by Samuel Mbaki | Jun 14, 2023 | Learn
Key Points
- Ripple vs. SEC case has been going on for the last 18+ months over claims that XRP is a security
- EX SEC Director William Hinman made a speech in 2018 claiming that some assets like BTC and ETH start as securities, but they evolve into commodities
- SEC has been trying to keep the documents sealed, but Judge Torres denied their motion on May 16, 2023
- The documents were released on June 13, 2023, for public access
Ripple vs. SEC: Hinmans documents
Hinmans documents are internal SEC messages concerning a speech given by former director William Hinman detailing that some crypto assets evolve from being securities. Hinman said that some assets become commodities as soon as decentralization disqualifies them as securities.
The SEC has been working to keep these documents hidden from the public as it continues to crack down n crypto platforms for trading ‘securities.’ In the case against Ripple, Judge Torres denied their motion to hide the Hinmans documents in May 2023, saying that the public has the right to know what transpired.
What should you expect from Hinmans documents?
We expect to see emails and comments made by Hinman, SEC staff, and Valerie Szczepanik concerning his speech on crypto assets evolving their asset classes as decentralization sets in. You can expect to see drafts and quotes from his speech in the documents. The documents are expected to bear minimal redactions.
Will the documents refer directly to the XRP token?
Though Ripple CEO Brad Garlinghouse says these documents are worth the wait, they are not certain to have XRP token mentions. However, as the SEC was investigating XRP, which at the time was among the top 3 coins in the world, it is possible that it mentioned or, rather, SEC incriminated itself in the process of handling the token.
Why are the Hinmans documents important to the crypto industry?
The crypto industry has been under a regulation attack by the U.S. SEC, with over 67 assets accredited as Securities. Most of these ‘securities’ are highly decentralized, which will most likely disrupt what the SEC is doing currently and may result in a major shift of their regulator power over the crypto industry.
If these assets are reclassified as commodities, the SEC will be in for a wild ride as the legal status of cryptos changes, and they have been knowing it for a long time but ignoring it and going ahead to charge trading platforms in the U.S. The legal proceedings with Riplle may also shift greatly.
What is the likely impact of Hinmans documents on the Ripple vs. SEC case?
Once the Hinman documents are released, Ripple will have a 25% outright chance of winning the case as they lean heavily in their favor. On the other hand, the SEC will have around a 5% outright chance of winning the case.
These documents are important to this case as they will influence the decisions and efforts made by the SEC to regulate Ripple and other future cryptocurrency-related investments. The documents may bear comments that suggest that XRP Ripple does not satisfy all elements of the Howie Test, making it not a security for purposes of the Federal Securities Laws.
Keep watching Fintech Express for updates on this and other fintech-related developments.
by Samuel Mbaki | Jun 5, 2023 | Learn, Blockchain
- A blockchain node is a device that participates in a blockchain network by running the network’s software which helps it to validate transactions.
- Blockchain nodes usually communicate with each other to verify transactions.
- The more nodes a network has, the more it is decentralized.
What are blockchain nodes?
The question of what is a node in blockchain is best answered by visualizing a blockchain network. To be a network, it needs several intercommunicating computers/ devices that can write, upload and verify data that goes to the software behind the network. For instance, if you want to run a node for Bitcoin (CRYPTO:BTC), you can download the Bitcoin Core software on a computer and run it without discrimination.
As such, a blockchain node refers to a device or computer running a blockchain network software and communicating with others to verify data uploaded in the blockchain. Running a blockchain network’s software on different computers increases its security and enhances its decentralization.
For most blockchain networks, anyone can run a node; however, some networks are choosy and only allows select nodes to run their software and participate.
How does a blockchain node work?
The main roles of a blockchain node are broadcasting and validating transactions. Once a user submits a transaction, it’s received by a node that then broadcasts it to all other network nodes.
Once the transaction is read by all nodes and verified that the user has enough funds to satisfy it, they authorize the user to complete the transaction. Since all nodes verify a transaction in a blockchain, a transaction can only be cancelled or rejected if 51% of the available nodes confirm it to be wrong.
