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Digital Currency

Berlin based Solarisbank has plans to dominate European digital sector with help of Samsung

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Digital financial ecosystems have come a long way since being an extremely niche industry a couple of years back. Major organizations like Solarisbank were now on the brink of creating a new financial world where traditional concepts meet the benefits of the digital sphere.

Just recently, Berlin-based Solarisbank revealed that they would be expanding to several European regions by the end of 2021. This growth was synonymous with the growing adoption rate of the digital economy around the world.

Solarisbank chief executive Roland Folz claimed that the move to other countries was an important step in terms of global acceptance.  The organization was also the first bank in Germany to shift toa completely cloud-based system. Solarisbank first shot to fame for its “banking as service” model which drew in some big names from the tech industry.

Samsung remains one of Solarisbank’s largest clients with the South Korean bigwig using the former’s technology for Samsung Pay transfers. The rapid rate of capital movement can be handled by Solarisbank now because of the movement from traditional architecture to Amazon Web Services [AWS].  All of Solarisbank’s core systems were moved to the web hosting service within a year of the company’s launch.

The expansion announcement was considered a major landmark in Solarisbank’s history with Mr. Folz adding:

“We want to grow with our existing partners and ensure that they can spread their business and value proposition across Europe. The ambition level could be higher. The opportunity is there to build a substantial financial powerhouse for any of the big techs out there.”

Samsung’s reach in the global technology sphere contributes to a major portion of Solarisbank’s growth. Statistics showed that there are over 80 million Samsung mobile devices present in Europe, a staggeringly large playing field. Even grabbing a small percentage of this market share would give Solarisbank;’s the major foothold it needs in the continent. This tactic could also help Solarisbank grab a larger piece of the bank account’s pie, a number rising rapidly daily.

 

 

A New Legislation to Regulate Digital Currency Payment Suggested by G20

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A new digital currency payment bill proposed by the G20 is set to propel the adoption of cryptocurrencies to levels never seen before. The G20 countries announced on 11 July that they might introduce a regulatory framework to payment of digital currencies and allow “digital currency” instead of just cash payment methods.

The Group of Twenty or G20  is an international forum for governments and central bank governors from 19 countries and the European Union. Members of the G20 are Argentina, Australia , Brazil , Canada, China , Germany, India , Indonesia, Italy , Japan, Mexico , Russia, Saudi Arabia, South Africa, Turkey, United Kingdom , United States of America and the European Union.

G20 ‘s attention to cryptocurrencies is a big deal for the entire industry. The successful approval of the proposed new bill is lucid: it will stimulate the mass adoption of digital currencies. This massive adoption is due to the fact that G20 nations account for 90 % of the world’s gross revenues.

In addition, more than 80% of all trade activities worldwide take place in these countries. And also the G20 countries account for more than 50% of the world’s total land area and two-thirds of the world’s total population.

G20 to enact FATF digital currency payments guidelines

The Financial Action Task Force ( FATF) is a body founded in 1989 to battle money laundering. The Authority held its annual Private Sector Consultative Forum in Austria this month, and digital currency payments were among the topics discussed.

The FATF reiterated that the guidelines and recommendations for implementing digital currency payments are still in place. Subsequently, the authority advanced to show its support for virtual assets, stating that crypto assets could have a significant impact on the world economy.

The G20 nations have also accepted  to support the guidelines recommended by the FATF by enforcing them. In particular, Russia, one of the G20 nations, has agreed to establish a regulatory structure for crypto assets in the country. The enactment of a clear structure in line with the FATF Directives was planned for July last year, but Russia is set to implement it this month.

Bottom line

In addition, another G20 member in Japan is actively working to establish a policing guideline for crypto assets in the country. South Korea is also reportedly prioritizing a clear regulatory structure and is working towards the realization of a consistent structure. On the other hand, South Africa and China could potentially see a change in cryptocurrency policing in their respective countries this year.

