China Trials Its Central Bank Currency, The Digital Yuan, In Shenzhen’s Gas Stations

China’s Central Bank assists Shenzhen citizens in using its digital currency as payments to refuel their motor vehicles. The community in the tech hub of China (Shenzhen) received $1.5 million in digital Yuan, airdropped to gear up the project, 11 gas stations are now accepting digital currency as payments, reported Economic Information Daily.

A leading agency, Guangdong Petroleum conducting tests and unveiled its pilot this week on 13 October. To make a transaction, QR codes are available at stations to scan and work the same as commercial payment apps like Apple Pay.

The community experienced best practices and gave positive feedback yet, as it completes transactions in a few seconds. Alongside, all the services in a station’s boundary like stores or kiosks are integrated and support digital payment methods.

The digital yuan application characteristic that makes it distinct is it doesn’t need a phone signal to transmit. Likewise, it allows users to utilize the service until the phone battery ends.

Meanwhile, other cashless payment apps like ‘WeChat’ use a different structure. It requires an internet connection to proceed and charge a transaction fee, too.

Per a report, Guangdong Petroleum is in the process of extending its boundaries to over 110 gas stations to fix the self-operated ecosystem in Shenzhen within a month. China’s digital yuan has yet another milestone to achieve, Digital Currency Electronic Payment (DCEP). It falls in the country’s Five-Year-Plan brackets to develop and deploy the world’s advanced technologies such as blockchain and artificial intelligence.

In 2019, the Chinese Parliament declared to complete the digital yuan project before the Winter Olympics in 2022. In September, China decided to position the DCEP project as a workable option to reduce its dependency on the US dollar. This plan has become a hot topic.

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Author: Hank Klinger

ConsenSys to Lead Phase Two of Hong Kong and Thailand’s Cross-Border CBDC Project

ConsenSys has been awarded the contract to lead phase two of the cross-border payments ‘CBDC’ project between Hong Kong and Thailand. Dubbed project ‘Inthanon-LionRock,’ the initiative follows successful research by the central banks of both jurisdictions, which found an additional value case in building a cross-border CBDC.

According to the press release by ConsenSys, they will work alongside industry giants Forms HK and PriceWaterhouseCoopers (PWC) towards implementing the second phase. Notably, the project has been in the works since May 2019 when the Bank of Thailand (BoT) and Hong Kong Monetary Authority (HKMA) signed a memorandum of understanding to dig deeper into the value proposition CBDC’s.

With ConsenSys now in the picture, the joint CBDC between Thailand and Hong Kong will move past the research phase to a more practical era. ConsenSys has since been tasked with building a proof-of-concept (PoC) cross-border corridor to enable Hong Kong’s Lionrock and Thailand’s Inthanon networks to interact seamlessly. The press release reads,

“Using its enterprise Ethereum stack, ConsenSys will test solutions that prioritize scalability, security, and interoperability.”

This is not the first time ConsenSys works collaboratively with a particular authority towards designing and developing a CBDC. The blockchain software technology firm has, in the past, worked with the South African Reserve Bank and Monetary Authority of Singapore to create decentralized payment networks. ConsenSys Hong Kong Director, Charles d’Haussy, noted that they are thrilled to take on a new initiative in a similar line,

“ConsenSys is thrilled to lead this implementation of CBDC for cross-border payments. We are humbled to work on the development of Hong Kong’s financial infrastructure.”

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Author: Edwin Munyui

VISA Execs Focus on Crypto And Blockchain Development As Its The Future Of Payments

Two of Visa’s largest executives in charge of crypto payments and blockchain technology gave a detailed interview on the overall crypto ecosystem. The interview of the pair, by Forbes, touched on how the company is structuring its business on the crypto and blockchain front to integrate innovative solutions to current payment problems.

The executives also highlighted the impact of the central bank’s digital currencies (CBDCs), stablecoins such as Libra, and the future of digital payments, cryptocurrencies, and blockchain in Visa’s strategy.

