What The FinTech #128 - 13 Feb 2023
Happy Sunday & Welcome back to What The FinTech, your regular FinTech & Innovation Newsletter focusing on Hong Kong & Asia!
To stay fully updated with all the latest HK & Asia FinTech & banking news, insights & intelligence impacting the sector - click on the button "subscribe" next to the Title.
You can now find this newsletter on substack - click on subscribe to follow it.
What The FinTech Episode 50
Recently, Florian M Spiegl, CEO of Evident, and I engaged in an insightful conversation about the realm of alternative asset investment. We explored how web3 technology and its underlying principles have opened up new avenues for investors to access, invest in, and trade private businesses and assets that align with their interests and passions.
Enhance your understanding of the topic by viewing the video or tuning in to the podcast.
Check out the previous videos here: on What The FinTech, Instagram or Youtube.
The previous interviews are available on podcast: Spotify, Apple Podcasts, Google Podcasts.
What was the FinTech this week in: 📰
1. HSBC to support eCommerce growth in Hong Kong with a new multicurrency solution
2. HK’s digital insurance lags behind Singapore and Western peers' over-reliance on 120,000 sales agents
HSBC to support eCommerce growth in Hong Kong with new multicurrency solution
HSBC has further strengthened its presence in Asia with the release of its new digital payment solution for SMEs in Hong Kong. The HSBC Merchant Box will act as a one-stop for international payments made on regional and global eCommerce platforms at competitive exchange rates. Leveraging the bank’s extensive payment network, the solution will make it easier for SMEs to capture local and international digital sales and is expected to strengthen the merchandise trade growth in the region. This takes advantage of the free travel between Hong Kong and mainland China and the opportunities for economic integration into the Greater Bay Area (GBA). HSBC’s Merchant Box is currently available for only a select number of HSBC commercial clients but will roll out to all customers in Hong Kong in the coming months.
HK’s digital insurance lags behind Singapore and Western peers over-reliance on 120,000 sales agents
Hong Kong lags behind Singapore and Western peers in online insurance, as most of the city’s 164 insurers still rely on their 120,000 agents to push sales. The digital platforms of 85 global insurers in seven markets, including 12 in Hong Kong. Each was given a score from 0 to 100 according to the performance of their platforms. The criteria included available information, quoted prices, sales claims, and overall user experience. Hong Kong is fifth with an average score of 51.1. The top four digital insurance markets were the Netherlands at 62.4, the US at 61.1, Ireland at 61.3, and Singapore at 51.5. Hong Kong ranks ahead of Belgium at 49 and France at 48.2. The companies include the biggest names in the market: AXA, HSBC Life, Bowtie, FWD, AIA, Blue, Prudential, Blue Cross, Manulife, Liberty International, Generali, and BOC Life. One area where Hong Kong’s digital insurance platforms stood out was user experience, as they make it easy for customers to access information through smartphone apps and websites. But the city ranked low in online advisory, quoting prices, and handling sales and claims. This also explains why Bowtie, a Hong Kong virtual insurer that only sells products online without any agents, ranked second in the world with a score of 79 points, after the Netherlands’ Unive at 80 points. France’s Matmut came in third with 65 points. Sia did not disclose the scores of other Hong Kong insurers.
1. Nium Expands Payments Platform with ‘Zero-Deduction’ Wire Transfers for Payroll and Procurement
2. Revolut enables Singapore customers to trade US stocks on its app
3. Will Revolut’s new crypto staking feature convince MAS to allow retail investment in crypto?
Nium Expands Payments Platform with ‘Zero-Deduction’ Wire Transfers for Payroll and Procurement
Nium, the global platform for on-demand money movement, today announced zero-deduction wire transfers, additional currency support for global payouts, and real-time transaction tracking through SWIFT gpi. The move benefits financial institutions, payroll, and procurement firms seeking lower costs, broader reach, greater transparency, and faster settlement of cross-border wire transfers. With the enhanced offering for cross-border payments, Nium customers will know exactly how much it will cost before initiating the wire transfer, who sent it and be able to track the payment in real-time. Be it enabling global payroll, B2B invoicing, or supplier payments, every wire transfer will arrive at its destination within minutes, and without any unexpected deductions.
