Category: Banking

Categories
Australia Banking Blockchain Crypto News

Big 4 Australian Bank Uses Blockchain Technology to Address Climate Risks

National Australia Bank (NAB) will participate in a new project with several overseas banks to offset carbon emissions using blockchain technology. 

The Big Four bank is joining the Canadian Imperial Bank of Commerce (CIBC), Brazil’s Itaú Unibanco, and UK’s bank and insurance company NatWest to launch Project Carbon – a voluntary pilot to enter the carbon marketplace.

Project Carbon to Use Ethereum Blockchain to Provide Transparency

More companies are buying carbon offsets, which are rights to reduce carbon emissions. This follows a surge in demand for greener assets in recent months, prompting institutions to set net zero targets in response. 

The strategy has been heavily criticised for the lack of transparency of transactions and its overall effectiveness. However, Project Carbon will use smart contracts from the Ethereum blockchain to record all transactions, demonstrating demand, trade sizes and prices of offsets. Drivers of the project hope this will provide enough transparency to encourage investors to stake their capital in green projects.

Project Carbon is a terrific example of how technologies such as blockchain can address existing barriers and make carbon offsets more accessible for our customers.

Victor Dodig, CIBC chief executive officer

Using Blockchain to Tackle Emissions

Blockchain technology can be an useful tool for institutions that aim to reduce CO2 emissions, and Australia is already addressing social and global eco-friendly issues using blockchain. As reported this week, Australia’s first international hackathon – an event hosted by Melbourne’s Monash University – will receive submissions from applicants worldwide to suggest ideas on how blockchain can address global issues.

The local crypto community has criticised banks in Australia, especially the big four lenders, for their indifferent and outdated policies regarding cryptocurrencies and potential blockchain technology use.

However, NAB marks the difference here and it hopes that blockchain will serve as the key technology for Project Carbon and be the backbone for the future of the carbon marketplace.

Categories
Banking Crypto News Ethereum Institutions

Sygnum the World’s First Bank to Offer ETH 2.0 Staking as a Service

Swiss bank Sygnum is officially the world’s first digital asset bank to offer Ethereum 2.0 staking as a service. The bank will stake its clients Ethereum (ETH) to generate up to seven percent yield per annum.

Sygnum and regulatory body, the Swiss Financial Market Supervisory Authority (FINMA), can now offer clients Ethereum staking services on their institutional-grade platform via a simple user-friendly setup:

With Ethereum powering the exponential growth of decentralised finance (DeFi) applications, staking is a compelling choice for long-term Ethereum investors also seeking attractive yields.

Sygnum

Sygnum already offers staking for the Tezos blockchain, as well as yield generation for its Digital Swiss Franc stablecoin (DCHF). However, the bank has various exchanges and pools to compete with. This offer is one for those who don’t want to get down and dirty with buying crypto and the perceived intricacy of moving it to a staking pool.

Higher Yields than Traditional Interest Rates

With interest rates of savings accounts in the US barely breaking one percent, and some of the best in Australia nearing three percent, the offer is “a digital asset alternative for yield generation in today’s low or negative interest rate environment”.

Bankrate, one of the leading providers of rates and financial information, shows that its top-rated online high interest account returns 0.57% APY.

And when considering real interest rates (bank lending rate minus inflation) in developed countries, most of them are sitting under 4%, with Australia’s at 1.65% in 2019.

US 10-year Real Treasury rate. Source: Multpl

With the US currently sitting at a negative real interest rate, people are looking for places to keep their money where it won’t be eaten away by inflation and decreasing interest rates.

Staking as a Long Term-Investment

Staking involves the locking up of assets to participate in the validation of transactions on proof-of-stake blockchains, with a financial ‘reward’ provided in exchange.

Sygnum

By staking Ethereum, investors hold an asset that has had a year-to-date growth (YTD) of 220 percent. So not only can the asset grow in value, but one also receives a percentage growth of the asset itself as a reward for contributing to the consensus process.

Sygnum clients can participate in the new proof-of-stake Ethereum and benefit from potentially higher staking rewards now. This is a compelling choice for long-term investors in the Ethereum ecosystem.

