IMF Warns of DeFi & Stablecoin Risks, Biden Administration Taking ‘Aggressive’ Approach to Crypto

IMF Warns of DeFi and Stablecoin Risks, Biden Administration Taking ‘Aggressive’ Approach to Crypto

A senior White House official says the administration ensures a “smart and effective regulatory system” for crypto. Meanwhile, for the IMF, because DeFi is one of the main drivers of the rapid growth of stablecoins, it “warrants close attention.”

The Biden administration is ramping its regulatory scrutiny of cryptocurrency and will make a move to address a range of risks, reported the Wall Street Journal, citing a senior White House official.

Peter Harrell, senior director for international economics and competitiveness with the National Security Council at the WSJ Risk & Compliance Forum on Tuesday, said,

“You’re really seeing the administration at the beginning of what we expect will be an ongoing, quite aggressive effort to make sure we understand and address the whole range of risks that we see in the cryptocurrency space.”

At the same time, the administration seeks to position the U.S. as a leader in digital asset innovation.

According to Harrel, the agencies do think the cryptocurrency industry has “some potential benefits,” such as financial inclusion, but added, “there are clearly a whole range of risks.”

“I think you’re really seeing the administration kind of moving out on a number of different lines of work to make sure that we have a smart and effective regulatory system in place for cryptocurrency.”

A Sound Regulatory Framework

Elsewhere, the International Monetary Fund warned that the rapid growth of cryptocurrencies poses several risks to both investors and policymakers.

While the “crypto ecosystem offers an exciting new world of opportunities,” it also has its challenges in the form of risks to consumers from lack of operational or cyber resilience and anonymity and limited global standards creating data gaps for regulators, which in turn pose a threat to financial integrity, it said.

Moreover, “the advent of crypto assets and stablecoins in emerging markets and developing economies may accelerate dollarization risks,” said the IMF adding these markets can face “destabilizing capital flows” because cryptos are used to circumvent capital controls.

The report also mentions investor protection risks for DeFi, which it says is “gaining momentum by offering new services to users,” and inadequate reserves and limited disclosure for some stablecoins.

Decentralized finance (DeFi), according to the IMF, is actually one of the main drivers of the rapid growth of stablecoins as such “warrants close attention.”

“A sound regulatory framework for crypto assets, and decentralized finance markets more generally, must be a priority on the global policy agenda.”

When it comes to stablecoins, the IMF says regulations should correspond to the risks they pose and the economic functions they perform.

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Author: AnTy

Biden Administration Seeking to Impose Banking Regulations on Stablecoin Issuers

Biden Administration Seeking to Impose Banking Regulations on Stablecoin Issuers

Meanwhile, the top US national security advisers will gather officials from 30 countries with plans to combat cyber crime and improve law enforcement collaboration on “the illicit use of cryptocurrency.”

The Biden administration is prepared to issue a report on stablecoins by the end of the month and is looking to regulate stablecoin issuers as banks.

The President’s Working Group on Financial Markets is expected to recommend that Congress establish a special-purpose charter allowing new crypto banks to manage stablecoins as deposits, reported the Wall Street Journal, citing a senior official involved with the report.

A group led by the Treasury Department further plans to recommend to the Financial Stability Oversight Council whether stablecoin activities should be designated as systemically important, the report added.

Examining whether stablecoins pose a systemic threat would be another approach to impose bank-like rules on stablecoins.

“Circle has already been working toward becoming a full-reserve national commercial bank,” said Dante Disparte, chief strategy officer and head of global policy for Circle, the issuer of the stablecoin USDC. The CSO sees the Treasury’s intent as “encouraging” and said they intend to work with regulators on appropriate crypto policies.

A few cryptocurrency firms, including Anchorage and Protego Trust Bank, have already won conditional bank charters from the Office of the Comptroller of the Currency (OCC).

