Snippings

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As for retail payments, they’re already reliable and cheap nearly everywhere except America. The TAM might be huge, but there’s not that much to disrupt.

From: Stablecoins might revolutionise payments, but what if they don’t?.

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The GENIUS Act would allow Big Tech firms and other commercial enterprises to acquire nonbank stablecoin issuers and use those issuers’ funds and services to establish dominant financial empires.  Alphabet (Google), Amazon, Apple, Meta (Facebook), Walmart, and X are poised to enter the stablecoin market if the GENIUS Act becomes law.  That outcome would undermine our nation’s longstanding policy of separating banking and commerce and create enormous risks.  Allowing commercial firms to issue and distribute stablecoins would give those firms access to their customers’ private financial data.  That access would increase exponentially the ability of Big Tech firms to sell their customers’ private information to third parties and use the same information to market their own goods and services.

From: Congress Must Reject the GENIUS Act and Remove the Dangers Posed by Nonbank Stablecoins.

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If Congress truly wants to promote a faster, cheaper, and more inclusive payments system, Congress should (i) support tokenization of deposits on permissioned distributed ledgers administered by FDIC-insured banks, (ii) encourage faster implementation of real-time settlement services for bank payments, and (iii) require FDIC-insured banks to provide low-cost deposit accounts with payment services to lower-income individuals and families who request such accounts and satisfy minimum qualifications for lawful status and financial responsibility.  The foregoing approach would significantly improve our payments system and increase financial inclusion without undermining the integrity and effectiveness of our federally-insured banking system.

From: Congress Must Reject the GENIUS Act and Remove the Dangers Posed by Nonbank Stablecoins.

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Art Wilmarth, writing in Open Banker, summarises what I take to be the view of the banking establishment, saying that because of the “intolerable threats” to banking system stability engendered by uninsured nonbank stablecoins, regulators should  reject the GENIUS Act and pass legislation requiring all issuers to be FDIC-insured banks. I think this is a very narrow view. The reason that we have FDIC insurance is because fractional reserve banks are vulnerable to runs, but a stablecoin backed by high quality liquid assets (HQLAs) such as Treasury Bills is not: if the issuer fails, the stablecoins can still be redeemed against the reserve.

We have already seen this work in the UK when Wirecard failed. Wirecard Card Solutions was regulated under the UK’s Electronic Money Regulations 2011 (based on the EU’s Electronic Money Directive) and provided issuer and payment processing services for many fintechs and prepaid card programs (Curve, Pockit, Anna Money, etc.). When Wirecard in Germany collapsed and the FCA temporarily froze WCSL’s activities, UK cardholders could not access their funds over weekend. Wirecard’s UK customers were protected because of the e-money regulation: the safeguarding of client funds, enforced by the FCA, ensured that clients’ money was ring-fenced from the company’s own assets and available for transfer to new providers. In the USA, the regulatory structure is fragmented, with weaker, less consistent protections—so a similar collapse could have much worse outcomes for American customers.

 

 

 

 

ELMI have to hold customers funds in the equivalent of HQLAs. Wirecard’s shareholders were wiped out, but customer funds were safe and were transferred Wirecard in the UK was an electronic money institution (ELMI), a regulatory category that does not exist in the US.

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“The amendment to the Target Guideline…is now expected to enter into force in October 2025,” states the ECB. “The Eurosystem considers this postponement necessary to avoid legal risks concerning the eligibility of non-bank PSPs to access Target, including T2 (for settling payments) and TIPS (for settling instant retail payments).”

From: ECB sets back deadline for non-bank PSP access to Target.

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Coinbase says that crooks bribed employees and contractors to steal customer data for use in social engineering attacks in an incident that may cost the crypto exchange up to $400 million to address.

From: Coinbase says crooks bribed workers for customer data in breach that could cost it $400m.

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Tyler Winklevoss suggested this is part of a broader effort by large financial institutions to choke off crypto access — what he calls “Operation ChokePoint 2.0.” That term refers to an alleged coordinated effort by banks or regulators to de-bank certain sectors by cutting off critical services.

Six days later, he followed up with a more direct accusation:

“This week, JPMorgan told us that because of it, they were pausing their re-onboarding of Gemini as a customer after they off-boarded us during Operation ChokePoint 2.0. Sorry, Jamie Dimon, we’re not going to stay silent.”

From: JPMorgan has a blunt response on killing fintech companies – TheStreet Crypto: Bitcoin and cryptocurrency news, advice, analysis and more.

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Hackers have stolen personal information of a majority of insurance firm Allianz Life’s 1.4 million customers in North America, its parent company said.

From: Allianz Life: Insurance giant says most US customer data stolen in cyber-attack – BBC News.

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A striking feature of the manipulation of our attention by smartphones is that it is not usually achieved through misinformation. Typically, our phones are not supplying us with false information. As those who endlessly scroll news platforms can attest, the accuracy and truth of the information they are accessing is central to whether they will continue to use a platform. Rather, what is being manipulated is our attention.Footnote6 The provision of information, resources, or useful tools is a way to draw in smartphone users whose attention can then be manipulated either for the purposes of marketing (think advertisements on news websites, ‘clickbait’, and targeted advertising), or for collecting social information that can then be used for manipulation (again, as in the Cambridge Analytica affair). Google Maps, for example, provides the user with accurate navigational information, while also providing the company Google with valuable information about all sorts of things from daily routines to shopping habits they can then use for targeted marketing across other unrelated apps. Tech companies can also add such data to large, anonymized databases which are a valuable commodity. This sort of manipulation, we argue, undermines the first-pass assessment of smartphones as cognitive extensions. Importantly, what is key here is not just that our phones can be used to exploit and manipulate us, but that they are designed for this purpose.

From: Full article: Smartphones: Parts of Our Minds? Or Parasites?.

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Mica is clear on the rules for a stablecoin issued by several issuers all within the EU. Under a unified regulatory framework, the issuers must maintain a single reserve, a unified custody policy, and make clear all issuers of the same stablecoin are jointly liable for any redemptions.

But the regulation is silent when it comes to a global firm issuing the same fungible stablecoin both from an EU-regulated entity and from a third-country entity as Circle has done. In this case, the reserves backing the stablecoin are split across jurisdictions, each with its own requirements, enforced by local regulators tasked with safeguarding the interests of their own jurisdiction. Stablecoin regulations remain unaligned on requirements regarding prohibitions on interest, redemption and eligible reserve assets.

From: The stablecoin loophole that could expose the EU.

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