Visa Executives share firm’s visions in crypto and blockchain

As SVP global head of fintech at Visa, Terry Angelos handles a distributed network of groups building solutions on blockchain and deals with clients in the crypto space. Cuy Sheffield’s role as the senior director in charge of crypto at Visa speaks on the way Visa’s fintech clients in the crypto and blockchain space can leverage existing products.

Visa has been making partnerships across the globe – recently partnering with Coinbase exchange, which saw the crypto exchange become the first Visa cards issuer. The partnership has since made waves across the crypto universe. Other recent partnerships include;

Responding on the number of crypto and blockchain clients Visa has so far, Terry said,

“So far, we have onboarded about 25 companies from around the world that are at various stages of development. Given this diversity, our engagement with them can go down a few different paths. First, there are very large and established companies like Coinbase, which we simply treat as strategic fintech clients.”

Further clarifying the distinction between how they rank their clients, Terry explained crypto companies as those that work with “assets that are natively issued onto a blockchain.” On the other hand, digital currencies are defined as “tokenized versions of fiat, such as what Coinbase and Circle are doing with USDC.”

A clear look on CBDCs from Visa

On the subject of the development of central bank digital currencies, Sheffield said Visa is ‘closely working with some of them in the development of a CBDC”. He stated for CBDCs to gain global traction, the assets must-have utility and should be acceptable by merchants,

“We think there’s a big opportunity for Visa to leverage our existing network and assets and expertise to add value to both central banks as they think about CBDCs, as well as to other private sector entities that are exploring these privately issued stable coins.”

Read More: CBDC’s Are The Future Of Money & Payment Ecosystems: Visa’s Head Of Crypto

Visa also led the founding team of the Libra Association before quitting a year ago, claiming they are concentrating on their payment projects. Cuy further explained that Visa is currently not looking for a consortium (recently joined Chamber of Digital Commerce) after leaving the Libra Association. He added,

“I doubt that we would join any exclusively.”

On his closing remarks, Terry highlighted that Visa is focusing on launching offline digital currency payment solutions in the future. He remarked, “One area that we’ve spent time on as well is offline digital currency payments,” he remarked.

“When central banks think about CBDCs, one of the potential features that they are paying attention to is offline payments.”

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Author: Lujan Odera

Mastercard Launches a Virtual Testing Platform for CBDCs

  • Global payments company Mastercard launched a virtual testing platform for central banks to test out their CBDCs.
  • The technology company invited central banks, commercial banks, techs, and advisory firms to evaluate the suitability of CDBDs through its custom testing platform.

As the Bank for International Settlements survey revealed, a whopping 80% of central banks are engaged in some form of Central Bank Digital Currencies (CBDCs). In the race to embrace digital payments, central banks clearly don’t want to lose its control of the monetary policy in issuing and distributing currency while supporting innovation.

Supporting central banks modernizing payments, Mastercard announced this “proprietary virtual testing environment” today where the use cases for the digital fiat currencies could be evaluated.

“Central banks have accelerated their exploration of digital currencies with a variety of objectives, from fostering financial inclusion to modernizing the payments ecosystem,” said Raj Dhamodharan, Executive Vice President, Digital Asset, and Blockchain Products and Partnerships at Mastercard. And with this new platform, the company wants to support that decision.

On this virtual platform, the interested parties can simulate the issuance and distribution of the CBDC along with the exchange ecosystem with banks and customers.

It can be used to demonstrate how CBDC can be used to pay for goods and services anywhere Mastercard is accepted.

The development efforts of the CBDC that includes the technical, design, and security aspect, can also be evaluated while to determine its value and feasibility in the market, use cases and tech designs can be examined as well.

“Mastercard wants to harness its expertise to enable the practical, safe and secure development of digital currencies.”

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Author: AnTy

New Payments Platform Australia (NPPA) Sues Ripple for ‘PayID’ Trademark

An Australian financial services firm, known as New Payments Platform Australia (NPPA), has sued Ripple Labs over a trademark infringement allegation that involves the PayID brand.

