Weekly Update

TFU | Dec. 11-17

A federal judge dismissed the New York’s challenge to the OCC fintech charter; the SEC halted an in-progress ICO; Bitcoin futures trading debuted; JPMorgan and Barclays joined IBM’s quantum computing initiative; and Wired looks at China’s social credit scoring platforms “for everything in your life.”

We’ll be taking off the next two weeks, but will return in the New Year. In the meantime, we wish you all the best for a fun, relaxing, and happy holiday season. See you in 2018!

Leading Off

A federal judge dismissed the NYDFS’s suit against the OCC challenging its proposed “fintech charter”; the SEC halted an in-progress ICO; bitcoin futures trading debuted in Chicago; JPMorgan and Barclays became charter members of IBM’s new quantum computing initiative; and Wired takes a deep dive into the credit scoring platforms “for everything in your life” operated by China’s largest tech firms.

In the News

Federal judge dismisses NYDFS ‘fintech charter’ suit.  Judge Naomi Buchwald of the U.S. District Court for the Southern District of New York cited a lack of ripeness in her dismissal of the state regulator’s lawsuit challenging the OCC’s proposed special-purpose national bank “fintech charter,” noting that the OCC has not “yet decided whether or not to grant fintech charters.”

SEC stops $15M Munchee ICO.  The Securities and Exchange Commission (SEC) halted a planned $15 million initial coin offering (ICO) by restaurant rating app Munchee for “advertis[ing] to the public without providing investor disclosures.” Munchee raised about $60,000 before the SEC stepped in. It is the first time the SEC has taken action against an ICO without alleging fraud.

Bitcoin futures contracts debut.  Cboe Holdings launched trading in the new derivative, allowing institutional investors to speculate on the future price of bitcoin. The price for the January contract date spiked more than 20% in the first day of trading. Cboe soon will have competition from CME Group, which is introducing its own bitcoin futures contract.

Banks and IBM team up on quantum computing.  JPMorgan Chase and Barclays became charter members of the IBM Q Network, IBM’s new 20-qubit quantum computing system. The banks are interested in using quantum computing for risk management, with JPMorgan also considering its potential value for other functions including trading, portfolio optimization, and asset pricing.

Mizuho implements AI for communications monitoring.  Mizuho Securities will use a suite of AI and voice recognition tools to help track and analyze communications between sales reps and investors to ensure compliance with applicable regulations. Mizuho conducted pilot test of the AI system last month and found “a significant reduction in monitoring time.”

MasterCard to allow new tools.  The global payments company is launching Assemble, an “innovation hub” allowing card partners and issuers to offer customers “checking, budgeting, and payment features, as well as additional money management tools.” Assemble’s first product will be a digital prepaid account, mobile app, and payment card aimed at millennials.

Vanguard to launch blockchain network.  The mutual fund provider, which manages $4.8 trillion in assets, is working with capital markets-focused DLT startup Symbiont to create a blockchain network that will help it “automatically [ingest] index data” and allow “investment managers to receive and process data . . . instantly.”

On the OCC’s continuing “fintech charter” fight.  The American Banker discusses what Judge Buchwald’s dismissal of the NYDFS’s fintech charter suit may mean for the future of the proposal. The AB notes that the reason for the dismissal — prematurity — “shines a spotlight on whether newly appointed Comptroller Joseph Otting will move ahead with accepting . . . applications.”

Take a deep dive into China’s social credit scoring.  Wired offers a fascinating long-form article on the growing phenomenon of social credit scoring in China, exemplified by Ant Financial’s Zhima Credit. Supported by the government, several large tech firms now operate private credit scoring platforms with algorithms that use behavioral and social inputs as well as financial ones.


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