Category: Banking

Categories
Banking CBDCs Crypto News Nigeria Payments

Nigerian Central Bank Reveals ‘Speed Wallet’ Ahead of October e-Naira Launch

The Central Bank of Nigeria (CBN) is set to release its official digital “Speed Wallet” to facilitate next month’s launch of the e-Naira, the central bank digital currency (CBDC).

The Nigerian apex bank has been researching CBDCs since 2017 and recently revealed it has contracted fintech company Bitt Inc as a technical partner overseeing the development of the planned digital currency.

Speed Wallet Will Aid in Transacting Digital Value

According to the CBN, Speed Wallet will not compete with or replace banks in the country. However, it will be primarily used to transact value in the soon-to-be-launched e-Naira until the existing financial institutions in Nigeria establish their own compatible wallets. No transaction fee will be charged for the wallet users. 

However, the central bank has placed daily transfer limits to the three tiers of accounts available with the Speed Wallet:

  • A 50,000 Naira (US$100) limit for first-tier users without a local bank account;
  • About 200,000 Naira (US$400) for second-tier users; and
  • And 1,000,000 Naira (US$2,000) for third-tier wallet users.

The Nigerian digital currency is scheduled to launch on October 1 to commemorate the African nation’s Independence Day. The e-Naira is being designed as a non-interest-bearing asset and will function as legal tender. 

Among other features, the e-Naira will enable increased cross-border trade, cheaper and faster remittances, monetary policy effectiveness and accelerated financial inclusion, according to the central bank. 

In its August 30 press release, the CBN confirmed it is working with Barbados-based blockchain startup Bitt Inc to oversee the introduction of the e-Naira. 

In choosing Bitt Inc, the CBN will rely on the company’s tested and proven digital currency experience, which is already in circulation in several eastern Caribbean countries.

CBN press release

Crypto Adoption in Nigeria on the Rise

In February, the CBN published a circular prohibiting local banking institutions from dealing or serving crypto-related companies in the country. This hit the Nigerian crypto market at the time, as both home and foreign companies operating in the country were affected. 

However, due to the quest to hedge against the declining value of the Naira, Nigerians switched to a peer-to-peer market. Since the ban, more Nigerians have got to learn about and join the cryptocurrency market, which coincides with the growing rate of crypto adoption in the nation.

Categories
Banking Bitcoin Payments

Anti-Bitcoin Protests Fill the Streets of El Salvador Amid BTC Legal Tender Launch

The political situation in El Salvador is heating up as hundreds of Salvadoreans protest the passing of the Bitcoin Law, which will make BTC a mandatory legal tender. The law takes effect on September 7 and prescribes that all citizens and economic agents accept BTC and the US Dollar as joint means of payment.

Demonstrations against the proposed law are taking place in the streets of El Salvador. Among the organising groups are workers, veterans and pensioners in their hundreds, all raising their voices in protest.

Last month, a group of university students, activists and unions gathered in front of Congress in capital San Salvador to demand the derogation of the Bitcoin Law, saying it only facilitates money laundering and corruption. Representatives of the group introduced a written statement arguing that bitcoin’s decentralisation could do more harm than good:

Bitcoin would facilitate public corruption and the operations of drug, arms and human traffickers, extortionists and tax evaders. It would also cause monetary chaos, hit people’s salaries, pensions and savings, ruin many MSMEs, affect peasant families and hit the middle strata.

Protest group statement

El Salvador is known for being an authoritarian country with non-transparent policies, and according to Salvadoreans the mandatory use of bitcoin will only encourage the government’s corrupt operations.

Cargo Carriers Threaten to Impose 20% Freight Levy

The Salvadorean Association of International Cargo Carriers (ASTIC) has demanded the modification of article 7 of the Bitcoin Law that stipulates the mandatory acceptance of bitcoin. It has threatened to introduce a 20 percent levy on customers paying for freight with BTC to protect itself from the currency’s volatility.