The lawsuit, which was filed last week in a federal court in New South Wales, alleges that Ripple Labs infringed on Australia’s Trademarks Act of 1995 as well as the country’s consumer law for the usage of the PayID trademark brand.

NPPA is a consortium that was founded by 13 banks, consisting of the Reserve Bank of Australia, Citi, ING, ANZ, and HSBC. The firm controls a remittance network within Australia, allowing for real-time payments among customers from various banks.

NPPA states that it launched the PayID brand in February 2018 and used about AU$3.3 million for an aggressive advertising campaign to make the platform mainstream. More than 90 small and large Australian banks, including other financial institutions, have so far joined the platform.

Adrian Lovney, NPPA’s CEO, states that he found out that Ripple, in June, introduced a similar PayID branded platform in Australia in line with the giant payments Open Payments Coalition and has partnered with about 40 companies across the world.

The court paper also alleges that 3 of the 40 partners within Ripple’s OTC are located in Australia, including BTC Markets, FlashFX, and Independent Reserve.

Lovney alleges that there is evidence to suggest that the three Australian firms wrongly believed that there was a connection between the services provided by the NPPA and those offered by Ripple, as per the PayID trademark. The lawsuit explains:

“PayID is the brand, name, and trademark used by NPPA to identify both the NPP’s Addressing Service and the account proxies/aliases that form part of the Addressing Service.”

According to NPPA, about 5 million PayIDs have so far been registered, which forms a crucial part of Australia’s NPP, a platform designed and managed by NPPA.

The court has already given NPPA the greenlight to serve Ripple Labs a notice outside of Australia.

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Author: Joseph Kibe

Fed Reveals More Details About FedNow to Support Instant Payments in the US

The Federal Reserve unveiled further details about its new real-time payments platform FedNow Service. The platform will enable financial institutions in the US to settle transactions virtually instantly and is set for launch in 2023 or 2024, as per the details revealed last week.

The plans for this new service was first announced about a year ago and since then has been receiving public comments on what it should look like and how it should operate.

FedNow is an instant payment infrastructure that is a tech-enabled leap forward from its century-old payment and settlement services that would allow individuals and businesses to access it “24x7x365.”

Individuals would be able to send $25,000 through the service, though the Fed said they would evaluate the figure after several commentators suggest a bigger transaction limit.

The idea here is to “modernize” the US payment system and promote a safe and efficient payment system. Federal Reserve Board Governor Lael Brainard said,

“The rapid expenditure of COVID emergency relief payments highlighted the critical importance of having a resilient instant payments infrastructure with nationwide reach, especially for households and small businesses with cash flow constraints.”

The Fed is connected with over 10,000 different financial situations across the country, and this system will allow them to facilitate funds near-instantaneously.

Competition and inappropriate expansion

Many non-bank payment services like Square and banks offer instant payment while transfers through The Clearing Houses RTP network, a real-time payment platform launched by a group of America’s largest banks and financial institutions in 2017, come with additional fees.

According to the Fed, FedNow will not only allow individuals to send and receive money more quickly and avoid penalties like late fees and businesses to access funds and manage cash flow but also stimulate “healthy competition” in the space.

Fed believes this competition in real-time payments space will result in “efficiencies related to pricing, service quality, and innovation.”

However, not everyone agrees to this as the central bank said it received over 2,200 letters from commentators that it “should not operate in competition with the private sector,” and that it would represent “an inappropriate expansion of the Federal Reserve’s role.”

But the fed argues that it would be playing the same “operational role” it always has, working together with the private sector instead of competing against it.

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Author: AnTy

Mastercard Approves Wirex to Directly Issue Crypto Payment Cards To Its Customers

  • One of the world’s major payments processors, Mastercard, has announced it has approved Wirex to become its maiden crypto firm to provide payment cards to its clients directly.
  • In efforts to expand its crypto program, Mastercard is now encouraging the crypto companies to apply to become its partners.

