2 Weeks Ago

The market for offering custody services globally is massive, with the top 15 providers having over $131 Trillion of assets in custody.

As we see more institutions investing in Digital Assets, we will need to have organisations offering custody services to cater to this new asset class.

This opportunity has not been lost on custody providers, as one of the largest custody providers Northern Trust has for a while been rumoured to be launching a custody service for Digital Assets. Fidelity, Goldman Sachs, and Coinbase are already offering custody services for Digital Assets.

Intercontinental Exchange (ICE), that runs 12 different stock exchanges and with a revenue of over $6 Billion, has just acquired DACC which offer Digital Asset custody services for over 100 Cryptocurrencies for 13 Blockchains. It is understood that one of ICE’s subsidiaries, Bakkt, has applied to the New York Department of Financial Services to be a trust company, which will enable the firm to serve as a Qualified Custodian for digital assets.

Kingdom Trust, which is a US-based custodian, was the first custody provider to get Lloyds of London to ensure its Digital Asset custody service last year.

Nomura, the massive Japanese bank with over 26,000 staff and offices globally, announced last year a joint venture with Ledger and Global Advisor Holdings, (a Cryptocurrency manager based in Jersey in the Channel Islands), to launch an institutional-grade custody solution for digital assets. The three parties have established a company called Komainu, which is looking to offer custody services that will also cover the insurance, regulation, and certification of the Digital Assets that it offers custody services for.

It would appear that we are seeing a reversal to where we were before asset managers relied on nominees and custodians. In the 1970s, due to the huge amounts of paperwork that bearer securities created, nominees like DTCC were created. Interestingly, Digital Assets which can be traded and transferred using Blockchain technology, are not dissimilar to bearer securities as records of the ownership of these assets are not held by a third party.

This means the “bearer” (the person presenting the asset), is paid directly, should they wish to sell. Blockchain technology is able to record the transfer digitally of assets, efficiently and potentially at a cheaper price, and without the need for many of the current intermediaries - all of whom charge fees for their services, so adding to the friction costs of trading securities.
There is an argument that with the creation of Multisig wallets custodians are no longer required. A third party, like a trustee, could be appointed and authorised the transfer of assets from a digital wallet under agreed terms and conditions.

This type of trustee service is currently being investigated by trustee providers, like PTTrustees, for the holders of digital assets. So we can see that, as the adoption of Digital Assets increases, there are new as well as traditional custody service providers beginning to offer a range of services for pension funds, asset managers and banks, and no doubt there will be more to follow…

It is of note that trust companies are moving from The Channel Islands, where they...


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Digital Assets
https://cointelegraph.com/news/ices-bakkt-annou...dium=email
In a recent report from Oracle and Finxtra Research, “Key Drivers, Emerging Trends, and Development in Corporate Banking”, they discussed how Fintech start-ups are increasingly becoming a threat to the status quo that traditional banks have enjoyed for years.

One of its key findings was how Artificial Intelligence (AI) and Blockchain technology are able to securely store, interrogate, capture, and validate data, while removing the need for multiple records so improving the efficiency of data management . As many of the banks’ customers are becoming more global, and as economies are becoming more digital, banks are being asked to provide faster services - whether that be for cash or credit management, while improving the efficiency of money transfers at ever lower transaction costs.

One of the key factors is for a bank to maintain its customers' trust and confidence, as banks have traditionally been a place to store cash, borrow money and transact. However, in a survey carried out in the USA by Gallop, it has seen since 1979 to 2018, that confidence in banks has fallen from 60% to 30%.

Banks’ public image and trust, since the financial crisis in 2008, has been severely challenged as summarised by a quote from The American Banker magazine, “A lack of widespread trust raises questions about banks’ relevance in the digital age and leaves them open to further political attack.”

In a report back in 2015 from the World Economic Forum, it stated that it believed “Blockchain technology, replaces the need for third-party institutions to provide trust for financial, contract and voting activities”. Traditional banks, with their legacy IT systems, are struggling to adapt. FinTech firms that do not have diverse hard and software systems to maintain and integrate are able to embrace technologies like Blockchain and AI and offer solutions. This has led to traditional banks moving away from building more in-house solutions and turning to nimbler Fintech firms.

