A library of snippets
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A2A payments could offset 15-25% of future card transaction volume growth, says the report, costing the industry billion in interchange fees and interest charges. The EPI’s Wero wallet is likely to accelerate adoption of A2A payments with a 37% reduction in card transactions predicted across Europe by 2027, according to Capgemini.
From: European card transactions to fall as A2A payments take off – report.
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Last week, Siemens issued a €300 million digital bond on the SWIAT blockchain, a private version of Ethereum launched in 2021 by Germany’s DekaBank. The sale to five German commercial banks was settled in traditional central bank money, but unlike other similar issuances (digital bonds settled via traditional rails), settlement took place within minutes.
This is possible via a “trigger solution” developed by Germany’s Bundesbank, which involves three main steps:
The digital asset changes hands on a distributed ledger.
A signal with instructions is sent via a “trigger layer”.
This connects to the EU’s TARGET 2 real time gross settlement system, which executes central bank money payment.
The trigger solution has the advantage of not requiring a wholesale central bank digital currency (wCBDC), which would make DLT markets implementation simpler and give authorities more time to see if wCBDCs are worth the upheaval.
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Testing testing 123.
This is an idea that’s been around from the very earliest days of the block chain. I remember giving a presentation about this to a group of cityfolk in connection with some work for one of the large infrastructure players in Europe. I also reviewed a project, that was built using similar techniques for some public payment applications in Belgium. The idea is quite straightforward: since you cannot connect bank accounts to smart contracts what you doing instead? Is have an Oracle that monitors account balances and pushes them on chain where smart contracts can access them to see if funds are available and you have a trigger that looks for unchain instructions from Smart contract. So my Smart contract outputs the instruction to transfer $10,000 from me to you, the trigger sees this ruction and uses open banking and instant payments to affect the transfer. The Oracle then reads the new balances and put these on chain.
In the fullness of time there will be no need to add this additional layer, of course, because unchain digital currency (for example, enter institutional wholesale central bank digital currency) will be used by Smart contracts to complete the transactions on chain.
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Experiments have borne out the difficulty and disappointment of interactions between traditional and tokenized systems. For example, in Switzerland, Project Helvetia initially linked the existing payment system to a tokenized securities system. However, without tokenized cash, the experiment found that operational burdens were added, not reduced. So when the new securities system went live, it did so with tokenized cash it issued itself, backed by funds at the central bank. The Swiss National Bank is also running a pilot that makes tokenized central bank money available for settlement.
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Experiments have borne out the difficulty and disappointment of interactions between traditional and tokenized systems. For example, in Switzerland, Project Helvetia initially linked the existing payment system to a tokenized securities system. However, without tokenized cash, the experiment found that operational burdens were added, not reduced. So when the new securities system went live, it did so with tokenized cash it issued itself, backed by funds at the central bank. The Swiss National Bank is also running a pilot that makes tokenized central bank money available for settlement.
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The Fedral Reserve Bank of New York says thart central banks can look forward by using research and experimentation to better understand tokenization’s potential capabilities and limitations. In fact they say that “multiple successful experiments” show efficiencies in a completely tokenized world—where money and securities are all tokenized and settlement can be automated and synchronized with smart contracts.
This is what tokenisation is all about it. It’s not about ideology, it’s about efficiency: decentralised finance and “web3” (for want of a better word) are simply cheaper.
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The case of CLS is instructive not only in terms of how central banks coordinate technological change, but also with regard to potential requirements for future tokenized systems. It offers two lessons. First, CLS settles with PvP (for securities, the equivalent is “delivery versus payment,” or DvP). Many tokenized systems refer to “atomic settlement,” which performs the same function. Second, CLS has access to central bank money, which reduces credit and liquidity risks. A tokenized system without both of these features may not be as robust as existing systems
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While the number of cryptocurrency-related complaints to the FBI – 69,000 – accounted for just 10% of all financial fraud complaints last year, they represented 50% of total losses.
The likes of bitcoin and ether are used in a host of frauds, although investment scams dominate, accounting for around 71% – $3.9 billion – of all crypto losses. Call centre frauds, including customer support scams and government impersonation scams, accounted for about 10% of crypto losses.
People over 60 filed the most complaints about crypto scams, reporting the most losses – over $1.6 billion. California saw nearly double the number of complaints of any other state.
From: Americans lost $5.6bn to crypto-related fraud in 2023 – FBI.
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Lina emphasised the beneficial business effects of using blockchain: recognition and funding from humanitarian donors for her agency. These benefits were immediate and not tied to any proof of the technology’s concrete achievements. Nor was any technical understanding of blockchain required to make the business case for using it.
From: Full article: Conjuring a Blockchain Pilot: Ignorance and Innovation in Humanitarian Aid.
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The Blockchain Pilot is ‘conjured’ as a product to be promoted to a marketplace of aid donors. ‘Conjurings’ are the spectacles and magical appearances that draw an audience of investors. Ethnographic research suggests that conjurings drive capitalist markets. Rather than just requiring knowledge and expertise, I argue that conjurings entail key forms of ignorance: (i) confusion, (ii) illusion, (iii) disappearance, and (iv) misdirection.
From: Full article: Conjuring a Blockchain Pilot: Ignorance and Innovation in Humanitarian Aid.
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. Stripe has increased its compliance technology spending sixfold since 2020, the spokesperson said, and over the last two years it nearly tripled its risk and financial crime team’s head count to roughly 700 employees, supported by more than 1,000 external reviewers.
Stripe’s current total head count is around 7,000,
From: Stripe’s Challenges With Wells Fargo, Goldman Highlight Payments Risks — The Information.
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Fintech companies, in the meantime, continued to report their Q2 2024 results. We saw many strong reports with a common theme: fintech companies continue to grow, and they continue to grow profitably. The TWIF index is up +25.1% YTD and continues to outperform Nasdaq Composite (+11.2% YTD) and S&P 500 (+13.4% YTD).
The fintech industry didn’t die in this rate hiking cycle. Many of them came out of this cycle stronger. Let’s see what the future holds when the rates start coming down.From: Signals: Public fintechs are becoming affirmatively profitable.
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