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Here’s why Bitcoin could be competing with Top Custodian Banks

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Bitcoin and other cryptocurrencies have become more prominent over time. Since cryptocurrencies have become more popular, they are also receiving more scrutiny. Regulators are working to limit the use of cryptocurrencies all around the world.

Despite the fact that cryptocurrency is becoming more and more popular among people, different organizations have varied views on it. It has been discovered that BTC might be in competition with some conventional banking institutions because of its incomparable market value.

Ki Young Ju, the CEO of CryptoQuant, has asserted that the market capitalization of leading custodian banks may soon be challenged by Bitcoin (BTC). He said in a tweet that seven of the top nine custodian institutions have entered the cryptocurrency custody industry only in 2022, despite Bitcoin’s market cap being barely 0.25% of that of the top nine banks.

Source

He continued by saying that tokenization is expected to be the next step taken by these custodian banks, which collectively hold $148 trillion in assets under custody or administration (AUC/AUA).

Ju claims that it is still unclear if they would do tokenization utilizing Layer 1 (L1) blockchains already in place or merely by employing distributed ledger technology. But the market valuation of whatever L1 they choose would soar; in the case of Ethereum, ETH could theoretically increase by 940x to almost $1.2 million.

His statement follows a Wall Street Journal report stating that BNY Mellon, the biggest and one of the oldest custodian banks, has started offering Bitcoin custody services after receiving New York state approval.

Institutions increase Bitcoin adoption

Not all traditional financial institutions have entered the Bitcoin and cryptocurrency industry, including custodian banks. Additionally, the sector has welcomed a number of asset managers. Asset management giant BlackRock began providing cryptocurrency investment services to its clients in August thanks to a collaboration with Coinbase Prime.

According to sources, J.P. Morgan permits its financial advisors to purchase and sell Bitcoin on behalf of its clients even though the company has not yet started providing custody services. Institutions engaged in trade finance have regularly observed a rise in customer demand for cryptocurrency services.

Italian Financial Institutions are Now Using R3 Corda Blockchain for Transactions

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Italian banks have recently embraced the R3 Corda blockchain network to boost the authenticity of transactions in banks across the country. More banks are now transitioning from the legacy interbank reconciliation infrastructure to the blockchain platform as a major overhaul of the financial institutions. According to recent reports, as many as 55 banks, which constitute 85 percent of all Italian banks, have migrated to the R3 Corda Blockchain platform.

Italian banks in stage two of R3 Corda blockchain trials

The Italian Banking Association has already set things in motion for the second stage of R3 Corda blockchain trials. This comes after the successful completion of phase one trials. The third and final phase of the tests is expected to be conducted by the start of October. Also,85 percent of the banks have already shifted to the platform since the launch of the second trials, in a move geared towards sharing inter-bank data.

The association predicts that by the start of the third phase, the number of banks embracing the technology will have steadily increased from the current 55 to up to 100. Technology has been lauded for its various benefits and has been seen by many as an upgrade. The Chief Innovation Officer of the Italian Banking Association, Silva Attanasio, has revealed the association’s plans to create a decentralized structure called Spunta, built above R3 Corda.

Blockchain technology a perfect fit for the financial sector

Before the adoption of R3 Corda blockchain platform, reconciliation infrastructure efforts regularly tended to consume a lot of time. It took from 30-50 days, but now after the implementation of R3 Corda; reconciliation happens in less than a single day.

Furthermore, rumors have it that the Italian Banking Association is also planning to test out the digital Euro in the banking sector.  These reports are yet to be confirmed, since no formal public announcement has been made at the moment.

Covid-19 Forces Germany into Recession; Over 100 Banks Charging Negative Interest Rates

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According to an announcement made late last week by the Statistisches Bundesamt, as COVID-19 forces Germany into recession, with the biggest quarterly decline since the 2008 international financial and economic crisis, over 100 banks in the nation have started charging clients negative interest rates.

According to data shared on May 15 by Germany’s Federal Statistical Office, Statistisches Bundesamt, the European heavyweights have now entered the recession. As per the data shared by the German Federal Statistics Office:

“The corona pandemic hits the German economy hard … [Q1’s contraction] was the largest decrease since the global financial and economic crisis of 2008/2009 and the second-largest decrease since German unification.”