If we look at ‘Know Your Client’ (KYC) costs, firm Consult Hyperion states it can cost a bank between £10 to £100 per client to carry out these checks which, depending on the riskiness of the client may need to be done every year. While carrying out these checks, vast quantities of personal data need to be collected and then securely stored which creates its own set of challenges. Alternatively, KYC checks can be carried out by firms like Blockpass, which can offer KYC services for less than £2 per person, and it does not store the personal data, so does not have the onerous burden and complexities around storing of this information.  In the area of fraud detection, Teradata is an AI firm selling fraud detection solutions to banks. It claims it helped Danske Bank to reduce the bank’s false positives by 60 %, and this was expected to reach 80% as machine-learning continued improve the model. At the same Teradata has increased detection of real fraud by 50%.

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https://www.finextra.com/finextra-downloads/res...pril19.pdf
Bloomberg reported last year that The Peoples Bank of China (PBoC) was looking to launch its own Digital currency, which would enable it to have more control and be able to track transactions, be able to reduce the Black market economy and even automatically refuse companies loans who had been blacklisted.

The PBoC has registered 78 patents since 2016, according to Bloomberg. In October 2018, PBoC was looking to recruit staff at its Digital Currency Institute, who have experience in software and encryption law. It would appear that China wishes to create a Digital Currency that is centrally controlled, arguably the opposite originally planned for Bitcoin when it was created in 2008!

China is looking to launch its own Digital CurrencyTo be called “Digital Currency for Electronic Payment”, and the governor Zhou Xiaochuan of the PBoC, was recently quoted saying its focus would be on “convenience, rapidity, and low cost in a retail payment system while taking into account security and protection of privacy.”

Meanwhile, ahead of a G20 meeting in Osaka in Japan in June this year, the Japanese have launched a manual for Cryptocurrency regulation as it looks to try and coordinate the approach that countries currently take. In some jurisdictions, regulation is minimal, while others take a more stringent or draconian approach.

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https://coinnewstelegraph.com/china-is-set-to-a...-populace/

3 Weeks Ago

The giant Dutch bank, ING, has called upon the cryptographic skills of Stanford University in California, University College London, and start-up Blockstream, to offer greater privacy when transferring Bitcoin, by hiding certain transaction details.

ING are calling this new method ‘Bulletproof”, and claim it is 300 times more efficient than some other methods of sending Digital currencies. Interestingly, this new method may be extremely helpful as a way to record data using Blockchain technology and still comply with GDPR regulations across Europe.Keeping user-information and data private has been a real challenge for exponents of Blockchain technology, and has led to some organisations turning to private or permissioned Blockchains.

Bulletproof Blockchains could also be ideal for security tokens, especially where the underlying asset is a publicly quote equity or may contain price-sensitive information. It would appear that, as it is now possible using ING’s bulletproof system, it could be possible to carry out transactions using a Blockchain, but not disclose the price of the asset, who is the buyer or seller, or how much is being transacted.

This would be a real breakthrough and would help to allay compliance officers’ concerns within asset managers and banks about having price-sensitive information in the public domain.

Enthusiasts of Digital Assets believe that if user's transactions can be made private and not available to prying eyes, it might help minimise scams and frauds, and attract more investors.

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Banking
Blockchain
https://cryptosumer.com/2019/04/15/ing-bank-is-...ockchains/

A Month Ago

Fedwire is a real-time settlement system used by the US Federal Reserve and by US banks to settle financial transactions.

To maintain confidence in the financial markets, it is vital that Fedwire is always available, so it was not good news to see this comment posted on Reddit on 2nd April 2019–Today the United States Federal Reserve experienced an unexpected issue and went completely down. No incoming or outgoing wires went through in the entire country. It’s still unresolved and yet not one single news outlet seems to be reporting on this and the massive impact it has.”

Fedwire processed over $2.8 Trillion of transactions daily in January 2019, but as they’re a centralised system, it will always be more vulnerable compared to a Decentralised system. Bitcoin was created as a decentralised system and has only been unavailable for 0.02% of the time since it first started over ten years ago. Bitcoin now has more than 10,000 nodes, so it is doubtful they will all be non-operational at the same time, thus the attraction of a decentralised mode of operation.

Several previous Fed bank payments experts have been recommending for a while that the Fed updates its system, so maybe it will look at Blockchain technology to be part of its upgrade?