South Korea’s Central Bank Forms Legal Panel to Research Digital Currency

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The Central Bank of South Korea appears to become more serious with its research into digital currency. As reported by the Korean Times on 15 June, the Bank of Korea (BOK) has set up a panel to advise on the possible regulatory obstacles in issuing a  central bank digital currency  (CBDC). The move by the bank does seem to be a step forward towards issuing a CBDC. The Central Bank said

“We established the advisory group to discuss legal issues surrounding a CBDC and figure out which laws need to be revised or enacted for smooth progress in the BOK’s possible issuance of digital currency,” a BoK official stated while speaking to Korea Times.

As per the report, the legal advisory panel consists of six law practitioners and law professors who will keep tabs on the legal framework of the central bank digital currency, if necessary. That being said, the country is not getting ready to issue digital currency any time soon.

The panel is another step in a rapid revaluation of the digital currency at Bank of Korea (BoK) in a 22-month period. Notably, in December the central bank set up a task force to study digital currencies. Instead of developing one, the task force was set up to keep an eye on what other countries are doing in terms of state-issued digital currencies.

South Korea ‘s Central Bank has recently stated that it may not be able to launch a digital currency any time soon, as the demand for fiat remains high. Irrespective of the sentiment, BoK launched a pilot test for the digital Won. The trial began in April and will take place until December next year to analyze the usability and regulatory provisions of the state-issued cryptocurrencies.

Bottom Line

The establishment of a legal advisory panel seems to be part of the overall pilot testing plan as it will only be in effect until 2021 for one year.

Notably, Governor Lee Ju-yeol of the central bank stressed the need to intensify research and innovation in state-issued digital currencies during the celebrations of BoK’s 70th anniversary. In addition, at times like these, when we need contactless payment systems more than ever, he urged the central bank and private sector to embrace digital innovations.

Secret Bitcoin Mining Scheme Uncovered by Chinese Law Enforcement in Mysterious Tombs

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The Chinese police have unearthed a secret Bitcoin mining scheme in what seemed to be multiple underground graveyards. According to a local media outlet, Beijing News, Chinese law enforcement authorities have uncovered the illegal mining operation in the Chinese city of Daqing.

In particular, the secret Bitcoin mining scheme was set up on what appeared to be two burial mounds. The authorities decided to survey the area, after being tipped by a local oil company about unexplained electrical outages.

Secret Bitcoin mining scheme running on stolen electricity

The law enforcement officers found the entry to the graveyard, and after some digging,they found some hardware used to mine Bitcoin, running on stolen electric power. Additionally, the local news outlet reported that the police discovered 54 Bitcoin mining hardware under a dog’s kennel in the same county, in Heilongjiang province.

These illegal mining incidents might have been spurred by last week’s rise in the price of BTC. Although China is a big supporter of blockchain technology, the same cannot be said about digital currencies. The trading of cryptocurrencies remains illegal in the Asian nation, while Bitcoin mining is not.

Chinese authorities crack down mining operations 

Chinese authorities have embarked on a mission to crack down illegal mining in the country. As the price of digital currencies start surging, so do mining activities elevate. Just recently, the provincial administration of Sichuan announced the suspension of local farms from mining digital currencies citing increased illegal mining.

Notably, according to a report from a study carried out by Cambridge University, Sichuan is allegedly responsible for roughly 10 percent of the world’s total Bitcoin hash rate. Seemingly, the province was initially targeting to lure more miners so as to counter the economic down-slide; brought about by the coronavirus pandemic. Instead, according to reports illegal fundraising and multi-level marketing projects thrived

Alipay’s Progress in Developing the Official Chinese Cryptocurrency Amidst the Global Chaos

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If/when cryptocurrencies based on official legal tenders become the new banter of the financial market, China has the potential to top the list by being one of the early adopters. 

China introducing its own cryptocurrency based on its legal tender Yuan is one of the much-anticipated news of the cryptospace. Nevertheless, things have slowed down due to numerous reasons such as the Bitcoin crash, the current pandemic Coronavirus and much more. 

While companies are laying off employees, and people are reporting bankruptcy, Alibaba’s Alipay has been registering several patents for China’s own cryptocurrency. 

