
  2. How can cross-border payments be simplified while respecting regulatory differences across different jurisdictions?
  3. What kind of governance arrangement would make countries comfortable sharing access to critical infrastructure such as payment systems?

Michele Bullock, assistant governor of the Reserve Bank of Australia (RBA), echoed these concerns, explaining:

Project Dunbar has provided valuable insights into the opportunities and challenges associated with developing a shared platform for multiple CBDCs to enhance cross-border payments. Allowing entities to directly hold and transact in CBDCs from different jurisdictions could reduce the need for intermediaries in cross-border payments, but it would need to be done in a way that preserves the security and resilience of these payments.

Michele Bullock, assistant governor, RBA

Australia’s involvement in Project Dunbar is another indication of the Reserve Bank’s growing interest in CBDCs, having last year sought to hire cryptocurrency experts to work in its Central Bank Digital Currency research team.

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Australia Banking Crypto News Stablecoins

ANZ Becomes First Bank to Mint Aussie Dollar Stablecoin A$DC

Australia and New Zealand Banking Group Limited (ANZ) has concluded a historic transaction in which its newly created stablecoin pegged to the Aussie dollar has been used in a real world transaction:

A First for Australia

According to a press release, ANZ minted 30 million of A$DC using an ANZ-built Ethereum Virtual Machine (EVM)-compatible smart contract deployed through the Fireblocks platform. These coins were then transferred between the parties and later redeemed back into fiat.

ANZ worked closely with leading providers in the digital asset domain including Fireblocks, Chainalysis and OpenZeppelin to create an in-house purpose-built stablecoin smart contract.

The historic transaction was concluded between one of Australia’s best-known investment companies, the Victor Smorgon Group (VMG), and a digital asset fund manger, Zerocap. VMG wanted to invest A$30 million into Zerocap’s digital asset fund and turned to ANZ to streamline the process and reduce costs.

By using ANZ’s stablecoin, VMG managed to avoid the costly conversion of Aussie dollars into US dollars, before then buying USDC, which Zerocap uses to access cryptocurrency markets. Instead, using ANZ’s stablecoin (A$DC), it was able to buy digital assets directly, avoiding a host of friction costs in the process. In addition, the transaction took just over 10 minutes, compared to several days had the legacy financial system been used.

ANZ services lead Nigel Dobson commented that “an ANZ-issued Australian dollar stablecoin is a first and important step in enabling our customers to find a safe and secure gateway to the digital economy”.

We’re excited to continue to trial our capability and explore how this use case can be applied in other industries and customers in the future.

Nigel Dobson, ANZ services lead

Recognising the role that stablecoins play in creating efficiencies, Dobson commented further on the transaction:

Stablecoins are a new way for customers to transact and in this case was an efficient and direct way for Victor Smorgon Group to access Zerocap’s digital asset exchange and move funds across a decentralised network.

Nigel Dobson, ANZ

Zerocap co-founder and CEO Ryan McCall remarked on how his company had taken a different approach by focusing on serving institutional clients:

Most of the crypto industry has been focused on directly servicing the retail market, whereas we’ve invested from the outset in establishing the product, technology, compliance and team to properly service private and institutional clients.

Ryan McCall, Zerocap co-founder and CEO

He concluded on a bullish note, saying: “Digital assets are going mainstream; we’re thrilled to be at the forefront of driving adoption and bringing that vision to life.”

ANZ Making Bold Moves

One of the oft-repeated phrases in crypto is how Ernest Hemingway spoke of going bankrupt: “gradually, then suddenly”.

ANZ’s “gradually” moment was late last year, when it indicated that there was a “weight of money behind crypto that you can’t ignore“. No doubt this was in response to rival Commonwealth Bank’s move to become the first local bank to offer crypto trading services to its clients.

Arguably, ANZ’s “suddenly” moment came earlier this week at the Australian Blockchain Week 2022 when it announced its entrance into the world of DeFi (decentralised finance).

Coupled with its move creating its own stablecoin, it seems reasonable to conclude that ANZ has determined that in order to remain relevant in the rapidly evolving financial industry, embracing crypto is no longer optional, it’s a prerequisite.

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Australia Banking Crypto News DeFi Hedera

ANZ Bank Exploring Hedera DeFi Services For Its 8.5 Million Customers

Australia and New Zealand Banking Group (ANZ), one of Australia’s ‘Big Four’ banks, is tapping into the growing demand for decentralised finance (DeFi) via the Hedera Hashgraph testnet.

Speaking as a member of an Australian Blockchain Week panel on DeFi, ANZ’s portfolio lead Nigel Dobson said his bank was exploring how best to offer DeFi services to its 8.5 million customers.

