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Stablecoin News for the week ending Wednesday 15th September.

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What makes a stablecoin useful?

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

One feature is that Stablecoins offer interim protection to traders from notorious crypto price volatility. They did so by almost maintaining their one dollar-peg and offering sufficient liquidity to traders who looked for a safety net during the market decline.

Blockchain analytics service CryptoQuant reported dramatic spikes in stablecoin transfers as the cryptocurrency market capitalization fell from $2.38 trillion to $2.103 trillion last Tuesday.

For instance, Tether (USDT), the leading stablecoin by volume, processed $10.51 billion worth of transactions on Tuesday compared to $4.02 billion on Monday.

The mean of all stablecoins transfer. Source: CryptoQuant

Similarly, the second-largest stablecoin USD Coin (USDC), backed by Circle, reported $5.728 billion worth of transfers on Tuesday versus $3.27 billion in the previous session, logging a 74% spike.

At the same time, the net stablecoin supply in circulation remained relatively idle, around $67 billion, showcasing adequate liquidity against demand even in the face of a brutal crypto market decline. As a result, many top stablecoins maintained their one-to-on dollar peg despite logging minor price drifts.

Which stablecoins were actually ‘stable’ during this week’s sudden Bitcoin price crash? (cointelegraph.com)

In the meantime, Benoit Coeure, head of innovation hub at the Bank for International Settlements (BIS), in a speech delivered at the Eurofi Financial Forum on Friday, said stablecoins and DeFi platforms will “challenge” bank models, and central banks “have to act while the current system is still in place — and to act now.” But then he moved on to ask a series of questions that Central Banks must have clear, consistent and thought thru answers to.

“Stablecoins may develop as closed ecosystems or “walled gardens”, creating fragmentation. With DeFi protocols,3 any concerns about the assets underlying stablecoins could see contagion spread through a system. And the growing footprint of big techs in finance raises market power and privacy issues, and challenges current regulatory approaches.4

Will the new players complement or crowd out commercial banks? Should central banks open accounts to these new players, and under which regulatory conditions? Which kind of financial intermediation do we need to fund investment and the green transformation? How should public and private money coexist in new ecosystems – for example, should central bank money be used in DeFi rather than private stablecoins?”

Benoit Coeure calls on central banks to ‘act now’ on crypto and DeFi (theblockcrypto.com)

One of the use cases Benoit may have in mind is deep negative interest rates.  According to the Wall Street Journal, central bank digital currencies (CBDCs) could actually negatively impact interest rates by giving policymakers an additional tool. 

In his article, “Digital Currencies Pave Way for Deeply Negative Interest Rates,” senior columnist James Mackintosh argues that the difference between a CBDC and cash would be highlighted if interest rates fell below zero. People would be more inclined to hold on to physical cash to “earn zero” rather than lose money on a digital dollar issued by the central bank.

This means the central bank will have more leverage with interest rates if it issues digital dollars that can’t be stashed under the mattress, he added.

CBDCs could lead to ‘deeply negative interest rates’: Wall Street Journal (cointelegraph.com)

In summary, we have been talking about CBDC’s stablecoins for nearly four years now, yet all we have to show for it are lots of questions and the only use cases for them are negative (interest rates or economic surveillance and control).  In the meantime the privately issued stablecoins continue to grow and are regularly tested at doing one thing – being stable in the Crypto world which is inherently unstable.

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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. 

__________________________________________________________________________________________________________

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.

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Source: https://dailyfintech.com/2021/09/15/stablecoin-news-for-the-week-ending-wednesday-15th-september/

Payments

Everyone is building a wallet

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I was not surprised by Square’s decision to enter the crypto wallet business. In June, at the Bitcoin 2021 Conference in Miami, Jack Dorsey revealed that Square was toying with the idea of a hardware wallet, in order to make bitcoin custody more mainstream. In August, Facebook revealed that it is ready to launch its Novi digital wallet, but it’s on hold until it obtains the necessary regulatory approvals. A few weeks ago, I read that Robinhood is testing a new crypto wallet and cryptocurrency transfer features for its app. Robinhood is planning to allow its customers to send and receive digital currencies off its platform. Today, Robinhood allows users to buy cryptocurrencies, but to be able to send and receive crypto along with paying for things like NFTs in crypto, you need to have a wallet. In April, Revolut started to let users send crypto to external wallets, but they can’t receive coins, since they haven’t issued individual wallets yet and cryptocurrencies are stored in a pooled virtual currency account. With more than 100 crypto wallets and growing, this sector is getting crowded. Everyone wants to play a direct role in the $2.5 trillion crypto market.

