Snippings

Apple (correctly) thinks that apps and websites should implement age assurance, an exemplar of credentials-based transactions that depend on a digital identity infrastructure that doesn’t yet exist, whereas Meta (incorrectly) thinks that age assurance is a great idea as long as they don’t have to do it and that the app stores should take care of it.

We all know what the problem is. None of us want children seeing inappropriate and potentially dangerous material online. But they do. All the time.

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A new Ofcom survey shows that 22 percent of eight-to-17 year olds lie that they are 18 or over on social media apps, easily bypassing flaccid self-declaring age assurance methods.

From: Kids are bypassing weak age assurance measure in droves, and it has to change: Ofcom | Biometric Update.

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The Australian government has pledged to legislate an age limit of 16 years for social media access, with penalties for online platforms that do not comply.

But the Labor government has not spelled out how it expects Facebook, Instagram, TikTok and others to actually enforce that age limit. Anthony Albanese is facing pressure from the Coalition opposition to rush the bill through parliament in the next three weeks, although a federal trial into age assurance technology has not yet commenced.

Albanese and the communications minister, Michelle Rowland, did not rule out the potential for social media users to have their faces subject to biometric scanning, for online platforms to verify users’ ages using a government database, or for all social media users – regardless of age – being subject to age checks, only saying it would be up to tech companies to set their own processes.

From: Australia to ban under-16s from social media – but can’t say how TikTok, Instagram and others will enforce it | Internet safety | The Guardian.

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Apple has released a white paper that lays out its position on age assurance and outlines new tools it will roll out to “help parents protect their kids in a way that is designed around privacy.” It also formally and firmly states its belief that the responsibility for age assurance measures should be on apps offering age-restricted content – and not app stores that offer them for download.
Its publication has drawn a response from Meta, which is among the loudest firms saying that age assurance should be handled by app stores, continuing a back-and-forth that has also drawn in the porn industry and digital rights activists.

From: Apple volleys age verification question back to sites and apps | Biometric Update.

Apple (correctly) thinks that apps and websites should implement age assurance (which I take to be an exemplar of credentials-based transactions that depned on a digital identity infrastructure) whereas Meta (incorrectly) thinks that age assurance is a great idea as long as they don’t have to do it.

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A man in Shanghai lost nearly $28,000 after being tricked into a long-distance “relationship” with an AI-generated girlfriend, Chinese state media reported on Wednesday.

Scammers used generative artificial intelligence software to create realistic video and still images of a young woman in order to pose as the fictional “Ms. Jiao”, according to state broadcaster CCTV.

The victim transferred nearly 200,000 yuan (nearly $28,000) to what he believed was his online lover’s bank account, after the scammers used the fake images to convince him that his “girlfriend” needed funds to open a business and help a relative with medical bills.

The scammers even created a fake ID and medical reports to support the ruse, CCTV reported.

From: Chinese Man Scammed Of Nearly $28,000 By AI ‘Girlfriend’: Report.

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Agent autonomy is a conundrum. You lose your productivity gains if you impose excessive supervision. Yet, in many cases, supervision is precisely what is needed to avoid disaster. Since the emergence of generative AI, there have been sufficient examples of algorithmic anarchy to make leaders wary — from an auto dealer chatbot offering a brand new car for a dollar, to an airline that was held liable for policies its AI chatbot hallucinated that did not exist. To avoid that problem, organizations are building AI agents that connect directly to internal systems and data, and new standards are emerging. That is a double-edged sword. Agents may be less likely to make things up if they’re relying on internal systems and data. But, as they become more trusted, they will also have a growing influence over life-altering actions such as approving home loans, allocating social security, protecting critical infrastructure from cyberattacks, hiring or firing staff, or even controlling lethal weapons systems.

From: How Much Supervision Should Companies Give AI Agents?.

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Today, nearly half of payments through the bank-to-bank Automated Clearing House network are originated by just two financial institutions, while over 93 percent are originated by the top-50 banks. Past research on the 25 largest bank holding companies found that “payment services bring in from one-third to two-fifths of [their] combined operating revenue.”

From: The Case for Payments Modernization – Milken Institute Review.

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What should be done in the US? Patrick Collison, the co-founder of Stripe, told the House Financial Services Committee that “Stripe strongly supports the concept of some sort of federal payments charter”. I do too, not that it matters. But what could such a Federal Payments Charter (FPC) look like? And what would it achieve.