However, under the former Acting Comptroller Brian Brooks, OCC made strides regarding crypto by giving national banks permission to offer crypto custody services, work with crypto custodians, and conduct payment using stablecoins.

Recently, Acting Comptroller Michael Hsu warned that crypto could threaten the financial system.

White House Calls A Meeting On Crypto’s Illicit Use

This week, the White House also said that top US national security advisers would be meeting with officials from 30 countries this month to work on plans to combat the growing threat of ransomware and other cyber crime.

An online session will also be hosted by the White House National Security Council aimed at “improving law enforcement collaboration” on issues like “the illicit use of cryptocurrency,” says the statement by President Joe Biden.

One White House official told the media that they are particularly eager to address “the misuse of virtual currency to launder ransom payments” and intend to “investigate and prosecute ransomware criminals,” many of whom are anonymous and attack institutions in other countries.

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Author: AnTy

Fintech Investment Firm, Ribbit Capital, Seeks $350M In ‘Blank Check’ Public Offering

Former Trump administration advisor, Sigal Mandelker, teams up with top profile investors in a $350 million public offering in Ribbit Capital, a SPAC firm that invests in fintech firms, including blockchain technology projects. The IPO will raise $350 million for a “blank check” company that invests in the unspecified business at the moment.

Ribbit LEAP, short for Ribbit Capital Long-Term Equity Acquisition Pool, is a unique purpose acquisition company (SPAC) looking to join the increasingly popular blank check model that allows the company to effect a merger, acquire assets, purchase stocks, or reorganize a similar business in a prospectus filed with the U.S. Securities Exchange Commission (SEC).

According to the prospectus, the SPAC has yet to define its planned businesses despite raising the multi-million IPO. Blank checks structures allow companies a vast ground for investment and business operations without any interference from shareholders, who are not allowed to vote on any decisions. The S-1 form reads:

“Our shareholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may complete our initial business combination even though a majority of our shareholders do not support such a combination.”

Ribbit LEAP is one of the first investors in the U.S’ largest crypto exchange, Coinbase, and over 75 other fintech startups, including Robinhood Markets, CreditKarma, MercadoLibre, Inc., Sea Limited, Next Insurance, and Zillow. Other top crypto companies in the Ribbit LEAP portfolio include U.K based Revolut, Xapo, and Chainalysis.

The prospectus further states that the company offered $402.5 million in class A shares at $10 per share to begin, but fees rose to approximately $52 million, bringing the total IPO to raise close to $350 million. Out of the total available shares, the SPAC has pledged a minimum of $100 million in a forward purchase commitment.

According to Reuters, the company is aiming to list the SPAC on the New York Stock Exchange in the coming days with JP Morgan, the only book-manager running the securities.

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Author: Lujan Odera

FDA Releases Blueprint On Using Modern Technologies To Usher In A ‘New Era Of Smarter Food’

  • The U.S Food and Drugs Administration (FDA) is looking into integrating modern technology such as AI and blockchains to develop a new era of food safety.

In a blueprint document published on July 13, ‘New Era for Smarter Food Safety Blueprint,’ the FDA is looking into a new approach to food safety through leveraging modern technologies to “create a safer and more digital, traceable food system.”

The document focuses on new technologies, strategies, and leadership to offer the safest food possible, blockchain is mentioned as a key component in the blueprint.

The new era of modern food security and safety lies on four key pillars, namely the new business models and retail modernization, food safety culture, faster prevention and approach methods to outbreaks, and finally, a tech-enabled traceability feature such as AI, Big data, and blockchain.

When we look at how industries track, through digital means, the real-time movement of planes, ride-sharing, and packaged goods or how firms are harnessing big data to identify trends,” the blueprint reads.

“It is clear FDA, and our stakeholders should be looking at how to tap into new technologies that include, but are not limited to, artificial intelligence, the Internet of Things, sensor technologies, and blockchain.”

