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Banks will be required to work with crypto, e-money and CBDCs to survive

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Image a scenario where you need different messengers to send different types of messages — for example, WhatsApp for text messages, Viber for audio, Telegram for video, etc. Rather inconvenient, right? But this is exactly what happens in finance: There is no way to send both digital fiat money and cryptocurrency from a bank account without extra steps. It’s not affecting the masses just yet, but after the issuing of national digital currencies, or central bank digital currencies, in the next few years over the world, the situation is about to become complicated. We need to start looking for a solution now.

CBDCs require a multi-format framework

The traditional financial system can’t brush off new technologies anymore. According to the Cambridge Center for Alternative Finance, the number of cryptocurrency users has almost tripled from 35 million people in 2018 to 101 million people in Q3 2020. Another study, conducted by researchers from the United Kingdom’s Financial Conduct Authority, revealed a 78% increase since 2019.

Cryptocurrency operations are profitable. In Q4 2020 alone, PayPal increased its number of transactions by 36%, which is worth about $277 billion. The increase began in Q3 2020 when the company introduced crypto transactions. This is one of the best quarterly returns in PayPal’s history.

Related: Will PayPal’s crypto integration bring crypto to the masses? Experts answer

However, central bank digital currencies are going to become a part of our daily lives in three to five years. And we need completely new infrastructure for its mainstream adoption. China was the first to actively promote its digital yuan project — referred to as the Digital Currency Electronic Payment, or DCEP. China is fully focused on the infrastructure because several local banks have already developed or are developing their own e-wallets — the main tool for working with DCEP.

Related: China turns up pace on CBDC release, tests infrastructure prior to adoption

So far, the Chinese digital yuan is the only example of digital money issued by central banks that is actually working. Notably, more than 60 central banks around the world are exploring this opportunity. DCEP is built on centralized blockchain technology fully managed by the Central Bank of China. This technology makes it possible to gain full control over all financial transactions, ensures social spending targeting, increases tax collection, and prevents financial crimes.

In turn, international payments system Visa recently introduced a protocol for offline transactions with central bank digital currencies. To pay or accept payments offline simply requires downloading a mobile application. In this case, CBDCs essentially replace cash, leading to an increase in the number of transactions controlled by the issuer, bank or financial intermediary.

The monetary multi-format framework is about to become a requirement for financial instruments. Banks will have to make sure that fiat, CBDC and crypto transactions can be made in one place: in a banking application. But there is a catch: The new formats have nothing in common with their predecessors. Moreover, governments view the launch of CBDCs as autonomous. In other words, it doesn’t follow a unified standard with neighboring countries.

What stands in the way of combining “old” and “new” money?

Cryptocurrencies and CBDCs are relatively new. So, there is a lot of uncertainty around these financial instruments. That being said, fiat and digital money share common functions, and the method and quality of their implementation affect how the multi-format financial solution is going to be created.

Building a multi-format financial solution requires a unified approach to compliance. If each service conducts Anti-Money Laundering checks for CBDC and cryptocurrency transactions following its own policy, the bank on the receiving end will not confirm them.

People who aren’t deeply involved in crypto might think digital assets cannot be integrated into traditional business processes. But this is untrue. Our experience shows that it is necessary to develop a unified approach to compliance — the same for both traditional fiat and crypto. Public vilification of all digital asset owners stands in the way of that.

Moreover, the tools in crypto finance are noticeably more effective in AML than those in the traditional system. For example, Know Your Transaction procedures can show the entire transaction history for a particular cryptocurrency — from the moment the token was created to when it was sent to the user’s wallet, including every operation in between.

Versatility is getting harder

The differences between “old” and “new” money shown above are just a few examples, but they are significant enough that we can’t anticipate the seamless use of different forms of money. That is why the compatibility between them is especially important for many banks and fintech services.

We are entering a new era of many financial intermediaries of all shapes and sizes. They will serve their own niche, combining different types of electronic money, CBDCs and cryptocurrencies, using a variety of services. For example, Visa cards already support fiat, crypto, precious metals and Bitcoin (BTC) cashback.

When companies and people can choose among different types of money/currencies/payment systems, only those financial institutions that can work with a wide variety of formats and services simultaneously can be considered universal banks.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Alex Axelrod is the founder and CEO of Aximetria and Pay Reverse. He is also a serial entrepreneur with over a decade of experience in leading technological roles. He was the director of big data at the research and development center of JSFC AFK Systems. Prior to this role, Alex worked for Mobile TeleSystems, the largest telecom provider in Russia, where he headed the antifraud and cybersecurity systems development.

Source: https://cointelegraph.com/news/banks-will-be-required-to-work-with-crypto-e-money-and-cbdcs-to-survive

Blockchain

Bitcoin HODL Waves Suggest Bull Run Has Barely Started

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Analyzing Bitcoin HODL Waves from previous bull runs as led crypto YouTuber and analyst Lark Davis to the conclusion that this cycle is still in its infancy.

He added that we are just now past the first major price wave, “get ready for wave 2”.

The chart depicts three distinct price waves for every market cycle back to 2011. The current cycle shows just one wave cresting at Bitcoin’s recent all-time high of $58,250 on Feb. 21. This indicates that, if history rhymes, there could be two larger ones to come especially if corporate giants keep buying it.

Bitcoin Being Hodled

HODL Waves are a visualization pioneered by Unchained Capital which shows the cross-section of Bitcoin held in wallets grouped by the age since they last moved. The Bitcoin financial services company explained;

“By comparing the age of bitcoin sitting in addresses to the current US dollar prices, we can make some interesting conjectures about the bitcoin economy and the sentiment of HODLers.”

