TFU | July 16-22

Leading Off

The CFPB has a new head of its Office of Innovation and is developing a regulatory sandbox; Coinbase received SEC and FINRA approval to offer tokenized securities on its platform; challenger bank Revolut reported suspected money laundering on its platform to U.K. authorities; Columbia University and IBM partnered on a new blockchain research center; and PayPal led a $50M investment round in merchant payments firm PPRO.

 

In the News

CFPB to create regulatory sandbox for fintechs.  Acting director Mick Mulvaney of the Consumer Financial Protection Bureau (CFPB) appointed Paul Watkins to lead the newly created Office of Innovation, and tasked him with developing a fintech regulatory sandbox. The initiative is expected to deal with cryptocurrencies, blockchain, and alternative credit-scoring methods, among others.

Coinbase approved to offer tokenized securities.  The crypto exchange received approval from the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) to sell crypto tokens that have been deemed securities by regulators. As a result of the decision, users soon may be able to invest in ICOs and other cryptocurrency markets, through the Coinbase platform.

Fed Chair says cryptocurrencies are great for money laundering.  Federal Reserve Chairman Jerome Powell said that cryptocurrencies are “great if you’re trying to hide or launder money” during an appearance before the U.S. Congress. Powell’s statement comes as part of a House Financial Services Committee initiative to determine the legal status of cryptocurrencies.

Revolut reports suspected money laundering.  The London-based money transfer service reported a series of suspicious transactions to the National Crime Agency and the Financial Conduct Authority. Revolut has signed up 2.25 million users since its launch in July 2015, but some critics suggest that the such aggressive growth may come at the expense of proper customer vetting and AML controls.

Mastercard wins patent to speed up crypto payments.  The global payments company was awarded a patent from the US Patent and Trademark Office (PTO) for a method of speeding up cryptocurrency payments. Mastercard is seeking to offer a way to reduce these transaction times between cryptocurrencies and fiat currencies.

Columbia and IBM form new blockchain research center.  Columbia University and IBM’s new Center for Blockchain and Data Transparency will be a research facility dedicated to studying “innovation in blockchain technology and data transparency” as well as an “innovation accelerator to incubate business ideas from entrepreneurial students, faculty and members of the startup community.”

Report: >90% of e-commerce login attempts are hackers.  According to a report from cyber security firm Shape Security [link], “[over] 90% of e-commerce sites’ global login traffic comes from [credential stuffing] attacks,” whereby hackers “use programs to apply stolen data in a flood of login attempts.” According to Quartz, such attacks may succeed as much as 3% of the time, costing businesses millions.

PayPal invests $50M in PPRO.  The global payments company led a $50 million investment round in the London-based cross-border merchant payment firm, with participation from Citi Ventures and HPE Growth Capital. PPRO offers merchants “a seamless way of accepting payments from customers using . . . the most popular payment form [of that] particular country.” PPRO’s valuation was not disclosed.

IBM seeks to launch a price-stable cryptocurrency.  IBM is partnering with crypto startup Stronghold to launch USD Anchor, a token backed by U.S. dollars and eligible for FDIC insurance. The first use cases IBM will pursue are around cross-border payments in the form of remittances and small-scale foreign exchange transactions.

Is Chinese tech funding drying up?  The New York Times examines the slowdown in Chinese venture investment, noting that private equity and venture capital fundraising in 2018Q1 was more than 67% lower than the amount raised in the same period last year. In correlation with this decline in private funding, many Chinese startups are going public, including 12 expected IPOs this year.

 

 

 

 

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