Thomas Brunner, head of accounts and custody, Sygnum

Most recently the number hit 6.1 million Ethereum being staked, with more than 185,000 validators. The amount of ETH being staked equates to over US$14 billion in Ethereum.

The digital asset bank is also looking to support DeFi assets, launching regulated banking services for eight leading tokens including Uniswap (UNI), Maker (MKR), and Curve DAO Token (CRV).

Categories
Australia Banking Crypto News Institutions

The Reserve Bank of Australia is Researching Tokenised CBDCs and Financial Assets

The Reserve Bank of Australia (RBA) and its various bodies responsible for financial regulatory issues have been conducting research on implementing a Central Bank Digital Currency (CBDC) and possible uses of digital financial assets.

In a submission to the Senate Select Committee on Australia as a Technology and Financial Centre , the RBA in partnership with the Council of Financial Regulators (CFR) has “recognised the potential for SVFs [stored-value facilities] to play a more prominent role in the payment system, and the recommendations [are] aimed at modernising and simplifying regulatory arrangements for SVFs in a way that is conducive to innovation, while maintaining appropriate consumer protections”.

Reserve Bank Sees No ‘Policy Case’ for Digital Aussie Dollar Just Yet

Despite prior reservations about CBDCs, research has continued to consider if and how this technology can be applied for the benefit of Australian citizens and industry alike.

The RBA has stated that “[it] does not consider that a policy case has yet emerged for issuing a CBDC”. Nevertheless, it has continued research into possible use cases for a retail CBDC, or a wholesale CBDC for cross-border payments between other central banks. There is also no evidence indicating that a CBDC will even make use of Distributed Ledger Technology (DLT).

The new form of money will be a liability of the central bank and, like cash, the unit of account of the CBDC would be the sovereign currency, such as the Australian dollar. It would be convertible at a one to one with other forms of money, and would likely also be specified to serve as legal tender.

DLT-Based Proof of Concept is in Development

The work currently taking place in the RBA’s in-house Innovation Lab concerning Distributed Ledger Technology is an interbank payment system that began development in 2019. This project is close to finalisation and has included various external parties to extend the proof of concept in numerous ways.

The project explores the implications of delivery-versus-payment settlement on a DLT platform as well as other programmability features of tokenised CBDC and financial assets.

Reserve Bank of Australia

According to the submission, a report will be published soon regarding the outcomes of the project tests. The only fully live CBDC is the ‘Sand Dollar’ issued by the central bank of the Bahamas; other countries are still in development and testing phases.

Real-Time Trading Between Individuals or Organisations

The RBA is part of the Digital Finance Cooperative Research Centre (CRC) team, bringing together many academics from 20 different entities in finance to “develop and exploit the opportunities arising from the digitisation of assets so they can be traded and exchanged directly and in real time between any individual[s] or organisation[s]”.

Categories
Banking Bitcoin Crypto News Institutions

NYDIG is Expanding Crypto Adoption to 650 Banks and Credit Unions in the US

New York Digital Investment Group (NYDIG) has partnered with payment giant NCR to expand Bitcoin adoption in the US.

The partnership will enable up to 650 banks to offer Bitcoin services to 24 million customers. While the NCR will provide the infrastructure for mobile apps, the NYDIG will be delivering custodial services to financial institutions that want to offer crypto services to their clients.

Banks to Compete with Crypto Exchanges

The move will put NCR’s institutional clients in direct competition with crypto exchanges, as banks and credit unions reported massive outflows of customer’s savings to make crypto purchases.

According to Douglas Brown, NCR’s president of digital banking, banks could soon follow PayPal’s success with crypto adoption and offer crypto payments for its clients worldwide. Besides, the NCR is exploring the possibility of paying its 200,000 retail clients with BTC.

We’re firm believers in the benefits of crypto and the strategic application. And that’s true for our banking relationships, as evidenced by NYDIG, and across retailers as well as restaurants and the like.

NCR president of digital banking, Douglas Brown

Despite the bearish market, NYDIG has seen massive interest from institutional clients to individual and wealthy investors who want to join the crypto space.

Just days ago, NYDIG partnered with Texas fintech firm Q2 to provide BTC exposure to Q2’s 18.3 million users, following massive client demand.

