[co-author: Lauren Bass]
Major Financial Institutions Announce Crypto and Blockchain Initiatives
By Robert A. Musiala Jr.
According to reports this week, one of the largest money transfer services in the world will partner with the Stellar Development Foundation to integrate the Stellar Blockchain into its money transfer services through the USDC stablecoin, which went live on the Stellar Blockchain in February 2021. The report notes that “[c]ustomers will be able to convert cash into and out of USDC for instant pickup at [physical] locations,” with an FDIC-insured bank facilitating settlement of the transactions.
Another press release published this week announced that a major U.S. financial institution has launched cryptocurrency custody services for institutional investment managers. The press release notes that the new service will focus on institutional custody for bitcoin, with support for more cryptocurrencies forthcoming.
Two other recent press releases announced blockchain trade finance initiatives by major global financial institutions. According to one of the press releases, a New York-based financial institution has joined the Marco Polo Network, a blockchain-based network operated by “a consortium of approximately 45 banks that provides an open software platform for trade, payments and working capital financing to banks, corporates and other market participants.” Another press release announced that the India and United Arab Emirates (UAE) subsidiaries of a major global bank have “successfully executed a blockchain enabled, live trade finance transaction” between an Indian steel company and a UAE plastics company. According to the press release, “The success of this transaction reinforces the commercial and operational viability of blockchain as an alternative to conventional exchanges for paper-based documentation.”
For more information, please refer to the following links:
Blockchain Adopted to Improve Supply Chains and Authenticate Products
By Lauren Bass
Earlier this week, one of Italy’s largest producers of olive oil reportedly partnered with a European technology consulting firm to develop and implement a secure and sustainable blockchain-based supply chain for oil olive production. According to reports, the new digital register, which will deploy on Algorand’s public blockchain, will provide resultant data to buyers, sellers and consumers in an effort to improve the quality, transparency and efficiency of olive oil manufacturing.
Similarly, a Japan-based trio formed by two chemical corporations and a printing company have reportedly partnered with a Netherlands-based technology company to begin testing a blockchain-based supply chain for the chemical industry. According to press releases, the partnership aims to use blockchain technology to help manufacturers manage and share information related to raw materials and carbon emissions in order to perpetuate the use of sustainable resources over petroleum-based products.
In a final related development, an Italian manufacturer of high-end road-racing bicycles has reportedly partnered with a boutique Italian tech company to integrate blockchain technology into its bicycle manufacturing process. According to reports, each new bicycle frame will be connected through RFID tags to the Automotive Blockchain, where owners and prospective buyers can authenticate the manufacture, transport and sale of the bicycles. This technology aims to reduce theft and allow purchasers to verify the legitimacy and provenance of a bicycle frame.
For more information, please refer to the following links:
Blockchain Reports Publish 2021 Blockchain, DeFi and NFT Stats
By Veronica Reynolds
This week, a major multinational financial institution published a primer on digital assets, reporting that to date, digital assets represent more than $2 trillion in market value with over 200 million users. The report points to this data as an indicator of the potential that digital assets have to “transform every industry by improving efficiency and reducing friction across transactions.” The primer provides an overview of investment frameworks related to smart contract applications, stablecoins, central bank digital currencies, non-fungible tokens (NFTs) and tokens that act like operating systems. Among other things, the primer addresses the impact these products have across various industries, including finance, technology, supply chains, social media and gaming.
According to a Q3 2021 blockchain report released this month by a global decentralized app (dapp) store, the blockchain industry grew 25% quarter-over-quarter and 509% year-over-year in terms of the number of Unique Active Wallets (UAW) connected to any type of dapp. The report notes that the market cap for the top 100 Ethereum NFT collections, including NBA Top Shot, amounts to an estimated $14.19 billion, with the NFT space generating $10.67 billion in trading volume during Q3 alone. According to the report, much of this growth is attributable to the “play-to-earn” or games category, which has attracted millions of users across numerous blockchains and an average of 754,000 UAW during Q3, even as both NFT- and DeFi-connected wallets decreased from the previous quarter, by 2% and 11%, respectively.