Revolut enables Singapore customers to trade US stocks on its app
Fintech company Revolut is now offering stock trading services to its customers in Singapore, enabling them to gain access to the United States stock market. The new feature will allow users of its financial app to buy and sell US stocks on a fractional basis, which means they can trade for as little as US$1 (S$1.30). All fees will be waived until March, after which customers will be charged a commission fee of 99 US cents per order. The firm is able to keep its fees low as it is a mobile-only platform and does not need to bear the costs of manual processing associated with running a physical operation. The move to launch its stock trading feature in Singapore is expected to make it easier for investors here to trade US stocks and lighten their fee obligations.
Will Revolut’s new crypto staking feature convince MAS to allow retail investment in crypto?
Revolut announced the launch of a new feature for its users: crypto staking. The service will allow Revolut users to stake their coins and act as validators for several blockchains, including prominent ones like Ethereum, Tezos, and Cardano. Customers can either stake tokens that are already in their account or purchase new ones for staking. In return, customers can expect returns of around 11.65 percent APY. Many companies that offer crypto services offer them as their bread and butter, but that’s not the case for Revolut. Revolut started out not as a cryptocurrency platform, but as a fintech company focusing on currency exchange services.
1. China is number 2 in the metaverse patent application count
2. China’s huge homegrown blockchain ChainMaker starts to take shape
3. Chinese consumers are saving more and borrowing less
4. WeTradegroup plans to launch the DEMO version of the ChatGPT-style Product
5. Chinese search engine Baidu announces Ernie in AI chatbot battle
6. China’s Tencent and Huawei Invest in AI Communication with Patents for Human-Computer Dialogue
7. Tech giants explore AI opportunities
8. Baidu leaps to 11-month high as it reveals plan to launch ChatGPT-style ‘Ernie Bot’
China is number 2 in the metaverse patent application count
China is now number 2 in metaverse-related global patent applications with a nearly 30 percent share gathered through its 14,291 applications, a report by South Korea's Korean Intellectual Property Office stated. China trails the United States which has filed 17,293 applications, accounting for nearly 36 percent of the total covering the period from 2011 to 2020. South Korea ranks third with 7,808 applications or 16 percent of the total. Some 43,700 patent applications related to the metaverse and immersive content were made from 2016 to 2020 in the US, South Korea, Japan, Europe, and China, which grew nearly threefold over those filed in the previous five years, the office said. A report by market consultancy Preqin said that instead of a global, shared metaverse, the Asia-Pacific region is more likely to see several local online worlds developed by various entities in China and South Korea. It noted that from 2021 to November 2022, more venture capital deals in AR and VR fields were concluded in China than in the US. In November, the Ministry of Industry and Information Technology released a plan to grow the market size of China's VR industry beyond 350 billion yuan ($50.4 billion) by 2026. Though it did not explicitly mention the metaverse, the plan called for more efforts to create fundamental technologies that support immersive AR, VR and mixed-reality experience.
China’s huge homegrown blockchain ChainMaker starts to take shape
Chinese state-backed enterprise blockchain, Chang’an Chain or ChainMaker, is starting to take shape. This week Chinese state media reported that the blockchain is underpinned by 1,000-strong clusters of high-performance servers and claims to process 240 million transactions per second. Putting these figures in context, most enterprise blockchains typically perform up to 10,000 to 20,000 TPS. ChainMaker is said to respond to blockchain queries within milliseconds. In November 2022, it was also reported that a new immutable storage system, ‘Hong’, was developed for ChainMaker with a petabyte of storage with plans to open-source it. While the ChainMaker solution is said to support encryption and other privacy-preserving technologies, it is being used for very sensitive data ranging from ID Cards and business licenses to facial recognition. Supporting the development of ChainMaker is an ecosystem of 50 organizations that are mainly state-owned. These include China Construction Bank, the State Grid, food company COFCO, and China Unicom.