COVID-19 forces Germany into recession

Moreover, the statistical agency claims that a substantial decline than the latest fall was only recorded back during Q1 of 2009 with a -4.7 percent drop. During Q1 this year, Europe’s biggest economy dropped off by 2.2 percent. In addition, the Eurozone economy recorded a sharp 3.8 percent decline within the same period.

COVID-19 forces Germany into recession

German economists, including the experts from Deutsche Bank, predict an even greater tumble during Q2, as the impact of the COVID-19 pandemic becomes evident. Chancellor Angela Merkel apprises that if the transmission rate of COVID-19 rises, Germany could be forced back into forced lockdown.

Number of banks charging negative interest rates escalating 

Over the recession period and over the course of the coronavirus pandemic, the number of financial institutions charging negative interest rates has been escalating fast. Back in April, only about 80 banks were charging their clients negative interest rates. However, currently this number has increased to over 100 banks. 

According to the German consumer comparison portal, Verivox, over 800 German banks have been studied. Virivox’s investigation has revealed that over 100 banks are currently charging negative interest rates in Germany. The contrast portal has grouped the banks in three classifications.

Furthermore, 94 of the banks have shared their fresh rates online or on their price catalogues. On the other hand, 10 banks are charging fees on demand deposits accounts that are normally free, giving an actual negative interest rate on such accounts. As per the portal, 22 other banks are also charging negative interest rates, but they are yet to publish the new rates online or share. 

Abu Dhabi Islamic Bank to use Blockchain Technology for Trade Distribution

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UAE-based Abu Dhabi Islamic Bank (ADIB), a leading Islamic financial institution, announced on Wednesday that it had completed trade finance distribution transactions using Blockchain technology.

Cross-border transactions have been made possible by the partnership between ADIB and TradeAssets. TradeAssets is an e-marketplace in trade finance driven by Blockchain technology to help digitize traditional processes of trade assets origination and distribution.

Trade finance includes financial instruments used by companies to enable trade, such as credit notes, performance guarantees, import/export loans, and supply-chain finance. The Trade Finance Distribution Initiative, a collaborative project launched last year to develop industry standards and experiment with new technologies for banks and asset managers, now includes some established participants such as Deutsche Bank AG, HSBC, Standard Chartered PLC etc.

ADIB’s partnership with TradeAssets has allowed it to automate trade finance transactions and successfully conclude transactions with bank counterparts.

Haytham Elmaayergi, Global Head of Transaction Banking at ADIB, said:

“The completion of the first trade distribution transaction using Blockchain by an Islamic bank shows that ADIB is at the cutting-edge of global transaction banking. As the only Islamic bank providing end-to-end Sharia’a-compliant trade financing through digital channels, ADIB is committed to expanding its digital footprint in trade financing and distribution, enhancing the efficiency and productivity of businesses across the region and globally.”

ADIB launched “ADIB Direct eFX” in March this year, a platform that allows clients to make use of live, competitive foreign currency rates and execute transactions at any time and from any place. The bank said the platform enhances the ability of the businesses to handle their finances locally and internationally. Such features include customizable dashboards, cashflow forecasting, and online trade issuance and funding that are available through all platforms including a mobile phone app.

Banking Closure in Venezuela Drives Bitcoin Trading Amid COVID-19 Pandemic

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Following the spread of coronavirus across the world, President Maduro has ordered national quarantine in Venezuela. Only 33 cases of COVID-19 were reported to have been confirmed in the South American nation. Irrespective of the number, the President decided on March 17 to put the whole country in quarantine.

The emergency action taken by President Maduro’s administration will prevent Venezuela’s health system from being flooded with the rapid spread of infection. In compliance with the decree, the banks in Venezuela have been closed for an indefinite period of time. However, even though this decision crippled the country’s banking system, it spurred bitcoin trading on peer-to-peer trading platforms.

Venezuelans not worried over banking closure

Venezuelans do not seem to be very concerned about the closure of the banking system. The country has been through severe economic conditions, and cash shortages are not a rare occurrence. The lack of technological infrastructure and dependence on the US dollar has already begun to push people away from traditional banking.

