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New Zealand To Take It Slow With The Development Of CBDC; Research To Carry On In Full Swing

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Countries have been working towards incorporating technological changes into the financial sector as the world traverses towards digitalization. While digital payment systems have already made their way into the global economic scene, Central Bank Digital Currencies [CBDC] is striving to enter the markets. As China has stepped up its game in developing CBDCs, several other countries are trying to catch up with it. However, New Zealand revealed that it was going at a slower pace, with regard to the development of its native CBDC.

New Zealand To Extensively Probe Development Of CBDC

Fearing China’s global take over in terms of CBDC development, many countries have been fastening the process. But, New Zealand seems to value a better understanding of CBDCs than a faster one. As per a recent speech by the Assistant Governor of the Reserve Bank of New Zealand, at The Royal Numismatic Society of New Zealand, Annual Conference, Wellington the bank will prolong its research on the development of CBDC as well as a state-issued digital currency.

The Assistant Governor, Christian Hawkesby said in his speech,

“[….] we have no immediate plans to launch a CBDC in New Zealand. We are,
however, following developments very carefully, and are among the 80 percent of central
banks that are actively researching CBDCs.”

The need to be ahead in the game of financial innovation is undoubtedly the concern of several countries. However, New Zealand revealed that it would tend to the immediate requirement of developing a CBDC as the “catalysts for researching CBDC depend on local needs.”

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China has already jumped on to the testing stage of its CBDC the digital yuan. However, a recent report formulated by the Bank of International Settlements [BIS] along with a few Central Banks laid out the requirements of a CBDC as opposed to the issuance of these currencies.

While cryptocurrencies have proved to be a topic of interest for economically suppressed countries, the fate of CBDCs in such economies is rather uncertain. The Assistant Governor further added,

“Central banks in economies with declining use of, and access to, cash are considering
whether a CBDC could deliver an additional form of legal tender. For example, in Sweden,
the Riksbank is considering an e-krona as a digital complement to cash given the decline of
cash in circulation.”

Bank of England Governor Discusses the Intrinsic and Extrinsic Values of Bitcoin- Claims Use Cases are Still Uncertain

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Since its inception, Bitcoin has been faced with a fair share of critics and critics. Many have opined that bitcoin was just a hype token with no inherent value that would help the economy.

Although the world’s largest cryptocurrency has come a long way in terms of price and functionality, members of the traditional financial world still continued to struggle to see its potential. This widespread sentiment was put on display recently by Bank of England Governor Andrew Bailey who said that it was hard to see any intrinsic value possessed by Bitcoin.

During a recent interview, Bailey talked about the changes in today’s world economy and how new technologies were rapidly changing the economic landscape. He went on to talk about Bitcoin and its resurgence over the past couple of years that inspired many people to jump on board the cryptocurrency bandwagon. The Bank of England Governor was frank in mentioning that he did not see any intrinsic value in Bitcoin although there was an extrinsic appeal to it.

The BoE official added that he was very nervous about people using Bitcoin for day to day payments. According to him, there was an uncertainty factor when it came to cryptocurrencies as they continued to be volatile even in 2020. At press time, Bitcoin was trading for $11,470 with a total market cap of $212.38 billion. A 7 percent price increase in the past week had elevated the cryptocurrency’s daily trading volume to $28.67 billion.

Officials from traditional organizations have always been critical of Bitcoin and compatriots, and the latest comments show that there are no signs of it letting off. Bailey’s comments come at a time when some countries were taking a positive stance towards crypto. Just recently, the European Central Bank had revealed that they were planning to trademark the term ‘digital euro’, a sign that virtual assets were moving towards the mainstream realm.

European Central Bank Takes Major Step Towards Crypto Adoption- Plans to Trademark “Digital Euro”

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The world of cryptocurrencies has come a long way since the first Bitcoin was first created by Satoshi Nakamoto. From being considered as a fringe asset class, cryptocurrencies were now being integrated into national government frameworks.

Latest reports from the European Central Bank revealed that the body was in the process of trademarking the term “digital euro”. This comes at a time when several governments across the world were also dabbling in creating their own centrally backed digital currencies.

Information from the bank revealed that the trademark application was filed on September 22 with the intent of pushing the digital movement. The bank added that the trademark would facilitate the seamless and safe integration of the digital economy with the current fiat institution. This decision comes on the back of the ECB’s mantra that they need to be plugged into the latest fintech developments.

Christian Lagarde, the President of the ECB has repeatedly been in the news for addressing cryptocurrencies and the way the financial sphere may transform in the years to come. During a recent speech, she said:

“The Eurosystem has so far not made a decision on whether to introduce a digital euro. But, like many other central banks around the world, we are exploring the benefits, risks and operational challenges of doing so. We have a duty to play an active role in balancing the risks and benefits of innovation in payments, so that money continues to serve Europeans well.”

