Autorenname: Mischa Wesdorp

The European Union has taken a major step forward in its bid to regulate the crypto assets world after its executive branch issued its most extensive proposals to date for supervising the growing sector. The measures suggested within the EU’s digital finance strategy include cryptocurrencies not presently included in general regulation as well as a number of so-called stablecoins. The aim is to not just reduce volatility in cryptocurrency trading or to provide more regulatory certainty for investors but also to reduce market fragmentation in Europe by ensuring that once a crypto trading company is approved in one EU state, it is free to operate in all other EU states. The Regulation on Markets in Crypto Assets or MiCA bill will provide definitions on what constitutes a crypto asset as well as various token subcategories. It will also lay down rules for digital asset custody and capital requirements as well as the relationship between token issuers and token holders. There are also measures to deal specifically with stablecoins following concerns raised by a number of finance ministers within the EU earlier this month. If the bill is passed it would make the EU one of the most regulated centres for crypto trading and digital assets. However, there is likely to be a lengthy legislative journey ahead. The bill must be debated by both the European Parliament as well the different national governments before it can be passed into law. Meanwhile the Commission has stated that it hopes to see the framework in place by 2024. The fact that any law must be implemented at a national level may prove to be a sticking point. The Commission has stated its preference for more regulatory harmonisation at an EU-wide level. But achieving harmonisation has proved difficult in the past and EU states have recently reduced a 2017 Commission proposal to bolster supervisory powers at an EU level in favour of maintaining power at a national level. Source (full article): Finextra

The Basel Committee’s oversight body, the Group of Central Bank Governors and Heads of Supervision (GHOS), has endorsed a set of measures to provide additional operational capacity for banks and supervisors to respond to the immediate financial stability priorities resulting from the impact of the coronavirus disease (Covid-19) on the global banking system. The measures endorsed by the GHOS comprise the following changes to the implementation timeline of the outstanding Basel III standards: These standards were finalised with the objective of complementing the initial set of Basel III standards. The revised timeline is therefore not expected to dilute the capital strength of the global banking system, but will provide banks and supervisors additional capacity to respond immediately and effectively to the impact of Covid-19. GHOS members unanimously reaffirmed their expectation of full, timely and consistent implementation of all Basel III standards based on this revised timeline. Current events demonstrate once again the importance of a resilient financial system, which these reforms will help further reinforce. Read the original article here. More information about the Basel Committee is available here.

  It’s happening – the payments industry is going through a transformational once-in-a-generation type of shift. Financial institutions have been controlling the payments industry for quite a while – until 2014, when big investors poured more than $130 billion into technologies like Blockchain and mobile payments. With the investment, the relationship between banks, credit card companies and consumers have drastically changed. Traditionally, banks and credit card companies serve a consumer’s financial needs from A to Z. With the future disruptive payments shift businesses and consumers will interact with multiple companies, on different levels and in a technology-driven and more decentralized system. The current payments landscape is shifting and changing at a fast pace: companies are vertically integrating, consolidating or looking to add new technologies and products to boost existing portfolios, as seen in the table below:

According to a report published by Reuters, Facebook has been silently setting up a financial technology firm in Switzerland. The platform’s fintech firm is called Libra Networks, and it will solely focus on payments, investing, financing and other financial technology solutions. Details concerning the cryptocurrency platform have been released a few days ago. We will pinpoint the highlights for you. How it all started It was near the end of 2017 when David Marcus, Facebook executive, was thinking of ways to build the internet of money: a global digital currency for everyone. Especially for people that have mobile phones but no access to banking. That’s when Marcus came to his idea: why not let Facebook develop a platform with a global reach and massive user base? That’s how Libra, an open-sourced blockchain system, was born. Breaking down Libra Libra Networks or simply ‘’Libra’’ is an open sourced digital currency that is going to be launched in the first half of 2020. Libra is said to allow billions of users around the globe to make financial transactions online. According to Facebook, Libra is a ‘’global currency and financial infrastructure’’, meaning that it is built by a Facebook-created version of blockchain which also holds the technology encrypted bitcoins and cryptocurrencies. Who owns Libra? The maintenance of the Libra platform will be carried out  by a collective of companies called the Libra Association. Companies that are part of the association include Mastercard, PayPal and crypto exchange companies such as Coinbase and eBay but also financial and venture capital firms such as Thrive Capital and Andreessen Horowitz and startups Lyft and Uber. The described parties have contributed a minimum of $10m (£8m) to be part of the association. The foundation will be headquartered in Geneva and Facebook claims it will be independent from governments and the company itself. How does Libra work? Facebook is not fully enclosing details about the currency. What we do know, is that traditional payment providers such as Visa and MasterCard will play a key role in providing users with the necessary means to buy the currency. The fact that startup firms Uber and Lyft are early investors could imply or suggest that consumers will be able to pay for services using the Libra cryptocurrency. Once a consumer is able to get Libra, they can use it by downloading the digital wallet Calibra. Calibra will be available in Messenger, WhatsApp and as a standalone app. With Libra, users will be able to send money to each other. Apart from consumer-to-consumer transactions, Facebook also initiated that they want Libra to be used as a means of day-to-day transactions. Is Libra safe? There are a couple of concerns regarding the crypotcurrency and the fact that the app will be run by Facebook. The platform has said to implement necessary technologies to prevent fraud and money laundering the same way banks and credit card companies use verification and anti-fraud processes. Click here and here for the original articles.

There have been rumors that Facebook is creating its own digital coin in reaction to the $1.7 billion investment fund Telegram raised for its own cryptocurrency project. Together with Messenger, Whatsapp and Instagram, Facebook’s reach amounts to a total of 2.7 billion users. If Facebook decides to create its own digital coin and payments environment, it could potentially become the largest central bank in the world. Facebook entering the world of online banking and payments could have far reaching consequences for credit card companies such as Visa and MasterCard. The transaction process as we currently know it, is pretty simple: we can pay without carrying around cash. On the back-end, either Visa or Mastercard settle the transactions made with any bank. However, if Facebook would enter the market with its own digital currency, things could change a great deal. Instead of a credit card, users get a Facebook mobile wallet with coins to make online payments. These Facebook coins could completely transform e-commerce in terms of making payments even easier. Users will be able to directly make online purchases (or sell items) in a wide range of apps that have already integrated a Facebook user sign-in. There will be no need for third parties, typing in your credit card credentials or PayPal account details. Online shopping will become a two-step process in Facebook apps. The two-step payment environment via Facebook will only take a matter of time – the payments game is about to change drastically. Click here for the original article.