TFU | Apr. 29 – May 5

Leading Off

A federal judge ruled that the DFS can move forward with its lawsuit against the OCC’s proposed fintech charter; the CFTC believes that more companies will apply to become clearinghouses due to growing interest in cryptocurrencies; IBM partnered with Thomson Reuters on a AI-backed regtech product; Facebook is working with large financial institutions to support its reportedly forthcoming stablecoin; and the Boston Fed produced a whitepaper on creating “supervisory nodes” on a blockchain.

In the News

Federal judge rules DFS may proceed with OCC suit.  Judge Victor Marrero of the U.S. District Court for the Southern District of New York ruled that the New York State Department of Financial Services (DFS) may move forward with its lawsuit against the Office of the Comptroller of the Currency (OCC) over its proposed “fintech charter.” A similar Conference of State Bank Supervisors suit is still pending.

CFTC Chairman says crypto may spawn new clearinghouses.  US Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo told Congress that an “explosion of interest” in cryptocurrency will likely result in new applications for registering clearinghouses. Giancarlo noted that clearinghouses represent “critical single points of risk” in the financial system and are growing increasingly complex.

IBM and Thomson Reuters ink regtech deal.  IBM OpenPages with Watson will use Thomson Reuters’ library of global financial services intelligence to offer financial services regulatory and compliance insights backed by AI and delivered through the IBM Cloud platform. “[This]  solution . . . brings a new level of insight and intelligence to the complex challenges of regulatory compliance,” said Alistair Rennie, IBM’s General Manager of Watson Financial Services.

Facebook is working with large FIs on crypto.  The social media giant is reportedly working with large financial institutions and global retailers to support its forthcoming cryptocurrency launch. Facebook’s reported stablecoin would allow Facebook users to make instantaneous money transfers and make online purchases that could “[threaten] the card networks’ dominance over global payments.”

Boston Fed considers “supervisory nodes” on blockchain.  A recent white paper from the Federal Reserve Bank of Boston considers whether regulators may need their own nodes on blockchain networks in order to properly monitor transactions and mitigate risk. “An unmonitored future is not likely for blockchain if and when it becomes a major conduit for global financial assets,” argues author Jim Cunha.

JP Morgan and Microsoft team up on blockchain.  The Bank will use Microsoft’s cloud-based service Azure to power its Quorum blockchain platform, aiming to make it easier, faster, and cheaper for companies to build and deploy blockchain applications. The partnership will allow enterprises using Quorum to build new blockchain applications in a matter of weeks.

 

 

AWS opens up its managed blockchain service to the public.  Following its targeted launch in 2018, Amazon Web Services (AWS) announced that it is opening its managed blockchain service for general use, allowing users to create and manage scalable blockchain networks on the AWS platform. AWS joins other large enterprise players like Microsoft and IBM with blockchain-as-a-service offerings.

Canadian banks adopt blockchain for identity checks.  Five Canadian banks, including Royal Bank of Canada, will allows customers to prove their identity digitally using blockchain technology via a digital identity system from SecureKey Technologies. SecureKey expects consumers to use the service to access health records, open accounts with banks, and access government services.

Tech lobbyists move to curtail the California Consumer Privacy Act (CCPA).  Wired reports that California lobbyists representing technology companies have backed legislation that would weaken the CCPA. The proposed bills, backed by the California Chamber of Commerce and tech lobbyists representing firms like Facebook, Google, Amazon, and Apple, would carve out exemptions from the CCPA for certain categories of business, drawing concern from privacy advocates.

 

 

 

 

 

 

Checkout.com raises $230M in first funding round.  Continuing the trend of large valuations for paytech firms, London-based Checkout.com has raised $230 million in “Europe’s biggest ever early-stage funding round for a fintech,” according to the FT. The company, which connects merchants to other payment networks, is valued at around $2 billion, and is a direct competitor with recently-listed Ayden.

The Economist publishes a special report on disruption in banking.  The report notes that digital disruption in banking, while lagging behind retail, will be fundamentally more transformative due to the sector’s systemic importance in the global economy. The Economist argues in favor of innovation-friendly regulation and strong capital buffers to manage risk.

 

 

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