In an official statement, ASTIC argued:

No Central American carrier contracted by an economic entity in El Salvador will accept bitcoin as a form of payment, creating divisionism in the sector for paying the foreigner in [US] dollars and the national for being obliged with the cryptocurrency.

ASTIC statement

Neighbouring Countries Are Watching and Waiting

While Salvadoreans fill the streets to make their voices heard, neighbouring Central American countries are waiting to see how the situation develops once the Bitcoin Law is passed. If it succeeds, El Salvador could save substantial costs of remittances, besides facilitating financial inclusion for the unbanked – something that could also benefit neighbouring countries such as Guatemala and Honduras.

Stanley Quinteros, a member of El Salvador’s Supreme Court of Justice workers’ union, predicted that the mandatory adoption of bitcoin would damage Salvadorean finances as there is no way to control or stabilise prices.

We know this coin fluctuates drastically. Its value changes from one second to another and we will have no control over it. Everyone is watching if it goes well for El Salvador and if, for example, the cost of remittances drops substantially … other countries will probably seek that advantage and adopt it.

Stanley Quinteros, El Salvador’s Supreme Court of Justice workers’ union

In anticipation of the Bitcoin Law’s passing, in June El Salvador launched 1,000 Bitcoin ATMs installed by Athena Bitcoin for the purchase and sale of BTC.

Categories
Banking Blockchain Crypto News Regulation

Tezos Soars 29% in a Day Amid Adoption by Swiss Banking Giants

The value of open-source blockchain platform Tezos surged 29 percent in 24 hours after it was chosen by a Swiss banking consortium to develop regulatory-compliant digital financial products.

Tezos Price Analysis chart. Source: TradingView

Incore Bank, a business-to-business transaction bank based in Zurich, is collaborating with two other Swiss entities – IT company Inacta and fintech specialist Crypto Finance Group – to power smart contracts for a range of on-chain digital financial products and use cases.

Along with Tezos, the three companies have launched a new standard for tokens called DAR-1, allowing smart contracts to help comply with anti-money laundering regulations, handle governance and support asset management activities.

Assets to be Issued in DAR-1 via Tezos Later This Year

Developed by Inacta, DAR-1 is based on Tezos FA2, a token contract interface for single and multi-token smart contracts. Incore and Inacta intend to begin issuing assets in the DAR-1 tokenisation standard via the Tezos network later this year.

In conjunction with Crypto Finance Group, Incore has announced a new range of services that include institutional-grade storage, staking, and trading services for Tez (XTZ), the native token of the Tezos blockchain.

This [three-way collaboration] is a tangible example of how FA2 on Tezos broadens the potential for tokenisation significantly. The launch of these Tezos use cases for the financial sector make innovative, compliant on-chain financial products a reality today.

Stijn Vander Straeten, CEO of Storage Infrastructure, Crypto Finance Group

Under the deal with Tezos, Incore Bank will also offer staking for its clients’ assets directly via e-banking. The Tezos platform has the necessary security to protect assets and other high-value use cases at the protocol and application layers, ideally suiting it to applications in banking.

This is not the first time Tezos has been targeted by major players in the banking industry. Last year, French bank Société Générale issued its official security token using the Tezos blockchain.

Categories
ATM Banking Blockchain Cryptocurrencies

ATMs Run Out of Money in Afghanistan as Taliban Occupies Major Cities

Afghanistan is under siege by the Taliban and with the president fleeing the capital, the state has fallen to the self-proclaimed Islamic Emirate of Afghanistan.

With many trying to flee the country, the frantic search for cash has led to banks and ATMs running empty.

According to reports by Al Jazeera and other news services, Taliban forces started capturing cities inside Afghanistan over the past week and have since taken Kabul, the nation’s capital.

Taliban fighters take control of the Afghan presidential palace after President Ashraf Ghani fled the country last week. Source: Zabi Karimi/AP/ Al Jazeera

More recent reports indicate that flights to Kabul have been re-routed and those to nearby provinces, Herat and Kandahar, have been cancelled.