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Financial Market
https://bitcoinist.com/federal-reserve-offline-...in-uptime/
The use of Blockchain technology, though not appropriate for all organisations, offers a powerful tool to cut costs, improve efficiency, increase transparency, and hold and share data using cryptographic security.

In an increasingly digital ecosystem, where the flow of money, data, identity and information is ‘in play’, we need secure digital solutions.

Central Banks have been encouraged to look at Digital Currencies by IMF MD Christian Lagarde, saying, “digital currencies issued by central banks can reduce the risk of global financial instability by eliminating the psychological motivation behind a bank run”. 

Blockchain technology, along with Artificial Intelligence, Internet of Things, Big Data and Machine Learning, will all help as economies migrate from paper, manual, and analogue processes to digital processes.

Several countries have recently announced their digital intentions, including UAE / Saudi Arabia, Iran, Venezuela, Cambodia, Lithuania and the Eastern Central Caribbean Bank.

Central banks have quoted various reasons as to why they are looking to issue their own digital currency – to tackle their black economy, to reduce their reliance on the “petrodollar”, and to improve the efficiency of transferring money internationally.

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https://www.coinspeaker.com/wef-40-central-bank...ocurrency/

2 Months Ago

Yes, $2 Trillion was laundered by regulated banks last year according to a recent report, yet banks remain resistant to offer banking services to firms involved in Cryptos.

Despite claims that 90% of all US$ banknotes have traces of Cocaine on them, banks and regulators still believe those in our society that want to carry out nefarious activities are using Crypto, not cash. But why would someone carrying out a criminal activity want to use a form of payment that leaves a digital footprint - a Crypto, when cash leaves no traces and banks seem to still be accommodating these activities?

Since 2008 banks have been fined over $26Billion JUST for KYC/AML non-compliance, with the USA regulator being the most active. While in Europe the UK’s FCA has imposed the largest number of fines. It is no surprise that many claim the current system needs to change, and while it was refreshing to see the FCA being proactive creating the FCA sandbox in 2016 where it allows regulated companies to trial new technology, which hopefully can improve the robustness of the financial system, more recent moves have called their ongoing commitment to innovation into question.

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https://www.btcwires.com/c-buzz/regulated-banks...-adoption/
SWIFT handled on average over 34million messages a day last December and is used by many international banks to settle FX and cash positions daily.

SWIFT has had a virtual a monopoly with global banks but has been facing increasing pressure from RIPPLE, the third most valuable cryptocurrency which is capitalized at over $13 Billion, and at one stage in 2018 had grown in value by a whopping 37,000% in 12 months. SWIFT is now using Blockchain technology and is working with the Singapore stock exchange, HSBC, Standard Chartered, DBS and Deutsche bank to create a more efficient way to handle share voting. The majority of publicly quoted shares are held in nominee accounts and proxy voting has become increasingly difficult and cumbersome.

The new e-voting service SWIFT are developing is designed to be faster and more transparent and reduce errors which in the past have proved to be very expensive. In 2016 it cost a US brokerage over
$190million to compensate shareholders due to share proxy errors, as the current system is largely paper-based.

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https://www.chainbits.com/news/swift-partners-w...in-voting/
BlockFi, who raised over $54million last year has launched a high-interest account paying 6% p.a. if they hold your Bitcoin or Ethereum assets.

The reason they can pay such high-interest rates is because they lend out your Crypto to other institutions but more importantly, your Digital Assets are held by a custodian independent of BlockFi called Gemini Trust Company. Gemini was co-founded by Cameron and Tyler Winklevoss and is regulated by the New York Department of Financial Services.

This new way to hold Cryptocurrencies is another example of how the traditional and the Digital worlds are converging, as BlockFi are offering in effect an instant-access, high-interest account to depositors while providing institutional asset lending facilities. Because the transactions are stored on a Blockchain there are fewer intermediaries involved, it is secured using military-grade security and not reliant on one company’s server/computer as the records will be distributed thus reducing concerns over disaster recovery.

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https://www.newsbtc.com/2019/03/06/highest-yiel...-interest/
Bank of Iwate, Aomori Bank, Akita Bank, and Yamanashi Chuo Bank, together with IT firms including AIT Corporation, IBM Japan, and NEC, have established “Fitting Hub’.

