A library of snippets
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Indian crypto exchange WazirX experienced a security breach in one of its multisig wallets, leading to the loss of user funds and over $230 million in withdrawals.
From: North-Korea Behind WazirX’s $230M Hack, Says Elliptic as SHIB, WRX Tumble.
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There are three related reasons why a financial system composed of a large number of relatively small and diverse financial institutions is more stable and prosperous than one with few large and similar institutions.
First, when financial institutions differ from one another, excessive systemwide risk-taking is less likely because, at any given time, the actions of some institutions inflate bubbles while others do the opposite.
Second, when faced with shocks, relatively homogeneous institutions will respond similarly, buying and selling the same assets at the same time. This leads to disastrous selling spirals. In contrast, when they are diverse, some institutions will buy and others will sell, dissipating shocks. In other words, a system with relatively homogeneous institutions acts as a shock amplifier, whereas a more diversified system absorbs and dissipates shocks and, hence, is more stable.
Finally, a system with many small and diverse institutions will be more prosperous. It allows better tailoring of financial services to the needs of the economy while also requiring lower buffers against systemic risk. This means it offers the cheaper provision of financial services.From: Why so many crises happen when we know why they happen and how to prevent them | CEPR.
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The reason it is so difficult to regulate finance is that the financial system is one of the most complicated of all human constructs. In effect, it is infinitely complex. And when a system is infinitely complex, there are infinite areas where excessive risk and misbehaviour can emerge. When market participants optimise, they are actively searching for overlooked areas in which to take risk, so it is almost axiomatic that crises happen where nobody is looking. How can we regulate something we have yet to see?
From: Why so many crises happen when we know why they happen and how to prevent them | CEPR.
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The startup, Seattle-based Interlune, said it will use the $346,000 NASA grant to test a critical part of its technology that it will ultimately use to prepare lunar soil, known as regolith, for the extraction of helium-3, an isotope scarce on Earth but abundant on the moon.
From: A Space Startup’s Moon Mining Plans Get a Boost With NASA Grant — The Information.
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In a recent discussion I said as a rule of thumb that two-third of European bank profits come from net interest margins and around half of this would be at risk. This correlates well with Klarna’s estimate that UK consumers lose around £6bn per annum through a lack of understanding of complex financial language in a market where combined bank profits are in the region of £20bn annum.
In Europe the embedded-finance market is growing at double-digit rates and the managment consultancy McKinsey forecasts revenues over €100 billion by the end of the decade.
In a recent survey on “Financial Services Expectations vs Reality”, FIS found that around half of all consumers want a single platform to manage all fo their financial services from all of their providers. Buit who would provide this single platform? Apple using open finance to access all of the consumer’s accounts? The consumer’s primary bank app? A brand (Nike savings account anyone?) or maybe new specialist financial health providers. Or Meta? Twitter?
I have to say that I agree with Tarun Bhatnagar, President, Platform and Enterprise Products at FIS, who said that as embedded finance propositions mature, there is a significant market opportunity for financial services companies to deliver a unique all-in-one platform experience for their customers.
Think about the dynamics. The distribution side of banking has a much better return-on-equity (RoE) than the manufacturing side of banking, for the obvious reason.
So it’s attractive to for banks to try and compete on the distribution side. But on the distribution side, they are not competeing with other banks but with Google and Instagram and Tik Tok.
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Ultimately, the opportunity is too good for any bank to ignore. The bigger banks will move slowly and cautiously, but they’re coming. If you wind that forward 20 years, you can see a world where banks no longer want to own distribution. They’d all start to look like Column, Lead Bank (or Griffin in the UK, who just raised their Series A). Banks, with a charter but no UI at all. Headless banks.
From: 🧠 Embedded Finance: Life after the consent orders. Apple vs DoJ.
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All but the biggest banks become headless. If embedded finance is so lucrative, why would banks operate any other way, especially smaller ones? Banks with large, profitable existing franchises are unlikely to give those up, but the prize for doing embedded finance well is too great to ignore.
Haggling will become the norm in all transactions, it’s just that people won’t be in the loop, so it won’t be annoying. This will have an interesting impact on supply and demand. Maybe I don’t want that Kindle at 149 but I’d take it at 119, whereas you might be happy at 129.
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Much as in the EU, AI regulation in New Zealand has been developing in tandem with a national strategy for digital identity. This week, the government launched its New Zealand Trust Framework Authority to determine which organizations are verified to provide digital identity services.
From: New Zealand crafts AI regulation and digital ID strategy with an eye on Europe | Biometric Update.
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Arguably the most significant obstacle to a regional cross-border payments network in Southeast Asia has been the difference in regulations and payment practices among the different countries. Unlike the European Union, which has a central bank that determines monetary policy for all of the member states, Southeast Asia has no unifying financial institution.
From: What are the prospects for Project Nexus? – Kapronasia.
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The Department of Homeland Security (DHS) Science and Technology Directorate (S&T) announced that Credence ID, Hushmesh, Netis d.o.o., Procivis, SpruceID, and Ubiqu have each won a government contract to develop technologies that protect the privacy of individuals using digital versions of credentials issued for immigration and travel. These digital credential users, including immigrants and travelers, could eventually store their information in privacy-enhanced digital wallets. Since DHS interacts more frequently on a daily basis with the American public than any other federal agency or department, maintaining secure, confidential digital interactions will have a tremendous impact on the privacy, security and safety of residents across the country.
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