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Stablecoin News for the week ending Tuesday 11th August

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Here is our pick of the 3 most important Stablecoin news stories during the week.

Russia’s bill to regulate cryptocurrencies has been signed into law by President Vladimir Putin. The new law gives legal status to cryptocurrency but prohibits its use as a means of payment.

The law provides a definition to digital currency, stating that it “is recognized as an aggregate of electronic data capable of being accepted as the payment means, not being the monetary unit of the Russian Federation or a foreign state, and as investments,” Russian news agency TASS described. “The digital currency cannot be used at the same time to pay for any goods and services.”

Meanwhile, the law sets forth that digital financial assets “are digital rights comprising money claims, ability to exercise rights under negotiable securities, rights to participate in equity of a non-public stock company and right to claim transfer of negotiable securities set in a resolution on the DFA issue,” TASS noted. These assets can be sold, purchased, exchanged, and pledged. However, they cannot be used as a means of payment.

Russian banks and exchanges can become exchange operators of digital financial assets provided that they register with the central bank, the Bank of Russia.

Almost the very next day up pops SberBank, the largest and state owned retail Bank in Russia, with advanced plans to use Hyperledger for it’s very own stablecoin.

Russia’s Biggest Bank Considers Launching Its Own Stablecoin

Meanwhile, China’s big four state-owned commercial banks have started large-scale internal testing of what would be the world’s first sovereign digital currency, as the launch of the digital yuan appeared to move a step closer, the 21st Century Business Herald reported on Thursday.

The Bank of China, the China Construction Bank, the Industrial and Commercial Bank of China and the Agricultural Bank of China are working on the digital yuan with the central bank in major cities, including Shenzhen, according to the Guangzhou-based newspaper.

Users taking part in the trial can use the app to top up their accounts, withdraw money, make payments and transfer money after registering with their mobile phone number. The banks are also testing a scenario where a user can make a transfer to another account without an internet connection, the newspaper added.

China’s digital currency edges closer with large-scale test by state banks

Another interesting angle on the Chinese CBDC from the FT, they speculate that in the past, the People’s Bank of China (PBOC or Central Bank) gave the local Tech giants an easy ride in the payments space and is now looking to balance things going forward.

China’s new digital currency takes aim at Alibaba and Tencent

So what we are seeing is that these two very centralised State actors are looking at CBDC’s as an opportunity for the Central Banks to give the State Banks a major leg up.  Will the west follow or go a very different way?

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Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years.  

We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.

For context on stablecoins please read this introductory interview with Alan “How stablecoins will change our world” and read articles tagged stablecoin in our archives. 

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New readers can read 3 free articles.  To  become a member with full access to all that Daily Fintech offers,  the cost is just US$143 a year (= $0.39 per day or $2.75 per week). For less than one cup of coffee you get a week full of caffeine for the mind.

Source: https://dailyfintech.com/2020/08/12/stablecoin-news-for-the-week-ending-tuesday-11th-august/

Fintech

Venture capital helps ‘buy now, pay later’ fintech business Affirm to $500m investment round

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Affirm, a buy-now-pay-later tech startup, has closed its Series G round on $500m.
The investment was led by GIC and Dura

Source: https://www.altassets.net/private-equity-news/by-news-type/deal-news/venture-capital-helps-buy-now-pay-later-fintech-business-affirm-to-500m-investment-round.html

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Payments

Here’s how Nasdaq-listed MicroStrategy went about buying $175m in Bitcoin

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MicroStrategy has become the poster child of mainstream Bitcoin adoption amongst corporations. It is the only publicly listed company to turn towards BTC as a reserve asset to store their capital in.

Their announcement last month regarding their decision to ditch the US Dollar in favor of BTC to store their capital was a big one, because it showed that the benchmark digital asset is gaining utility as a store of value.

For a company with hundreds of millions of dollars in cash, the decision makes sense, as the crypto’s scarcity allows them to avoid the massive losses that would otherwise be incurred due to inflation.

Acquiring this much BTC without going through over the counter (OTC) venues is no easy task, however, and the company’s CEO explained in a recent tweet how they went about doing this.

MicroStrategy now holds 38,250 Bitcoin 

Earlier this week, Microstrategy CEO Michael Saylor announced that his company had doubled down on their Bitcoin bet, adding $175m worth of the digital asset to their holdings.

This massive purchase came about just weeks after the company had revealed its plans to switch to an alternative Bitcoin-focused financial strategy. They now intend to hold their entire capital reserves in BTC to avoid inflation and devaluation of the US Dollar, which is being printed at unprecedented rates.

This strategy is unprecedented and was kicked off by the purchase of a whopping $250m worth of the digital asset.

The company revealed on September 15th that they were buying even more BTC, conducting a $175 million purchase via the spot retail markets. This may have caused Bitcoin’s price to rally to $10,900 while the rest of the market trended lower.

Their total holdings now stack up to 38,250 Bitcoin, with an aggregated purchase price of $425 million.

Here’s how MicroStrategy market-bought 16,796 BTC

During their latest bout of purchasing, MicroStrategy used the retail market to acquire their crypto, with the company’s CEO explaining that they purchased 16,796 BTC throughout 74 hours of continuous trading.

“To acquire 16,796 BTC (disclosed  9/14/20), we traded continuously 74 hours, executing 88,617 trades ~0.19 BTC each 3 seconds. ~$39,414 in BTC per minute, but at all times we were ready to purchase $30-50 million in a few seconds if we got lucky with a 1-2% downward spike.”

The massive amount of capital that was introduced into the market as a result of these 74 hours of continuous trading likely had lasting impacts that may still be influencing Bitcoin.

Bitcoin, currently ranked #1 by market cap, is down 0.45% over the past 24 hours. BTC has a market cap of $202.22B with a 24 hour volume of $26.08B.

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Source: https://cryptoslate.com/heres-how-nasdaq-listed-microstrategy-went-about-buying-175m-in-bitcoin/

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CoinTelegraph

EU to see comprehensive crypto regulation by 2024

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The European Union, or EU, plans to incorporate crypto and blockchain technology into its main processes by 2024. 

Over the next four years, the economic union aims to firm up fresh regulations that will promote blockchain and digital asset usage for international money transfers, according to internal documents that Reuters reported on Friday. 

The documents detailed:

“By 2024, the EU should put in place a comprehensive framework enabling the uptake of distributed ledger technology (DLT) and crypto-assets in the financial sector […] It should also address the risks associated with these technologies.”

Finding that almost 80% of its population transacts in paper money, the European Commission, the union’s governing entity, wants to see digital payments become more common, while aiming for immediate transaction times, Reuters explained.

The commission’s reported aims include a desire for increased data access, financial activities availability — all while aiming for increased efficiency. “By 2024, the principle of passporting and a one-stop shop licensing should apply in all areas which hold strong potential for digital finance,” the documents noted. Over the next year, fast transaction avenues will likely take over, Reuters added. 

Although the COVID-19 pandemic may have expedited the desire for digital payments across the globe, blockchain and crypto assets have been the talk of the regulatory town, with many countries looking toward central bank digital currencies to streamline their payments infrastructures. 

UPDATE Sept. 18, 21:00 UTC: This article has been updated. 

Source: https://cointelegraph.com/news/eu-to-see-comprehensive-crypto-regulation-by-2024

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