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Texas: Crypto AriseBank CEO Pleads Guilty to Deceiving Investors in $4.2 Million Case

The U.S. Attorney for the Northern District of Texas reportedly described Jared Rice’s plea as one of the first of its kind.

The former CEO of reported cryptocurrency scam AriseBank has pleaded guilty to defrauding victims of over $4.2 million, Texas-based daily news outlet Dallas News reported March 21.

Jared Rice, whom the FBI arrested over securities and wire fraud in November last year, confessed to his activities, according to an announcement by the United States Attorney for the Northern District of Texas, Erin Nealy Cox. Rice had allegedly falsely claimed that AriseBank could offer customers “FDIC-insured accounts and traditional banking services, including Visa-brand credit and debit cards, in addition to cryptocurrency services.”

The announcement, seen by Dallas News, reportedly shows that Rice specifically entered a guilty plea for one count of securities fraud, implicating him in lying to investors of AriseBank while it operated.

As Cointelegraph reported, Rice initially faced a 120-year jail term for the combined counts, but sources now indicate the maximum term will be 20 years.

In total, AriseBank seized $4,250,000 from participants, which Rice may now have to repay in full. He will return to court for sentencing in July.

“Given the fairly recent emergence of cryptocurrency, Rice’s guilty plea is one of the first of its kind in the U.S.,” Dallas News references the Attorney’s office as adding.

In December of last year, both Rice and then-AriseBank COO Stanley Ford were also ordered by a U.S. federal court to pay around $2.7 million in fines to settle charges related to reportedly fraudulent initial coin offerings (ICO) operated by AriseBank.

The scheme had received notice it was no longer welcome in its home jurisdiction of Texas months prior to Rice’s arrest.

At the time, the Texas Banking Commissioner Charles G. Cooper sent a cease and desist order to AriseBank, arguing it did not have the required permission to offer banking services to residents.

The move closely followed a similar demand by Texas regulators sent to defunct cryptocurrency scheme BitConnect, which imploded shortly afterwards.

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Pet Stablecoins: Why Some Banks Issue Their Own Digital Tokens, While Others Don’t

A number of banks revealed plans to issue their own tokens, following JPMorgan Chase’s move.

This week, a number of banks shed light on their respective crypto-related projects, following the recent expansion of JPMorgan Chase into the field.

IBM was the big mover. A joint announcement by IBM and Stellar (XMR) said that as many as six global banks might issue their own stablecoins on IBM’s blockchain-powered payments network, dubbed “Blockchain World Wire” (BWW).

The question now is whether this marks a turning point for cryptocurrency’s use, or if it merely continues the experiments that have marked the early stages of digital money. While quite a few financial institutions seem ready to go blockchain and create tokens in a bid to streamline cross-border payments, some still choose to set the technology aside.

Citigroup, the corporation behind one of the world’s top-20 banks by asset value, revealed earlier this week that it was abandoning its “Citicoin” project to focus on more conventional remittance methods like SWIFT. The bank’s reasoning seemed focused on preserving the current forms of inter-bank transfers as a proven and universal method.

Can those bank-issued coins be called “cryptocurrencies”?

When JPMorgan Chase announced that it built its own digital token based on a private Ethereum (ETH) blockchain last month, the crypto community seemed largely skeptical.

Nathaniel Popper, author of the book “Digital Gold, a History of Bitcoin,” tweeted back then:

“The JPM Coin makes it possible to move dollars between JPMorgan bank accounts instantly. That raises the question: Why was it not already possible to move dollars between two JPMorgan bank accounts instantly?”

Given that the JPM Coin is only available for private use within the inner circle of the banks’ clients, one should be hesitant to even call it a cryptocurrency, according to at least one expert.

Hartej Sawhney, a blockchain expert and co-founder of Hosho, a startup protecting investments and providing multiple smart contract services, told Cointelegraph in an email:

“Recently, banks and media have had a field day misusing the word cryptocurrency. There is no such thing as a ‘cryptocurrency’ without open consensus or permissionless participation. Announcing a new ‘coin’ was simply a marketing play for J.P. Morgan. Bitcoin for example, is open source, permissionless, strictly limited in quantity, and has no account fees.”