Recently, a Chinese local blog reported that Alipay has been making preparations for the central banks’ cryptocurrency.

From February 21st to March 17th, 2020, Alipay has disclosed five patents related to the digital currency of the central bank. [You can find all the patents here]

On 21st, “Method and device for executing transactions with digital currencies and electronic devices” was registered followed by “A method and device for managing accounts in digital currency” on the 25th. 

On 28th they published, “a method and device for opening a wallet in digital currency and electronic device” and recently on March 17, Alipay issued a patent on “a digital currency-based anonymous transaction method and system”. 

The Chinese central bank’s digital currency DCEP adopts a two-tiered structure and requires operating institutions to participate in the secondary issuance of digital currency. This patent revealed in the background introduction that Alipay is likely to participate in secondary issuance, which is on an equal footing with commercial banks.

The decision-makers have also stated that the cryptocurrency may not have a blockchain necessarily but will comply with the traceability requirements of the digital asset. That said, the registered patent’s most important invention is how digital currencies can be traced. 

Right, but, how?

Alipay decided to split the digital currency transactions into two; ‘transaction execution instructions’ corresponding to each participant, and priority-based execution instruction. By sorting the results of transaction execution instructions, digital currency transactions can be traced back to the entire life cycle of digital currency circulation, while concurrent processing can be satisfied, which facilitates the controlled and anonymous circulation of cryptocurrencies.

Not just this, the second patent introduces a specific form of front-end encryption machine. 

“It can be a hardware device equipped with a secure computing environment. In the secure computing environment equipped with this hardware device, the public and private key equivalent data of the central bank can be maintained. This secure computing The environment can take on some of the cryptographic operations involved in the DC / EP distribution process. “

Additionally, the patent released on 25th Feb provides a solution for the lack of supervision on crypto accounts. The patent introduces a method/device for controlling a digital currency account. Certain account restrictions will be deployed between each supervisor and the operating agency on the wallet server. This will help regulators to keep an account of the transactions. 

Lastly, the most recent patent released on 17th March is about making transactions anonymous and how the cryptocurrency would be separate from cash money. The patent describes that “digital currency is different from the electronic amount in the existing electronic account, but is the digitization of cash banknotes, which has the characteristics of a virtual entity”.

 

 

 

People’s Bank of China (PBoC) Almost Complete Sovereign Digital Currency

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Amidst the COVID-19 adverse effect across China and the world at large, there seem no setbacks in the development of China’s digital yuan.

As per the report shared by a Global Times on Tuesday, the People’s Bank of China (PBoC) is way closer to issuing digital yuan. The report was cited with the “industry insiders”, adding to that the central bank is also drafting relevant laws to roll out its national digital currency.

The news comes in a wake of China’s anti-crypto, elaborating three types of scams happening across crypto exchanges. In addition to this, the bank had also noted the crowning cryptocurrency, Bitcoin is not a safe haven and it is too volatile.
On the other side, the recent report also noted that the country’s leading payment platform, Alipay’s patent shows several functions required to circulate, issue or proceed payment for digital currency. The industry insider told the Global Times as follows;

“Judging from the patents, the first step of technological development has been basically completed,”

However, the People’s Bank of China (PBoC) early this year acknowledged that the top leave design of the sovereign digital currency has been completed. However, he quietly noted that the currency is progressing smoothly.

With the coronavirus epidemic continued, people rarely care about fiat or paper money that may likely act as a reason for more COVID-19 cases. That being said, Bitcoin and other digital currencies have been considered as a feasible solution. On the same stance, Industry Insider suggested that the country should move forward of launching this digital currency in ongoing COVID-19 crises which have also affected the financial system.

Nonetheless, Cao Yan, managing director of Digital Renaissance Foundation, stated that;

“If there is a chance China is considering lowering its interest rate into negative territory as a final option and directing such policy to commercial loans and lending, a circulated digital currency rather than M0 will be able to achieve that,”

PBoC’s Ex President Says Coronavirus Could Boost the Issuance of Digital Currency

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The former president of the People’s Bank of China said that the efforts for fighting with novel coronavirus could push China’s central bank’s plan to issue a digital currency to avoid the spread of the virus through traditional money notes.