The discussion on digital currency adoption has been ongoing for years now and it is only now that it has received major traction After the report was made public, the cryptocurrency community was filled with a lot of positive reactions. Many believed that the acceptance shown by a traditional institution was just the key required to bring crypto into the mainstream fore. It still remains to be seen how the digital euro will be implemented which will have far-reaching implications on all of the financial space.

 

Visa Sheds Light On Its Exit From The Libra Project

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The crypto-verse is luring in several mainstream platforms into exploring the prospects of cryptocurrencies. After payments giant, PayPal expressed its interest in crypto, another popular financial service company, Visa seems to have jumped the bandwagon.

In a recent interview with Forbes, Cuy Sheffield, the senior director, head pf crypto at Visa along with Terry Angelos, SVP global head of fintech at Visa addressed several elements and elaborated on the incorporation of crypto in Visa. Sheffield pointed out that, Visa was working on both the product as well as the research side of digital currency. Despite, this the platform is reportedly yet to discuss new strategies.

Back in February 2020, San-Fransico’s prominent cryptocurrency exchange, Coinbase revealed its association with Visa by unveiling the Coinbase Card. This card is a Visa debit card that permitted users to withdraw their cryptocurrencies. The entire partnership put both the parties under the crypto spotlight as it was the first of its kind.  Revealing that Visa had onboarded about 25 companies, Angelos added,

“We are seeing significant interest in demand from crypto companies that want to work with Visa and connect their clients to our network of 60-plus million merchants.”

Visa To Work On CBDC?

Central Bank Digital Currencies have drawn the attention of several governments across the world. China’s advancement in the same has turned several heads. Speaking about the integration of CBDCs into the economy, Sheffield pointed out that Visa’s relationship with central banks is not news. Visa has been working with several central banks across the globe and discussions about CBDCs has reportedly gained more traction. While several continue to diss stablecoins formulated by private companies, Sheffield believes that CBDCs would have to deal with similar prospects.

Stressing on the process of including CBDCs into the global economy, he added,

“[…]We think there’s a big opportunity for Visa to leverage our existing network and assets and expertise to add value to both central banks as they think about CBDCs, as well as to other private sector entities that are exploring these privately issued stable coins.”

Exiting The Libra Project

Facebook’s crypto venture, Libra had stirred the entire globe. As the regulatory pressure around the project surged, several members of the project walked out of the door. Shedding some light on the same, Sheffield put forth a conjecture that the payments platform was keen on aiding digital asset projects that the “diverse set of clients demand.” The focus was more on delivering a service that worked with a wide variety of digital currencies and networks, he added.

Furthermore, Angelos said,

“If we join a consortium, it’ll be because we want to influence and help some of those principles that we believe in be executed.”

Lockdowns Due to COVID-19 Seems to Have Lent Traction to Fintech Acceptance Movements; Changes Here to Stay

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The coronavirus pandemic has brought with it multiple changes that have permeated almost all major industries on the planet. One of the sectors where the effects of the pandemic have been felt is the financial world, which is in the midst of a complete transformation.

The latest studies have shown that as the pandemic has progressed, more and more people were delving into the world of financial applications. This was a marked change from the time when people preferred in-person meetings with their brick and mortar establishments.

Market experts have stated the pandemic has revealed the underlying expectations of users who are involved in making big money transfers. Since a majority of the people were stuck at homes because of government-mandated lockdowns, they were delving into mobile applications built by banks as well as non-banks. The non-banking sector has been heavily involved in the fintech area for some time now and their progress has beaten all market expectations.

One of the fintech firms that has benefitted massively from this pandemic was the San Fransisco based Plaid. The firm, which was recently acquired by Visa for a whopping $5.3 billion has been on a roll with many services using its digital architecture to carry out transactions on a large scale. Plaid’s chief executive Zach Perret went on an interview with CNN, where he stated:

“I think the pandemic has made it incredibly clear that digital financial services are here to stay. People are trying digital finance for the first time. It’s going from an attitude where people think, ‘I do my banking in person,’ or, ‘I do financial services in person,’ to an attitude of thinking, ‘I could use these digital services. Breaking that zero-to-one gap, that’s the biggest gap.”

Analysts have also agreed with Perrett’s sentiment, with many predicting a future where big banks will make use of fintech architecture to keep up with customer demands. New technologies like blockchain and smart contracts have opened up an entirely new avenue for speed and efficiency. Although the cryptocurrency market still has a major share of critics, more and more people were warming up to the idea of its foundation, blockchain technology. As major banks try to create their own version of the existing blockchain system, only time will tell if it becomes a complete mainstay.