Although they have been working on this project since 2017 the first service they are going to roll out is an ‘electronic delivery service’ designed to send and receive data from different institutions on one screen.

This is a significant development and will not go unnoticed by other banks as
Japan has four of the largest banks out of the top twenty banks in the world and still remains the third-biggest economy. The banking industry continues to search for ways to cut their cost base and be more efficient hence the impressive rise of the Fintech sector globally.

It was only in September 2018 that Money Tap the first Blockchain powered money transfer system was licensed in Japan as a way to cut the cost and time it takes to make payments within Japan in the banking system. The granting of a license to Money tap meant that Japan was the first major economy to use Blockchain technology to carry out transfers between banks.

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https://www.yahoo.com/news/japanese-banks-unite...00409.html
Signature bank of New York has announced that it is now offering bank accounts for businesses based in Bermuda that deal in Digital Assets.

There are believed to be over 60 companies that initially this will be of great assistance to, as despite the Bermuda government changing it’s law no locally based bank offer accounts in the Crypto sector. However, Signature bank claims that they are signing up companies that are also not involved with Cryptos.

The lack of banking facilities is a major hurdle facing businesses that deal in Digital Assets globally as it is extremely difficult to get a bank account in many jurisdictions around the world.In the UK Clearbank  which is the first bank in over 250 years to be granted clearing bank status, is one of the is one of the few banks to offer bank accounts to firms engaged in Digital Assets but the company needs to be FCA regulated or in the process of applying to the FCA to be accepted by Clearbank.

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https://coinfomania.com/signature-bank-services...n-bermuda/
Nivaura has secured $20m of fresh capital, with investors including The London Stock Exchange (LSE), Santander and the law firm Allen and Overy. LSE will also have one of their staff joining the Nivaura board.

Nivaura was the first company in the world in 2017 to issue a bond for a client using a Blockchain while in the UK FCA Sandbox and they claim that the time needed to issue bonds could be reduced by 60% by using Blockchain technology. They have recently been followed by BVVA in Spain who issued a bond using Blockchain technology to raise $160m.

If it proves to be so much cheaper to access the debt markets using Blockchains then bonds could become an option for SMEs to raise capital, which in turn could be competition for the Peer 2 Peer lenders...

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Banking
Capital Markets
https://www.forbes.com/sites/michaeldelcastillo...1d0d146e46
Signature bank of New York has announced that it is now offering bank accounts for businesses based in Bermuda that deal in Digital Assets.

There are believed to be over 60 companies that initially this will be of great assistance to, as despite the Bermuda government changing it’s law no locally based bank offer accounts in the Crypto sector. However, Signature bank claims that they are signing up companies that are also not involved with Cryptos.

The lack of banking facilities is a major hurdle facing businesses that deal in Digital Assets globally as it is extremely difficult to get a bank account in many jurisdictions around the world.

In the UK Clearbank  which is the first bank in over 250 years to be granted clearing bank status, is one of the is one of the few banks to offer bank accounts to firms engaged in Digital Assets but the company needs to be FCA regulated or in the process of applying to the FCA to be accepted by Clearbank.

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https://coinfomania.com/signature-bank-services...n-bermuda/
Julius Baer with $382 Billion under management plans to offer access to digital assets through a partnership with Swiss start-up SEBA Crypto in the latest move into cryptocurrencies by a Swiss private bank.

Julius Baer markets head Peter Gerlach said, “We are convinced that digital assets will become a legitimate sustainable asset class of an investor’s portfolio,”

This announcement is just another sign of traditional banks offering Digital asset services as their clients are asking how they can get involved in this sector, so helping this new asset class to be more widely accepted. It follows the announcement that of the JPMorgan Coin and  Fidelity Investment and Goldman Sachs both offering Crypto custody services to its clients and no doubt we will see more institutions getting involved…

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https://www.ccn.com/major-swiss-bank-julius-baer-crypto
Banco BTG Pactual is to launch a Digital Asset linked to distressed Real Estate and aims to raise $15m.

BTG will pay investors a share of the rental income from the property and expects the returns to be approximately 15% p.a. BTG claim they decided to launch the token as Crypto investors are looking for high-risk investments. The bank is going to provide liquidity using their own capital and at $15m is a  sign this large Brazilian bank is just putting a toe in the water to test the appetite for this type of offer.