Not only is the JPM Coin permissioned and available only to institutional customers who have been cleared via JPMorgan Chase’s Know Your Customer (KYC) precautions, Sawhney added, it is also pegged 1:1 to fiat currencies held by the bank. That is fundamentally different from what cryptocurrencies constitute, he argued:

“Anyone can use a cryptocurrency, and anyone can participate in its consensus system without seeking permission from anyone else.”

Regulated institutions will act

Michael Dowling, CEO and founder of FairX, a financial services company involved with banking and digital assets, and former chief technology officer at IBM’s blockchain arm, also distinguishes bank-issued coins from conventional, “pure-play” cryptocurrencies akin to Bitcoin (BTC), XRP and XMR. Bank-backed tokens are “cryptocurrency implementations of fiat currency,” which are commonly referred to as “stablecoins.” He told Cointelegraph:

“A lot of people are obsessed with this ‘token’ thing, but at the end of the day a bank is a really fancy ledgering company with amazing security; the key to bank’s successful use of blockchain tech, in a practical way, is to shift some of the authentication of a user from the centralized bank to the user’s own device, proven by a cryptographic ledger. That’s really what this bank-issued coin is really all about — it’s still the same USD ledger, its authentication for who is allowed to change the ledger has shifted from username/password at the bank to pub-pri key cryptography in a distributed fashion.”

Downey then summarized his statement: “I do NOT believe regulated institutions will announce their own pure-play cryptocurrencies, but I am absolutely certain they will announce their own deposits on ledger.”

Interestingly, while JPMorgan Chase’s move was largely reported as a first for a United States bank (and any major lender), New York-based Signature Bank rolled out a similar feature earlier in December 2018. Dubbed the Signet Platform, the private blockchain allows the banks’ clients to move their money “in 30 seconds,” just like the JPM Coin — and it is also pegged to the U.S. dollar. It comes as no surprise that Signature’s coin was largely overlooked, given how the bank compares to JPMorgan Chase size-wise: The former has just $45 billion in assets, while the latter wields more than $2 trillion.

When announcing the feature, Signature Bank co-founder and CEO Joseph J. DePaolo seemed particularly bullish on the use of private blockchains for financial institutions. He told Forbes:

“We have to do this, otherwise we’re not going to exist. […] If you’re not involved in blockchain, in five years, you won’t be around as a bank.”

DePaolo’s viewpoint seems to echo the findings of Citigroup’s “Bank of the Future” report, which suggests that fintech companies that are actively disrupting the banking market with new technologies are driving out its longstanding participants — or at least compelling them to give up a large portion of their margins, a traditionally important source of income for banks. Specifically, the paper estimates that by 2025, major North American banks could lose 34 percent of profit from mainstream areas such as payments, investments and personal lending.

What is a bank-issued coin’s purpose?

Primarily, banks tend to pick up blockchain for instantaneous cross-border payments. The technology shows a lot of potential within that field. Blockchain reportedly allows performing international remittance “in near real-time,” according to the IBM website, while normally they take three to five working days to complete within the existing infrastructure. Moreover, transaction costs can be saved as third-party intermediaries get removed from the process (according to research from McKinsey, the average cost for a bank to execute a cross-border payment through correspondent banking costs $25 to $35).

The two largest blockchain projects aiming to streamline cross-border remittance for global banks are hosted by Ripple and IBM Blockchain. Ripple has at least two blockchain-powered payment tools for those purposes, called xRapid and xCurrent (the main difference between them is that xRapid uses XRP, the company’s native token, while the latter works with fiat currencies). IBM, in turn, oversees its Blockchain World Wire (BWW) payment network operating on the Stellar (XMR) blockchain, which completed its beta in September 2018.

At this point, both Ripple and IBM Blockchain seem to be a force to be reckoned with: RippleNet reportedly has more than 200 clients, while BWW, which has been around for considerably less time, is currently used by 54 banks, as Jesse Lund, global vice president of IBM Blockchain, told Cointelegraph. Both of them are networks that are open to a wider amount of financial institutions, while some banks — like the aforementioned JPMorgan Chase — want to deploy their own private ledgers.