Chinese consumers are saving more and borrowing less
Consumers in China are reportedly reining in spending and borrowing less due to economic uncertainty. Chinese consumers borrowed the equivalent of $564 billion last year, a more than 50% drop from 2021 and the lowest level in eight years. The decline was largely due to dwindling home sales and a corresponding drop in demand for new mortgages. In addition, day-to-day consumer spending was down due to pandemic lockdowns, meaning there was less demand for short-term borrowing. Instead, consumers held onto cash, with new household deposits hitting a record high of more than $2.6 trillion last year.
WeTradegroup plans to launch the DEMO version of the ChatGPT-style Product
WeTrade Group Inc, a global diversified "software as a service" ("SaaS") technology service provider committed to providing technical support and digital transformation tools for enterprises across multiple industries, announced that the company would conduct in-depth expansive research on the use of ChatGPT style technologies, launch a DEMO product similar to ChatGPT, combine Open AI content generating technology with YCloud, and apply it in WeChat, Alipay, Baidu and other mini-programs to further improve user services and interactive experience. As the service provider that is substantially involved with China's leading Internet companies, WeTrade Group will also integrate AI technology into the company's product line and assist the leading Internet companies in the implementation scenario and application promotion of ChatGPT-like products. WeTrade Group believes the birth of ChatGTP products is an important milestone in the development of global technology enterprises. With the in-depth application of the product technology, it will also become an important infrastructure for technology service enterprises. In the future, WeTrade Group will continue to follow the application of such technology and work with partners to create the most cutting-edge digital technology services for customers.
Chinese search engine Baidu announces Ernie in AI chatbot battle
Chinese search engine Baidu revealed its plans of launching a ChatGPT-style AI chatbot called ‘Ernie Bot’. Baidu’s Hong Kong-listed shares jumped as much as 13.4% on the news. Ernie, meaning “Enhanced Representation through Knowledge Integration,” is a sizeable AI-powered language model introduced in 2019. The news comes after years of work by Baidu to shift from online marketing to more advanced technologies, which has cost the company billions of dollars in research into AI. The ERNIE project has evolved, allowing users to write poems and papers or use text prompts to automatically generate images. It is now in its third iteration. Language models are trained on vast troves of data online in order to generate compelling responses to user prompts. Researchers are “continuously working” to upgrade the technology to allow it to learn multiple tasks like humans. The ERNIE project is now the third revision. It can compose essays and poetry or use text prompts to automatically produce graphics for its users.
China’s Tencent and Huawei Invest in AI Communication with Patents for Human-Computer Dialogue
Tencent Technology (Shenzhen) Co., Ltd. is at the forefront of this charge, having recently applied for a patent for a “human-computer dialogue method, device, equipment, and computer-readable storage medium”.This patent promises to revolutionize communication between humans and computers by allowing for smooth, seamless conversations. Huawei Technologies Co., Ltd. is also getting in on the action, applying for a patent for a “man-machine dialogue method and dialogue system”. This patent aims to take AI communication to the next level by identifying abnormal user behavior and responding accordingly. In addition, a patent has been filed for “machine-machine dialogue and pre-trained language model training method, system and electronic equipment”, which will significantly improve the accuracy of question-answer interactions. With these major players leading the charge, it’s clear that China is well on its way to creating its own version of ChatGPT and advancing the field of AI communication. Stay tuned for further developments in this exciting field.
Tech giants explore AI opportunities
Chinese tech companies are upping the ante in the fast-growing artificial intelligence-generated content sector, as ChatGPT, the latest chatbot launched by US-based AI research company OpenAI, has gained wide popularity since its debut in November and revolutionized the AI field due to its advanced conversational capabilities. Leveraging machine learning algorithms, ChatGPT is able to mimic humanlike responses with AI-generated content, and assist people with tasks such as writing essays and scripts, making business proposals and even checking program bugs, which it does within seconds. AIGC-related stocks continued to rally in the A-share market, with Chinese AI companies, such as Cloudwalk Technology and Speechocean, seeing their shares surge by the daily limit of 20 percent on the science and technology innovation board on Monday. AIGC is likely to become a new engine driving innovation in digital content production and free human creators from tedious tasks, with a wide range of commercial applications in fields such as culture, media, entertainment, and education. Chinese tech heavyweight Baidu Inc announced on Tuesday that it will complete internal testing of its AI chatbot service similar to OpenAI's ChatGPT, called "Ernie Bot" in March. The Beijing-based company has invested large sums of money in developing its Ernie system, a large-scale machine-learning model that has been trained on massive data over several years and possesses in-depth semantic comprehension and generation capabilities.