In an interview with China Daily, on February 16, Lihui Li argued that the bank’s plan had been made especially desirable as a digital currency is efficient, cost-effective, and convenient. Previously, Li directed the People’s Bank of China and now deliver his services as the blockchain lead for the state-operated National Internet Finance Association.

For the prevention of the spread of the coronavirus through physical cash notes, the government has distributed about 600 billion Yuan that is approximately $85.9 billion and quarantined some old paper notes in Huobi, where the outbreak of virus took place initially. Meanwhile, millions of people are unable to make any payment as they are restricted to their homes following a government order.

Moreover, Dong Yang, a professor at the Renmin University of China who works on blockchain and fintech research said that as an alternative to money, other digital currencies and other forms of digital payment as offered by Alipay and WeChat Pay have become popular.

According to Dong, the overall implication of the epidemic virus will further boost the development of CBDC.

“This is because the frequency of direct contact between people has been significantly reduced, and cash has been withdrawn as a medium for transactions,” Dong said.

However, Li also added that the adoption of any digital currency by the central bank is still dependent on the demand from China’s retail market, Alipay and WeChat Pay currently rule that.

“China’s modern and emerging electronic payment platform is very mature, and WeChat Pay and Alipay online payment platforms have ranked first and second in the world,” Li expressed.

The professor also believes that, for a short period, individuals will be more interested in digital currency transactions, and this trend will help build user affection. Digital currencies will take advantage of this by accelerating their adoption.

US Treasury to Introduce New Cryptocurrency Regulations

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The US Treasury plans to introduce new rules and regulations  on Digital currencies intended to crack down on its use to facilitate money laundering and other illicit activities

Steven Mnuchin, the treasury secretary told a Senate Finance Committee that the Financial Crimes Enforcement Network will soon announce new rules on digital payment and cryptocurrency. The primary concern with digital currency adoption is the issue of scams, opacity and ambiguous trade-offs that seem unconventional to traditional finance. Mnuchin hopes the new rules to improve transparency in order to stop money laundering and will prevent the use of cryptocurrencies as a “secret bank accounts”.

The US administration has expressed concern about the increased use of crypto in the execution of anonymous and illegal transactions. Additionally, the lurking potential of evading American Sanctions by nations like North Korea and Iran remains a huge threat to the blockchain. 

He did not hesitate to suggest that the framework was a representation of the government’s support for the new technology; as well as caution of avoiding digital currencies becoming the equivalent of the ancient Swiss Secret number banking. Nonetheless, the charing did not provide further details entailing the new regulations. However, the Treasure Secretary highlighted they would offer improved transparency for law enforcement; and a guide for the enforcement to track where money was going and prevent laundering. 

President Trump was not hesitant to express skepticism about digital currencies. Last year, the president told Twitter followers that he is “not a fan” of Bitcoin and other cryptocurrencies. Adding to the note, he described cryptocurrencies as volatile and based on thin air. Furthermore, he would warn Facebook that they should seek a banking charter and adhere to banking regulations; if they were to issue a digital currency. 

Mr. Mnuchin’s efforts to closely monitor cryptocurrency saw the relocation of the Secret Service towards the treasure Department, rather than Homeland Security. In the White House Budget proposal released this week, the administration cited the efficiency of policing cryptocurrencies through the treasury department and the secret service. White House has identified how cryptocurrencies are used as an emerging threat.

Nevertheless, the United States Federal Reserve stated in a separate hearing; that it was exploring how a US digital currency would look like. The Federal Reserve said it had studied the costs and benefits of implementing the digital currency. As well as the implications of the same in the global economy. However, Mr. Mnuchin had stated on Wednesday that he didn’t believe a digital dollar was even necessary. 