Well, let me begin by stating clearly that Collison is absolutely right about this and I simply do not understand why his suggestion is not already US policy. I have long thought that some kind of  OCC federal charter that would allow regulated institutions access to payment systems, but would not allow them to provide credit, is a straightforward way to improve American financial infrastruture and bring more competition into the world of payments. Such a charter would separate the systemically risky provision of credit from the less risky provision of payment services but creating a new kind of financial institution, rather like the European “Payment Institution” or Indian “Payment Bank” that does nothing more than hold customer money in accounts that can be used to send and receive payments.

I am far from the only person who thought this, by the way. Mihir Desai and Sumit Rajpal, wrote in the Harvard Business Review other countries have begun exploring ways forward and note in particular that the US can learn from what the United Kingdom, Australia, and Singapore have all been doing. They identity two broad solutions: Allow nonbanks to access the payment system as the UK and others have allowed, or create banks that do nothing more process payments. They focus on the latter, but I think we want Federal Payment Institutions (a regulatory category that I just made up) that do both. Such institutions could then issue stablecoins in a sound and well-regulated manner to the great benefit of consumers and businesses around the world.

J. Christopher Giancarlo, former chair of the U.S. Commodity Futures Trading Commission, Daniel Gorfine of Gattaca Horizons and Brian Peters from Stripe put forward an detailed (and excellent) exposition of the issues in a article on “The Case For Payments Modernization” in the Milken Institution Review. They point out that under both Republican and Democratic administrations, the US Treasury recommended the establishment of a federal payments framework and are clear than the kind of FPC envisaged would be limited to providing payments and related technology services, avoiding traditional banking activities such as lending. An obvious one of those “relatred technology services” is stablecoins. 

 

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In his recent book, Beyond Banks, Dan Awrey similarly seeks to answer a basic question: “why the United States was able to send 24 men to the moon, but seems chronically incapable of delivering a cheap, fast, secure, and universally accessible system of money and payments.” His work explores a fundamental conflict embedded within the structure of our financial system:

This tension is a product of the fact that we rely on banks to perform three critical and, at least as presently constituted, intertwined functions. The first is the provision of loans and other types of financing to people, businesses and governments, thereby necessitating that banks hold risky and often illiquid longer-term assets. The second is money creation, with short-term and highly liquid bank deposits representing by far and away the largest source of money in the modern economy. The third is payments, where banks serve as both the gatekeepers and custodians of the vast and sprawling network of financial plumbing that moves money across time and space in satisfaction of our financial obligations. As economist Matthew Klein recently put it, this essentially makes banks “speculative investment funds grafted on top of critical infrastructure.”

From: The Case for Payments Modernization – Milken Institute Review.

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Today, it is not gold or silver content that determines the intrinsic value of money, but laws and institutions that underpin it. At the same time, payments utility is determined by technological advances that can outpace changes to these laws and institutions. As a result, bad money often gets bundled with good payments. People are offered cheaper, faster, more convenient, more secure, and more accessible ways to send and receive money at the expense of the underlying money being less sound. In times of relative stability, bad money may offer a comparative advantage.

Awrey calls this Gresham’s New Law and lays out a blueprint to address it.

From: Gresham’s New Law – by Marc Rubinstein – Net Interest.

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Now it is quite understandable that the incumbent banks are not happy about this. Generally speaking, the big banks earn about a third of their revenues from payments and every payment provides invaulable data that the institutions can use to learn more about their customers.

Sveinn Valfells

Co-founder & Chair, Monerium, Reykjavik, Iceland

 

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For incumbent banks and fintechs, stablecoins do not herald a gold rush because their infrastructure and business models are built on old paradigms.

From: Letter: Banks and fintechs will be outcompeted by stablecoins.

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Mesh develops a payments network on blockchain rails, connecting crypto wallets with exchanges payment service providers for merchants. With Mesh, users can pay with crypto assets such as bitcoin (BTC), ether (ETH) and Solana’s SOL, while merchants settle the payment in stablecoins of their choice including Circle’s USDC, Paypal’s PYUSD and Ripple’s RLUSD.

From: Crypto Payments Firm Mesh Raises $82M as Stablecoin Adoption Soars.

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merchants want to see 70% of UK consumer accounts supporting CVRPs before they could commit and adopt themselves.

From: Will Commercial Variable Recurring Payments kill the Direct Debit.

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While Fiserv said it won’t disclose customers’ names to one another, the fact that it’s training the chatbot on enterprise customer data could be of interest to countless companies that would love to do the same.

 

From: $120 Billion Fintech Firm Trains Chatbot—on Customer Data — The Information.

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Fiserv did not respond to further questions about how it managed to obtain permission from those customers to use their data for chatbot training.

The United Nations has proposed a mandatory digital ID system linked to bank and mobile money accounts to enhance social protection programs while addressing online misinformation.