On Monday, July 20, Mastercard announced that it was seeking to make it easy for crypto card issuers to become its partners through the firm’s Accelerate program. Now, it will take just a few weeks before applicants can be approved as partners, the firm stated.

The Accelerate programs offer partners the requisite support for their market entry, continued development as well as international expansion. The approved partners will be helped to integrate into Mastercard’s technology easily and will be allowed to benefit from the firm’s market research and cybersecurity expertise.

Although the firm is focusing on making it easier for partners to access the Accelerate program, firms wishing to be onboarded must adhere to the company’s “core principles.”

The core principles comprise of ensuring the security and privacy of the users, adherence to the requisite laws and regulations like AML rules as well as coming up with a level playing field for all the stakeholders involved like merchants, financial institutions as well as mobile network operators.

The company’s head of digital assets and blockchain, Raj Dhamodharan, explained that the crypto market is fast maturing and the firm wants to be part of this journey. He said:

“The cryptocurrency market continues to mature, and Mastercard is driving it forward, creating safe and secure experiences for consumers and businesses in today’s digital economy.”

Wirex cardholders will have a chance to instantly convert their crypto assets into different fiat currencies that can be used at a point of sale which accepts Mastercard.

Pavel Matveev, Wirex CEO, praised the partnership, saying that it shows that cryptocurrency is slowly gaining recognition and acceptance by several global bodies as well as regulators. He added that the partnership would allow the firm to reach all corners of the world as Mastercard is a global institution.

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Author: Joseph Kibe

G20 Set to Accept Digital Currencies; Green Lights Policy Changes for Regulatory Framework

The G20 members are set to accept digital payments as soon as November 2020, according to the Japanese media outlet, Kyodo News. This shift in attitude towards crypto assets coincides with increasing interest by oversight bodies.

Last year, the G20 was skeptical on digital assets’ ability to impact current financial ecosystems, this now seems to have changed as the members prepare for the annual summit to be held in Riyadh, Saudi Arabia.

Kyodo News detailed that the change in tact towards crypto ecosystems has been influenced by Facebook’s Libra proposal and China’s digital yuan. These two projects hit the crypto scene with a bang, fueling discussions across the board.

While China’s digital yuan is at its sunrise phase, Libra is still facing regulatory challenges. Nonetheless, the G20, which comprises 20 members, including the EU, has seen it fit to lay a framework for digital assets as well.

The changes in policy are scheduled to take effect as of October, just before the G20 annual summit. Discussions will revolve around digital currency use, money-laundering risks, and the challenges of using crypto as a form of payment. With such groundwork in place, G20 is optimistic about spreading the risk attributed to stablecoins as per an October 2019 report.

Global Progress in Digital Asset Frameworks

China continues to lead the way in CBDC progress, having recently piloted a digital yuan. The Asian superpower is now looking to integrate this PBoC backed digital currency with its existing financial ecosystem. Going by China’s active use of mobile payments via Alipay and WeChat, stakeholders are optimistic about a seamless integration in a move that will enhance the CCP oversight in digital payment networks.

The EU has made some fundamental progress in this field, especially in regulation. Currently, crypto-oriented businesses operating within its jurisdiction have to comply with the 5AMLD, which came into play earlier this year.

However, this framework has not been very friendly to all crypto-based entities as some had to relocate shops in search of more accommodating digital asset laws. Finally, the U.S, which has long been skeptical, are also looking into digital assets. CFTC Chairman, Heath Tarbert, recently said that they are waiting on the SEC guidance to go ahead with listing more crypto derivatives in the U.S market.

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Author: Edwin Munyui

Banco Santander Adds 19 Regions to Ripple Partnered International Payments App, One Pay FX

Banco Santander’s One Pay FX international payments app, built together with Ripple, is now available in 19 more regions, according to a blog post announcement on July 9. This initiative, whose focus is solving the challenges in international remittance ecosystems, began back in 2018, rolling out in Spain, United Kingdom, Poland, and Brazil.