Ilias Louis Hatzis is the founder and CEO at Kryptonio wallet. Please participate in our Crypto Wallet Survey, we could use your help. It’s seven simple multiple-choice questions about crypto wallets and you should be done in 60 seconds. The survey is completely anonymous.

Crypto’s immutable nature, makes wallet security a top priority. Immutability is one of the key features of bitcoin and blockchain technology. Immutable transactions make it impossible for any entity to reverse a transaction, once it’s been verified on the blockchain.

The crypto market has been plagued by hacks, thefts and people losing their private key, seed phrase, or forgetting a password.

In a recent article the BBC listed some of the largest hacks and thefts:

  • $610 million was hacked from Poly Network (2021)
  • $2 billion was stolen from Thodex, the Turkish exchange (2021)
  • $281 million was hacked from KuCoin (2020)
  • $40 million worth of bitcoin was hacked from Binance (2019)
  • $146 million was hacked from BitGrail, with 230,000 users losing their funds (2018)
  • $534 million was hacked from Coincheck (2018)
  • $450 million worth of bitcoin was hacked from MtGox (2014)

Over the last 8 years, cybercriminals have stolen at least $15 billion in crypto, and the global pandemic has only increased these attacks.

But hacks are just part of the story. People are people and our human nature is another big reason crypto gets lost.

A recently published study shows that crypto users are not using the best security practices to keep their crypto assets safe and secure from loss or theft. The report by Beyond Identity showed that 63.2% think their crypto wallet password is safe and 3 out of 10 share their crypto wallet password with others.

Here are a few more stories to put things in perspective:

  • Lost Passwords Lock Millionaires out of their Bitcoin fortunes. (New York Times – Jan 12, 2021)
  • “I forgot my PIN”: An epic tale of losing $30,000 in Bitcoin. (WIRED – Oct 29, 2017)
  • Ledger suffered a massive hack that unmasked hundreds of thousands of user profiles and details that led to phishing attacks. (Forbes – Dec 28, 2020)
  • On Coinbase, 6000 customer accounts were drained because of a software flaw in their two-factor security authentication. (Reuters – Oct 2, 2021)
  • Metamask users lose their funds to phishing or social media attacks, giving out their private recovery key, without even knowing. (Twitter – May 18, 2021)

So, figuring out how to safely store digital assets is on everyone’s mind. As the market is booming and it looks like prices will be hitting new all-time highs, no one wants to lose all that stored value.

It’s such a well-known problem, that Tim Dillon created an absolutely brilliant spoof trailer “The Wallet,” that revolves around Tim and his brother, attempting to access their deceased father’s crypto wallet, who died before sharing his wallet’s private key with them.

“Not your keys, not your coins” is an important concept for retail and institutional investors.

According to research by Blockdata, about 4 million bitcoins, or approximately 20% of the total supply, have been lost in orphaned wallets. The vast majority of cryptocurrency investors hold their own assets. That said, with bitcoin’s price over $60k that’s around $240 billion worth of bitcoin that can’t be accessed. That’s too much money to ignore.

Blockdata estimates that there were $371 billion in custodial wallets at the end of Q2, up from $67.8 billion at the same time last year.

It is a no-brainer why Square wants to be in this space. I can also see the attraction for Robinhood. A cryptocurrency wallet is a logical next step for their customer base.

In the past year, we have seen a widespread push for credibility in the digital currency space from decentralized coins like bitcoin and ethereum, to central bank digital currencies and security is paramount moving forward.

The next battleground will be cryptocurrency wallets. Crypto wallets will not only serve as a means of gaining wallet market share for their creators but also as a battleground for mind share.

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Source: https://dailyfintech.com/2021/10/18/everyone-is-building-a-wallet/

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This Week in Fintech ending 15 October 2021

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This week our experts brought you the following insights based on their experience as investors, entrepreneurs & executives.