California-Based Blockchain Capital The Latest Addition To Libra Association

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After receiving immense backlash from regulators across the globe, social media giant, Facebook, decided to delay the release of the Libra project. The project had previously assured to meet the regulatory requirements put forth by the regulators and the latest news suggests that the platform is at it.

Libra Association On-Boards Latest Member

The social media giant seems to be back on track with its Libra project as the Libra Association has been rolling out an array of updates pertaining to the project. On Friday, the Association welcomed Blockchain Capital, a San Fransisco-based venture capital company. The platform was rolled out back in 2013 and co-founder, Bart Stephens elaborated on his view about the company’s association with the Libra project. He added,

“We’re honored to join the Libra Association and believe deeply in the mission of creating a more equitable payment system. Leveraging blockchain technology to improve financial access and promote innovation has been at the core of Blockchain Capital’s portfolio strategy.”

After severe regulatory opposition from the SEC last year, several members of the Libra Association bid adieu to the project. Prominent platforms like, PayPal, Mastercard, Visa, Stripe, and several others exited the project. However, everything seems to be falling in place for the Association as it recently on-boarded, Temasek, an investment firm in Singapore, and Slow Ventures along with Paradigm.

Furthermore, just this week the Association hired, James Emmett a former HSBC Exec as the Managing Director of Libra Networks. This list goes on as the platform recruited several to spearhead the operations at Libra.

Dante Disparte, the Vice Chairman and head of policy and communications at the Libra Association was pleased with the latest alliance as he stated,

“As a member of the Libra Association, Blockchain Capital brings deep industry insight and a dynamic network of supporters as we work on building a blockchain-based payment system that supports responsible financial services innovation.”

Even though the Association released the updated version of the Libra white paper, the European Union recently asserted that the European Central Bank [ECB] was the only entity authorized to issue currencies. The French Finance Minister part of the meeting specifically mentioned the Libra project in his statement.

Payments Giant PayPal Probes Incorporation Of Crypto Into The Fold

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Several mainstream companies have been looking at the prospects of cryptocurrencies and have been venturing into the industry. While the social media giant, Facebook’s Libra project has been a great example of the same, several other platforms have been making use of the existing currencies. PayPal is reportedly the latest company to delve into the acceptance of crypto.

PayPal Steers Towards Crypto

Appearing on CNBC’s Squawk Box, Sandi Bragar, the Managing Director at Aspiriant hinted that online payments company, PayPal was working on incorporating crypto into their platform. The COVID-19 pandemic has put the entire globe in shackles, however, the virus hasn’t restrained individuals from engaging in activities pertaining to e-commerce. Bragar pointed out that this cycle would prolong even after the pandemic and PayPal has been evidently been at the forefront of e-commerce and digital payments.

Revealing details regarding PayPal and its interest in crypto, Bragar further added,

“We also like that PayPal is working with merchants to bring crypto into the fold, and we think that’s gonna be really important as cryptocurrencies become more mainstream in the years ahead.”

While Bragar did not provide any further details about PayPal working with its merchants to incorporate crypto, the payments platform isn’t a new name to the crypto-verse. PayPal made news back in June, as rumors pertaining to the platform launching a crypto-centric trading service surfaced the internet. However, a recent letter that the company presented before the European Commission highlighted that PayPal intends to carry forward its presence in the crypto-verse by aiding regulations. The letter further read,

“Of particular interest for us is how these technologies and crypto-assets can be utilized to
achieve greater financial inclusion and help reduce/eliminate some of the pain points that exist today in financial services.”

PayPal has already established its support for the crypto-verse as it provides payment services to cryptocurrency exchanges like Local Bitcoins, Coinbase as well as Paxful.

Additionally, PayPal’s latest move could prove beneficial to the crypto industry as the company hoards a user base of 325 million.

After Libra, Regulations Delay Launch Of Digital Settlement Project Led By Banks

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Soon after the world witnessed the evolution of cryptocurrencies, several mainstream companies started pouring into the industry. While a few platforms invested in the existing coins, firms like Facebook and JP Morgan decided to roll out their own. After mainstream organizations, banks started taking a keen interest in developing digital coins. The announcement of the world’s biggest banks collaborating to roll out digital currencies took the world by storm. However, the latest updates suggest a delay in the project.

Regulatory Hurdles Stand Tall Before Digitalization

The Utility Settlement Coin [USC] was a project put forth by the 13 of the largest banks in the world, including Credit Suisse, Barclays as well as Banco Santander. After a while, USC changed into Fnality International and was originally scheduled to roll out this year. However, the project will reportedly launch during the Q1 of 2021.

