Category: Institutions

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Crypto News Cryptocurrencies Institutions Payments

VISA Partners with 50+ Crypto Companies as Everyone Plans to Launch Crypto-Linked Cards

Visa has announced it will partner with more than 50 leading crypto companies after reporting a successful first quarter of 2021, with over US$1 billion spent on crypto-linked Visa cards.

After working with industry-leading companies such as BlockFi, Coinbase and Crypto.Com, Visa plans more partnerships to facilitate conversions across 70 million merchants worldwide.

Merchants won’t have to accept cryptocurrencies as such, as the network will convert crypto transactions into fiat. As reported in March, Visa expanded its MCO cards in Australia via a global alliance with Crypto.com.

Cardholders Will Have the Option to Pay with Stablecoins

Visa outlined the “developer-friendly” features of stablecoins and how the market for these has grown to US$100 billion: “Stablecoins are starting to live up to the promise of digital fiat: the developer-friendly characteristics of cryptocurrency combined with the reliability of fiat-backed reserves.”

In a 2020 project, Visa worked on integrating the US Dollar Coin (USDC) into its network.

In the future, we also plan to allow cardholders to pay their balances using stablecoins. We are also working on giving cardholders the option to select how they would like to earn their rewards from any cryptocurrency that we support on BlockFi.

Visa blog post

Visa continues to support the cryptocurrency ecosystem because it foresees a sizeable market with potential use cases. “It’s clear that the crypto community sees value in linking digital currencies to Visa’s global network,” reads the blog post.

Visa Moves to Alleviate Cryptocurrency Concerns

However, Visa has faced numerous inquiries and concerns from investors and regulators about the perceived risks of digital assets. To alleviate these concerns, the payments giant has engaged with policymakers and global organisations to help promote a better concept of cryptocurrencies.

We are doing a lot to create an ecosystem that makes cryptocurrency more usable and more like any other currency. People are exploring ways in which they can use cryptocurrencies for things they would use normal currencies for. There are lots of issues in terms of volatility, etcetera. But that’s up to the owners of cryptocurrencies to manage and track.

Vasant Prabhu, chief financial officer, Visa

While it is bullish to help spread further adoption of cryptocurrencies, some in the DeFi and crypto community argue that a centralised institution holding and operating cryptoassets undermines the original ethos of crypto.

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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).

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Australia Crypto News Institutions Regulation

Aussie Crypto Companies Call for Regulatory Certainty

More Australian crypto companies are requesting clearer and updated regulations for the digital asset environment, prompting the Australian Fintech Senate to create “innovation-friendly” measures.

These suggestions come after the fintech committee set specific guidelines for submitters to send their requests regarding topics related to technology and finance and how Australia can benefit from emerging technologies, as well as becoming a hub in those fields.

Aussie crypto exchange Swyftx recommended the senate should look at establishing a robust regulatory regime for digital assets in Australia that would remove any uncertainty or doubt for service providers and customers.

A dedicated and harmonised framework is therefore necessary … to provide specific rules for crypto assets and related activities and services and to clarify the applicable legal framework … Such a framework should support innovation and fair competition while ensuring a high level of consumer protection and market integrity in crypto-asset markets.

Swyftx letter to Fintech Senate

Australians are Demanding Access to Crypto Services

The interest in cryptocurrencies in Australia remains strong despite the fact that several high-market cap currencies as Ethereum and Bitcoin have halved while DeFi tokens and altcoins are leading the market.

The crypto community in Australia has already pointed out that the current regulatory measures do not necessarily work for blockchain and cryptocurrencies. According to R3, an enterprise software platform working with blockchain technology, simplicity is key to designing proper frameworks for crypto assets.

Simplicity is key in designing frameworks. Layering additional regulations on top of already robust and effective frameworks would only complicate the industry and inhibit innovation with no resulting upside.

R3 statement

The company noted that the government should align digital asset regulations following the principle of “same risk, same activity, same treatment”.

Australia Has a ‘Unique but Diminishing Opportunity’ to Become a Leader in the Crypto Space

On the other hand, Bitaroo, an Australian BTC-only exchange, suggested Australia should follow El Salvador’s example and recognise bitcoin as a foreign currency.

