China and Russia are rallying to finish developing a new payment system for BRICs nations ahead of schedule as they see more nations’ interest in pulling forces together. Currently, 25 more nations want to join the bloc to reduce their reliance on the US Dollar.
BRICS nations to get a new payment system soon
The new yet-to-be-launched payment system developed by China and Russia will integrate the upcoming BRICS digital currency soon and get used to settling cross-border transactions. The payment system will also incorporate the Shanghai Cooperation Organization (SCO) group to transfer money internationally seamlessly.
The new payment system is set to put the block of five nations at an advantage when trading with other countries, as there won’t be any economic restrictions on what they can or cannot buy with the currency.
More nations want to join BRICS as USD remains in jeopardy
BRICS is set to become even bigger after 25 more nations showed interest in joining. The nations are seeking to be part of the economic bloc to reduce their dependence on the US dollar.
The move adds more pressure to an already affected and struggling US Dollar and other leading Western currencies like the Euro and Sterling Pound.
The 25 countries seeking to join the BRICS bloc and trade using the yet-to-be-released currency are Afghanistan, Algeria, Argentina, Bahrain, Bangladesh, Belarus, Egypt, Indonesia, Iran, Kazakhstan, Mexico, Nicaragua, Nigeria, Pakistan, Saudi Arabia, Senegal, Sudan, Syria, The United Arab Emirates, Thailand, Tunisia, Turkey, Uruguay, Venezuela, and Zimbabwe.
Keep watching Fintech Express for updates on this and other finance-related news.
Crypto adoption has been accelerating lately despite the recent market turns proving that the industry may already be beyond the point of return. As such, large financial institutions previously objecting to legalizing crypto technology are slowly warming up to it, with the likes of Goldman Sachs, Bank of America, and JP Morgan Chase Banks even offering custodial services.
German Banks are offering crypto services to institutional investors
Crypto is still young and thus yet to be legalized in most nations, including Germany. However, the narrative is now changing slowly but at a steady pace. Germany is exploring the potentially game-changing abilities of the crypto industry due to concerns about missing out as other nations are doing the same.
In March 2023, Deutsche WertpapierServiceBank (Dwpbank) introduced its wpNex crypto trading platform that exposes 1,200 banks and financial institutions in Germany to digital assets. However, how well the banking institutions will receive innovation over time remains to be seen.
In other reports, several banking organizations already offer crypto services to institutional investors. Deutsche Bank majorly owns the asset management group DWS, which has been looking for a way of getting into crypto and exposing its investors to digital assets.
In April, DWS announced that it was working with Galaxy Digital to develop exchange-traded products linked to cryptos that will be available in the European markets. Its CEO posted a statement on Linked In saying that though cryptos are most fraudulent, some innovations will disrupt international markets.
Other banks like Commerzbank and Dekabank are among the growing entities seeking crypto licenses from Germany’s financial watchdog, the Federal Financial Supervisory Authority (BaFin). However, their plans are geared towards institutional investors and not retail.
Though there are still limits on who can use German banks to access crypto assets, crypto adoption is seemingly taking root. However, only time will tell where the government will stand regarding crypto adoption there.
Select U.S. banks spearheading crypto adoption
Though the U.S. SEC is vehemently going after crypto ‘troublemakers, banks in the country are not stopping or slowing down crypto adoption. The number of banks warming up to the industry is slowly rising, showing signs of possible total crypto adoption.
Goldman Sachs, a major banking institution in the U.S., began providing cryptocurrency trading in the U.S. in 2018 but had to discontinue it as investors began becoming wary. However, the 2021 bull market brought more pressure from investors to access major crypto assets like Bitcoin, which made the bank start offering crypto trading again. Now, it allows for the trading of both Ethereum and Bitcoin.
Metropolitan Commercial Bank is another U.S.-based financial institution allowing crypto trading via partnerships with major crypto exchanges like COinbase and Gemini. It also provides wire transfer services with Bitcoin firms and other crypto-related financial services.
JP Morgan Chase is one of the largest banks in the world and is based in the U.S. It has been gearing up to offer crypto services even with its CEO actively despising the assets on a personal basis. Now, his bank allows its users to connect to Coinbase exchange to buy and sell crypto assets. It has also built a private blockchain and crypto known as JPM coin to facilitate international payments.
Bank of America, one of the largest banks in the U.S., has shown itself to support crypto adoption, though it still doesn’t allow its customers to invest directly into crypto assets. It uses one of its subsidiaries, Merrill Edge, an electronic trading platform launched in 2010 to allow its customers to trade Exchange-traded funds (ETFs) that provide exposure to crypto assets.
In 2021, the Bank of America also introduced a new executive position, head of digital trading. Mark Donoghue will be helmed and tasked to deal with investment questions regarding digital assets.