When the news broke, Afghans and foreigners alike flocked to the airport seeking a way out, trying desperately to get their hands on money for supplies and flight tickets.

“The ATMs were all out of money, [and] the banks were full of hundreds of people lining up trying to take out as much money as they could,” said Afghani citizen Abdul Wahab, who was in Mazar on a business trip. The liquidity crisis has had serious repercussions for people who need some form of money to survive.

A similar situation occurred in Lebanon in 2019 where ATMs ran out of cash and banks capped withdrawals.

Blockchain Solutions to Broken Infrastructure

During crises like these, the internet can be suspended in a country cut off from the rest of the world, or provided solely to critical institutions. In a case such as that unfolding in Afghanistan, the military can stop routing traffic outside the country, making it nearly impossible to enact a bank transfer or any kind of transaction.

Even without internet access, however, people inside the country can still use peer-to-peer infrastructure or other bandwidths to transact if they have wallets on their phones containing crypto. The actual bitcoin balances are stored on the blockchain “public ledger”, which is constantly being updated by the bitcoin network even when holders are offline.

According to Richard Myers, a decentralised applications engineer at Global Mesh Labs, “In many parts of the rural and developing world, internet connectivity is both expensive and intermittent. Bitcoin transactions can be made over alternative low-bandwidth transport layers like mesh radios and SMS.”

The deployment of mesh networks and long-range radios can act as a substitute for internet connectivity. Using SMS bridges or meshnets, users can broadcast transactions throughout the network, without requiring an internet connection.

As in the current situation in Afghanistan and other countries in the world with infrastructure problems, blockchain and cryptocurrency are a solution to transact when the internet goes down, but when the power goes out that’s a different story.

Categories
Banking Blockchain CBDCs Crypto News

Jamaica Mints Nation’s First CBDCs with $230 Million JMD Pilot

Jamaica has become one of the few nations to release a central bank digital currency (CBDC) this year. On August 10, the Bank of Jamaica (BOJ) celebrated the minting of the Caribbean nation’s first batch of CBDCs in a pilot phase. The country began working on CBDC last year amid rapid growth in digital payments and the economy. 

Jamaica Plans to Boost Financial Inclusion with CBDCs

Following the announcement, the central bank issued the first batch of the CBDCs worth J$230 million (about A$2 million). As part of the pilot program, the Jamaican CBDCs will be issued to deposit-taking institutions and authorised payment service providers in the country. The pilot exercise will last until December. 

During the minting ceremony, the country’s Minister of Finance and the Public Service, Dr Nigel Clarke, noted that a legislative amendment would be introduced before year’s end to accompany the CBDC.

The Jamaican government believes the CBDC will improve cash management processes and costs for the central bank and deposit-taking institutions. Additionally, it anticipates the CBDC will increase financial inclusion since it can facilitate more efficient and secured payments. 

Central Banks Embrace CBDC

The CBDC concept became more popular among the world’s central banks following the outbreak of Covid-19 last year. Notably, the pandemic resulted in a rapid transition to digital mediums for financial transactions, especially cryptocurrency. However, most central banks argue crypto is privately issued and can expose users to certain risks. 

Hence they embraced the idea of central bank-issued digital currencies. The Republic of China is among countries working towards a CBDC, as well as Australia.

In a recent report, the Reserve Bank of Australia reiterated it is researching possible use cases of a potential CBDC. However, “[it] does not consider that a policy case has yet emerged for issuing a CBDC“.

Categories
Banking CBDCs Crypto News Nigeria

Nigeria to Launch Digital Currency “e-naira” in October

The central bank of Nigeria has confirmed it will test the “e-naira”, a Central Bank Digital Currency (CBDC), as early as October.

According to an article by Reuters, Nigeria’s Central Bank (CBN) governor Godwin Emefiele announced on July 27 that it would be launching its own cryptocurrency, called the e-naira.