Following its expansion, the One Pay FX solution since became available in prominent jurisdictions, such as the U.S, Portugal, and Chile. Ed Metzger, the CTO of One Pay FX, has noted that they look forward to bring this tech to even more people in future:

“We’re looking to expand One Pay FX to new territories and customer segments so more people can benefit from faster, cheaper and more transparent international payments.”

Santander, which features among the top banks in Europe, took an interest in the international payments space after it was prompted by customer feedback. Some of the issues highlighted were lack of transparency in the amounts received as well as an uncertain delivery period, typically 3-5 business days.

It was then that the bank decided to leverage Ripple’s tech for solutions in the international remittance ecosystem. Metzger highlights speed as one of the reasons Santander settled for Ripple:

“Ripple also helps us address the speed issue of international transactions. Some payments on One Pay FX now happen instantly. I made a payment recently from an account I have in Spain to one in the UK and received text alerts about the transaction from both accounts within seconds of one another.”

So far, this initiative seems to have gained traction and boosted liquidity within Santander’s remittance network. The One Pay FX app won a silver award during the Distribution and Marketing Innovation Awards held in 2018. According to Metzger, more clients are making international transactions on the app given its seamless nature:

“customers now treat an international payment like a domestic transfer. They have so much confidence in the low cost, same day process, it’s no longer a big deal to send money abroad.”

Ripple’s Products on Demand

Despite the XRP token value proposition still being in question, Ripple’s products built for the international payment networks have been integrated by big boys in both finance and tech. Some notable mentions that have considered this tech include American Express, Standard Chartered Bank, and MoneyGram.

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Author: Edwin Munyui

Regulators Easing the Restrictions on Banks Set in the Aftermath of Great Recession

The shares of big banks declined after the Fed said it would put a temporary cap on their dividend payments to preserve cash during the coronavirus pandemic.

In its stress test, the central bank found that most banks would remain well capitalized in an economic downturn, but it also sees that large financial institutions remain vulnerable to it.

The Fed also suspended bank’s share buybacks through the third quarter, following eight big bank’s pledge early this year to halt buyback programs through this month. Fed Governor Lael Brainard, who argued that these restrictions weren’t strict enough said,

“Using backward-looking earnings as the basis for payouts in a forward-looking capital framework is problematic at a time when future earnings are likely to decline, and required buffers are likely to rise.”

Regulators also gave breaks, capital-requirement relief, to large global banks to make it easier to lend and operate in financial markets.

Let’s risk customers’ deposits

In contrast, the US banking regulators are easing the restrictions that were created in the aftermath of the Great Recession.

On Thursday, the bank stocks, including that of Goldman Sachs, Wells Fargo, Morgan Stanley, and JPMorgan Chase, jumped after Federal Deposit Insurance commission officials said they are loosening the restrictions from the Volcker Rule.

This will allow banks to make significant investments, not only their own but also of their clients, into venture capital funds that invest in start-ups and small businesses more efficiently.

Such a decision allows banks to free up billions of dollars by avoiding setting aside cash for derivatives trades between different units of the same firm.

The White House has long been pushing to roll back the regulations imposed by previous administrations. The Volcker Rule, part of the 2010 Dodd-Frank Act was passed to prevent another financial crisis caused in part by the irresponsible risk taken by the banks and from acting like hedge funds.

Late Federal Reserve Chairman Paul Volcker also barred banks from making speculative investments using customers’ FDIC-insured deposits, including venture capital funds.

While the banking industry acknowledged the benefits of keeping more capital to cushion the losses, the likes of JPMorgan CEO Jamie Dimon and lobbying groups have criticized them as being overly restrictive.

The Office of the Comptroller of the Currency and FDIC are to vote on the rule change, which must be signed by the Fed and SEC.

The good thing is more millennials are now trusting bitcoin over these big banks. A recent survey found 47% of the respondents in 2020, up from 29% in 2017, are preferring the world’s leading digital currency.

This growing confidence in BTC is the result of an “increase in public confidence towards BTC as an asset class” amidst the central banks printing money incessantly during the pandemic.

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Author: AnTy