TFU | July 1-7

Leading Off

The U.S. House Financial Services Committee formally requested that Facebook halt its planned Libra rollout; the U.K. FCA proposed a ban on derivatives tied to crypto assets; IBM’s TradeLens consortium added new members; the forthcoming Libra currency is already attracting digital scammers and domain squatters hoping to make a quick profit; and the Financial Times published an opinion piece on why central banks should issue digital currencies.

 

In the News

Congress formally requests to halt Libra rollout.  House Financial Services Committee chair Maxine Waters (D-CA) sent a letter to Facebook management requesting that it halt the planned rollout of Libra, saying it could “pose systemic risks that endanger us and global financial stability.” Facebook responded that it “look[s] forward to working with lawmakers as this process moves forward.” 

FCA proposes ban on crypto derivatives.  The U.K.’s Financial Conduct Authority (FCA) is considering banning derivatives linked to cryptoassets, to prevent retail investors from “suffer[ing] harm from sudden and unexpected losses if they invest in these products.” The FCA estimated that banning these instruments would save consumers between £75 million and £234 million per year.

Goldman Sachs is exploring tokenization.  CEO David Solomon said the bank is conducting “extensive research’’ on tokenization, noting that he “assume[s] that all major financial institutions around the world are looking at the potential of tokenization, stable coins and frictionless payments.” Goldman joins competitor JPMorgan in exploring tokenization; the latter rolled out its JPM Coin in February.

Scammers flock to cash in on Libra.  Cybercriminals and digital squatters reportedly have moved quickly to take advantage of the forthcoming Libra cryptocurrency by registering domains related to it and the Calibra wallet. While many likely are “domain squatters looking to make a quick buck from Facebook,” at least a handful appear to be “impersonating the legitimate . . . sites in an effort to trick visitors.”

Australian banks partner with IBM on blockchain bank guarantees.  ANZ bank, Commonwealth Bank, and Westpac have are working with IBM to pilot Lygon, a new blockchain-based platform used to manage bank guarantees. The participants say Lygon can help reduce the time it takes to issue a guarantee to as little as one day; while the typical process can take up to one month. 

TradeLens blockchain initiative grows.  The blockchain-based shipping platform, launched by IBM and Moller-Maersk, added two major container shipping operations. The additions give the program five of the world’s six largest carriers, controlling about 60% of the oceangoing container cargo capacity. Widespread participation across the supply chain is seen as key to making TradeLens work.

Hundreds of German fintechs have closed since 2017.  According to a study from consultancy PwC, 233 German fintechs have gone bust since 2011, with three quarters of those having closed since the beginning of 2017. The study partially attributes the spike in closures from 2017 to so called “me-too” start-ups begun in 2013 and 2014 who found that competitors had already established themselves.

Currencycloud raises £32M in Series E.  The London-based provider of a cross-border payments API and related services closed £32 million in “the first part” of a Series E funding round, with investments reportedly coming from Goldman Sachs and Alphabet’s GV fund. Since its founding in 2009, Currencycloud has processed over $50 billion in transfers to over 180 countries.

Revolut hires banking veteran as COO.  The U.K. challenger bank hired Richard Davies, who previously held senior roles at British banks TSB and HSBC, as its chief operating officer (COO). The new hire is likely to be seen as part of Revolut’s efforts to improve its internal culture and governance, a pledge it made in response to scrutiny of its compliance practices and advertising activities in recent months.

Why central banks should issue digital currencies.  Noting the trend towards cashless societies, and risks of fragmentation into networks and new forms of currency competition posed by digital money, an FT opinion piece from a former deputy governor of the Banque de France argues that central bank digital currencies “would protect the pre-eminence of public money in a digitalised economy.”

 

 

 

 

 

 

 

 

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