Emefiele stated that the e-naira would operate as a wallet against which customers could hold existing funds in their bank account. The CBDC aspires to help Africa’s largest economy with financial inclusion, monetary policy effectiveness, improved payment efficiency, revenue tax collection, remittance improvement, and targeted social intervention.

Nigeria’s Central Bank governor Godwin Emefiele

Before the end of the year, the Central Bank will be making special announcements and possibly launching a pilot scheme in order to be able to provide this kind of currency to the populace.

Rakiya Mohammed, information technology specialist, CBN

CBN information technology specialist Rakiya Mohammed added that the bank wants the digital currency to make remittances more accessible for Nigerians working abroad. (Nigeria was ranked in the top 10 remittance receivers globally in 2020.)

Mohammed also stated that the CBN had given due consideration to the architecture, accessibility issues and privacy of the currency, which is being built on the Hyperledger Fabric blockchain.

Crypto Usage Booms in Nigeria

In February, Nigeria’s central bank implemented restrictions on the use of cryptocurrencies, though crypto was on the rise regardless and began to be used for peer-to-peer transactions. A few months down the line it was back in favour due to its 32 percent adoption rate by the population.

According to crypto utility website UsefulTulips, in the first half of 2021 the volumes of two major P2P platforms in Nigeria, Paxful and LocalBitcoins, were the largest in Africa, with transactions totalling over US$200 million. Nigeria is the largest market for Paxful, with around 1.5 million users and over US$1.5 billion in trading volume.

Africa has seen a massive 386.93 percent increase in P2P trading volumes on Binance since January, according to Damilola Odufuwa, Binance’s spokesperson in Africa. The user count across the continent grew 2,228.21 percent in the following four months. Elsewhere on the continent, Tanzania is also in the process of adopting cryptocurrency.

Categories
Banking Crypto News DeFi

Goldman Sachs Plots a Move into ‘DeFi’ with its ETF, Critics Speak Out

Following a July 26 filing with the Securities and Exchange Commission (SEC), Wall Street investment bank Goldman Sachs has taken its tentative first steps into the world of DeFi with the announcement of a DeFi exchange traded fund (ETF).

On closer inspection, however, it isn’t quite as it seems.

Goldman Sachs ‘DeFi ETF’

As per the filing:

The Goldman Sachs Innovate DeFi and Blockchain Equity ETF (the ‘Fund’) seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the Solactive Decentralized Finance and Blockchain Index (the ‘Index’).

Goldman Sachs SEC filing

Goldman Sachs considered “DeFi” to mean the “Digitalisation of Finance”, defined as “the digital transformation of traditional financial services, including the support and delivery of payments, transaction services, lending and insurance”.

In terms of the types of investments with the ETF, the filing noted:

The eligible universe of stocks is comprised of common equity securities, including depositary receipts, of companies located across developed and emerging markets worldwide, listed and traded on major exchanges in certain developed markets, including: Australia, Canada, France, Germany, Hong Kong, Japan, South Korea, Switzerland, the Netherlands, the United Kingdom and the United States.

Goldman Sachs SEC filing

According to the filing, the ETF will be tied to the performance of companies that are working on blockchain technology and the digitisation of finance.

The ‘DeFi ETF’ Is Anything But DeFi

While some were quick to praise the move, some sharp-eyed critics highlighted a glaring issue:

On a closer inspection of the index that the ETF would be tracking, it revealed only legacy companies with zero exposure to crypto-native businesses – hardly a ‘DeFi ETF’ as advertised.

Buzzwords Over Substance

Earlier this year, Goldman appeared to be making moves in the right direction. In May it recognised crypto as an investment asset, followed by the introduction of a crypto trading desk despite investors’ uncertainty. Following this latest move, however, the megabank’s reputation will undoubtedly suffer within crypto circles.

What drives such inaccurate labelling of financial products, and is it deliberate? Could it be the blockchain equivalent of environmental greenwashing? Given the track record of investment banks, it seems likely that the appearance of “keeping [up] with the times” (ie, blockchain) is more important than actually doing so.