HongKong banks exploring how to take part in spearheading crypto adoption
Chinese banks are readying themselves to offer banking services to offer crypto startup services in Hong Kong as the China ban still ensues but does not extend to the break-away city. As major crypto banks like Signature and Silvergate have already collapsed, these chines banks are scrambling to replace them.
Hong Kong-based ZA Bank is one such bank. It is already allowed to serve as a settlement bank for regulated Web 3 companies in the city. The online bank will now offer crypto-fiat conversions with two licensed digital assets, exchanges HashKey and OSL.
Other Hong Kong banks like Bank of Communications Co., Bank of China Ltd., and Shanghai Pudong Development Bank have also started to offer financial services to local crypto firms or, in other cases, offered to help. These developments foreshadow a growing acceptance of digital innovation, likely boosting crypto adoption in Asia.
On May 24, 2023, Binance CEO revealed that China State TV had covered crypto news long after the country enacted a blanket ban against investing in crypto assets in September 2021 and jailed the ‘lawbreakers’ on this front. However, things did not cool down as Bitcoin registered an all-time high price in November of the same year.
CCTV (China Central Television) just broadcasted crypto. It's a big deal. The Chinese speaking communities are buzzing. Historically, coverages like these led to bull runs.
Now, the narrative of nations against crypto adoption seems to be changing into nations protecting investors against being taken advantage of by regulating digital assets. This journey has been joined by banks, which shows that the crypto industry is still here to stay and most likely thrive. However, only time can tell how regulation will factor in the development and growth of the industry.
Keep watching Fintech Express for updates on this and other related stories. No part of this article should be regarded as financial advice. Do your research and use caution if you choose to invest in the crypto space.
Crypto regulations in the U.S. have been a hot discussion point in the past months, with specialists citing harsh regulation. In under 6 months, the U.S. regulators, including but not limited to SEC and CFTC, have charged numerous high-profile individuals and organizations in the U.S.
While some of these organizations went against the common banking rules in the U.S., there is an outcry that regulators, specifically the Securities and Exchanges Commission, are using enforcement measures before introducing a binding regulatory framework first which might affect the interest of crypto organizations in the U.S.
SEC’s recent efforts
Kraken charged
On Feb. 9, 2023, the SEC held a closed-doors meeting coming out with information that it had charged Kraken crypto exchange $30 million for violating some of its regulations via offering crypto staking services in the U.S. Additionally, it asked Kraken to cease offering these services in the U.S.
Coinbase legal battle
Coinbase seems to be the next high-profile truffle with the SEC after XRP’s parent company Ripple. The exchange’s CEO, Brian Armstrong, has taken a strong stand against the regulator’s tendencies to charge crypto organizations without a fitting regulatory framework.
On May 16, 2023, the SEC asked courts to reject a recent request by Coinbase that sought to compel the authority to introduce clear rules of the road regarding regulating crypto. The exchange filed the motion on Apr. 27, 2023, also revealing that it had initiated legal proceedings against the SEC after receiving a Well’s Notice from the regulator.
The exchange’s Chief Legal Officer Paul Grewal expressed the company’s frustration with the regulatory stance in the U.S. last month, saying:
“Coinbase does not take any litigation lightly, especially when it’s with one of our regulators,” he noted. “Yet we, like other companies in the industry, are facing potential punitive actions from the SEC without clear understanding of how the SEC interprets the law in relation to our business.”
Budget increase
In March, the SEC Chair Gary Gensler revealed to Congress that his authority required an extra $2.4B in funding. He said the authority lags in monitoring and regulating upcoming markets like cryptocurrencies. He said the extra funding would help arm the authority with the right tools and personnel to flush out bad actors from these markets.
Gary Gensler says a vast majority of cryptos are securities
One of the most controversial statements to ever come from Gary Gensler regarding cryptocurrencies is that Ethereum is a security asset. He also said that many cryptos should be classified as securities.
These statements were not welcomed by the crypto community and other regulators like CFTC, who believe that some crypto products are commodities. However, some experts never agreed with either; they stated that cryptos are digital assets and should be bound by new regulations and classified distinctly from traditional finance products.
Planned attacks?
Dr Thomas Hogan
DR Thomas Hogan, Senior Research Faculty at American Institute for Economic Research (AIER), released a video on Youtube in April discussing how the U.S. was attacking crypto via Operation Chokepoint. He also addressed the possible resurgence of this planned attack in the form of Operation Chokepoint 2.0, which aims to cripple the crypto industry.
In the video, Hogan states that the regulators’ power over the crypto industry has increased exponentially over time, with unelected bureaucrats getting heavily involved in the making and enforcement of new regulations which circumvent the democratic process as their core aim is safeguarding their wealth or making new fortunes off of the new regulations that they are bringing.