Notably, unlike Ripple, IBM’s BWW supports different digital assets within its blockchain, including bank-issued coins: Just recently, Cheddar reported that six international banks — such as Brazil’s Banco Bradesco, South Korea’s Bank Busan and the Philippines’ Rizal Commercial Banking Corporation — have signed letters of intent to issue their own stablecoins backed by their national fiat currencies on IBM’s network. “These are expected to add Euro, Indonesian Rupiah, Philippine Peso, Korean Won and Brazilian Real stable coins to the network,” Lund told Cointelegraph in an email, adding:

“Ultimately, we hope to see a global financial network that represents a real-time facility for moving money from anywhere to anywhere — where foreign exchange is just an inherent part of the process that happens automatically through the use of an expanding digital asset ecosystem.

“World Wire can use fiat currency, lumens or stable coins. This is a completely new kind of payments infrastructure than traditionally used, and it differs from SWIFT and other approaches.”

Downey also highlighted this feature as a major advantage for the network:

“While IBM’s service does use a pure-play crypto as a settlement asset as an option, I believe the legitimate institutions will use fiat-stablecoins issued by banks as settlement assets instead. That stabs Ripple in the heart — why use XRP if I can use….an acknowledged and accepted currency?”

Cointelegraph has reached out to Ripple to get a further comment for this article, but they failed to prepare a statement before press time.

Ripple’s CEO, Brad Garlinghouse, has criticized the concept of bank-issued digital coins (which he calls “bank coins”) and specifically the JPM Coin in the past, citing its centralized structure, among other things. He has also argued that the JPM Coin lacks the interoperability that would make it a significant innovation:

“This guy from Morgan Stanley was interviewing me last week, and I asked him, so is Morgan Stanley going to use the JPM Coin? Probably not. Will Citi use it? […] Will PNC? And the answer is no. So we’re going to have all these different coins, and we’re back to where we are: there’s a lack of interoperability.”

Downey agrees with that statement. “It [the JPM Coin] MUST be interoperable between banking institutions for it to work properly,” he told Cointelegraph. “Otherwise, we’re just swapping bank currencies.”

Bank-issued stablecoins vs. public stablecoins

Stablecoins — with their ability to overcome crypto’s infamous volatility — have become widespread during the bear market, especially among more compliance-oriented players.

Projects like USD Coin (USDC), launched by payments company Circle in conjunction with Coinbase, the Winklevoss twins-backed Gemini dollar, Paxos and Facebook’s secretive project are among the most notable examples.

Recently, Jeremy Allaire, co-founder and CEO of Circle, has argued that, as the sector continues to see new market participants, stablecoins using an open-standards approach will prevail, while also welcoming Facebook’s still-to-be-confirmed plans:

“That’s [Facebook’s reported plans are] very, very positive in our view overall. The approach that we’ve taken is to create a consortium model. When we think about a standard for how fiat money works on the internet, it’s really critical that it’s an open standard that many companies can implement, that has an self-governance mechanism around it that can evolve both a technical standard as well as a membership framework.”

Essentially, Allair argued that creating “an HTTP for money on the internet” that could support global participation from multiple actors is “ultimately going to be much more successful than a single company issuing a cryptocurrency themselves.”  

However, Downey told Cointelegraph that stablecoins that are not issued by banking institutions might have a significant disadvantage over the public ones run by startups:

“Only banks can ‘take deposits,’ which have a specific meaning with specific legal protections around the assets held on deposit in case of bankruptcy.  Some, such as Gemini, have set up ‘trusts’ to park the cash, but it requires costly monthly attestations that come, frankly, for free as a bank. In addition, the Gemenis, the Circles, etc. all seem to be releasing their coins for the purpose of de-risking within their platforms. Very short term thinking, and no one is going to do real business (with real volumes with real value) using that setup. That’s what banks are for.”

Notably, Ron Karpovich, global head of e-commerce solutions at JPMorgan Chase, has recently raised a similar point in an interview with CNBC’s Squawk Box.