Monday Ilias Hatzis our Greece-based crypto entrepreneur (Founder & CEO at  Kryptonio a “keyless” non-custodial bitcoin and cryptocurrency wallet, that lets users manage bitcoin and crypto, without private keys or passwords and Weekly Columnist at Daily Fintech) @iliashatzis wrote Bitcoin stronger than ever

Bitcoin hit $55,000 for the first time since mid-May, as cryptocurrency prices continue to rise in October. Bitcoin exceeded $55,833 according to Coinmarketcap on Friday.

The last time it moved at similar levels was in May before it collapsed after Elon Mush tweeted that Tesla would stop accepting bitcoin for car purchases due to environmental concerns.

Editor note: Bitcoin is a fortunate pawn in the geopolitical Cold War between America and China. If China bans crypto, America will embrace the wealth producing capability of crypto.

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Tuesday Bernard Lunn, CEO of Daily Fintech and author of The Blockchain Economy wrote: Part 2 Ethereum’s big transition to Proof Of Stake

A much heralded part of Ethereum 2.0 is the transition to Proof Of Stake. It may happen during 2021 or 2022.

With Proof Of Stake, users validate transactions based on the number of coins they hold. For example, the more ETH a user has, the more power they possess. This is not mining, it is more like voting shares. Voting eliminates the energy needed for mining and should be faster, so that transactions can be done in under 3 seconds (ie “human real time”, short enough to impact consumer behaviour, as in “did you get my payment”, “wait, OK I see it, thanks”).

Proof Of Stake (POS) appeals to the financial establishment for 4 reasons.

Editor note: Some subjects are too complex for our short attention spans, so we do 4 posts one week apart, each one short enough not to lose your attention but in aggregate doing justice to the complexity of the subject. Stay tuned by subscribing.

Wednesday Alan Scott Managing Director EMEA at 24 Exchange @Alan_SmartMoney wrote his weekly roundup of Stablecoin news.

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Thursday

Rintu Patnaik, an Insurtech expert based in India, wrote: Win Some, Lose Some in Accelerated Life Insurance Underwriting

Life insurance ownership has seen a decline in the recent past. There was an estimated $25 trillion gap between coverage purchased and needed in the event of a loved one’s death in 2016, in the US alone. Suboptimal processes might have contributed to this shortfall. Consider something as basic as getting a physical examination, often required to buy a policy. Research found that half of respondents were more likely to purchase if this invasive step was removed.

Editor note: Of course life insurers need to know our health to estimate our longevity but the physical exam is a) only a snapshot in time and b) a huge hurdle to adoption.

Christian Dreyer @x3er, the Swiss based CFA who focusses on how XBRL changes our world wrote his weekly roundup of XBRL news.

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Friday Howard Tolman, a well-known banker, technologist and entrepreneur in London, wrote his weekly roundup of Alt Lending news.

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Source: https://dailyfintech.com/2021/10/15/66301/

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Payments

Alt Lending Week ending 15th October 2021

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Consumers need to know about new financial products!

While the concept of BNPL (Buy now pay later loans) is as old as the hills the app based finance providers are not. The commentary in the cnbc piece is interesting as it exposes the fact that regulation takes some time to catch up with product development and consumer protection legislation differs widely from country to country. In fact this issue is not new at all. Regulation has always lagged behind market innovation but whereas in the past the vast majority of new products were emerging in wholesale markets and the bankers themselves were deemed to know what they were doing this does not necessarily apply to consumer finance. As usual the situation consumer protection is largely opaque. It is up to the borrower to know what their rights and protections are. Taking out a BNPL loan can effect such things as an individual’s credit score in ways which are not necessarily understood as well as complicating the relationship between buyer and seller. Caveat emptor indeed.

Evergrande – What happens next?

Chinese  behemoth Evergrande  is inevitably in the financial news more or less every day with deadlines and payments being missed with depressing regularity. What is truly astonishing about this is the sheer size and scope of its operations together with the geo political distribution of its liabilities. It’s quite clear that a potential default of this size, north of $ 300 billion, will have a significant impact on the world at large. We will presumably find out when and if it happens but the pessimistic  comment coming from the financial press is disturbing. The old and widely quoted Chinese curse “may you live in interesting times” is likely to show us all exactly what that means. The uncertainty is already making investors and lenders start to look very carefully at the opacity of the Chinese market and the possibility of a sectoral collapse in the property and construction area which has been running hot for years. Interesting indeed.