Baidu leaps to 11-month high as it reveals plan to launch ChatGPT-style ‘Ernie Bot’
Baidu’s AI chatbot project will likely complete internal testing in March before being made public, and it will be named “Ernie bot” in English or “WenxinYiyan” in Chinese. Ernie stands for “Enhanced Representation through Knowledge Integration. What distinguishes ERNIE from other language models is its integration of extensive knowledge with massive data, resulting in exceptional understanding and generation capabilities. It has since evolved into a series of advanced big models that are capable of handling a wide range of tasks, such as language understanding, language generation, and text-to-image generation.
1. India's biggest retailer trials digital rupee
2. Japan becomes mobile wallet adoption leader among 11 countries, attracts native Apps
3. Unpacking India's CBDC pilots as the country prepares for the digital rupee
4. Mobily joins hands with Tencent Cloud to provide cloud solutions and services in Saudi Arabia
5. CrediLinq.Ai, an artificial intelligence B2B embedded finance startup, receives an infusion of additional seed capital
6. Cashfree Payments launches automated escrow management solution
7. PhonePeenables cross-border UPI payments in select countries
8. Paytm boosted by India’s ban on Chinese Apps
9. Asia’s interest in wholesale central bank digital currency—and challenges to cross-border Use
10. LinkAja’s strategies to get Indonesia closer to financial inclusion
11. Jombingo, a leading social e-commerce company in Southeast Asia, is about to start its global expansion plan
India's biggest retailer trials digital rupee
India's CBDC plans have taken a step forward with news that the country's largest retailer, Reliance Retail, has agreed to start accepting digital rupee payments. Reliance has teamed up with Icici Bank, Kotak Mahindra Bank and fintech Innoviti Technologies to roll out CBDC acceptance at its Freshpik stores. The rest of the giant's locations will follow. Customers that want to pay with the digital rupee, will be given a dynamic digital rupee acceptance QR code that is scanned at checkout. India began piloting a retail digital rupee last month, following up on an earlier wholesale CBDC trial. The central bank hopes that a CBDC will help in its aggressive efforts to move the country away from cash and boost financial inclusion, as well as deter interest in cryptocurrencies.
Japan becomes mobile wallet adoption leader among 11 countries, attracts native Apps
Digital engagement has become integrated into consumers’ everyday lives across the globe. One example: Mobile wallet use has been growing in-store, replacing some shoppers’ physical wallets, even in cash-heavier countries like Japan. The global digital transformation is still trending upward, especially regarding daily engagement. Globally, 73% of consumer respondents engaged in one or more of the 37 digital activities the index tracks at least weekly. This indicates a more sustainable momentum than the spikes in sectors such as travel in the previous quarter and may predict continued and steady growth in the coming future. It is clear that mobile wallets have been on the rise. Overall, 16% of consumers paid for their last physical purchase with a mobile wallet in Q1 2022, but by Q3 that share had grown to 18%.Japan’s rapid adoption of mobile wallet use for in-store transactions was particularly notable, as using cash for retail transactions is still common in the country. Also making this growth notable was that, of the 11 countries surveyed, Japan ranked last in the average number of activities conducted monthly, weekly, and daily. Nevertheless, a 20% increase in mobile wallet use for physical transactions in the country occurred in the third quarter of 2022. And once the alternative payment method caught on, it did so quickly. Japan now boasts the highest adoption rate of mobile wallet use within a quarter and the highest rate overall of its use in-store.