Experienced members of the crypto community have long been suspicious of Wall Street’s moves into the industry, and perhaps they have a point.

Categories
Banking Bitcoin Crypto News Institutions

Banking Giant JPMorgan Announces Crypto Support For Clients

On July 16, JPMorgan announced it had granted its wealth management clients access to cryptocurrency funds, becoming the first major US bank to support crypto.

Daniel Pinto, co-president of JPMorgan, hinted in discussions earlier in the year that he was interested in expansion into the crypto space.

In a humorous thought, rewind back to 2017 when CEO Jamie Dimon said “Bitcoin is a fraud”, and if he found out any JPMorgan employees were trading cryptos, “I would fire them in a second, for two reasons: It is against our rules and they are stupid, and both are dangerous.”

Five Crypto Funds Offered

With total assets worth US$3.4 trillion, JPMorgan is targeting the wealth management business with five new cryptocurrency products launched on July 19.

The funds initially offered are:

JPMorgan’s advisers can buy and sell crypto on behalf of their clients; they cannot recommend any cryptos, but can only execute the crypto trades as instructed.

We are excited to be onboarded to the JPMorgan wealth platform. OBTC remains the lowest-priced publicly traded bitcoin fund in the US, and we believe JPMorgan’s clients will see value in the product.

Greg King, founder and CEO, Osprey Funds

A recent report estimated that US$43 billion is already held in global Bitcoin investment funds, and this new offering by JPMorgan follows other giants such as Goldman Sachs, Blockrock, Citigroup and Deutsche Bank.

JPM Coin

Depiction of JPM Coin

JPMorgan is also heavily investing in blockchain technology to facilitate instantaneous payments, including launching a coin called “JPM Coin” to be used for business-to-business money movement.

JPM Coin is a permissioned, shared ledger system that serves as a payment rail and deposit account ledger, enabling participating JPMorgan clients to transfer US dollars held on deposit with JPMorgan. JPM Coin facilitates real-time value movement, helping to solve common hurdles of traditional cross-border payments.

jpmorgan.com

JPMorgan Investing Heavily into Blockchain

It also launched a new service called “Liink” through Onyx by JPMorgan, which is a platform accelerator for businesses wanting to adopt Blockchain with a payments network infrastructure:

Over 25 of the world’s largest banks have already signed up to join in helping to improve transaction and information flows around the world powered by a peer-to-peer network and smart contracts.

Categories
Banking CBDCs Crypto News Europe

European Central Bank Launches Digital Euro Project, Wants It to be More “Sustainable” Than Bitcoin

The European Central Bank has announced it will explore the possible creation of a digital euro, launching a two-year project to work on the design.

The project’s launch follows extensive groundwork from the bank including a digital euro report, public consultation, and experiments to assess the technological feasibility of a digital euro.

These experiments found the proposed digital euro core infrastructure would be environmentally friendly compared to the energy consumption of cryptos like Bitcoin. 

ECB has indicated a digital euro would complement cash rather than replace it, being a direct claim on the central bank that would reduce risks associated with digital payments and enable purchases across all EU countries. 

ECB President Christine Lagarde said: “Our work aims to ensure that in the digital age citizens and firms continue to have access to the safest form of money, central bank money.”

Potential Digital Euro Still Years Away

While the goal of the digital euro project is to be prepared for a digital currency, the ECB says the decision about whether or not to develop a digital euro would come at a later stage – and the development work could take an additional three years. 

ECB board member and chair of the high-level task force on a digital euro, Fabio Panetta, said the cautious approach was key to balancing progress with monetary and financial stability.

It [the project] will involve focus groups, interaction with financial intermediaries, prototyping and conceptual work. We will engage with all stakeholders. And we will continue to interact closely with other European institutions to define the necessary legislative framework.

Fabio Panetta, ECB

“Money and payments permeate our everyday lives and underpin the economy. Any changes stemming from technological innovation, if not properly designed, can become a source of disruption for our financial systems, economies and societies,” Panetta added.