Glassnode has extrapolated the short-term HODL waves and overlaid them on the logarithmic scale price chart. Using these metrics it does appear that there is a lot more to go with this bull run, but there are many other on-chain and fundamental factors to consider.

One of them is them is the central bank money printing narrative which could drive wild inflation and devalue global currencies. Trillions of new dollars have been printed for stimulus purposes in the U.S. alone since the Covid-19 pandemic put the economy into shutdown mode in early 2020.

Vice President of digital asset strategy at Fundstrat Global Advisor, Leeor Shimron, compared Bitcoin to M1 money stock – the country’s basic money supply that is used as a medium of exchange. He also thinks this cycle could “get very wild” in the face of unprecedented money printing.

BTC Price Outlook

At the time of press, BTC was trading at $49,250, down from its recent weekly high of $52,580 hit in late trading on March 3 according to Tradingview.com.

Momentum is still bullish from a weekend swing low to $43,300 but the asset needs to break above resistance at $55,250 to push towards a new all-time high.

March has traditionally been a bearish month for Bitcoin and crypto markets so this move may come later in the year.

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Source: https://cryptopotato.com/bitcoin-hodl-waves-suggest-bull-run-as-barely-started/

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Blockchain

Ripple CEO files motion to dismiss SEC complaint citing ‘abuse of prosecutorial discretion’

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Ripple CEO Brad Garlinghouse has filed a motion to dismiss the SEC’s amended complaint against him, calling it “regulatory overreach.”

The exec took to Twitter to announce his position on the SEC’s charges against him and Ripple Labs Inc. by sharing a link to the letter filed on his behalf, saying that “it speaks for itself.” According to the said letter, the SEC’s allegations against Garlinghouse fail on account of a number of reasons.

The same, addressed to U.S District Court Judge Analisa Torres, claimed,

“First, the SEC fails to recognize the economic realities of Defendants’ transactions in XRP, the XRP market, and Ripple’s business, each of which exhibits none of the traditional characteristics of an investment contract.”

The motion to dismiss, filed by Cleary Gottlieb Steen and Hamilton, also commented on the SEC’s amended complaint, while also expanding on the regulatory agency personally targeting Garlinghouse for the alleged violation of securities laws.

“Straining to impose personal liability on an executive like Mr. Garlinghouse for simply doing his job where he reasonably understood that his actions complied with the law represents an abuse of prosecutorial discretion that has sent a dangerous signal to entrepreneurs and will chill innovation.”

Garlinghouse was reported to have sold over 60% of his XRP holdings for approximately $159 million at the time of those transactions, leaving him with 200 million XRP tokens. While holding 200 million XRP tokens is a considerably long position, some members of the community feel that Garlinghouse selling a majority of his XRP is disingenuous on his part.

In fact, Ripple’s lawyers have argued that the SEC’s allegations with respect to Garlinghouse’s XRP sales are “vague,” with no particular reference to any of these transactions occurring within the United States.

“The truth is that the vast majority of Mr. Garlinghouse’s XRP sales were made on foreign exchanges, and those transactions do not and cannot violate the federal securities laws,” they asserted.

XRP was trading at $0.4660 at press time, down by over 25% from a high of $0.6338 in February.


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Source: https://ambcrypto.com/ripple-ceo-files-motion-to-dismiss-sec-complaint-citing-abuse-of-prosecutorial-discretion

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Blockchain

OKEx Lists Chiliz, Enables CHZ/USDT and CHZ/BTC Spot Trading

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The blockchain-based fan engagement platform Socios.com received a huge boost after its native asset Chiliz (CHZ) was listed on OKEx – a leading global crypto exchange and derivatives trading platform. The popular digital currency for the sporting and entertainment industries, CHZ became available for spot trading against USDT and BTC at 10 AM UTC on March 3, 2021.

The CHZ blockchain’s Socios.com allows sporting teams and clubs to create Fan Tokens to connect and engage with their fans. These Fan Tokens will act as membership cards, providing its holders with the privilege to participate in various decision-making processes of their favorite teams. In addition, fan token holders will also be eligible for exclusive access to team events, merchandise and other rewards. Socios.com has already partnered with some of the biggest sporting teams and clubs including the likes of AC Milan, FC Barcelona, Juventus, UFC and more.

According to Chiliz, their Fan Token model has also helped sporting organizations unlock new revenue streams, enabling them to overcome losses in the form of poor ticket sales, lost sponsorship deals etc., during the pandemic.

Acknowledging the role of Chiliz in promoting blockchain technology, CEO of OKEx Jay Hao said, “Chiliz has uncovered another key use case for blockchain technology showing how the sports and entertainment industries can adapt to an increasingly digital world and create new revenue streams beyond traditional sources. As more and more fans begin to engage with clubs and teams through fan tokens, the use of cryptocurrencies becomes continuously more mainstream. OKEx couldn’t be happier to support this important initiative.”

Celebrating the new listing, OKEx is distributing $150,000 worth of Fan Tokens to the CHZ community members through lucky draw. Users depositing or trading CHZ on OKEx until March 10, 2021, will be eligible for the giveaway program. Up to $10,000 worth of Fan Tokens is earmarked for referral rewards.

OKEx will be activating CHZ withdrawals on the platform starting 10 AM UTC on March 4, 2021.

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Source: https://www.newsbtc.com/news/company/okex-lists-chiliz-enables-chz-usdt-and-chz-btc-spot-trading/

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