Unpacking India's CBDC pilots as the country prepares for digital rupee
India wants to launch its central bank digital currency at a national level by the end of 2023, but early into its pilot, the Reserve Bank of India has identified challenges, several people familiar with the matter said. Initially, four banks, including the State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank participated. Internationally, 105 countries, representing over 95% of global GDP, are exploring a CBDC, according to the Atlantic Council’s Central Bank Digital Currency Tracker. Privately, as an emerging economy, one of the world’s largest populations in 2023, and the fifth largest in terms of GDP, India’s geopolitical motivation is to counter the dollarization of the global economy.“In the context of the internationalization of the Indian rupee, an Indian CBDC will make it easier for the nation to get international acceptance because it is digital,” said an official working on the CBDC efforts. “For emerging markets, it is a good weapon to have so that in the future when we are looking for internationalization this can be one good help.”The primary challenge for India’s CBDC project is marketing it to the nation’s populace. Indians are grappling with several questions around CBDCs, including distinguishing between wholesale and retail CBDCs, the digital rupee and eRupees, and whether a blockchain is even involved. The broad objective of India’s CBDC has been to “modernize the current physical (cash) currency system,” according to a senior official working on the CBDC efforts. India’s government has begun launching “awareness” campaigns warning citizens about the risks of investing in cryptocurrencies at large, contrasting those with the still-developing CBDC projects.
Mobily joins hands with Tencent Cloud to provide cloud solutions and services in Saudi Arabia
Mobily, an integrated service company in the Kingdom of Saudi Arabia (KSA), and Tencent Cloud, the cloud business of a global technology company, have signed a Memorandum of Understanding (MoU) for a strategic collaboration that will pave the way to launch the next-generation cloud solutions and services in KSA. Mobily will lead and manage the data center hosting, network links, and information and communications technology (ICT) infrastructure, while Tencent Cloud will provide cloud solutions and services, from infrastructure as a service (IaaS) products such as cloud virtual machine, storage, and network solutions, to platform as a service (PaaS) products such as database and media solutions. The collaboration also highlights the use of Tencent Cloud Enterprise (TCE), an enterprise-grade private cloud platform leveraging Tencent Cloud’s established product system.TCE provides self-controllable and elastically scalable full-stack service capabilities, and also integrates diverse IaaS, PaaS, and SaaS products, and uniformly deploys data centers, networks, servers, systems, and applications to provide a one-stop solution for enterprises in KSA.
CrediLinq.Ai, an artificial intelligence B2B embedded finance startup, receives an infusion of additional seed capital
CrediLinq.Ai, a technology infrastructure company that enables ultra-fast B2B online financing and payments, has raised a seed extension round from MS&AD Ventures, Big Sky Capital, and existing investors 1982 Ventures, and angels. A pioneer in this space, CrediLinq.Ai has developed advanced API solutions, alternate credit scoring models, and underwriting approaches to serve emerging markets, all of which allow it to empower B2B marketplaces to seamlessly offer Credit-as-a-Service on their platform. Serving this region has traditionally been difficult but CrediLinq’s team is able to build technology that offers unique insights by using alternative data, artificial intelligence, and machine learning to help their customers grow and extend their runway. With a global team of 18 highly trained professionals, the company specializes in facilitating an end-to-end integrated embedded financing experience. The team plans to use the fresh capital to scale its operations and begin establishing its presence in the global embedded finance market. The firm is also eying strategic acquisitions across its key markets, including Indonesia and Singapore, and opportunistically signing on customers from other global regions. The firm works with digital banks and funding partners to channel volume via its platform for underwriting and giving access to SMEs that need funding. They recently signed with two major stock exchange-listed customers and are already enabling several other smaller e-commerce, payments, and procurement platforms across Singapore, Hong Kong, Malaysia, Australia, and Indonesia.