In response to a question as to how the top U.S. bank is ready to compete with new actors that can employ blockchain and cryptocurrencies to offer the same services as the industry’s veterans, but with cheaper fees, Karpovich said:

“Ultimately behind the scenes, they [crypto innovators] are going to have to use a bank to move funds. There’s more partnership instead of competition in that space. […] When it comes to margins and capabilities — payments is never something that grows in margin, nobody wants to pay for a payment. That’s one of the hardest parts of this process: you have limited resources in the capability to sell, so you need highly efficient and large players.”

“Citicoin”: The four-year project cut short in favor of more traditional remittance methods

Citigroup, unlike other mainstream institutions that couldn’t resist mentioning the word “blockchain” in their press releases at the time when it was popular to do so, has kept its cryptocurrency operation underground. It first surfaced back in July 2015, when International Business Times interviewed Ken Moore, head of Citi Innovation Labs. Moore told the publication that they were studying distributed ledger technology (DLT) for “the last few years.” Moreover, he added, the lab had constructed three separate blockchains and a cryptocurrency for test purposes:

“They [the three blockchains] are all within the labs just now so there is no real money passing through these systems yet, they are at a pre-production level to be clear. […] We also have an equivalent to bitcoin up and running, again within the labs, so we can mine what we call a ‘Citicoin’, for want of a better term. It’s in the labs, but it’s to make sure we are at the leading edge of this technology and that we can exploit the opportunities within it.”

Moore also specified that “most of our efforts have been focused on payments; trade probably being a second runner.”

Now, when JPMorgan Chase has just rolled out its own cryptocurrency to speed up its in-house transactions, Citigroup announced it was putting its crypto project on hold. Specifically, Gulru Atak, global head of innovation for treasury and trade solutions, said in one report that they were reviewing methods for cross-border payments, but with a shorter-term effect. Citigroup is not abandoning blockchain, she said. But, for now, it is looked at as merely an adjunct to SWIFT.

Indeed, SWIFT is a 46-year-old interbank messaging service and a co-operative owned by about 11,000 member banks in more than 200 countries. Its network handles as much as $5 trillion worth of transactions per day worldwide, as per U.S. Department of Treasury data, which allegedly includes more than half of all high-value, cross-border payments, making SWIFT a top player when it comes to sending money from country A to country B.

“Citi’s experience was just like JPM’s, with one big difference,” Downey told Cointelegraph:

“Both were prototypes, and both focused on internal transfers. JPM has been investing in blockchain tech for years now, and I think they needed to start justifying those investments, and that’s why they announced — with much fanfare — a prototype that works….only within JPM.  Citi’s approach is to focus on faster payments through SWIFT. I don’t believe it was a ‘this solution can’t work,’ it was more of a ‘we choose to focus on different solutions while other players focus on cash on chain’.”

SWIFT is aware of blockchain and its advances within the cross-border payments industry. At some point, the banking juggernaut even ran a proof-of-concept (PoC) of blockchain to see if it could pick up the technology for itself, but was left somewhat disappointed with the results. In March 2018, the co-operative declared that blockchain was not ready for mainstream use as “further progress is needed before it will be ready to support production-grade applications in large-scale, mission-critical global infrastructures,” although the tests went “extremely well.”

That seems to be the main consensus for traditional banking players that have chosen to stay away from blockchain: The technology has a lot of potential but is not mature enough to be picked up for industrial-scale use. The list of such lenders includes the Bank of Canada (BoC), the Spanish bank BBVA and the Bank of England, among others.

Sawhney told Cointelegraph that, whatever the outcome of the competition among blockchain-powered platforms and SWIFT is, the nearly 50-year-old conventional system is now being forced to update. Indeed, apart from testing blockchain, in February 2017, the banking network launched its Global Payments Innovation (GPI) service. While GPI promised “faster, same day use of funds,” it is technically a messaging system, and despite supporting real-time, end-to-end tracking, it is not blockchain-based.