Venezuela’s informal economy is thriving through barter trade, gold, cash, and digital currencies are the latest addition. Peer-to-peer exchange platform, LocalBitcoins has endured its largest trading activity this year as a result of growing interest in digital currencies. At the end of February, the traded volume of bitcoin was at 491 BTC which has eventually hiked to 540 BTC. Additionally, the trades for bitcoin against the U.S. dollar stood at 479 BTC.

Moving forward, the economic impacts of COVID-19 appear to be triggering a massive adoption of digital currencies across South America. LocalBitcoins have increased by more than 30% in Peru and approximately 15% in Colombia over the last seven days.The last time we saw such figures was back in 2019 when the price of bitcoin escalated after a long period of crypto winter.

Peru

Columbia

Coronavirus threatens Venezuela’s Petro program

President Maduro vowed back in January to make Petro cryptocurrency a success. Biopago (Petro’s payment system) then temporarily suspended service delivery to the public. However, the President ordered all state services to be priced and paid for the use of petro cryptocurrency.

In fact, some Venezuelan crude oil buyers have stopped doing business with Venezuela. This is because the port officials of the South African nation began demanding port fees in the controversial Petro cryptocurrency.

The threat posed by the spread of COVID-19 pandemic appears to have thrown cold water on President Maduro’s endeavor to impel the adoption of petro cryptocurrency in Venezuela. The last major activity by the president to stir oil-backed Petro use was back in January. Then, Maduro launched Petro-powered casinos from which health and education programs will be funded. 

In addition, the announcement of the casinos came after President Maduro ordered the sale of airline fuel; for international flights to be sanctioned by the use of petro. Despite the government’s efforts to drive the adoption of petro in the country, the Venezuelans were not convinced by the idea of petro. A couple of weeks ago, Venezuelans sold the oil-backed petro digital currency at half the official set price of $60.

 

Wells Fargo to Settle $35 Million with the SEC as Questions are Raised Against Crypto

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Several officials in mainstream finance have repeatedly attacked the cryptocurrency industry for being too volatile and ‘ prone to scams. ‘ This sentiment was one of the main reasons why there was a hold on the number of institutions entering the cryptoverse.

While most of the fiat supporters argued that the existing financial structure worked best, the number of issues within the model has also increased. This was recently demonstrated when Wells Fargo was charged with a multi-million dollar fine by the US Securities and Exchange Commission [ SEC ].

The SEC has announced settled charges against Wells Fargo Clearing Services and its Financial Network Advisors for failing to inform its customers of the risks involved in single-inverse ETFs. Wells Fargo agreed to pay a fine of $35 million after multiple customers sued the bank for lack of adequate compliance policies and procedures related to inverse traded ETFs.

The SEC’s order found that the bank had no inverse trade ETF regulations in place between April 2012 and September 2019. According to the SEC:

“The order finds that some Wells Fargo brokers and advisers did not fully understand the risk of losses these complex products posed when held long term. As a result, certain Wells Fargo investment advisers and registered representatives made unsuitable recommendations to certain clients to buy and hold single-inverse ETFs for months or years.”

Wells Fargo has also been embroiled in controversies in the past, which begs the question: why is the fiat industry not seen with the same disapproving eyes that the crypto market is subject to? The digital asset industry, unfortunately, has its share of problems, but this has not halted developments in the market. The development has been so strong that even mainstream companies have come to the fore.

This growth dynamic did not stop US Secretary of the Treasury, Steve Mnuchin, from saying that cryptocurrencies were the bane of the financial ecosystem. He also believed that Bitcoin and other cryptocurrencies could only be used for illegal activities.

These so-called’ activities’ included cyber-crime, tax evasion, malware, extortion to name a few. Mnuchin claimed that cryptocurrencies funded large-scale projects, a comment that seemed ironic in the face of Wells Fargo’s previous $3 billion settlement. For 14 years, the bank had to pay a massive sum for mistreating its customers by messing with accounts and copying numbers.

The case was brought before the authorities in 2016 and eventually came to a conclusion last month. The bank was found to have created credit cards and accounts for its customers without their knowledge. The scale of the case stunned the financial world and led to the resignation of then CEO John Stumpf.