According to recently published research by one of the largest blockchain analytics providers, Central and Southern Asia and Oceania (CSAO) is one of the fastest-growing cryptocurrency markets in the world and the fourth largest included in the study, representing 14% of global transaction value during the July 2020 and June 2021 time period, with 706% growth compared with the same time period the year prior. The study cites DeFi as a main driver of growth in the CSAO region as well as globally, with transaction volumes spiking around May 2020 due to increased activity across decentralized exchanges and DeFi protocols. Global data will be released later this month when the analytics provider’s report is published.
For more information, please refer to the following links:
Financial Watchdogs Publish Reports Addressing Cryptocurrency Markets
By Robert A. Musiala Jr.
Multiple international financial organizations published reports this week addressing various aspects of the cryptocurrency markets. The Bank for International Settlements (BIS), an international financial institution owned by central banks that “fosters international monetary and financial cooperation and serves as a bank for central banks,” published two sets of guidance. The first guidance document addresses conditions for central bank digital currencies (CBDCs) to operate effectively. The conditions cited by the report include cooperation between public and private institutions to “ensure integration with existing payments systems; to anticipate customers’ future needs; and to support innovation while preserving public trust, privacy and stability in the broader financial system.” The second BIS guidance document addresses standards for “stablecoin arrangements” (SAs) and “provides considerations to assist relevant authorities in determining whether an SA is systemically important.”
The International Monetary Fund (IMF) published a blog post this week addressing challenges to global financial stability posed by the cryptocurrency industry. According to the post, “The total market value of all the crypto assets surpassed $2 trillion as of September 2021—a 10-fold increase since early 2020.” The post identifies various risks associated with this growth, including consumer protection risks, and makes policy recommendations for regulators.
Finally, the Financial Stability Board (FSB), an international body that monitors and makes recommendations about the global financial system, published a report this week addressing “global stablecoins.” Among other things, the report notes that fostering the soundness of “global stablecoins” is critical to enhancing cross-border payments. The report identifies key areas for international coordination, including “conditions for qualifying a stablecoin as a ‘global stablecoin’; prudential, investor protection, and other requirements for issuers, custodians and providers of other global stablecoin functions (e.g., wallet providers); redemption rights; cross-border and cross-sectoral cooperation and coordination; and mutual recognition and deference.”
For more information, please refer to the following links:
DOJ Announces Crypto Enforcement Team, Warning Issued on French ICO
By Jordan R. Silversmith
On Wednesday, the U.S. deputy attorney general announced the formation of the new National Cryptocurrency Enforcement Team (NCET). According to a press release, the team has been formed to handle complex investigations and prosecutions of criminal misuses of cryptocurrency, particularly crimes committed by virtual currency exchanges, mixing and tumbling services, and money laundering infrastructure actors. The team will also assist in the tracing and recovery of assets lost to fraud and extortion, including cryptocurrency payments to ransomware groups.
According to reports, the issuer of the USDC stablecoin has been served a subpoena by the U.S. Securities and Exchange Commission (SEC). The company reportedly said in a regulatory filing that it had received an “investigative subpoena” from the SEC’s Enforcement Division in July requesting “documents and information regarding certain of our holdings, customer programs and operations,” according to the filing. The company said that it is cooperating fully with the SEC’s investigation of the filing, which was submitted as part of the company’s bid to go public. The company did not elaborate on the focus of the SEC’s investigation.
The AMF, France’s stock market regulator, recently issued a warning to the public about the risks of fraud associated with the upcoming initial coin offering (ICO) prepared by the company Air Next. After the AMF was contacted by the company to obtain a visa for its proposed ICO, the AMF reported that some of the submitted documents appear to be forgeries. The AMF warns investors approached to invest in this project to be vigilant and to refrain from passing on such solicitations to other parties.
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