As such, the 51% attack can be made, but it’s not easy in a decentralized network. A decentralized network is one where different nodes are available and are not led by a single user or a block of users that can concur to Sencor select transactions. That means the higher the number of nodes, the higher the security of a blockchain against the 51% attack.
Once a node validates new transactions, it is grouped into blocks that are then added to the blockchain following the set rules of the network. After that, no node in the network is allowed to change the contents of any block, making the data recorded in the network immutable.
by Samuel Mbaki | Jun 3, 2023 | Learn
Key Points
- A tight labor market occurs when there are more job opportunities than available workers
- A tight labor market could see an inflation spike and a consequential rates hike
- Recruiting in a tight labor market doesn’t have to be that hard.
What does a tight labor market mean?
A tight labor market is a market cycle with plentiful vacant jobs and scarce workers. This usually happens when an economy grows super fast, and most employers are looking to expand their workforce.
However, a tight labor market can also occur when there is a decline in labor force participation resulting from a rise in economic inactivity. While it is generally accepted that fewer workers cause market tightness, it is also accurate that workers participating in fewer work hours could also result in a tight labor market.
The COVID-19 pandemic saw most markets tighten due to employees having to work from home. That resulted in some cutting their working hours. As such, the number of new hires started to spike till the pandemic slowed down, and the national economies were revealed to have been heavily impacted, which led to massive layoffs.
Though there are still layoffs, the U.S. is showing an increase in new hires, with an average of 341K per month for the past 12 months and positive hire reports for the past 25 months. This data comes when the U.S. economy slows down due to inflation, a debt ceiling crisis, and a banking meltdown.
These labor reports show that something happened during the COVID-19 work-from-home era that made people reconsider their work ethics and recalibrate their work-life balance toward working fewer hours. If this trend represents a permanent shift keeping the labor supply low, the country will likely face a tight labor market as its economy rebounds.
Most factors behind the formation of a tight labor market are short-term. However, structural economic changes can also be to blame. Some factors that may lead to market labor tightness include:
- Accelerated retirements
- Widening skills gap
- Geographic imbalances in the labor pool
- Too fast economic growth
- Working population decline or immigration
Consequences of a tight labor market
Tight labor markets mean that the production targets of an economy may go unmet as the available workers may not be willing to overwork to hit the set quotas. Here are some of the consequences of labor market tightness in an economy:
- This can lead to a crunch in supply chains as production is hampered by shortages due to unmet quotas.
- This can lead to increases in the relative bargaining power of working people leading to a rise in union pay demands and or an increase in production costs.
- It can lead to cost-push inflation as employers pay higher rates to hire and maintain their key staff.
- It can result in embedded inflation rates that could affect the economy adversely. As such, it directly leads to interest rate hikes to control the embedded inflation risk.
Recruiting in a tight labor market
A tight labor market is one of the hardest times to acquire a star-studded team. However, that doesn’t mean you cannot build one. Here are some tips that you can use to build a great team during seasons with labor shortages
1. Tailor the hiring process to favor candidates
Ensure that your hiring process favors candidates by aligning it with a candidate’s point of view. Throughout the process, ensure you do not lose top candidates due to adjustment and negotiation times delays.
2. Market your organization
Develop attractive landing pages for your organization and explain all perks to employees well to give you an edge over other employers.
3. Develop an employee referral program.
Give incentives to employees who refer others to your organization
4. Focus on the active and passive candidates
Improve the working environments of the present candidates and workers to ensure that they will stick with you and develop a sense of loyalty.
5. Talk about Salary early.
Negotiate salary in the initial stages of discussion to align with the worker. However, be aware of making the hiring process lengthy as the worker may get a counteroffer.
6. Always be recruiting
Keep your recruiting window open to attract top performers to your organization and increase your chances of getting more employees.
7. Be prepared for counter offers.
Be prepared that some top workers and candidates may be given counter-offers to move away from your organization. Introduce bonuses and competitive salaries/ work environments.
What to avoid when developing a star-studded team in a tight labor market
- Underpaying/ being out of touch with marketplace salaries
- Not being realistic about temp-to-perm options
- Not maintaining contact with candidates throughout the process
by Samuel Mbaki | May 25, 2023 | Learn
Introduction
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.
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.