Cashfree Payments launches automated escrow management solution
India-based payments and API banking solutions company Cashfree Payments has launched `Co-lend`, a fully automated escrow management solution for co-leading.The new service facilitates secure and instant disbursal with auto reconciliation, as well as a dashboard for managing multiple partnerships and collaborations at the same time. Furthermore, it does not require any type of manual intervention, and it notifies the loan management system automatically while eliminating reconciliation efforts. `Co-lend` was developed according to the digital leading guidelines provided by the Reserve Bank of India (RBI). In the collaborations made through co-leading, both the lender and the originator will have the possibility to pool the desired sum into the Co-lend escrow. The disbursals and collections will further happen from and into the escrow. The new features of Cashfree Payments aim to address all the challenges and risks that might appear in this process, such as the errors and delays that might happen because of the repayments and disbursements handled manually, or even the ones caused by accounting and reconciliation for each player in the partnership. `Co-lend` provides its customers with an entire automated process, while focusing on its efficiency and accuracy. The clients are allowed to use the platform for co-lending originators and lenders, especially the ones that are sanctioning high volumes of loans, cases where real-time repayments, disbursements, and reconciliation are required.
PhonePeenables cross-border UPI payments in select countries
PhonePe is now enabling cross-border Unified Payments Interface (UPI) payments in select countries. With this support for UPI international payments, PhonePe’s Indian users can pay foreign merchants instantly when traveling abroad. Its current launch of support for UPI international payments supports international merchant outlets in the United Arab Emirates, Singapore, Mauritius, Nepal, and Bhutan that have a local QR code. At these locations, PhonePe’s Indian users will be able to make payments in foreign currency directly from their Indian bank rather than having to use a foreign currency or their credit or foreign exchange (FX) cards.
Paytm boosted by India’s ban on Chinese Apps
India has reportedly banned 232 apps connected to China as relations between the neighbors worsen. The order by India’s tech ministry blocks 138 betting and gaming apps and 94 credit services. Most of the apps were tied to China, while others were Indian in origin but suspected of transmitting data to China. The ban was good news for the Indian mobile eCommerce website Paytm, as several local media outlets in India said its competitors were included in the ban. Shares of its parent company, One 97 Communications, jumped as high as 20% in early trading. India banned more than 160 Chinese apps in 2020 following a border dispute with China that killed 20 Indian soldiers.
Asia’s interest in wholesale central bank digital currency—and challenges to cross-border Use
As U.S. policymakers continue to examine the implications of China’s digital yuan in 2023, they should also take note of accelerating wholesale central bank digital currency (CBDC) research and development efforts across Asia. Unlike “retail CBDC,” which is generally designed as a central bank liability universally accessible to individuals and businesses within a jurisdiction’s financial system, “wholesale CBDC” refers to a digitized central bank liability designed for sizable(generally interbank) transactions, and for which access is limited to certain financial institutions. For example, in late November 2022, Indonesia’s central bank released a white paper indicating that it would soon test CBDCs, prioritizing the launch of wholesale CBDCs that “complement” existing large-value payments infrastructure—and which the central bank believes may ultimately enable more efficient cross-border transactions. India’s central bank launched a wholesale CBDC pilot in October 2022 aimed at facilitating a more efficient secondary market for government securities, with cross-border payments being a stated future pilot goal.
LinkAja’s strategies to get Indonesia closer to financial inclusion
LinkAja, one of the country’s major digital wallet providers, has its own strategies to enter this space. Its main approach is by collaborating with strategic partners such as telco company Telkomsel, energy firm Pertamina, and other state-owned enterprises (SOEs). It’s an obvious move, considering LinkAja itself was formed through a national synergy of 10 SOEs.In 2022, LinkAja changed its B2C-centric strategy to B2B2C –or a two-sided business model, in other words. The purpose of the shift was not only to ease digital payments for end users but also to offer end-to-end financial solutions for digital and traditional supply chains, especially those within the SOEecosystem. For B2C, LinkAja makes a serious effort to low acquisition costs and profitable users, while on the B2B side, the firm concentrates on digitizing traditional end-to-end value chains for SOEs. All this is done with one aim: to become a fintech company that can improve national financial and economic inclusion. LinkAja has partnered with the national Baznas, Indonesia’s Islamic alms-giving governing body, to cater to users’ religious needs such as making payments for zakat (mandatory alms), infaq (charity), and qurban (animal-sacrificing ritual). Shariah investment products are also offered. To further support Indonesian Muslims in achieving their spiritual goals, LinkAja Syariah has collaborated with a third party for the Hajj feature. Not only can users easily sign up for their Hajj pilgrimage on their smartphone, but they can also enjoy benefits such as obtaining financing for the down payment of the registration.