Blockchain technology also mentioned as a critical component in leveraging digital transformation whereby if implemented, it will help in “receiving receive critical tracking events and key data elements from industry and regulatory partners.”

FDA is critically looking at blockchain solutions to improve traceability and tracking of food and medicine. In May, BEG reported FDA’s successful completion of a pilot blockchain program together with IBM, KPMG, Merck, and Walmart to trace medication in the U.S.

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Author: Lujan Odera

China Modifies New Guidelines For Patented AI, Big Data And Blockchain Applications

China’s National Intellectual Property Administration (NIPA) just revisited their guidelines on the patent assessment process for new technologies such as AI and blockchain. The new blockchain guidelines will begin on February 1, 2020.

According to the announcement from their office, patent applications regarding Big Data, artificial intelligence, and blockchain technology will henceforth follow all new guidelines.

The office also stated that it would treat technical features of patented technology when assessing the uniqueness of an invention patent on business rules and algorithms. According to the revised guidebook, all technical features would no longer be treated as separate items.

Moving forward, they will look at proposed innovations, the technical outcomes, and the challenges the technology may face for adoption and utilization.

China leads in blockchain-related patents

China has always shown its support for blockchain and blockchain-related businesses. Before the end of last year, the country had received more than 12,000 applications for blockchain-based patents, according to the Incopat database.

2019 shows more than 4,200 applications for blockchain technology patents were filed in China, with big companies like ReeChain, Alibaba, and Tencent leading the list.

Streamlining the process of patient application

NIPA said the reason behind this recent revision is to restructure the patent application procedure, in terms of new technology. It also hopes to improve the enforcement of patent applications for improved efficiency.

An example of an update of the new guideline is to secure communications across all blockchain nodes. According to the new guidelines, the communication methods of the blockchain node can solve the limitation of leaky privacy data during inter-communication.

The guidelines stated that when a new node links up for communication, it should be able to find out the setup and connection based on pre-configured CA trust. It should also be based on CA certificates within the communications request. It will improve the security of blockchain stored data and lower the risk of leaking private data. With the new guidelines, there will be improved security within the communication nodes. It also makes sure the communication nodes and security of these are not compromised.

Revised Guideline a preparation for the AI and blockchain industry

Artificial Intelligence and blockchain is gradually sweeping over the Chinese business center. With the rise of blockchain’s popularity, there is a need for effective rules that guide the safety and operation within the industry. Apart from protecting patented technology, the guidelines stress China’s strategic decision towards patent application and intellectual property.

China paving the way for digitalized currency

China is implementing several laws in preparation for the Central Bank’s digitalized currency. The regulators are implementing laws to make it easy to oversee all businesses related to cryptocurrency and digital assets in the country.

The country has officially implemented its guidelines for cryptographic passwords management.  They also have plans for the Central Bank to create a long-awaited digital Renminbi.

The law was passed towards the end of October of last year. According to the law, passwords, commercial passwords, and common passwords would be divided. The law, in particular, is meant to aid the development of cryptocurrency and blockchain-related businesses in the country.

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Author: Ali Raza

Firms Have Borrowed $8.2 Billion from the Blockchain Platform of a Chinese Forex Regulator

The Chinese regulator State Administration of Foreign Exchange (SAFE) runs a cross-border blockchain financing system and has helped firms with more than $8.2 billion.

The SAFE platform has helped small and medium-sized (SMEs) corporations and enterprises with this amount of money in only 8 months after being opened, reports the Economic Information Daily. Ever since it has been launched in March 2019, it has expanded its pilot financing program from 7 provinces to 17, having more than 160 banks joining its program.