“The battle is on for near-instant transactions, complete transparency and thorough transaction tracking, low clearing costs, and compatibility with any currency or asset type,” Sawhney said. “It has just begun, we are still a long way from getting a firm answer on which solution will dominate the future of the global payments industry.”

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JPMorgan Chase Exec: Crypto Innovators Will ‘Ultimately Have to Use a Bank to Move Funds’

JPMorgan Chase’s Ron Karpovich says there is “more partnership instead of competition” between the financial establishment and crypto disruptors.

Ron Karpovich, Global Head of eCommerce Solutions at JPMorgan Chase, stated that there is “more partnership instead of competition” between the financial establishment and crypto disruptors when it comes to the payments space. Karpovich made his remarks during an interview on CNBC’s Squawk Box today, March 20.

In response to a question from CNBC’s host as to how the banking giant is poised to compete with new and disruptive actors than can leverage blockchain and cryptocurrencies to offer the same services as the old guard, but with lower fees, Karpovich said:

“Ultimately behind the scenes, they [crypto innovators] are going to have to use a bank to move funds. There’s more partnership instead of competition in that space. […] When it comes to margins and capabilities — payments is never something that grows in margin, nobody wants to pay for a payment. That’s one of the hardest parts of this process: you have limited resources in the capability to sell, so you need highly efficient and large players.”

Karpovich thus attributed the high degree of “consolidation in the payments space” to this prime requirement to provide efficiency in the ability to make payments.

In his further comments, Karpovich noted that whereas blockchain could indeed revolutionize the payments industry, consumers in future may not necessarily register the transformation, as the technology may well develop into a back-end technology that simply provides cost and time efficiency to services.

With regard to JPMorgan Chase’s recently unveiled blockchain-powered JPM Coin, Karpovich dismissed the suggestion that the move represents a u-turn in the bank’s stance toward the crypto space — given CEO Jamie Dimon’s notorious antagonism toward Bitcoin (BTC) in particular:

“I think there’s a difference between trading a cryptocurrency that’s in the market that’s ubiquitous versus using the technology to enhance your payments infrastructure. We look at the technology as being a means to doing things faster and cheaper: every CEO would like to make things faster and cheaper. So from that standpoint I think it represents a buy into the concept of using blockchain.”

This, he continued, aligns with JPMorgan Chase’s ongoing initiatives, given that Karpovich considers the bank to be a “big player in the blockchain space,” citing the bank’s private blockchain platform Quorum and accompanying Quorum-based Interbank Information Network.

As reported, responses to JPM Coin have been mixed, with some hailing the development as a highly positive moment for the crypto industry as a whole, and others critiquing its proprietary and closed network structure, arguing it will perpetuate the fragmentation of the financial sector.

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Silvergate Bank Onboarded 59 New Crypto Customers in Q4 2018

Major U.S.-based bank Silvergate added 59 new crypto customers in the fourth quarter of 2018.

Crypto-supportive Silvergate Bank has signed on a slew of new cryptocurrency customers in the fourth quarter on 2018, according to a recent filing with the United States Securities and Exchange Commission (SEC).

The filing reveals that as of Dec. 31, 2018, Silvergate had 542 digital currency-related clients including cryptocurrency exchanges and miners, custodians and global investors, among others. This marks an increase of 59 crypto-related customers since a previous filing in September 2018.

By Dec. 31, 232 cryptocurrency customers were purportedly in various stages of the bank’s customer onboarding process, including regulatory compliance.

The bank further says that it believes that acceptance of digital currency by traditional financial institutions will continue to grow, highlighting the following data:

“Currently, there are over 300 institutional investment funds with aggregate estimated assets under management of between approximately $7.5 billion to $10 billion. Over $8.3 billion has been invested in digital currency-related projects, excluding initial coin offering funding, since December 31, 2013. Approximately $1.3 billion in venture funding was raised in the digital currency and blockchain market in the 12 months ended June 30, 2018, which is the most recent date such information is available.”

Per the document, in the fourth quarter of 2018 the bank saw two exchanges, 33 companies, and 24 investors among its new clients, including software developers, cryptocurrency miners, and service providers.