Categories
Banking Bitcoin Crypto News

Billionaire Salinas is “Working with his Bank in Mexico” to Accept Bitcoin

With an estimated fortune of US$15.2 billion, Ricardo Salinas recently dipped his toe into the world of Bitcoin in a big way – to the tune of 10% of his net worth. This has since been followed by an unexpected announcement via Twitter where he revealed he is working with his bank to be the first in Mexico to accept Bitcoin.

Salinas’ View of Bitcoin: ‘No Stinky Fiat in My Portfolio’

In a short video doing the rounds on Twitter, Salinas talked about Bitcoin and his view that all fiat currencies are “a fraud”. When asked how he would invest over the next 30 years, he named Bitcoin and, with a smile, indicated he would not have any “stinky fiat” in his portfolio.

Salinas further argued that Bitcoin’s liquidity and global value alone justified inclusion in every investor’s portfolio. To him, the most important aspect of Bitcoin was the 21 million hardcap that stood in direct contrast to the limitless abundance of fiat currency.

#Bitcoin @RicardoBSalinas on Twitter

Bitcoin Billionaires Banter on Twitter

Shortly after the Salinas video was published, Michael Saylor shared it and had this to say:

Soon after, the 65-year-old Mexican mogul responded:

Financial Institutions are Increasingly Changing Their Tune

Salinas’ sentiments reflect a growing recognition within financial institutions such as banks that the digital asset space is here to stay. This remarkable turnaround started with the establishment of trading desks, which has since progressed into retail banking.

To illustrate this dramatic shift, NYDIG recently reported that by the end of 2021, up to 300 million US citizens would be able to buy Bitcoin natively through their online banking.

It’s difficult to see this trend slowing down in the long run, particularly in light of El Salvador’s recent adoption of Bitcoin as legal tender, with a host of Latin American countries looking to follow suit.

Notwithstanding these positive developments, at this stage it remains unclear whether Salinas will succeed in his quest to get his bank to accept Bitcoin.

Categories
Banking Crypto News

Tanzania’s Central Bank Says It’s Working on Adopting Cryptocurrencies

Tanzania’s central bank has made a u-turn on its decision to ban cryptocurrencies following orders from the East African country’s new president, Samia Suluhu Hassan.

Hassan, who came to power in March 2021 after the death of her predecessor, said the arrival of digital currencies in Tanzania was “inevitable” as it witnesses the emergence of blockchain technology.

Tanzania’s Central Bank

All Aboard the Crypto Train

Tanzania has become the latest country to adopt cryptocurrencies and blockchain technology after El Salvador decided to make Bitcoin legal tender earlier in June – which prompted other Latin American countries such as Paraguay and Panama to explore digital assets.

Many countries in the world have not accepted or started using these currencies. However, I would like to advise the central bank to start working on those issues. Just be prepared.

Tanzania President Samia Suluhu Hassan

In November 2019, Tanzania banned cryptocurrencies after its central bank refused to recognise them under local law, but now the bank seems to be working on the directives given, a spokesperson told Reuters.

Crypto Adoption Plans Accelerate Worldwide

Crypto adoption is on the rise, not only in Africa but worldwide. Nigeria is working to develop and implement its own CBDC by the end of the year, and Brazil, El Salvador, Paraguay, China and now Tanzania are just some of the countries accelerating their plans to embrace crypto and launch their own digital currencies.

We could soon see a handful of other countries and states racing to join the digital financial world. Even the European Central Bank has said countries that choose not to launch a CBDC could be “left out” when it comes to cross-border payments.

Categories
Banking Crypto News Cryptocurrencies Stablecoins

What Are CBDCs and Stablecoins?

CBDC

Everything is being dematerialised and it’s no surprise that money is quickly moving in that direction too. Central banks around the world have recognised that digital currencies are here to stay and in response they are forming their own stablecoins, CBDCs.

What are CBDCs?

A CBDC (central bank digital currency) is simply a digital form of a fiat currency issued and regulated by a central bank and/or government authority. They can be classified as either retail or wholesale.