The project aims at launching digital versions of the U.S dollar, Canadian dollar, the Japanese yen, euro as well as the British pound. While the world was in anticipation of the launch of this project, regulations put a hold on it. The Chief Executive of Fnality International, Rhomaios Ram told Reuters that the project was still in need of regulatory approval.

The 13 banks involved in the project invested a whopping 50 million pounds. The project has reportedly been under development for the past five years and was operated by the USB Group AG. The banks involved in the project intend to steer towards digitalization by limiting paperwork that takes place during the transfer of funds.

This isn’t the first time regulations have come in the way of innovations. Social media giant, Facebook’s crypto venture, Libra is the perfect example of the above statement. The project was constantly subject to scrutiny from regulators across the globe and was delayed. Even though the magnitude of regulatory pressure of the Libra project and Fnality have a huge disparity, seeking regulatory approval has become quite a task. Stressing on the same, Ram added,

“The technology is the least complicated part of this whole thing.”

American Express Announces Acquisition of Fintech Firm Kabbage

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A week after acquisition talks began, the New York-based multinational financial services corporation, American Express, finally announced that it had entered into an agreement to acquire substantially all of the fintech company, Kabbage, in an effort to expand its services to small businesses.

This includes a full suite of financial technology products, data platform as well as IP built for small businesses, and excluding Kabbage’s pre-existing loan portfolio, according to the official press release.

Following the latest development, Kabbage CEO and co-founder, Rob Frohwein commented

“At Kabbage, we have always made the success of America’s small businesses our primary objective. We have built a technology and data platform that provides them with the kind of capabilities and insights often reserved for larger businesses. By joining American Express, we can help more small businesses succeed with a fully digital suite of financial products to help them run and grow their companies.”

The Atlanta-based Kabbage products, backed by investors including SoftBank Group Corp. ‘s Vision Fund and Reverence Capital Partners, include access to flexible credit lines, online bill payment, cash flow visualization tools, e-gift certificates. Other financial details of the deal have not yet been disclosed, but reports suggest that the numbers could be as high as $850 million.

This comes at a time of severe distress among the SMBs amid the COVID-19 pandemic. Kabbage was founded to provide quick funding to small businesses more than a decade ago and the news of its acquisition by the credit-card giant did not sit well with many commentators in the space.

Anna Marrs, the President of Global Commercial Services at AmEx, had recently asserted,

“For several years, American Express has been expanding beyond our industry-leading commercial card products to offer our business customers a growing set of payment and working capital solutions. This acquisition accelerates our plans to offer U.S. small businesses an easy and efficient way to manage their payments and cash flow digitally in one place, which is more critical than ever in today’s environment.”

 

Mastercard Partners with Wirex to Take the Cryptocurrency Industry up to the Next Level

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The cryptocurrency market is maturing at a faster rate than thought before and investors are loving it. As the days progress, more and more mainstream players are entering the field which makes it even more important for developments to take place at a faster rate.

Mastercard was the latest mainstream player to make a mark in the virtual asset world after its recent tie-up with the London-based financial firm Wirex. Mastercard ‘s move is a step in the right direction for the industry that has been trying to get out of the shell.

With Mastercard’s latest offering, it has become clear that there is a pressing need for a legitimate platform for cryptocurrency transactions. Officials close to Wirex also said that they would become the first native cryptocurrency platform to gain principal membership on Mastercard. Raj Dhamodharan, Mastercard’s executive vice president for digital asset and blockchain products and partnerships said:

“The cryptocurrency market continues to mature, and Mastercard is driving it forward, creating safe and secure experiences for consumers and businesses in today’s digital economy. Our work with Wirex and the wider crypto ecosystem is accelerating innovation and empowering consumers with more choice in the way they pay.”

Now that Wirex can directly issue cards on the Mastercard platform, customers will have the added advantage of using Mastercard’s privacy and security features. At the same time, Mastercard will also bring more cryptocurrency firms into its Mastercard Accelerate start-up initiative.

While Mastercard certainly has an elevated playing field in the financial world, it is certainly not the first to enter space. Last year, Brian Armstrong, led by Coinbase, launched his own crypto card in partnership with Visa, the rival of Mastercard. Following this development, Coinbase went on to become a principal member of Visa.  Principal membership allows a partner to make use of more features within the card as well as penetrate into new markets.

Market analysts have refrained from calling the Mastercard update a watershed moment because of how the industry as a whole has grown. Looking at the changes over the last few months, it has become evident that there has been an increasing demand not only from an investor point of view but also from a regulatory standpoint. This will be Mastercard’s first major cryptocurrency venture following its association with the Facebook Libra project in 2019.