Throughout the whole year, Silvergate’s deposits derived from cryptocurrency customers reportedly increased by $150.4 million, or around 11.4 percent. Digital currency investors’ deposits saw a growth by $4.8 million to $577.5 million, while other startups’ balances increased by $46.4 million, reaching $273.9 million.

Last February, the Digital Currency Group (DCG), a cryptocurrency venture capital firm, announced that they had invested in the Silvergate Capital Corporation, which contains the Silvergate Bank. As the Corporation later revealed on its website:

“Proceeds from this placement will support further growth in the Bank’s nationwide fintech deposit initiative and its business banking and residential lending activities.”

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Six Global Banks Sign up to Issue Stablecoins on IBM’s Now-Live Blockchain Network

Six global banks will reportedly issue their own stablecoins backed by their national fiat currencies on IBM’s Stellar-powered payments network.

Six international banks have reportedly signed letters of intent to issue their own stablecoins backed by their national fiat currencies on IBM’s now-live blockchain-powered payments network, “World Wire.” The news was jointly announced by IBM and Stellar during a keynote at Money 2020 Asia in Singapore, financial news channel Cheddar reported on March 18.

As previously reported, IBM’s cross-border payment network, Blockchain World Wire (BWW) was launched in collaboration with Stellar (XLM) in September 2018. BWW, which went live today and reportedly has over 44 banks on service, aims to leverage cryptocurrencies to enable near real-time international settlements between banks.

In today’s development, Cheddar reports that six banks have confirmed their intent to issue stablecoins backed by their national fiat currencies on BWW — including Brazil’s Banco Bradesco, South Korea’s Bank Busan and the Philippines’ Rizal Commercial Banking Corporation.

Other as-yet-undisclosed banks will reportedly issue stablecoins backed by the euro and Indonesian rupiah, among others, IBM head of blockchain solutions Jesse Lund revealed.

Ahead of today’s bank-issued stablecoin announcement, IBM had also partnered with Stronghold, a Stellar-based, USD-backed asset, to create the Stellar network’s first stablecoin.

Lund has stated that IBM plans to expand its blockchain-powered settlement network with further assets. He said:

“We let the market drive the expansion and selection of the network incrementally. We are really feeling excited that we are on a roll to build something new and revolutionary that’s really going to change the landscape of cross-border payments.”

As Cheddar reports, BWW currently supports more than 47 currencies for payments across 72 countries. It disintermediates legacy bank settlement systems by introducing the XLM token as an efficient, immutably-tracked settlement instrument for fiat currencies between institutional parties.

IBM does not issue the settlement asset chosen between parties, as Lund had emphasized in an interview earlier this week:

“Our view for stablecoins is really that they should be more broadly accessible and what World Wire seeks to do is to provide fungibility of digital assets across financial institutions.”

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Israeli Bank Policy Should Not Have Shut Down Bitcoin Mining Firm’s Account, Court Rules

A judge in Tel Aviv has delivered a mixed verdict as part of a case involving Israminers and Union Bank.

An Israeli court has ruled in favor of a Bitcoin (BTC) mining company after a local bank closed its account over money laundering concerns. Israeli daily business news outlet Calcalist reported the development on March 17.

Israminers, which sued Bank Igud (the Union Bank of Israel Ltd.) in May 2018, had faced problems with cash flow due to the bank blocking deposits which it said was against its terms.

Following a lengthy appeals process, a Tel Aviv district court judge argued that the bank’s policy on cryptocurrency clients was too broad, and should not include automatic rejections.

“I believe that the sweeping policy, which does not distinguish between different types of activity, scope of activity and different types of customers — in the field of digital currencies — is unreasonable,” Calcalist quoted judge Limor Bibi as saying.

At the same time, however, Bibi said banks were within their rights to refuse deposits which originated from cryptocurrency trades.

The episode continues the patchwork regulatory attitude to cryptocurrency trading as it impacts the legacy banking system. As Cointelegraph has reported, various banks have taken issue with servicing businesses and private investors who trade cryptocurrency.