  • Retail CBDCs
    • Issued for all people and companies (or, put differently, the general public)
  • Wholesale CBDCs
    • Only used by permitted institutions such as banks
    • Used as a form of settlement for interbank transfers

Despite improvements in efficiency, a recent European survey showed that privacy remains the #1 concern when it comes to CBDCs. CBDCs would allow governments to automatically tax every transaction, to allocate funds away from specific individuals and, most importantly, provide visibility into every transaction and counterparty.

Are Stablecoins Different to CBDCs?

Stablecoins are a type of cryptocurrency whose value is tied to an outside asset, such as the US dollar or gold. Unlike CBDCs, issued by public authorities, stablecoins are issued by private companies. Therein lies the primary difference between the two.

Usually the entity behind the stablecoin will set up a regularly audited reserve asset base backing the stablecoin. Fiat is the most common collateral for stablecoins (as is the case with Tether and USDC), but others are pegged to precious metals or other cryptocurrencies.

What’s the Current Regulatory State of Stablecoins and CBDCs?

Over the past few years, stablecoins have continued to enjoy increased levels of acceptance among regulators. Most notably in January, the US Office of the Comptroller of the Currency (OCC) announced to the 1,100 banks and federal savings associations that they can issue payments with stablecoins to their clients. The UK Treasury also took steps towards regulation, recognising the important role stablecoins may play in settling and clearing large transactions in capital markets.

Some argue that CBDC projects have been initiated largely in response to the growth in the use of stablecoins, but not all governments agree. At present, there are 77 CBDC projects in either research, pilot or close to production stages.

Some, such as the Bank of Japan, are in the early research/experimentation phase, while others such as the “Sand Dollar” by the Central Bank of the Bahamas is already in full production. The People’s Bank of China’s “DCEP” appears to be in late test stages with the general public and as recently as May 2021, the US Federal Reserve in collaboration with MIT announced it was pursuing its own digital dollar currency project – dubbed Project Hamilton.

Stablecoins and CBDCs backdrop

The Race is On

At this stage, it remains unclear how stablecoins and CBDCs will coexist in a future fully digitised economy. In some respects, it looks to be a race between corporates and governments.

In the short term, it is unlikely that growth in the use of stablecoins between merchants, corporates and retail will subside. It also seems reasonable to expect more robust regulatory frameworks and increased competition and development of CBDCs over the coming year.

Despite a lack of clarity, one thing is certain: the race is on as to which digital currency will be the first to be recognised as legal tender.

Categories
Banking Crypto News

Cuba Central Bank Bans US Dollar Cash Deposits

Cuba’s national bank announced on June 11 that it would temporarily put a halt to deposits in US dollars, blaming US sanctions that restrict its ability to use the dollar abroad.

According to a statement from the Central Bank of Cuba:

[…] it is increasingly difficult for Cuba to find international banking or financial institutions willing to receive, convert, process or process cash in US currency as a result of the extraterritorial effects of the blockade, and of the additional measures adopted by the United States in the last four years, which, to this day, remain in full force.

The bank said the move would not affect transfers of US dollars from abroad, the value of savings held in US dollars, or cash withdrawals (if funds are available at a given branch). 

It tweeted that the suspension of deposits in US dollars will take effect from June 21:

US Dollars Won’t be Accepted as Payment

While Cubans are not restricted from holding them, US dollars won’t be accepted as payment in the country while the measures are in place. Foreign tourists travelling to the the Caribbean island nation have been warned to bring another currency or use international cards. 

According to Cuba’s central bank the duration of the block on US dollar deposits depends on the lifting of US sanctions.

A Long History of Sanctions and Love-Hate for the US Dollar

The US’ embargo against communist Cuba began in 1958 – it is the most enduring trade embargo in modern history, with a range of economic sanctions imposed over the years. For one, the Cuban peso cannot be used for international trade.

Given this long-standing economic divide, use of US currency in Cuba has had a chequered past. Possessing dollars was once banned in the country and for many years Cuba imposed a 10% tax on greenbacks.

In 2020 it lifted that tax and introduced dollar-only stores, where US currency can be used to buy higher-quality goods to boost Cuba’s economy in response to falling revenues caused by a decline in tourism during the pandemic.

There is some speculation the central bank’s move to stop accepting deposits in dollars is an attempt to influence the black market price of the dollar. 