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https://www.bloomberg.com/news/articles/2019-02...cked-token
Mizuho Bank who are part of Mizuho Financial Group with 30,000 employees and $1.8 trillion of assets is following Goldman Sachs and JP Morgan and launching a Stablecoin linked to the Japanese Yes in March 2019.


Mizuho will be launching the J-Coin in conjunction with 60 other Japanese institutions and say there will be no transaction charges between the banks and the J- Coin wallets. It plans to charge merchants/shops much less than the 2% to 5% transaction fees that credit cards currently charge in order to offer a competitive advantage and gain traction.

The Digital Asset market in Japan is well established with e-commerce giant
Rakuten, Japan’s equivalent of Amazon, and Line, a messaging App like WhatsApp, having launched their own Digital Assets already.

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https://www.fxstreet.com/cryptocurrencies/news/...1902211402

3 Months Ago

Union bank in the Philippines is to launch a network of Cash machines/ATMs that will allow one to convert Pesos to Crypto or Crypto to Pesos.

The Philippines central bank has been allowing Crypto payments since 2017 as well as regulating Crypto Exchanges as it aims to ensure that these assets do not attract the wrong users – hence regulation. This is another sign of how Asia seems to be embracing the Digital Asset and follows the lead of a number of South American countries who also have a network or ATMs that handle Crypto currencies.

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https://www.investinblockchain.com/union-bank-p...rypto-atm/
ING’s Zero-knowledge range proof solution (ZKRPS) could validate that a new client lives in a country that belongs to the European Union, without revealing the country.

Simply put, this technology allows information to be shared without revealing contextual details. Annerie Vreugdenhil, head of Wholesale Banking Innovation at ING said “Our overall goal with distributed ledger technology and specifically blockchain is to create solutions that empower our clients to transform their business models,” One of the key elements in this process for clients is how to deal with data and privacy, ZKRPS is the next step in this journey.”

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Data Security
http://ftreporter.com/ing-blockchain-might-impr...a-privacy/
The number of Governments using Cryptocurrencies seems to be gathering pace, with the announcement that Iran has been in discussions with Austria, Bosnia, France, Germany, Russia, South Africa, and Switzerland.

Iran is looking to launch a state-backed Cryptocurrency called Peyman, Persian for covenant. Four Iranian banks are involved, Bank Mellat, Bank Melli Iran, Bank Pasargad, and Parsian Bank. The over-the-counter exchange Iran Fara Bourse will offer the ability to trade the new currency. Initially, the Peyman will only be available for institutions, as Iran looks to accelerate the speed of banking transactions and facilitate payments globally as a way around US-led sanctions. Having been removed from SWIFT last year Iran has struggled to efficiently deal in global financial markets.

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Cryptocurrency
https://www.ccn.com/iran-launches-gold-backed-c...-sanctions
Swiss private bank Falcon have are now offering the custody of certain Digital Assets and for clients to swap their holdings with each other.

The ability to for clients, who hold Digital Assets to trade directly with each other without the need to use an exchange is a potential threat for Digital exchanges but is another example of how Blockchain technology is able to disintermediate. Falcon can now allow private and institutions to transfer cryptocurrencies with each other as well as convert into fiat as well as offer.

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https://www.globenewswire.com/news-release/2019...ncies.html

4 Months Ago

If Western Union will deal in cryptocurrencies could this mean you do not need digital exchanges?

The president of Western Union Global Money Transfer has claimed the company is “ready to adopt any kind of currency,” potentially including cryptocurrencies. Odilon Almeida stated there is no big difference between cryptocurrencies and regular digital payments, the likes of which Western Union has been handling for years. Almeida believes that the firm’s long-term stance makes it potentially ready to launch any type of currency, including blockchain-based ones. However, Almeida thinks that in order to achieve mass adoption, cryptocurrencies have to solve problems with volatility, governance, and compliance. As per the Western Union exec — hinting at the concept behind some stablecoins — the issue with volatility in crypto markets can be addressed by pegging coins to some “strong currencies, such as the [United States] dollar.”

Apart from cryptocurrencies, Western Union is also exploring the use of blockchain. According to a press release accompanying the video, the firm has already partnered with Ripple to “test whether sending payments by blockchain was faster and less expensive,” adding that the “tests are ongoing.”


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https://altcointoday.com/western-union-consider...a560076-l/