By recognising bitcoin as a foreign currency and by exempting capital gains tax on foreign currencies, Australia has a unique but rapidly diminishing opportunity to position itself as a global and forward-thinking leader in this space.

Bitaroo statement

In a consultation paper published on June 30, the Australian Securities and Investment Commission (ASIC) laid out guidelines for the inclusion of cryptocurrencies in exchange-traded products (ETPs). ASIC is seeking feedback from market participants to adjust rules for local operators and to protect crypto service platforms and consumers alike.

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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]”.

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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.

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Bitcoin Crypto News Institutions Regulation

Up to $435 Billion Could Flow into Crypto as New Legislation is Approved in Germany

Updated regulations around crypto investments in Germany could lead to a US$435 billion inflow to the crypto economy from German institutional funds.

The new Fund Location Act (Fondsstandortgesetz) comes into play from July 1, pending a final decision by the German Bundesrat (Federal Council).

Big Investment Managers Can Now Invest 20% in Crypto

The new act allows existing German special funds (Spezialfonds) to invest up to 20 percent of their portfolios in Bitcoin (BTC) and Ethereum (ETH). Before this new regulation was passed, these funds were prohibited to invest in crypto.

Spezialfonds are considered the German institutional fund vehicle of choice for most liquid asset classes, and for property within distinct structures.

Jacqueline Winter, Blockchain Capital
blocksize-capital

Sven Hildebrandt, CEO of Germany-based Distributed Ledger Consulting (DLC), said there could be a theoretical inflow potential for crypto assets in the order of US$435 billion.

This won’t happen overnight, but we are talking about the largest investment vehicle that we have in Germany – literally all the money is in there.

Sven Hildebrandt, Distributed Ledger Consulting

This amounts to around 20 percent of the estimated assets under management of these wealth and institutional investment fund managers. Their 4,000 open-end domestic special funds currently have an estimated €1.87 trillion tied up, some of which could flow into crypto. This legislation being passed by one of the economic powerhouses of the world could spell good news for wider institutional acceptance.

Coinbase Crypto Services Approved in Germany

According to a report, Coinbase has recently secured a Federal Financial Supervisory Authority (BaFin) licence to conduct business in Germany.

The Nasdaq-listed company holds the first licence issued by BaFin for crypto custody and trading, which is now legally seen as a financial service in Germany.

In an attempt to combat money laundering and fraud, the German government has issued new regulations that require a licence to deal with digital assets. Coinbase can now legally conduct business in Germany and Japan and could open the doors for new investors.

Coinbase Germany will launch in coming weeks to serve both new and existing German customers more effectively, including by localising our service and increasing our product offering.

Coinbase Germany press release

Will we see the German giants put up a fight against the various other institutional powerhouses across the globe? Watch this space …

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Crypto News Institutions Investing

PayPal and Visa Bet on Blockchain Capital’s US$300 Million Fund

Blockchain Capital, one of the oldest venture capital firms focused on crypto technology, has secured US$300 million in funding with high-profile partners PayPal and Visa.

Blockchain Capital announced the close of Blockchain Capital V, LP, a fund heavily oversubscribed at its US$300 million hard cap, which saw the participation of many strategic investors, pension funds and major university endowments.

Payment Giants Investing in Crypto Companies

Blockchain Capital is a leading venture firm in the crypto industry and has previously worked with several high-profile crypto companies such as Ripple, Kraken, Coinbase, and Anchorage. On June 21, the firm -together with Morgan Stanley Tactical Value – led a US$48 million Series B funding round for Securitize, a Coinbase-backed asset tokenisation platform.

We are incredibly honoured to welcome a world-class group of investors into Fund V who appreciate the value of a firm dedicated to a single industry. As founders ourselves, we know how hard it is to build companies, protocols and, indeed, a whole new industry.

Blockchain Capital co-founder and managing partner Bart Stephens

The Fund V will be focused on DeFi (Decentralised) and NFTs (Non-Fungible Tokens) startups while avoiding the assets themselves. The firm has the decentralised NFT marketplace OpenSea as part of its portfolio.