Coinbase CEO Brian Armstrong claims the SEC wants to do away with crypto staking
Coinbase CEO Brian Armstrong has repeatedly revealed that the US SEC has hidden agenda regarding the crypto industry. He has come out to say that SEC’s plan is to cause destabilization of the industry in a bid to control it internationally, which might not work, leaving the U.S. behind in the innovation.
On Feb. 9, 2023, he tweeted that his office had received rumors that the SEC sought to eliminate crypto staking for retail customers.
1/ We're hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I hope that's not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen.
Lax regulation witnessed in the traditional U.S. financial sector
Silicon Valley Bank sinks pulling international customers down with it
Republican lawmakers are accusing top bank regulators of sitting back while big banks like Silicon Valley Bank went down in flames. The collapse of this regional banking institution in the U.S. was the second largest of its kind in U.S. history.
Regulators closed the bank on March 10 and FDIC announced that it would bail out customers using the money paid to it. However, new information has surfaced that international customers did not benefit from this act of ‘kindness and responsibility’ by regulators.
As if foreigners didn't have enough incentives to dump their U.S. dollars, the FDIC just gave them another. Foreign customer's of #SVB weren't extended the same protection as domestic customers and will take heavy losses. The message to foreigners is clear. Don't bank in the U.S.
Treasury Chair Janet Yellen has confessed that lax regulations by the US government are to blame for the industrial collapse of 2008. We never saw any major changes in the way that the banking system is run in the U.S. even after the collapse meaning loss of income for millions of citizens.
Additionally, a big number of officials of wrongly managed financial institutions of the era were never charged or barred from ever participating in similar offices ever again. For instance, an executive at SVB was the CFO of LeMahns Brothers which collapsed in 2008. Should regulators bar such individuals from ever participating in the financial sector ever again? You tell me.
Banks are issuing risky residential mortgages under regulator’s watch
Banks have been issuing residential mortgages that are risky and hurting U.S. citizens due to a lack of enough oversight from governing bodies. Some types of mortgages like the ones with variable prices are risky as they squeeze a big number of people down their social classes when an economic crisis happens.
Unluckily, the U.S. regulators are not talking about this issue as banks continue to siphon money from innocent citizens who never participated in the process of passing bad financial policies that have brought inflation rates up necessitating high bank rates from the federal reserve.
Now in May 2023, the prices of varying mortgages was up by 7%, and have to be serviced by the same citizens who are battling a 6% total inflation against the US dollar.
Harsh crypto regulation is not good for innovation…
Several crypto and financial analysts have called out the SEC for its regulation methods citing that it won’t be good for innovation. Here is what some of them have to say:
Brian Armstrong
Coinbase CEO Brian Armstrong has become one of the greatest forces in the blockchain industry following his readiness to challenge the SEC in court regarding its poor regulatory framework and its tendency to capitalize on it.
On Feb. 9, 2023, he condemned the US SEC for seeking to ban crypto staking, stating that it would affect the U.S. markets by driving crypto companies offshore. He stated that the operation of companies away from the U.S. is the real reason for increased fraudulent activities, like in the case of FTX and Terra ecosystems.
5/ Regulation by enforcement doesn’t work. It encourages companies to operate offshore, which is what happened with FTX.
Armstrong also led his team in building an international exchange last month to move away from the U.S., which foreshadows growing displeasure among crypto entities in the U.S.
Tim Tully- CEO, Zelcore Technologies
In an interview with Fintech Express, CEO Timothy Tully of Zelcore Technologies, a Web 3 company offering secure and simple-to-use ‘control center’ for cryptocurrency wallets, digital assets, and blockchain data, insisted on the U.S. having a uniform crypto regulatory framework.
He referenced the FTX, Kraken, and Paxos’s BUSD cases, saying that regulators are not making the rules clear yet insist on enforcing their mysterious interpretation of TradFi rules.
In his words, he said:
“Though regulation is necessary at this point, some of the steps that the U.S. regulators are taking may only make things worse. For instance, the branding of BUSD as a security, introduction of CBDCs which will be used as tools of surveillance is wrong and will most likely push crypto innovation away from the U.S.”
He explained that the noise witnessed in the crypto space is most likely a trojan horse from the U.S. SEC looking to stifle crypto innovation globally.
Joe Lubin, CEO, ConsenSys and Ethereum co-founder
In March, Joe Lubin, Consensys CEO, and Ethereum co-founder, hit back at claims that Ether is security. He said that he feels Ethereum is not a security after Gary Gensler labeled it so, and a subsequent lawsuit from the New York Attorney General against crypto exchange KuCoin also named it so.
Lubin said that Ethereum is more of a commodity like oil other than a security citing that people often buy oil anticipating a price rise. He stated that crypto industry participants are generally frustrated with how regulators handle their job. However, he added that it’s a good thing that some regulatory efforts have brought more light to the crypto space.