Jombingo, a leading social e-commerce company in Southeast Asia, is about to start its global expansion plan
Jombingo, a leading big data, and cloud computing company, has been at the forefront of technological innovation in the social commerce industry since its establishment in 2016. Jombingo is also about to be backed by Andgo Partners and Maya Capital, two prestigious investment firms that recognize the company's potential for success and growth. This multimillion-euro investment will provide Jombingowith with the resources and support it needs to further solidify its position as a leader in the social commerce industry. Headquartered in Illinois, USA, Jombingo boasts a core team of top talent from renowned organizations such as McKinsey, BCG, Amazon, eBay, Shopee, and more. The company has a solid financial foundation, supported by its investors, including top VCs in Silicon Valley, and has the potential to become an industry unicorn. At Jombingo, the company's focus lies in cross-border e-commerce, social group buying, wisdom media, and supply chain finance, leveraging its technological innovations for maximum efficiency and results. The company's innovative solutions include an end-to-end smart system, user behavioral and preference analysis, order and commodity demand forecasting, and precise and intelligent matching of customer needs with desired products. Jombingo also employs logistics and route deployment algorithms to minimize cost and optimize results, utilizing smart data analysis throughout its operations.
BLOCKCHAIN - CRYPTO - DIGITAL ASSETS - DE FI
1. Central Banks Are Working on a Monitoring System for Stablecoin Balance Sheets
2. PayPal disclosed $604m of crypto in custody on its balance sheet
3. Australian Open using web3 to make it the most accessible sporting event
4. Digital asset protection provider Coincover raises $30m
5. JPMorgan report shows institutional trader interest shifting from blockchain to AI after the crypto slump
6. Australia’s crypto token mapping consultation has a novel approach
Central Banks Are Working on a Monitoring System for Stablecoin Balance Sheets
The Bank for International Settlements (BIS), the association of the world’s central banks, is spearheading the development of a monitoring system for stablecoins to ensure issuers maintain adequate reserves. Named Project Pyxtrial, the program will also investigate tech tools to help regulators form data-based policy frameworks. A stablecoin is a crypto token whose value is linked to the value of other assets such as sovereign currencies, and its ability to keep its peg is linked to the strength of its balance sheet. While central banks worldwide have been heads-down on projects that experiment with digital versions of sovereign currencies (CBDC), the stablecoin project is a first and illustrates a growing concern among regulators. While CBDCs are viewed by some central bankers as a more secure alternative to volatile private cryptocurrencies, stablecoins promise the stability of the U.S. dollar or euro, and make up the bedrock of decentralized finance (DeFi) applications – something regulators haven’t yet figured out how to supervise. BIS’ 2023 program focuses heavily on how central bank digital currencies could improve payment systems. The BIS is also working on monitoring systems for crypto and DeFi with Project Atlas.
PayPal disclosed $604m of crypto in custody on its balance sheet
PayPal has published its annual report for 2022. The balance sheet includes $604 million in cryptocurrency held in custody on behalf of clients. Generally, assets held in custody on behalf of clients do not appear on the balance sheet. However, at the end of March 2022, the SEC published a staff accounting bulletin that said crypto-assets carry additional risks and hence assets held in custody must be disclosed on the balance sheet. Invariably the same figure will appear as both an asset and a liability. The PayPal balance comprises $291 million in Bitcoin and $250 million in Ethereum, with the balance made up of other cryptos. The total of $604 million represents less than one percent of PayPal’s balance sheet and is down from $690 million at the end of September 2022. To put the PayPal figure in context, the equivalent amount on Robinhood’s balance sheet was $9.3 billion and Coinbase held $95 billion at the end of September. In 2020, PayPal enabled its clients to access cryptocurrencies through a deal with Paxos. And from March 2021, U.S. merchants were able to accept PayPal-held cryptocurrencies for payment. A survey of 2,000 retailers conducted by Deloitte and PayPal last year found that 85% anticipate cryptocurrency being ubiquitous within five years.