PayPal’s Head of Crypto, Jose Fernandez da Ponte, said that investing in Blockchain Capital’s new fund allows it to connect with the entrepreneurs leading the change for the DeFi world:

PayPal is committed to fostering an ecosystem of companies making digital currencies more accessible, useful and secure. Investing in Blockchain Capital’s new fund allows us to engage with the entrepreneurs driving the future of the decentralised economy and the new wave of financial services.

Jose Fernandez da Ponte

The firm said PayPal, Visa and other Fund V investors will take part in its strategic partnership program.

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Bitcoin Crypto News Institutions Investing

Goldman Sachs Investors Divided on Whether Bitcoin is an Investable Asset

Goldman Sachs investors don’t seem to agree on whether Bitcoin (BTC) is an investable asset or not.

The multinational investment bank issued a report on June 15 called “Digital Assets: Beauty Is Not in the Eye of the Beholder” – concluding that Bitcoin is no longer an investable asset.

Bitcoin is Not “Digital Gold“

This new report was issued by the bank’s Investment Strategy Group and contradicts its plans to launch crypto investment services in Q2 for its wealthiest clients. As reported, Goldman Sachs began trading Bitcoin futures on June 18 in a partnership with Galaxy Digital.

Further, the report concludes that Bitcoin itself is not digital gold, as gold is not a “reliable store of value”:

The argument that Bitcoin and cryptocurrencies are a digital version of gold does not confer any value to Bitcoin and other cryptocurrencies, because gold itself is not a consistent or reliable store of value.

Crypto May Not Be As Viable an Investment as Many Thought

This also contradicts Goldman Sachs’ May 21 report called “Crypto, a New Assets Class?” where several experts in the crypto field, such as Galaxy CEO Mike Novogratz, were gathered to analyse the current market, outlining a positive future for cryptocurrencies and stating that they were a new alternative investment.

The report suggested that despite many advances in blockchain technology, this would become obsolete with time and many enterprises would turn away from it. It concluded by saying cryptocurrencies are not a “viable investment” for their clients:

After analysing various valuation methodologies and our multi-factor strategy asset allocation model, we have concluded that cryptocurrencies are not a viable investment for our clients.

Categories
Crypto News DeFi Institutions

Switzerland Bank to Offer DeFi Yield and Lending With Ethereum

Switzerland’s Sygnum Bank will allow investors to dive into the decentralised finance world by launching custody and trading for several DeFi tokens.

According to a recent blog post, the bank will offer trading services for up to seven leading tokens in the DeFi market: Aave, Synthetix, UNI (Uniswap), Aragon, Curve, Maker, and 1inch Network.

This is the next step on our journey to enable a variety of yield-generating products in the digital-asset space. These can either be based on the proof-of-stake protocol, so staking itself, or also leveraging and decentralised lending to generate yield for our clients, which is a bit further out on the roadmap.

Thomas Eichenberger, Sygnum Bank’s head of business units
Sygnum is a digital assets bank founded on Swiss and Singaporean heritage

Banks Rush to Explore DeFi

With a TLV (Total Lock Value) of US$60 billion, banks are rushing to explore the DeFi world as more institutional investors show interest in investing in it. In a further note, Sygnum outlined that the fast-paced growth of the DeFi ecosystem will “play an increasingly relevant role in shaping Future Finance”.

Besides custody and trading, the institution also launched banking services for USDC and intends to launch yield-generating products for its institutional clients. This bridges the institutional space with the decentralised one in a regulated manner.

DeFi Personal Banking Set to Take Off

As DeFi expands across international financial markets, investor Mark Cuban believes DeFi can revolutionise the way people do banking in the future. Cuban claims that while DeFi is hard for the average person to understand at first, once it becomes as easy to use as credit cards there will be a massive take-off in adoption.

Australia is not falling behind when it comes to DeFi as more Australian startups are emerging as international leaders in DeFi and tokenisation. Among some of these projects is Synthetix, a derivative liquidity protocol, and Ren Protocol, which provides inter-blockchain liquidity for dapps (decentralised applications).

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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.