An international group of regulators and government officials created in the wake of the 2008 financial crisis has released a wide-ranging report on financial technologies including blockchain.
The report grew out of a months-long process within the Financial Stability Board (FSB), which first revealed it was researching blockchain and its impact on the global financial system in February 2016. The board is composed of central bank governors and financial regulators from nations in the G20 group, as well as its predecessor Financial Stability Forum, and the European Commission.
Though the study states that “there are currently no compelling financial stability risks from emerging fintech innovations,” it outlines 10 potential issues that regulators should focus on. In the context of blockchain, the FSB report identifies the implications of the technology’s cross-border nature and legal uncertainty around smart contracts.
The authors go on to note:
“These and other legal issues could be even more prevalent when considering cross-border activities. For example, blockchain has raised questions, such as data privacy concerns across jurisdictions, and identifying the location of an asset when no one bank or entity is the custodian of the record.”
More at: Financial Stability Board: Blockchain Could Raise Cross-Border Data Issues – CoinDesk
IBM won the contract following a global competitive bidding process.
IBM has signed a lucrative deal to provide a European banking consortium with blockchain-based financial trading.
Based on IBM Blockchain powered by Hyperledger Fabric, the new trade finance platform will aim to simplify and facilitate domestic and cross-border trade for small and medium enterprises in Europe, while helping to increase overall trade transaction transparency.
Big Blue was chosen by the Digital Trade Chain Consortium which consists of Deutsche Bank, HSBC, KBC, Natixis, Rabobank, Societe Generale and Unicredit.
The Digital Trade Chain solution will run in the IBM Cloud and is designed to connect the parties involved in a trade transaction, both online and via mobile devices. It is designed to simplify trade finance processes by addressing the challenge of managing, tracking and securing domestic and international trade transactions.
More at: IBM wins major blockchain deal with European banks – Computer Business Review
Visa is working with blockchain outfit Chain to build the new platform.
At Money20/20 conference, Visa Inc. will preview and show off details of its B2B Connect project, a new platform that the card giant is developing to give financial institutions a fast and secure way to process B2B payments globally.
Visa is working with blockchain outfit Chain to build the new platform using Chain Core, a blockchain infrastructure that facilitates financial transactions on private blockchain networks.
Visa B2B Connect, which competes with interbank funds transfer networks such as Swift and Ripple, is designed to improve business-to-business payments by providing a near real-time notification and finality of payment combined with an immutable system of record over a permissioned private blockchain.
More at: Visa Shows its B2B Payments Blockchain Platform at Money20/20 – Finance Magnates
The Emirates Islamic Bank’s announcement last week that it was planning to integrate blockchain technology with paper checks may have left many pondering the incongruity: Why waste such a modern invention on such a traditional payment method? Aren’t paper checks like, you know, so last century?
However, dig a bit deeper and you find that things are not quite what they seem.
One peculiarity of the UAE banking system is the preferred form of security for bank loans: paper checks. The established practice is that the borrower writes the lender a post-dated check for the amount of the loan, plus interest. When the loan is due, the happy lender simply cashes the check. If the repayment is monthly, the lender will often ask for a stack of post-dated checks to cover the individual payments.
This makes the process of lending much easier. With a signed check in hand, the lender can avoid rigorous vetting procedures and confirmation hassles.
Also, banks often ask for a signed paper check to cover the monthly limit before issuing a customer with a credit card. Ah, you ask, but in all the above cases, how do they know the check won’t bounce?
It’s a question of incentives. If you are an individual and your check bounces, you can go to jail.
At least, that was the case until a few years ago, when the bouncing of checks issued as collateral for an entire loan was decriminalized (not for monthly payments). Last year, the bouncing of any type of check from small and medium businesses (SMEs) was also decriminalized (but not yet for individuals).
With this in mind, the ‘blockchain tech meets paper checks’ idea becomes more interesting.
More at: Blockchain and the Birth of a New Financial Instrument – CoinDesk
When Brad Garlinghouse, the CEO of Ripple, has to explain to his mother, who lives in Kansas, what his company does, he says, “Mom, it’s pretty simple. We sell software to banks.”
But it isn’t quite that simple. Most fintech startups fall into one of two camps: those that want to compete with banks and those that want to save banks from themselves. Ripple is the rare exception that wants to do both.
The San Francisco startup, which began years ago by launching a cryptocurrency but has since turned its attention to business applications for blockchain technology, can easily prove its bona fides in the second camp. The fact that 60 banks are now in the process of commercially deploying Ripple’s enterprise software—among them Santander, Royal Bank of Canada and Mitsubishi UFJ Financial Group—reflects the company’s incumbent-friendly approach.
“We’re not the disruptors, we’re not the guys who come in and tear everything down,” said Stefan Thomas, Ripple’s chief technology officer.
More at: Inside Ripple’s plan to make money move as fast as information – American Banker
Thomson Reuters is the first major industry player to make a smart oracle available in the blockchain ecosystem, BlockOne IQ.
Thomson Reuters (NYSE:TRI) has made a smart oracle available in the blockchain ecosystem for lean experimentation purposes. This means that organizations are now able to represent real market conditions in their proof of concepts by using the smart oracle, BlockOne IQ, to include current and historical market data within their applications, with cryptographic proof that Thomson Reuters is the source.
“After speaking with our customers, it became clear that there isn’t currently a participant in the blockchain ecosystem that is acting as a trusted source of external data for many of the financial services use cases,” said Sam Chadwick, Director of Strategy in Innovation and Blockchain, Thomson Reuters. “At our core, Thomson Reuters provides access to aggregated, high quality data and analytics – two characteristics that play well in an oracle and smart contract system – so it’s a natural transition for us, and another mechanism to deliver our content to industry participants.”
More at: Thomson Reuters to Act as Trusted Data Source for the Blockchain Ecosystem – Finance Magnates
The Tel Aviv based company raised the money in digital currency in a record ICO (initial coin offering).
Israel-based prediction market blockchain company Bancor has raised $153 million in digital currency in a record ICO (initial coin offering). 10,885 buyers participated including venture capitalist Tim Draper, who joins Bancor’s board.
The Bancor website said, “The Bancor team is humbled by the astounding support from our community. In what is now a historic Token Generation Event, 10,885 participants contributed 396,720 ETH, equivalent to $153,003,311.63, in less than three hours. To provide everyone the opportunity to invest in Bancor at an early stage, our team developed novel protocols to guarantee access to smaller contributors.”
“Reuters” explains, “Bancor enables the creation of so-called ‘smart tokens,’ which can hold one or more tokens or digital currencies in reserve. It also allows any party to instantly purchase or liquidate them directly via smart contract, without any counterparty and without relying on exchanges. Smart contracts are self-executing transactions.”
More at: Israeli blockchain co Bancor raises $153m – Globes