Cryptocurrency advocates are now expecting the SEC to give the industry a fair chance when challenges have arisen all over the world. There have also been some positive changes from the SEC, but it will be some time before regulators can make a fair decision.

Standard Chartered Digs Its Heels Into Blockchain With Contour Partnership

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The barrier for entry for mainstream companies to enter the cryptocurrency space has always been high due to the regulatory atmosphere. With the advent of better rules, several institutions are taking the plunge into crypto and blockchain.

Standard Chartered, one of the world’s most popular banks has decided to invest in a blockchain company to further its network developments.

On January 29, the bank announced that it will be investing in Contour to digitally create, approve Letters of Credit for the company. A letter of credit is issued by a bank to another bank to serve as a guarantee for payments made to a specified person under specific conditions.

Standard Chartered is slated to work with Contour to make the financial ecosystem faster and much more secure. Lisa Robins, the Global Head of Transaction Banking at Standard Chartered stated:

“Our investment into Contour underscores our commitment to forge partnerships and solve common industry challenges – taking paper out of the process while improving speed and accuracy. With our footprint across the world’s fastest-growing trade corridors, we have the unique opportunity to support our clients in achieving a more sustainable supply chain, by improving access to financing through paperless trade and simpler processes.”

Standard Chartered chose Contour because of its prowess to digitize the LC process from end-to-end. Contour will also be involved in the issuance, confirmation and documentation preparation for all LCs. At the same time, the bank will utilize its smart guarantee feature to enable the digitization process.

The blockchain startup stated that they will be approaching more banks to streamline their requirements. Contour is built on R3’s Corda blockchain and will also take the required help from the R3 team to bolster development. Apart from Standard Chartered, Contour also has partners in HSBC, ING Bank, Bain & Company among several others.

Contour had also conducted pilot tests in 14 countries where over 50 major banks and corporates participated. During the tests, it was discovered that the processing time for Letters of Credit had reduced by over 90 percent. This meant that the time for the final output reduced from 5 to 10 days to just under 24 hours.

Standard Chartered had run a program with Contour [then known as Voltron] back in August 2019. The bank had executed a pilot transaction with the PTT Group in Thailand that involved the first cross border LC in the oil industry.

Elliptic Helping Banks Analyse Crypto Transactions with its New Product

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Crypto compliance startup Elliptic has launched a new product called Elliptic Discovery which aims to help banks and financial institutions manage risks related to crypto transactions.

Elliptic Discovery will reportedly provide detailed profiles of over 200 crypto exchanges across the world which eventually is designed to offer compliance teams with various insights they require to ascertain the flow of transactions and possible risk it posses.

More so, up-to-date profiles of more than 200 crypto trading platforms will open up the new opportunities, manage risk as well as meet rigorous regulatory requirements.

“Most banks at the moment have a zero-tolerance approach to crypto,” said Elliptic’s chief scientist and co-founder, Tom Robinson. “They don’t have any visibility into the risks that a particular exchange may possess. They all look the same to them. So, many of them won’t bank any exchanges.”

Robison further elaborated that the tool will offer exchange’s KYC and AML policies, information about exchange’s jurisdictions and license it holds, types of coins that exchange has listed and the flow of funds into and out of crypto assets.

He added that the Elliptic Discovery is partly based on the communication with the dozen bankers. During his formal discussion, few bankers reportedly showed intense interest in exchange’s risk profiles.

Instead of the blanket ban and letting banks missed out potential opportunities in the crypto sector, Elliptic’s new product paved a new alternative way for banks. However, Elliptic Discovery might not be well-accepted by few retail customers of Elliptic who are already working in crypto without the bank’s association. Still, Robinson strongly believes that the new product will bring a positive impact on the whole cryptosystem.

Elliptic has been around the corner, especially after partnering with the Binance crypto exchange in May. More so, it has also secured $23 million funding in a Series B round from notable investors, including Japanese financial company SBI Holdings and Santander’s Venture capital arm Santander InnoVentures.

Disclaimer: The presented information is subjected to market conditions and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.