According to Dobson, ANZ was taking a “blockchain agnostic” approach and had already experimented with minting, transacting and burning tokens on the Hedera Hashgraph testnet.

All Part of ANZ’s Sustainability Plan

With Bitcoin and Ethereum often criticised for their high carbon emissions, Hedera Hashgraph’s lower-carbon imprint fits with ANZ’s stated goals to be a more ecologically responsible bank:

With Hashgraph able to run Solidity smart contracts, existing smart contracts and applications on Ethereum could be ported over to Hashgraph to the advantage of a potential DeFi ecosystem.

ANZ’s Targets to 2025

On the subject of sustainability, ANZ has already set targets to:

  • fund and facilitate at least A$50 billion by 2025 towards sustainable solutions for its customers;
  • engage with 100 of its largest emitting business customers to encourage them to strengthen their carbon transition plans and enhance their efforts to protect biodiversity by the end of 2024;
  • develop an enhanced climate risk management framework that strengthens ANZ’s governance and is responsive to climate change, by the end of 2022; and
  • achieve ANZ’s 2021-2025 suite of environmental footprint targets.

Set the Course for DeFi

Last November, Dobson described competitor CommBank’s pacesetting move into the Australian crypto space as “bold”, suggesting it was just the start of a major shift in the financial system and something traditional finance would need to embrace or adapt to.

“We are moving to a more decentralised system that can generate new outcomes and business models that can’t be ignored,” Dobson said at the time. “The power of decentralised networks transcends all companies – you just need to choose whether to be part of it or ignore it … I think we have a much stronger bias to participate than ignore.”

Categories
Banking Bitcoin Crypto News Trading

US Bank Facilitates First Over-The-Counter Bitcoin Transaction

Goldman Sachs (GS) has become the first financial institution to make an over-the-counter (OTC) crypto options trade as it expands its digital assets team. GS has partnered with Galaxy Digital, a New-York based cryptocurrency investment firm, on the bank’s Bitcoin futures trading desk, which facilitated the transaction.

The digital asset trading unit at GS made its OTC crypto transaction in the form of a bitcoin non-deliverable option (NDO). An OTC Bitcoin NDO means that GS has essentially bought a contract betting on the future price of Bitcoin, rather than buying the digital asset itself. GS also added another digital assets VP to its team.

The company describes the move as a sign of maturity of the asset class in the eyes of institutional players. According to Damien Vanderwilt, co-president and head of global markets at Galaxy Digital:

We are pleased to continue to strengthen our relationship with Goldman and expect the transaction to open the door for other banks considering OTC as a conduit for trading digital assets.

Damien Vanderwilt, co-president and head of global markets, Galaxy Digital

Options Trading On the Rise

The move also follows the investment banking giant becoming more involved in the crypto space after restarting its bitcoin trading desk in March last year. Options trading has become an increasingly popular way of investing in crypto. Instead of traders buying and selling digital assets, they buy and sell contracts that bet on the prices of the assets.

Goldman Sachs Gets Bullish on Bitcoin

After the exciting news of the OTC NDO was announced, we see GS becoming ever more bullish on Bitcoin. Earlier this year, it released a note to its investors saying that a US$100,000 price tag for bitcoin is possible this year if it continues to erode gold’s utility as a store of value.

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Australia Banking Cryptocurrencies Investing

Commonwealth Bank Says It Intends to Heavily Invest in More Crypto-Related Services

A digital assets specialist at the Commonwealth Bank of Australia has confirmed the bank’s intentions to invest more into crypto facilities following the CBA’s highly successful launch of its in-app crypto trading service in November last year.

https://www.commbank.com.au/guidance/newsroom/Fitch-Ratings-affirms-CBA-rating-revises-outlook-201805.html
CommBank is looking to offer more crypto-related services.

Representatives from Visa, JPMorgan, Macquarie Bank and the CBA addressed this week’s Blockchain Australia Blockchain Week conference with reports of heightened consumer desire for cryptocurrency-related services. CBA’s Sophie Gilder in particular had some interesting updates to share on behalf of her bank:

According to Gilder, head of blockchain and digital assets at CommBank, her department is looking to offer additional products for both institutional and retail crypto investors. CBA’s goal is to offer enough crypto-related services to cater to the full spectrum of client needs and it is looking at ways to “double its blockchain size” in the coming months.

Aussie Banks Adapting to Crypto

In November, CBA became Australia’s first bank to support crypto purchases with its CommBank mobile app. Partnering with blockchain analytics firm Chainalysis and crypto exchange Gemini, CBA sought to provide customers with exchange and custody services, allowing users to buy, sell and hold digital assets.

Following the precedent set by CBA, ANZ acknowledged that “there is a weight of money you simply can’t ignore” in stating its belief that crypto was “here to stay” in Australia.