Having loaded up on mortgage debt that went sour, then failed to find a savior in the government or private sector, the 158-year-old Wall Street investment bank Lehman Brothers filed for bankruptcy on Sept. 15, 2008.
The fallout over the following days, weeks and months would threaten to topple the entire financial system, necessitating trillions of dollars in rescue lending to banks and other firms by governments and central banks. The global financial system hadn’t looked more fragile at any point since 1929.
Worse, support for the system was undermined by the fact that Wall Street executives still collected multimillion-dollar bonuses – even as millions of the taxpayers, who helped fund those bonuses, lost their homes.
Within a couple of months of Lehman’s bankruptcy, though, a new piece of technology would debut – almost unnoticed – one that appeared to offer an alternative to this catastrophe-prone system. On October 31, 2008, an unidentified individual going by the name Satoshi Nakamoto published the bitcoin white paper to a cryptography mailing list.
The paper described “a purely peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution.”
Satoshi had almost certainly been working on the protocol for months or years prior to Lehman’s collapse but, according to Cornell computer science professor and blockchain researcher Emin Gun Sirer, there was a timely motive to the launch.
Former Linkedin Data Executive Joins Coinbase as VP of Data
Former LinkedIn executive Michael Li has recently joined major U.S. crypto exchange and wallet provider Coinbase as the VP of data, TechCrunch reports September 18. Li started his career at LinkedIn as Director of Business Analytics back in 2011. The expert has been growing his professional experience at the the business and employment-oriented company, working on business analytics and data science.
In his LinkedIn post, Li noted that centralized data organization is a “strategic way to get the most value out of data for the company,” claiming that it is “still a new concept for many companies,” including those in Silicon Valley.
The data expert further suggested that strong data organization is “becoming the number one choice for more and more companies” in an environment of rapidly growing data and stricter data regulations.
Regarding his new position at Coinbase, Li stressed in a Medium post that data is an “essential” aspect of empowering Coinbase’s mission, as well as the “core strategy” to providing “the most trusted and easiest-to-use” crypto services, and creating data solutions for blockchain use cases.
Earlier in August, Coinbase hired former Amazon Web Services (AWS) and Microsoft employee Tim Wagner as VP of engineering. Prior to that, the crypto exchange announced that ex-Pershing exec Jeff Horowitz will join the company as Chief Compliance Officer.
In April, LinkedIn co-founder and former CTO Eric Ly launched a reputation service that allows users to verify the teams behind Initial Coin Offerings (ICOs), which in turn aims to help potential investors determine whether a project is legitimate.
UK Lawmakers Call For Greater Oversight of Crypto Industry
A group of U.K. lawmakers has called for more oversight and regulation of the cryptocurrency industry in a new report published Wednesday.
Arguing that “crypto-assets have no inherent value,” are “especially risky” for retail investors and are “particularly vulnerable to manipulation,” the report states that “the introduction of regulation [to the cryptocurrency space] should be treated as a matter of urgency.”
The report comes roughly seven months after the U.K. Treasury Committee first announced it would look into the benefits and risks of cryptocurrencies.
The group wants to give the Financial Conduct Authority (FCA), the U.K.’s top financial regulator, more authority to regulate crypto markets. The report notes that organizers of initial coin offerings (ICOs), at present, can exploit certain loopholes to avoid scrutiny from the agency.
“Apart from drawing attention to the risks, there is little the FCA can do to protect individuals from being defrauded or losing their money. This is because most ICOs do not promise financial returns, but instead offer future access to a service or utility, meaning they fall outside the regulatory perimeter,” the report states.
Loyalty Live: Blockchain & Loyalty Rewards Conference
Loyalty Live is the first conference in the world focused on bridging the gap between loyalty rewards and blockchain technology. The conference will bring together corporate executives and the MarTech community with blockchain companies and influencers – bringing some of the biggest names from both sides to help simplify and better educate each other on these multi-billion dollar industries. Get to know the technology behind the products and meet the brilliant minds to better understand and build trust in this new world.