Australian Open using web3 to make it the most accessible sporting event
In January, 900,000 visitors attended the Australian Open (AO) tennis event in real life, with remote visitors able to engage via the metaverse. AO plans to expand its web3 offering in 2023, aiming to make AO the most accessible sports and entertainment event. This year, the virtual events consist of the AO ArtBall 2023 and the AO metaverse. In AO Artball, NFTs are linked to a 19x19cm plot on the physical tennis court. If the winning shot from any Australian Open match landed on the spot, the data was recorded on the NFT. The owner was then provided with benefits like wearables, the winning tennis ball in case of a championship game, and ground passes for the finals week of the tournament in the successive year. The AO metaverse involved a virtual hosting of the game alongside other virtual events in Decentraland, a 3D virtual world platform. While the north star of the venture was to make the sports event accessible, it also focused on adding value to owners of the product, making the NFTs more than just a digital collectible. In this case, the NFTs also doubled as a digital membership for the event. In AO Artball, owning the NFT that scored a Match Point on the AO23 court could win two tickets to the equivalent match at AO24. AO also aims to engage fans during months when other tennis events happen around the world.
Digital asset protection provider Coincover raises $30m
Coincover, a UK-based digital asset protection provider, has raised $30 million in a funding round led by Silicon Valley’s Foundation Capital. Coincover is tackling one of the biggest issues in digital assets: trust. The firm says it has developed a unique technology that shields assets for crypto companies and individual investors. Monitoring and analysis systems identify suspicious transactions, while the firm also offers compensation for some hacks because its technology is insured. Finally, an end-to-end encrypted vault offers secure storage. Coincover already works with more than 300 businesses, from exchanges and wallets to hedge funds, family offices, and banks. It also works directly with a number of digital asset custodians to help them keep their clients safe. Current customers include Fireblocks and Bitso.
JPMorgan report shows institutional trader interest shifting from blockchain to AI after the crypto slump
More than half of institutional traders surveyed by JPMorgan Chase & Co. said artificial intelligence (AI) and machine learning would be the most influential technology to shape trading methods over the next three years. The findings were published JPMorgan’s January e-Trading report, an annual assessment of sentiment across different asset classes that had responses from 835 institutional traders in 60 global markets. AI outpaced every other major technology category in the survey, with 53% citing it as the most influential, far ahead of blockchain at 12% and mobile apps at 7%. That contrasts with 2022 when blockchain and AI tied for second with 25% of respondents predicting them to be the key emerging technologies. Mobile trading applications came in first last year at 29%. While institutional traders are taking a shine to ChatGPT, so are cryptocurrency enthusiasts, using it for research, creating trading bots, and coding assistance for developers. U.S.-based cryptocurrency exchange PayBito said this month it would integrate ChatGPT on its platform to teach new investors about crypto trading. PayBito said AI integration in crypto can enhance market data analysis and trend predictions. Other companies are also building new business models based on AI and crypto integration. For example, Ocean Protocol is a blockchain-based marketplace that sells tokenized data. SingularityNET is building a blockchain-based marketplace for artificial intelligence services and has seen its native token AGIX jump over 200% to as high as US$0.55 from US$0.17 over the past 7 days.
Australia’s crypto token mapping consultation has a novel approach
The Australian government Treasury opened a one-month consultation on token mapping. Once it has completed the token mapping process, it expects to proceed to crypto licensing and custody legislation in the first half of this year. The Australian approach is significantly different compared to other jurisdictions. For example, typical token classifications include stablecoins, security tokens, and utility tokens and a more granular taxonomy within those. Australia’s approach, however, focuses on functions. At a high level, Australia’s proposed token taxonomy envisages two classes of system. The first is intermediated token systems which encompass crypto asset services and intermediated crypto assets. The second is public token systems which include network tokens and public smart contracts.
Please contact me if you’re interested in sponsoring the newsletter.
I hope you find the information provided in this newsletter to be informative and helpful.
To ensure that I am addressing the topics that are most important to you, I would welcome your feedback and suggestions.
Follow me on Twitter @medhy_souidi & Telegram to get the annotated edition of this newsletter on Monday or Tuesday. Plus I tweet most of what makes it into the newsletter.