“I think some of us believe that many of the actions are right and reasonable,” he said, adding “more clarity” was needed. “We’ve seen focus on things that should see real scrutiny and we’ve seen misunderstandings.”
Oliver Linch, CEO Bittrex
Oliver Linch’s Bittrex Inc. was charged by the US SEC on Apr. 17, 2023, on allegations that it was operating as an unregistered securities exchange, broker, and clearing agency in the U.S. The regulator further accused the exchange’s international branch, Bittrex Global GmbH, of failing to register with them, claiming that both exchanges shared a single order book.
“We’ve not really seen an explanation as to what the SEC’s thinking is there, why that is of significance,” Linch said, referring to allegations of a shared order book. “Suffice to say, we think that they’re mistaken in the way they conceive of it legally and in terms of facts.”
Oliver Linch hit back at the regulator’s claim that they did not get any notice of an ongoing investigation until the SEC sent a notice saying they had reached a preliminary conclusion. He explained that the SEC did not serve justice as they ignored their right to have a chance to explain facts about how their exchanges operated.
He, however, praised the regulatory efforts in Lichtenstein, Bermuda, saying that it’s great for regulators to identify the risks associated with crypto and move to managing them rather than discouraging service providers.
“What we’re seeing is a growing realization that the most successful regulatory regimes are ones that have created a framework for crypto on a bespoke basis,” Linch said. “Now, that’s why we’re regulated in Liechtenstein in Bermuda, because what those jurisdictions did really early on is really get to grips with crypto, what the product is, what services, what the risks are, and say to people, ‘OK, well, we can identify and manage. Here’s how you do it safely.’”
Linch asked the U.S. Congress to help sort out the crypto regulatory mess and ensure that if the country wants to regulate the industry, it starts with developing a workable framework
Keep watching Fintech Express for more finance-related updates.
The U.S. Chamber of Commerce has just filed a brief in Coinbase v. SEC case, calling out the SEC for acting “unlawfully” in the digital asset space.
Coinbase case to save crypto from unfriendly regulation?
The U.S. Chamber is a highly influential organization representing companies in all industries across the U.S. making it a force to reckon with in the preservation and fostering of innovative financial technology.
It has now intervened in the Coinbase vs SEC case where the crypto exchange decided to stand ground and face the regulator with confidence that it had met all operating requirements therefore shouldn’t be served notices regarding its already vetted products or charged.
“As it stands today, nobody knows for certain which digital assets, if any, are ‘securities’ under federal law.”
In the brief, the Chamber makes 3 arguments.
1. Regulatory uncertainty is killing innovation in the U.S.
2. The SEC is destabilizing the digital assets regulatory environment.
3. The SEC is violating Constitutional Due Process and Fair Notice rights.
The Chamber goes ahead to declare:
“The SEC’s actions are not just harmful policy; they are unlawful…”
Coinbase CEO Brian Armstrong has been condemning the SEC for poor regulation. Most people took it as a pr stunt or a losing battle as the SEC has been notoriously cracking down on crypto. Now, the new statement from the Chamber of Commerce will add more weight to the matter and stand strong in court.
However, only time will tell where the direction of the case will be headed but the involvement of the most influential innovation fostering authorities in the U.S will make it interesting. Keep watching fintech express for updates on this and other fintech-related stories .
Brits to endure more pain as leaks reported by Fintech Express yesterday prove right as 25 basis point interest hike gets announced in the U.K. Now, the Bank of England has made it official, which marks a record 4.5% range which was last seen 15 years ago. At the moment, these hikes are already causing pain among Brits as many can now not pay their debts in time.
BoE announces the expected 25 basis points hike
The cost of living in the U.K. is set to rise again following an announcement by the Central Bank that it is raising the interest rates further to help fight inflation. It has announced a 25 basis points hike, the 12th consecutive bump, and a peak since 2008.
As expected, the Monetary Policy Committee voted for the hike by a margin of 7 to 2, saying that the inflation, particularly food costs, has failed to fall as fast as previously anticipated. The MPC also suggested that PM Rishi Sunak is on the edge of missing his target of halving the rate of the price rise by the end of Q4 2023, as CPI is projected to be 5.1 percent by that quarter.
However, BoE has upgraded its views on the market, saying that GBP is projected to be higher by 2.25 percent by the end of the three-year forecast period than predictions made in their February meeting.
More pain to already struggling Brits
Though raising interest rates is calming down inflation, it is heavily impacting the lives of British Citizens. At the end of April, over 700K homes could not pay their mortgages. It is predicted that the new raise will immediately impact the bills of around 2.2 million people signed into variable mortgages.
MPs who condemned the biggest high street banks for stepping off the loyal savers via financing plans like variable mortgages have noticed this continued trend of inflicting pain on citizens.
Keep watching Fintech Express for updates on this and other macro finance stories.