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HSBC in the eye of the storm as bank decides to cancel protest-related accounts in Hong Kong

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The fundamental human right to protest has resulted in mass movements that have overthrown governments and changed the course of financial developments. One such protest was the recent example in Hong Kong, where millions of people took to the streets to oppose the bill that allowed the government to send its citizens to China for extradition. Now, one bank has come to the fore for cutting off access to protest funds and rebel resources.

HSBC, one of the world’s largest banking conglomerates, recently revealed that they would be canceling all accounts related to crowdfunding campaigns. The organization has stated that the decision was made because of a fund that accepted donations and used it for other purposes. HSBC has given the party a 30-day notice period, which it has to comply with.

The Hong Kong Journal, one of the most popular newspapers in the region, revealed that they found funds were being used inconsistently with its original documents and paperwork. Vin Tran, one of the spokespeople for HSBC Hong Kong, stated:

“As part of our responsibility to know our customers and safeguard the financial industry, we regularly review our customers’ accounts,. If we spot activity differing from the stated purpose of the account, or missing information, we will proactively review all activity, which can also result in account closure.”

HSBC is one of many companies that has had to go through the financial tornado, with citizens hoping against hope that a solution would come soon. 612 Humanitarian Relief Fund, an organization that helps protestors with their legal and medical expenses, has currently stated that their holding HDC account is still fully functional.

Hong Kong has been a financially positive state for HSBC as the bank drew a surplus of 35 percent revenue from the region in the first nine months of business commencement. Some members of the cryptocurrency community have stated the decision will affect hundreds of other activists and that centralization is a real hindrance to freedom of speech and expression. Rhythm, a famous cryptocurrency proponent tweeted:

“BREAKING: HSBC just shut down bank accounts for Hong Kong anti-extradition bill events, as reported by the Hong Kong Economic Journal. I.E. closing accounts for protesting demonstrations. Bitcoin fixes this. This is why Bitcoin was created, for making the transactions they say you can’t make.”

Disclaimer: The presented information is subjected to market conditions and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.

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Canada’s major bank decides to step into blockchain and cryptocurrency to explore new avenues

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Mainstream institutions jumping on the cryptocurrency bandwagon has become a norm as most of them have realized the benefits of a decentralized ecosystem. The latest organization to consider crypto and blockchain is the largest bank in Canada, the Royal Bank of Canada [RBC].

The institution, which deals with $965 billion worth of assets, has claimed that bringing in technologies like blockchain will help to improve the scalability of the financial industry as well as streamline it.

Jean Francois Thibault, the spokesperson for the RBC, stated that the bank has a patent for proprietary applications and technologies. The trading platform recommended by the company would facilitate the buying and selling of individual digital coins, including Ethereum, Bitcoin, and several other combinations of cryptocurrency trade.

A patent filed by the bank read:

“To individual users, managing cryptographic keys and transacting with different cryptographic assets can be a challenge. In some situations, cryptographic asset transactions may take time to be confirmed, and/or may not be compatible or supported by merchant systems or point-of-sale devices.”

Marc Kaufman, a Washington DC-based partner at Rimon Law, assessed the industry and stated no other banks across the planet have a direct plan to set up its own cryptocurrency exchange.

The bank has not only filed for patents in its native land but also in the United States in a bid to assert its dominance in the cryptocurrency field. The Rimon Law partner added that the latest move by RBC would make tokenized assets more accessible, just like how mutual funds make stocks more accessible. Marc Kaufman said:

“I would, and you would, and I think RBC would feel more comfortable exchanging a state-backed coin from China or Canada than Bitcoin.”

The RBC’s entry into the world of digital assets has been no secret as its CEO David McKay had revealed earlier that the bank was experimenting with blockchain for tokenization. The original plan was to take an asset or even a company and create a unit on a decentralized blockchain and then sell it into the marketplace. The company works with the idea of taking assets that are less liquid and make them more fluid.

This is not RBC’s first stint with blockchain technology, as the bank has used it multiple times in the past. The bank had made news in 2017 when it decided to move capital between its American and Canadian branches using blockchain technology. This May, the bank also claimed that it was using blockchain to verify the legitimate identities of clients.

Disclaimer: The presented information is subjected to market conditions and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.

Never miss our daily cryptocurrency news, price analysis, tips, and stories. Join us on Telegram | Twitter or subscribe to our weekly Newsletter.