Loyalty programs are on the rise for a wide variety of key industries. They are a crucial and strategic investment for many types of organizations, however consumers experience significant friction prohibiting the use of their legacy points. Many programs lack liquidity and about a third of points are never used. Even if the end consumer doesn’t know it yet, they already hold digital currency in their pockets. Blockchain technology is the next natural step for turning these points into cryptocurrency and advancing a digital points economy. It has the power to add security and liquidity to points programs with the tokenization of digital assets.
Loyalty Live supports the convergence of these two industries – bringing together the biggest names and thought leaders from both worlds, for knowledge exchange and education. Attendees will be at the centre of this exciting evolution of the Loyalty and Rewards industry and the discussions on integrating blockchain solutions for all horizontals in the sector.
The event will demystify blockchain for enterprise, with intro bootcamp sessions and expert panels. Learn how to leverage the technology to improve points systems, operate programs at low cost and high security, develop a liquid value ecosystem, acquire more users, and increase value for existing customers.
Get to know the technology that’s changing the world and meet the brilliant minds taking it mainstream. Expect topics to cover: why blockchain is the remedy to loyalty challenges, merging blockchain with existing business systems, tracking systems, lowering transaction fees, improving points liquidity and redemption, reducing consumer friction, and eliminating fraud.
Start Time: Tuesday, October 16 @ 7:00 pm
End Time: Thursday, October 18 @ 11:30 pm
Location: JW Marriott Chicago
Expected Attendees: 600 – 800 people
Expected Speakers: 50
Organized by: Untraceable
Nasdaq to Acquire Crypto Swedish Stock Exchange Cinnober
News wires buzzed this week when the National Association of Securities Dealers Automated Quotations (Nasdaq) announced its pending purchase of Swedish crypto-friendly stock exchange Cinnober. Nasdaq made “an USD 190m all cash recommended public offer” to the exchange, which it terms a major “financial technology provider to brokers, exchanges and clearing houses worldwide.” It could also be a significant first step for the $10 trillion Nasdaq into the world of crypto.
Adena Friedman, President and CEO, Nasdaq explained, “The combined intellectual capital, technology competence and capabilities of Cinnober and our Market Technology business will expand the breadth and depth of our fastest growing division at Nasdaq.”
From Stockholm, Sweden this week came a public announcement Nasdaq had made a $190 million offer to gobble up Swedish crypto-friendly stock exchange Cinnober. The acquisition “would strengthen its position as one of the world’s leading market infrastructure technology providers,” Nasdaq claimed.
“Not only have the global capital markets continued to evolve rapidly,” Ms. Friedman, 49, continued, “new marketplaces in various industries are demanding market technology infrastructure that enables rapid growth and scale as well as access to tools to promote market integrity. This acquisition will enhance our ability to serve market infrastructure operators worldwide, and will accelerate our ability to expand into new growth segments.”
Based in the New York City, USA, Nasdaq is the second largest exchange in the world by market capitalization, valued at some $10 trillion. It is nearly 50 years old, and is known as the first electronic, automated stock market. Touted as what was to come in the retail brokerage industry, Nasdaq’s emphasis on digital production meant a lowering of that critical difference between the bid and ask price of a stock. It was thought to be a model of price discovery efficiency.
Japanese Regulator Unveils Crypto Regulation Updates
Japan’s financial regulator has recently unveiled the current state of the crypto regulations in the country. Three crypto operators are currently being reviewed. With 160 companies wanting to enter the space, the regulator plans to add more personnel to help review new applicants. In addition, a self-regulatory plan for crypto exchanges has also been submitted to the regulator.
Japan’s top financial regulator, the Financial Services Agency (FSA), published several documents from its fifth crypto study group meeting on Wednesday, September 12. The current state of crypto regulations and exchange registrations were discussed.
Japanese Regulator Unveils Crypto Regulation UpdatesThe agency confirmed that out of the 16 companies that have been allowed to operate crypto exchanges while their applications are being reviewed, only three have survived the agency’s recent inspections. Coincheck, Lastroots, and Everybody’s Bitcoin are currently being reviewed. The FSA reiterated that it is “currently reviewing the work improvement report” of Coincheck and, going forward, it will periodically conduct on-site inspections of registered exchanges.
