Rakuten withdrew its application to operate its bank as an ILC—but plans to refile with the FDIC; digital payments and e-commerce continued to surge during the coronavirus pandemic; China continued to draft relevant laws for the circulation of the digital yuan; Revolut launched its app and services in the U.S.; and Robinhood offered users impacted by app outages compensation—with a catch.
In the News
Rakuten withdraws ILC charter application. Rakuten has withdrawn its application to operate its bank as an ILC, but plans to refile with the FDIC in the coming months. Rakuten’s withdrawal may be an effort to bring the application in line with the new guidance on parent companies of industrial banks and industrial loan companies.
Digital payments surge in face of Coronavirus. The use of digital payments and e-commerce platforms has risen dramatically in recent weeks, as COVID-19 restrictions have forced more people to rely on online ordering and non-cash payments. In Italy, digital transactions have “increased 81% since the end of February,” per McKinsey estimates, while cash usage in the UK has been halved since last week.
China drafts digital currency laws. China’s central bank reportedly has completed the basic development for its digital currency and is now drafting relevant laws to prepare for its circulation, as well as working with regulators on its supervision as both the central bank and financial institutions will be able to issue the digital currency. There is no time frame yet for its launch.
Revolut launches in the US. London-based challenger bank Revolut launched its service and app in the U.S, partnering with Metropolitan Commercial Bank to offer Revolut debit cards and FDIC-insured deposits up to $250,000. Thousands of customers that were on Revolut’s U.S. waiting list now have access to all of the app’s core features, and can expect more features in the future, such as the ability to purchase cryptocurrencies and invest in the stock market.
Robinhood offering compensation with a catch for users affected by outages. After the series of technical outages during recent market volatility, Robinhood, the digital investing app, is offering some users $75 in compensation. Some users lost up to tens of thousands of dollars on a day when the U.S. surged by $1.1 trillion. However, the compensation will only be given to users that sign away rights to future legal action.
Digital Dollar bill surfaces in the Senate. The “Banking for All Act,” sponsored by Sen. Sherrod Brown (D-OH), proposes a definition for digital dollars and a digital dollar wallet and mandates that member banks offer pass-through wallets for all persons, including those eligible to receive coronavirus stimulus. For those outside the Fed system, the bill contracts the Postal Service to offer access to the wallet via its network of post offices.
Russia introduces bill to allow fintech sandboxes. The Russian Prime Minister introduced a new bill which creates regulatory sandboxes to test “digital innovation” technologies such as AI and DLT. Russia’s central bank will be supervising the sandboxes related to fintech. Fintech projects will be subject to lighter regulation regarding cash reserves, financial reporting, and foreign currency controls according to representatives of the Economic Development Ministry.
Digital Dollar Project announces 22 advisory members. The organization, a collaboration between Accenture and the Digital Dollar Foundation, which is dedicated to establishing a Central Bank Digital Currency in the U.S., named a group of 22 advisors supporting the effort [full list]. The advisory panel includes a “cross-section of distinguished experts” from industry, regulatory bodies, and academia.
Plastiq raises $75M. Plastiq, the U.S. startup that helps small to medium businesses pay any bill with a credit card, raised $75 million in a Series D round, bringing the fintech’s total known venture capital raised to over $140 million. The new financing will be used to invest in building out additional features to give SMBs faster services around payments and processing.
ZA Bank launches in Hong Kong. ZA Bank, the first of Hong Kong’s new batch of digital banks, has launched operations. The Bank is an offshoot of ZhongAn International, a Chinese online-only insurance company. Last year, Hong Kong issued eight virtual banking licenses to companies, including Alibaba affiliate Ant Financial.