Often, the hostile stance contradicts other activities at the same bank: United Kingdom-based Barclays, for example, also shut down accounts prior to developing a relationship with major cryptocurrency exchange Coinbase to conversely speed up deposits and withdrawals.

In the case of Union Bank, it would appear senior executives had benefited from education in the emerging sector, with local startup Bit2C conducting a seminar on its workings last November.

Earlier this month, a dedicated committee from Israel’s securities regulator issued final recommendations for governing the cryptocurrency economy, something which could see banks’ treatment become more uniform in future.

“The committee recommends considering adjustment of the existing regulation to create more suitable regulatory infrastructure for this trading activity in order to better cope with the risks incurred in this activity,” an accompanying report explained.

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United Arab Emirates’ Financial Authorities Host Crypto Asset and Fintech Forum

The United Arab Emirates Banks Federation and the Abu Dhabi Global Market hosted a joint forum on crypto assets and fintech.

The United Arab Emirates Banks Federation (UBF) and the Abu Dhabi Global Market (ADGM) hosted a joint forum on crypto assets and fintech, the UAE’s official news outlet Emirates News Agency reported on March 17.

Per the report, the event was held in ADGM in collaboration with the UBF Compliance Committee and aimed to bring together industry specialists to discuss the challenges and opportunities facing fintech and crypto assets.

At the start of the meeting, ADGM also shared its regulatory objectives and the main features of its crypto asset policy and surveillance tools.

Moreover, the overall topics discussed at the forum reportedly ranged from ADGM’s crypto assets regulations and supervisory approach to how banks and financial regulators can jointly develop processes and procedures to ease crypto asset regulatory risks. The report also quotes UBF Chairman Abdul Aziz Al-Ghurair as saying:

“Given the rapid emergence of new FinTech such as cryptocurrencies and other crypto assets, it is essential that we develop frameworks and regulations that govern these technologies and developments.”

Al-Ghurair also noted the local aspiration to become one of the foremost international hubs for finance and how keeping up with the technological change is necessary to achieve this objective.

The UBF is a non-profit organization that represents 50 member banks that operate in the country. ADGM is an international financial center located in the UAE’s capital city.

As Cointelegraph reported in February, the UAE Ministry of Finance also announced that it planned to discuss the development of blockchain and digital assets in the country’s economy at the 7th World Government Summit.

During the same month, six commercial banks from Saudi Arabia and the UAE joined a digital currency project after the authorities of both the countries announced an agreement to cooperate on the creation of a cryptocurrency in January.

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IBM Hints at Stablecoin Cross-Border Payments Solution for Financial Institutions

IBM’s Jesse Lund, has hinted that bank-targeted stablecoins will be a major forthcoming development for IBM’s blockchain-powered cross-border payments solution.

The head of blockchain solutions for IBM, Jesse Lund, has hinted that bank-targeted stablecoins will be a major forthcoming development for the tech giant’s blockchain-powered cross-border payments solution. Lund made his remarks during an interview on financial news channel Cheddar on March 15.

While more details are set to be imminently announced next week, Lund told Cheddar that “market demand” is driving IBM to develop a stablecoin solution for financial institutions.

“More than a few banks around the world […] see tremendous business benefit to issue stablecoins in their native fiat currency,” he said.

When asked how IBM’s solution compares to JPMorgan Chase’s forthcoming in-house, USD-backed “JPM Coin” stablecoin, Lund hinted that IBM’s solution would be “somewhere in between” JPM’s exclusive, closed network asset. He stated:

“It’s not a proprietary coin like JPMorgan’s solution, although I think what they’re doing makes a lot of sense for them. […] What JPM’s doing also adds tremendous validation to what we’re doing. But our view for stablecoins is really that they should be more broadly accessible and what World Wire seeks to do is to provide fungibility of digital assets across financial institutions.”

“World Wire” refers to IBM’s collaboration with Stellar (XLM) and use of the network’s native asset in IBM’s cross-border payment network, Blockchain World Wire (BWW).

Alongside BWW, which aims to leverage cryptocurrencies to enable near real time international settlements between banks, IBM has also partnered with Stronghold, a Stellar-based asset, to create the Stellar network’s first stablecoin.