The FSA’s vice commissioner for policy coordination, Kiyotaka Sasaki, said at the meeting that “The biggest problem is how to deal with new operators,” Reuters reported on Wednesday.
Japanese Regulator Unveils Current State of Crypto RegulationsHe noted that the agency currently has 30 personnel whose jobs include monitoring crypto exchanges and traders, supervising unregistered operators, and reviewing registration applications.
However, with over 160 companies wanting to enter the market, the FSA is seeking additional workforce to help with reviewing applicants. The agency is requesting 12 more personnel in the financial year 2019 to swiftly respond to crypto exchange operators, the publication conveyed.
Coinbase’s New NYC Office to Hire 100 in Wall Street Crypto Push
The crypto industry unicorn Coinbase has aggressive growth plans for its newly opened New York office, which caters to institutional clients.
The digital asset exchange plans to expand the operation to 150 employees next year, from 20 currently. According to the company, the slump in cryptocurrency prices this year has not quelled institutional demand for this asset class.
“When we saw the market begin to correct, which we all expected, institutions didn’t lose interest,” Adam White, general manager of Coinbase Institutional, told CoinDesk. “It was exactly the opposite.”
“They look at it as an opportunity to enter when things are not too frothy.”
Many of the local staff members were hired away from traditional financial institutions such as the New York Stock Exchange, Barclays, and Citigroup.
New York “is an incredibly deep pool of talent,” White said during an event Thursday celebrating the opening of its first permanent location in the city (it previously had employees working out of a WeWork there).
“We have to create a bridge between financial services and technology,” he went on. “In order to do that, we need to pull from some of the best and brightest minds that have worked their whole careers in other kinds of traditional financial firms.”
European Central Bank: ‘No Plans’ for Digital Currency
The European Central Bank (ECB) has “no plans” to issue its own digital currency, President Mario Draghi told the European Parliament Wednesday, September 12.
Addressing a query by MEP Jonás Fernández, Draghi said “substantial development” was still needed in the underlying technology behind cryptocurrencies before the Central Bank would consider using them.
“The ECB and the Eurosystem currently have no plans to issue a central bank digital currency,” he summarized:
“Nonetheless, we are carefully analysing the potential consequences of issuing such a currency as a complement to cash.”
Explaining why no plans were afoot at the ECB, Draghi drew attention to those same factors.
“…The technologies which could potentially be used to issue a central bank digital currency […] have not yet been thoroughly tested and require substantial further development before they could be used in a central bank context,” he told Fernández, adding:
“With regard to the central bank administering individual accounts for households and companies, this would imply that the central bank would enter into competition for retail deposits with the banking sector and lead to potentially substantial operational costs and risks.”
He added there was at present “no concrete need” to issue an additional currency within the eurozone, saying demand for cash banknotes “continues to grow” in the EU28.
Draghi continues the wary stance the 28-member bloc has traditionally held on bank-issued cryptocurrency, in contrast to moves by countries such as Russia and China.
Earlier this year, a joint report from the ECB and Bank for International Settlements (BIS) highlighted “side effects” of a potential launch of such a currency, also considering the need for more research beforehand.
AirSwap Has Announced a New Partnership
Decentralized cryptocurrency trading platform AirSwap has announced a new partnership designed to aid in the tokenization of one of the Western Hemisphere’s most expensive real estate markets.
That partnership, inked with FINRA-registered broker-dealer Propellr, will see the two firms use AirSwap’s peer-to-peer trading protocol to create a platform that allows brokers and their clients to tokenize securities and trade these crypto tokens in a manner that complies with securities regulations.
AirSwap and Propellr will initially focus their efforts on the New York real estate market, though details on how they aim to achieve this remain slim. Though often labeled a decentralized crypto exchange (DEX), AirSwap does not quite fit this designation since it serves more like a decentralized search engine that helps buyers and sellers arrange trades over a peer-to-peer protocol.
