TFU | Dec. 3-9

Leading Off

U.S. regulators issued a joint statement encouraging banks to consider implementing innovative BSA/AML compliance tools; the SEC fined CoinAlpha Investors for several failures related to what it determined was an unregistered securities sale; an Abu Dhabi test found blockchain “radically simplified” the traditional KYC process; Signature Bank won NYDFS approval to offer blockchain-based real-time payments to some of its customers; and U.K. challenger bank Monzo raised £20M in new funding through crowdfunding.


In the News

U.S. regulators encourage BSA/AML compliance innovations.  Federal bank regulators representing the FRB, FDIC, FinCEN, NCUA, and OCC published a joint statement encouraging banks to “consider . . . innovative approaches to meet their Bank Secrecy Act/anti-money laundering (BSA/AML) compliance obligations.” The letter also stated that pilot testing innovative tools “should not [by itself] subject banks to supervisory criticism.” [Full text]

Two House bills proposed on cryptocurrency.  A bipartisan group in the U.S. House of Representatives introduced two bills concerning cryptocurrency, seeking to “prevent fraud, protect consumers and [remain] a leader in the global digital asset class” by empowering the Commodity Futures Trading Commission to develop recommendations for proper crypto regulation.

SEC takes action against crypto fund.  The U.S. Securities Exchange Commission (SEC) fined fund manager CoinAlpha Advisors $50,000 after it determined the firm had executed an unregistered securities sale. The SEC also found that CoinAlpha “did not run adequate know-your-customer procedures to ensure that all of its investors were credited.”

Signature Bank approved to offer blockchain-based RTP.  The bank was approved by the New York State Department of Financial Services to offer real-time payments (RTP) on a blockchain platform. Transactions on the Signet platform will “require no transaction fees and avoid third-parties,” though clients must hold a minimum $250,000 balance with the bank to use the service.

Abu Dhabi trials blockchain solution for KYC.  The Abu Dhabi Global Market’s (ADGM) Financial Services Regulatory Authority tested its new blockchain-based Know Your Customer app, finding that the tool “radically simplified” the “cumbersome, repetitive and cost intensive” KYC process. ADGM says the tool features an “audit trail, secure data sharing, [and] compliance with the [EU GDPR].”

Zopa receives U.K. banking license.  The British P2P lending pioneer received a banking license from the Financial Conduct Authority, allowing Zopa offer a suite of new products on its platform, including “a fixed term savings product . . . a credit card platform . . . and an Open Banking hub.” Zopa joins the increasingly congested U.K. “challenger bank” market, which includes Starling, Monzo, and Atom.

Hang Seng Bank forms a fintech partnership with Tencent.  The Hong Kong-based bank is partnering with the Chinese e-commerce giant on a series of fintech initiatives, including co-developing a remote account opening system using WeChat. Hang Seng will also provide a merchant-acquiring service for WeChat Pay HK, enabling customers to use mobile payments at select merchants in Hong Kong.

Blockchain firms form “Blockchain for Europe.”  Ripple, the NEM Foundation, Emurgo, and Fetch.AI partnered to establish an industry group to address the EU’s “‘fragmented’ policy debate around blockchain” through education and advocacy initiatives, and to “help the continent ‘shape the global agenda’ on blockchain.” The full text of the association’s formation announcement is here.

Cross River Bank secures $100M in new funding.  The New Jersey-based bank raised $100 million in new funding, led by private equity giant KKR and existing investors Battery Ventures, Andreessen Horowitz, and Ribbit Capital. The frequent fintech “partner bank” will use the cash to support its technology and infrastructure improvement and talent-acquisition efforts.

Monzo raises fresh £20M through crowdfunding.  The U.K. challenger bank raised £20 million in new funding in two days on crowdfunding site Crowdcube. The round was open to existing investors, who pledged £2 million, and to eligible customers, with 33,549 combining to raise the remaining £17.9 million. In 2016, Monzo raised a record £1 million in 96 seconds through crowdfunding.

Is Bitcoin close to becoming worthless?  Yes, says Santa Clara University professor of finance Atulya Sarin. Writing in MarketWatch, Professor Sarin argues that as the cryptocurrency’s price falls below the cost of mining it – estimated to be about $5,000 – its price will enter a “death spiral” to zero. Currently, one Bitcoin is valued at roughly $3,500, down over 80% from its historic peak.




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