SME’s take on more debt during pandemic

It’s official then. SME’s have taken on more debt during the pandemic. We know this because the Bank of England has told us. I suspect the same thing is happening all over the European continent and with the same baleful outcomes. Seriously though what did the government of the UK or other European countries think about businesses that were essentially stopped from doing any kind of businesses. Obviously the big names hit the headlines, Airline companies, hospitality, non essential (in who’s opinion/?) retail. The Uk government’s approach was to hose them down with money so they could bounce back! I don’t suppose that much thought was given to the fact that the world would have profoundly changed when the time came to repay this debt or that the banking system would not have been negatively affected. Payback time is rapidly approaching in the traditional and non traditional sense and I don’t think that it’s going to be pretty. We all know that the government is guaranteeing most of the COVID support loans but the devil will be in the detail of the arrangements between the treasury and the distributing banks and the resources that they are capable of deploying for debt collection.  I’m afraid there will be a lot of blood on the carpet.

Howard Tolman is a well-known banker, technologist and entrepreneur in London,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 Alt Lending please read the Interview with Howard Tolman about the future of Alt Lending and read articles tagged Alt Lending in our archives.

Daily Fintech’s original insight is made available to you for US$143 a year (which equates to $2.75 per week). $2.75 buys you a coffee (maybe), or the cost of a week’s subscription to the global Fintech blog – caffeine for the mind that could be worth $ millions.

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Source: https://dailyfintech.com/2021/10/15/alt-lending-week-ending-15th-october-2021/

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XBRL News about sustainability reporting, proxy votes and value chain reengineering

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Here are the three most relevant developments in the world of structured reporting we became aware of in the course of last week.

1  Ep. 5: Jason Meyers on Continuous Audit and Real-Time Reporting

Jason is currently developing the only known use case of blockchain for the auditing industry with AuditChain, and bringing some much needed change with real time assurance and financial reporting. If Satoshi Nakamoto will go down in history as the inventor of the world’s first peer to peer payment system without central intermediary with Bitcoin, Jason will be remembered for being the pioneer of decentralized continuous audit.

Listen to this at your own peril if you’re currently engaged in state-of-the-art financial reporting. Auditchain provides an (the?) infrastructure for reengineering the full reporting value chain, in which XBRL plays a crucial role. Note that the author has a commercial interest in this. 

2  SEC proposes enhanced, structured disclosures on proxy votes

XBRL looks set to be deployed for reporting on funds stewardship in the US, facilitating access to information on how asset managers are voting at AGMs. The US Securities and Exchange Commission (SEC) has proposed rule changes to enhance the information disclosed by investment funds about their proxy votes, in the form of amendments to its Form N-PX. Crucially, in addition to improvements to the content of disclosures, it would require filers to use “an XML structured data language.” 

Proxy voting behaviour by asset managers is an important piece of information in the assessment of their engagement activity, especially when monitoring for greenwashing. This information is currently accessible through tedious manual labour only. This proposal will hopefully change that.

3  Insights on reporting the business model, sustainability risks and opportunities

​​Following a collaborative effort in the review of reporting practices and gathering stakeholder feedback, the PTF-RNFRO, whose focus was on the reporting on sustainability risks and opportunities and the linkage to the business model- a key element of a proposal for a Corporate Sustainability Reporting Directive (CSRD)- has published its findings in a Main Report and Supplementary Document with good reporting practices.

Although rife with Eurospeak acronyms, these insights indeed provide helpful pointers to current best practice in business model and sustainability reporting, which – admittedly – is a dynamic space.

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Christian Dreyer CFA is well known in Swiss Fintech circles as an expert in XBRL and financial reporting for investors.

 We have a self-imposed constraint of 3 news stories each week because we serve busy senior leaders in Fintech who need just enough information to get on with their job.

 For context on XBRL please read this introduction to our XBRL Week in 2016 and read articles tagged XBRL in our archives. 

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

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
Click here to access.

Source: https://dailyfintech.com/2021/10/14/xbrl-news-about-sustainability-reporting-proxy-votes-and-value-chain-reengineering/

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