In a statement, AirSwap highlighted how this technology can benefit secondary market transactions:
“Ultimately, we hope to reduce the time to complete secondary market transactions of private securities from months to days, with the actual execution, clearing, and settlement taking place in a matter of minutes. With a non-custodial, no order book model, our technology is far better positioned for the private securities market than alternatives that take custody, use order book matching engines, and wrongly assume that private securities will trade with the same frequency as publicly traded securities or cryptocurrencies.”
They aren’t the only ones who believe that real estate, a notoriously illiquid capital asset class, will greatly benefit from tokenization.
Recently, crowdfunding giant Indiegogo partnered with a broker-dealer to host its first security token offering (STO), which aims to sell tokens that represent equity in a luxury resort in Aspen, CO.
Separately, cryptocurrency startup Swarm has begun issuing tokens that represent equity in privately-held tech companies such as stock trading platform Robinhood, helping make another class of secondary market securities more liquid.
IMF Advises Against Crypto as Legal Tender in Marshall Islands
The International Monetary Fund (IMF) has advised against the Republic of the Marshall Islands’ plan to introduce a digital currency as a second legal tender alongside the U.S. dollar.
The Marshall Islands – a remote chain of islands in the central Pacific – passed a law on the issue in February, aiming for the planned “Sovereign” cryptocurrency to boost the local economy and counter the increasing risks of the nation becoming disconnected from the global financial system.
However, following a period of consultation with officials from the islands, the IMF published a paper on Monday advising against the move. According to the paper, the Marshall Islands economy is now “highly dependent” on external aid, as the country faces constant climate change and natural disasters.
The only domestic commercial bank in the country is now “at risk of losing its last U.S. dollar correspondent banking relationship (CBR) with a U.S.-based bank,” due to tightened due diligence across financial institutions in the U.S.
Tthe IMF argued that the introduction of a cryptocurrency as legal tender may backfire, if a lack of comprehensive anti-money laundering measures eventually leads to the U.S. bank cutting ties with the country.
The IMF continued:
“In the absence of adequate risk mitigating measures, the issuance of a decentralized digital currency as a second legal tender would not only increase macroeconomic and financial integrity risks but elevate the risk of losing the last U.S. dollar CBR.”
Should that happen, “external aid and other flows could be disrupted, which would result in a significant drag on the economy,” it argued.
While the IMF is specifically advising in this case on the social and monetary systems in the Marshall Islands, it perhaps offers a window into the thinking of the global monetary organization on whether cryptocurrencies should be elevated to the status of legal tender in the traditional financial system.
The paper also follows recent remarks made by IMF officials who argued that the rapid growth of crypto assets poses a threat to the demand for fiat currencies.
As such, they argued that central banks should raise their game, adopting desirable features of cryptocurrencies to better compete with the nascent technology – a move described as “fight fire with fire” by the IMF chief Christine Lagarde.
Australian Watchdog to Apply Market Rules to Crypto Exchanges
A top Australian financial regulator has indicated it will take a new approach when regulating cryptocurrency exchanges, as well as tighten scrutiny of initial coin offerings (ICOs). In its a corporate plan for 2018–2022, released Friday, the Australian Securities and Investments Commission (ASIC) outlined its areas of focus for the period. Top of that list is to continue “monitoring threats of harm from emerging products” such as ICOs and cryptocurrencies.
Further, for 2018 and 2019, ASIC said it is developing a new framework that will apply “the principles for regulating market infrastructure providers to crypto exchanges” and will intervene where “there is poor behavior and potential harm to consumers and investors.”
According to the ASIC website, its current market infrastructure principals include a licensing scheme, via which it seeks to supervise financial market operators, settlement facilities, derivative trading and market participants.
The planned framework follows cross-department efforts the ASIC has been taking to implement supervisory approaches, such as dispatching staff onsite in financial institutions related to emerging tech including cryptocurrency, ASIC indicated.
Currently, cryptocurrency exchanges in Australia are required to comply with know-your-customer and anti-money laundering standards enforced by Austrac, the country’s financial intelligence agency.
ASIC, however, has not issued any pertinent regulation for crypto exchanges, but did published guidelines last year for businesses wishing to conduct ICOs.
The plan appears a timely one, as the country has already seen one public firm seeking to raise capital via a token sale to fund the launch of a cryptocurrency exchange.
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