As Cointelegraph reported in February, Lund recently hinted at IBM’s interest in stablecoins as a vital aspect of innovating the cross-border payments landscape. Proposing that there should be an ecosystem of various digital assets that work as settlement instruments for cross-border payments, he suggested:

“It could be […] XRP […] it could be Bitcoin, but it would also probably include other instruments, like stablecoins, and even eventually soon — hopefully — central bank-issued digital currencies.”

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German Bank Association: New Regulation for DLT-Based Securities May Be Necessary

The German private banking association foresees that the need for new regulation may arise from the emergence of DLT-based securities.

The Association of German Private Banks (Bankenverband) foresees that a need for new regulation may arise from the emergence of distributed ledger technology (DLT)-based securities. The association expressed its concerns in a post on its official website on March 11, Cointelegraph auf Deutsche reported.

Per the post, if securities are issued using new technologies, then there is a need for new safekeeping and settlements processes. According to Bankenverband, corporate actions and securities trading may also be subject to change because of DLT-based securities.

The statement further explains that because of the changes that new technologies will create in business processes, “adaptations of civil and regulatory requirements at national and European level may be necessary.”

Recently, the German Federal Ministry of Finance also published a key issues paper on the treatment and regulation of blockchain-based securities.

As Cointelegraph recently reported, German regulators and lawmakers have thus far failed to create a workable legal framework that would provide legal certainty for applications of blockchain technology.

The news came shortly after German parliamentary representatives have argued that the country’s blockchain strategy should include an appropriate legal framework for cryptocurrency trading and token issuance, which would in turn encourage the sector’s domestic development.

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QuadrigaCX CEO Used Personal Money to Fund Exchange During Litigation With Bank in 2018

The late founder of QuadrigaCX, Gerry Cotten, was purportedly funding the exchange with his own money during litigation with a bank in 2018.

The late founder of Canadian crypto exchange QuadrigaCX, Gerry Cotten, was purportedly funding the exchange with his own money while it was in litigation with a major Canadian bank. Cotten’s widow Jennifer Robertson revealed details about the exchange’s financial situation in a statement published on March 13.

The statement reads that Cotten was putting his own money into Quadriga to fund user withdrawals in 2018, after the Canadian Imperial Bank of Commerce (CIBC) had frozen five accounts holding $21.6 million. Robertson stated:

“While I had no direct knowledge of how Gerry operated the business, he told me that he had been putting his own money back into QCX to fund user withdrawals in 2018 while the CIBC money remained frozen. I believe Gerry had the best interests of the business in mind, and cared for his customers.”

At the time, the CIBC froze accounts belonging to the exchange’s payment processor, Costodian Inc., and its owner, Jose Reyes, purportedly due to an inability to identify the funds’ owners.  The CIBC then requested the court to withhold the disputed funds and decide whether they belong to QuadrigaCX, Costodian, or the 388 users who had deposited the funds.

Quadriga subsequently told the court that the bank froze the funds mistakenly, and claimed to be the undisputed owner of the greater part of the funds as there was “no evidence” of competing claims.

In the recent statement, Robertson also revealed that the legal firm currently representing the exchange will cease its association with Quadriga CX, apparently due to a conflict of interest. The statement reads:

“I have been advised by Stewart McKelvey that, in light of concerns regarding a potential conflict of interest that have been raised as a result of information which has come to the attention of the Monitor since the start of the CCAA [Companies’ Creditors Arrangement Act] process, they have withdrawn from representing QuadrigaCX (QCX) and the other applicant companies in the CCAA process.”

Earlier in March, Robertson asked the court for $225,000 in compensation for legal costs for financing used to help the crypto exchange acquire court-approved protection from creditors. After $145 million in crypto assets went missing following Cotten’s death, Robertson provided interim financing for legal proceedings.

While the issue of repaying Robertson was reportedly discussed in court, the law firm representing QuadrigaCX’s affected clients, Cox & Palmer argued that repayment should not be granted until Ernst & Young — the court monitor — has reviewed asset and transaction information from Cotten’s estate.