Could Cryptocurrency Be Key to Cuba’s Future?

Some members of the crypto community think Cuba should go the same route as El Salvador, which recently adopted Bitcoin as legal tender.

One Redditor asked, “Will they take crypto now?”, and another joked: “I can’t wait to get my Coinbase debit card and go to Cuba to spend it all!”

Another more serious take from Reddit cryptocurrency thread: “I don’t think this will reduce demand for US dollars by locals. If anything, it will skyrocket the informal exchange rate with less dollars entering the country but [the] same – or more – amount of people demanding this scarce resource.”

Categories
Banking Bitcoin Crypto News Institutions

Berkshire Hathaway Invests $500 Million into Digital Bank Company

Warren Buffett’s American multinational holding company Berkshire Hathaway (one of the largest publicly held companies in the world) now has a US$500 million stake in Nubank, the world’s largest independent digital ‘Bitcoin-friendly’ bank, based in Brazil.

With 8.5 million customers, Nubank is the biggest online bank outside of Asia and has positioned itself as the most valuable financial institution in Latin America and the world. It was recently recognised as one of the most influential global companies by TIME magazine and one of the most innovative by CNBC. Launching its first product in Mexico just over a year ago, it has already received 1.5 million applications and is one of the largest issuers of new credit cards in that country.

The company is the largest digital bank in the world in terms of customer numbers – it has just reached the 40 million mark and, in the first five months of 2021, has grown at a pace of more than 45,000 new customers per day.

Nubank Blog

The company acquired Easynvest, a digital brokerage firm that offers a Bitcoin exchange-traded fund (ETF), in 2020 and is seriously challenging the global financial system by expanding its core credit card service to the unbanked to include personal lending and entrepreneurial investment loans.

On June 8, Nubank announced that it plans to use the money raised to fund its international expansion to Mexico and Colombia, launch new products and services, and hire more employees.

Superstar Executive Line-up

Nubank boasts an all-star team of brainiacs, including: Chief People Officer Renee Mauldin (Google, Twitter and Uber); Director of Operations Youssef Lahrech (MIT engineer and former senior vice-president at Capital One); and Product Director Jag Duggal (ex-Google and Facebook).

Although many Brazilians don’t have bank accounts, they do have mobiles and thus can use Nubank’s no-fee credit cards with a smartphone. The future we’ve been talking about is finally here. No wonder the banks and governments are FUDding. They are scared. Very scared – because the world is changing and they are being left in the dust.

Berkshire Hathaway Annual Shareholders Meeting 2021 – source

Billionaire investor Charlie Munger‘s fear and negative sentiment towards Bitcoin and cryptocurrency in general will soon be a thing of the past. The old-school generation of corporate finance and Wall Street manipulation must die so the new generation of open source money, free from banks and institutional control, can live.

Categories
Australia Banking Crypto News

Standard Chartered Bank To Provide Crypto To Aussie Institutional Investors

British-based multinational banking and financial services company Standard Chartered will launch a trading platform for institutional investors, with particular relevance to its Australian branch business and local banking in general.

SC Ventures is the innovation and ventures arm of Standard Chartered, which has 87,000 employees in more than 70 nations and US$789.050 billion in total assets. SC has partnered with Asian company BC Technology Group, owner of Hong Kong digital asset platform OSL, to establish a brokerage and exchange platform for clients in the UK and Europe, and ultimately Australia.

The joint venture is expected to be up and running in the fourth quarter of 2021, subject to regulatory approvals, and aims to deliver access to liquidity in Bitcoin, Ethereum and other digital assets.

Another Brick in the Digital Asset Wall

BC Group’s chief information officer Usman Ahmad, who will head up the new company, says that collaboration between market-leading firms is imperative to the continued development of robust global institutional digital asset infrastructure.

This joint venture will aid in maturing the digital asset ecosystem by combining OSL’s expertise in secure digital asset trading with SC Ventures’ capacity to develop future technology capabilities in banking and finance.

Usman Ahmad, SC/BC joint venture CEO

For the record, OSL subsidiary OSL Digital Securities made history in March when it executed Hong Kong’s first-ever licensed digital-asset trades.