How Advanced Are Major Nations with their Digital Currencies?  

A number of jurisdictions are running their own experiments in readiness for the adoption of digital versions of national currencies.

A digital dollar project being run by researchers from the Federal Reserve Bank of Boston and MIT already has at least two prototype platforms that allow users to store and make transactions using the currency. 

In April 2021, both the UK and Japan started exploring a central bank digital currency (CBDC), while China recently expanded on its initial CBDC work to trial paying some workers’ salaries in digital yuan.

Categories
Banking Crypto News

Debanked Cannabis Companies Are Turning to Crypto

Wholesale cannabis companies are looking to crypto to solve some of the headaches of doing business in an industry where quality matters and trust is a must.

The red tape cannabis companies have to deal with makes it increasingly difficult to do business in general, but more specifically relating to moving money, or receiving financing, it is hard for them to find banks to work with due to the perceived regulatory risk. Although the legal sale of marijuana is permitted in more than 20 states in the US, weed is still illegal federally.

The technology blockchain brings can help solve problems in this billion-dollar industry. These include cross-border payments and banking restrictions, but crypto is not just about exchanging currency. People want to know where their product is coming from and need to be able to trust its quality.

The Benefits of Seed-To-Sale Tracking via Blockchain

Like a farm-to-fork-style business model for the food industry, corporate cannabis is adopting a seed-to-sale model of its own, with the help of blockchain. One of the main advantages of blockchain is that it allows secure record-keeping without the need of a trusted third party.

But if you think US regulator the SEC (Securities and Exchange Commission) is hard on crypto innovation, in particular when it comes to newer cryptocurrencies, there are even harsher levels of legislation for those dealing in cannabis.

Los Angeles-based pot startup Paragon launched its own blockchain-based cryptocurrency, Paragon Coin (PRG), and a marijuana-friendly workplace in Hollywood called ParagonSpace. Paragon was audited by the SEC and ordered to pay a US$250,000 fine after being accused of trading its PRG token as an unregistered security. Paragon denies PRG was a security and chose to pay the fine without admitting or denying the SEC’s findings.

The company maintains that it uses blockchain to ensure a secure system for monitoring the growth and shipping of cannabis, referred to in the industry as seed-to-sale tracking. Developing such a system as an industry standard is the goal of many blockchain cannabis companies.

Cannabis-specific cryptocurrency DopeCoin’s rebranded DigiGreen aims to serve up real-world solutions to selling weed, providing a payment gateway to a range of other blacklisted industries.

Cannabis Industry Needs to Cut Out the Middleman

The daily interactions involved in a cannabis company’s business could be much more efficiently handled by adopting a new system using crypto and cutting out the middleman. US software company Red Hat Inc’s Gordon Haff says these systems are ready to be implemented today. The delay, he says, is “getting everybody in the ecosystem to agree to use a common platform”.

The cannabis industry is still fighting discrimination and is waiting for governments to grant it equal rights to operate as any other legitimate business can. And crypto is still waiting for fear, uncertainty and doubt to dissipate for it to become more widely understood and accepted as the invaluable tool it is.

From a weed store point of view, to accept payment in crypto, it is presently too complicated both for staff and customers. Crypto is not yet widely adopted enough for it to be helpful for in-store purchases.

The world is not ready to pay in digital currency on a mass scale. The technology is too new and does not provide the average consumer with enough benefits to want to use a digital currency over traditional cash or credit card.

Adam Howell, DopeCoin founder

Blockchain technology offers efficient and sophisticated record-keeping processes for cannabis businesses transacting with each other within their industry (or for any business in any industry, for that matter).

Cannabis and Crypto Have Much in Common

Cannabis and crypto are kindred spirits. It has taken decades for the health benefits of medical marijuana to be recognised and for the industry to become legally corporatised.

As both sectors continue to grow, they face legislative hurdles. Banks are going to have to become more open to doing business with corporate cannabis and crypto or they will fail to profit from two of the world’s most rapidly expanding industries.