But the Secretary said it was also a project to consider somewhere down the road. For instance, Jerome Powell noted that a Federal Reserve digital currency also posed the threat of low privacy and high fraud. The Chair of the Federal Reserve, Mr. Powell stated: 

“There’s a lot to weigh and a lot to work on there. Every major central bank in the world right now is doing a deep dive on digital currencies, and we think it is our responsibility to be at the very forefront of knowledge and thinking about a central bank digital currency.”

The creation and deployment of one such government-issued digital currency would need approval from congress. 

China’s Effort into Launching Digital Currency Takes The Ramp With New Patents

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China has made no efforts to hide the fact that it was diving headfirst into blockchain technology and cryptocurrencies. Banking officials in the Red Dragon have also commented multiple times on the future of a central bank digital currency.

New reports have shown that China is ramping up developments in the Fintech sector with its central bank filing 84 CBDC-related patents

The Financial Times first reported that the central bank of China was given the go-ahead by the government to outperform existing CBDCs. China had first come into the fintech picture when the head of the central bank, as well as Xi Jinping, admitted that utilizing blockchain technology was the way to go.

Information on the number of patents first surfaced after an investigation initiated by the United States Chamber of Digital Commerce. The last time the CDC was in the news was when it made its stance in the Telegram vs SEC case. This time around the CDC discovered that the Chinese patents focus on designing protocols that will control the issuance and supply of digital renminbi.

Perianne Boring, the President of the Chamber of Commerce added that China has made massive investments into the fintech industry. He also claimed that China was taking a very drastic approach from the United States about the blockchain industry. Some of the patents were related to the creation of a middle-layer entity to help customers deposit fiat and withdraw renminbi.

Some of the patents were in connection with the ‘tokenomics’ concept. The DCEP working group has also revealed that there were planning towards programmed inflation control mechanisms. Although no dates have been announced for the launch, many are expecting the digital renminbi to change the phase of the financial sphere.

Other countries have also taken steps to improve the digital assets sector. A think tank of central bankers from Canada, Sweden, Japan and Switzerland along with the European Central Bank has been set up to give clear definitions to the crypto industry. The group is set to have its first meeting in April.

US Fed Chair Gives Juicy Comments on ‘FedCoin’ and Future of Cryptocurrency

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The United States has made no efforts to hide the fact that it considered China its biggest rival in the financial world. China’s focus on the cryptocurrency field has also riled American officials and the Federal Reserve chair has been feeling the brunt because of it. 

In a sit down with the House Financial Services Committee, Jerome Powell was asked multiple questions of the state of the US economy as well as China’s plans with the cryptocurrency industry.

Jerome Powell was in charge of submitting his monetary policy report in front of the US House Financial Services Committee. Powell was then made to answer multiple questions from Congress where Representative Bill Foster took all his time to enquire about cryptocurrencies.

Foster questioned Jerome Powell about the potential for a central bank digital currency and how it can impact the suffering economy. The Fed chair was honest in stating that the dollar was holding fine especially when compared to the failing currencies of other currencies. To this Powell replied:

“Having a single government currency at the heart of the financial system is something that has served us well. It’s a very, very basic thing, it really hasn’t been in question, and I think before we move away from that, we should really understand what we’re doing. Preserving the centrality of a central, widely accepted currency that is accepted and trusted is an enormously important thing.”

Jerome Powell claimed that there was a risk involved in central banks taking up the responsibility of crypto and blockchain. The Fedcoin plan was first proposed to combat the idea of privately owned cryptocurrencies. During the Congress meet, Powell acknowledged that banks around the world were looking into CBDCs.

The Fed chair admitted that it was the responsibility of central banks to learn about the costs and benefits associated with a possible digital currency. This was also a segue into Powell’s comments about China’s fore into cryptocurrencies. The Federal Reserve chair stated that China was developing crypto in a completely different institutional context.

Jerome Powell added that China’s position on cryptocurrencies was very different from Bitcoin. China wants to create crypto that is governed by the centre but admitted that Bitcoin functioned on a free and decentralized model. According to Powell, the US just needs to watch over its shoulder for China while creating a solid regulatory ecosystem for cryptocurrencies.