One-Third of Chinese Lenders Providing Forex Services

Since November 29th, almost 1,600 companies, most of them SMEs, have become part of the SAFE program and started sharing their financial bookkeeps with over 160 banks. One-third of the lenders in China are providing Forex service. SAFE’s deputy director Zhang Xin said the platform will be advanced to make foreign exchange receipts and cross-border trade settlements easier. This is what the blockchain analyst Cao Yin declared about the initiative:

“The traditional financial processes, which require a lot of human labor to carry out information verification and authorization, leave a lot of room for financial fraud, but as the blockchain system promises a decentralized and encrypted track of each capital flow, it leaves potentially little to no space for human mediation.”

Aside from having a reliable trust mechanism, the SAFE platform offers real-time supervision and reduced processing time for any transaction. Zhang said transactions are now taking in place in 15 minutes, as opposed to the 1 or 2 days like they did before.

SAFE Platform to Be One of the Most Influential Chinese Blockchain Projects

The cross-border blockchain platform run by SAFE is at the moment the only state organ to file a Cyberspace Administration of China blockchain record. It’s set to become one of the most influential blockchain projects in the country, together with the central bank’s Greater Bay Area blockchain trade and finance platform.

After President Xi Jinping has endorsed the blockchain, more government authorities and enterprises in China have started hurrying to implement the new technology. Earlier in November, China has launched a blockchain identification system for cities.

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Author: Oana Ularu

China’s State Administration of Forex (SAFE) Extends Cross-Border Pilot to Leverage Blockchain Tech

China’s State Administration of Foreign Exchange (SAFE) has recently taken a move to help leverage blockchain technology so that better cross-border financial services are offered, reports local news outlet Global Times.

To be more specific, their cross-border financing blockchain platform pilot now covers up to 19 provinces and cities, which has increased from their original decision to cover nine. According to the news outlet, SAFE’s endeavor is deemed the most scalable in the country, as it has the ability to provide accounts receivable financing services from exports, and ensures that companies taking part in cross-border related businesses have been verified.

As of the end of October, the introduced system has supposedly completed 6,370 transactions as well as giving out $6.8 billion in loans. Thus far, they’ve been able to secure 1,262 companies as clients, most of which consists of small and medium-sized businesses.

Having spoken to Global Times Analyst, Cao Yin shared that this is definitely a milestone for them, especially considering the gap in traditional financial processes and that of the blockchain system.

More specifically, he shared:

“The traditional financial processes […] leave a lot of room for financial fraud. But as the blockchain system promises a decentralized and encrypted track of each capital flow, it leaves potentially little to no space for human mediation.”

In addition to allowing users to retort to a financial service that isn’t with a traditional financial institution, SAFE’s system is deemed crucial for Chinese exporters because it promotes real-time supervision and is time-efficient (i.e. processing time from one to two days to simply 15 minutes) among other improvements.

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Author: Nirmala Velupillai

Blockchain Tech May Be Used By The FDA for Drug Recalls and Medical Product Reviews

The U. S. Food and Drug Administration (FDA) has recently announced that it may use blockchain technology in the future. According to the organization, this technology could be used to improve medical product reviews and recalls.

Amy Abernethy, deputy commissioner of the institution, has affirmed that the main goal of the organization with the technology to modernize the way that healthcare is able to communicate with other important agencies.

According to her, the organization will use blockchain, artificial intelligence (AI) and APIs to create a fully interoperable system that will handle the way that information is shared and medicine is reviewed.

Abernethy affirmed that this will make the agency much more agile and efficient and that new traceability solutions will certainly allow it to crosscheck information better and to guarantee that the quality of data will be solid.

With blockchain technology, a system in which information is sent quickly and can receive feedback in real-time may be possible. The whole process of approving a medicine will become quite faster this way and less paperwork will be needed as blockchain is an immutable ledger that can easily store all the information.

Another way in which technology can be used is to improve the quality of medical surveillance and to determine when to recall medicine. The system will let recalls happen faster and with fewer problems, it was affirmed. Also, medicine will possibly become more targeted and individual with the aid of these solutions.

The new system is expected to be launched in around a month or two, according to the deputy commissioner.

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Author: Gabriel Machado