Weekly Update of Global Fintech

【CONTENTS】

Ⅰ. World Bank Sells $33.8 Million More of Its Private Ethereum Blockchain Bonds

Ⅱ. Israeli Financial Authority to Accelerate Blockchain, Fintech Licensure

Ⅲ. 60 Latin American Banks Can Now Use Bitcoin for Cross-Border Payments

Ⅳ. China’s Transsion and Wapi Capital start African fintech fund

Ⅴ. Network gear of Chinese company brings 5G services to London homes

Ⅵ. Microsoft opens AI framework to other firms

Ⅶ. ICE’s Bakkt set to launch bitcoin futures contracts

Ⅷ. Line and Nomura launch online brokerage in Japan

The World Bank has issued a second round of its landmark blockchain bonds.

The international financial institution raised another $50 million AUD ($33.8 million U.S.) by selling the “blockchain-operated debt instrument” (bond-i), according to Commonwealth Bank of Australia (CommBank), which managed the sale jointly with RBC Capital Markets and TD Securities.

Both new and existing investors participated, CommBank said.

All told, the World Bank has issued $160 million AUD ($108 million U.S.) of these bonds, which run on a private version of the ethereum blockchain. It is “the first bond created, allocated, transferred and managed through its life-cycle using distributed ledger technology,” according to CommBank.

“We are happy to see the continued, strong support and collaboration from investors and partners,” Andrea Dore, the World Bank’s head of funding, said in a press release. “The World Bank’s innovation and experience in the capital markets is key to working with our member countries to increase digitization to boost productivity in their economies and accelerate progress towards the Sustainable Development Goals.”

The blockchain platform was built and developed by CommBank’s Blockchain Centre of Excellence.

“CBA now has tangible evidence from our first bond offering using blockchain technology and subsequent bond management, secondary trading and tap issue via the same platform, that blockchain technology can deliver a new level of efficiency, transparency and risk management capability versus the existing market infrastructure,” Sophie Gilder, head of blockhain and AI at CommBank, said in last week’s release, adding:

 “Next we intend to deliver additional functionality to deliver greater efficiencies in settlement, custody and regulatory compliance.”

A year ago, the World Bank announced the first $110 million AUD (roughly $81 million U.S. at the time) issuance of bond-i.

In May of this year, the World Bank and CommBank began to record secondary market bond trading using blockchain tech.

(2019-08-19 Source: Coindesk)

The Capital Market, Insurance and Saving Authority, a division of Israel’s Ministry of Finance (MoF), is looking to accelerate the process of procuring licenses for blockchain and fintech companies in the country.

Israeli business news outlet Calcalist reported the development on Aug. 19. According to the report, the authority has launched dedicated industry teams, some of which specialize in blockchain companies.  

According to the report, the authority is hoping to foster local competition by licensing more fintech companies. Moshe Barkat, who was appointed as the supervisor for the department back in 2018, remarked:

"Business and technological innovation and the relationship with the industry are the basic principles that guide the Authority in its operations. The Authority is engaged in the licensing and regulation of fintech companies on a regular basis, including digital insurance companies, P2P platforms and credit providers, digital wallets, blockchain-based fintech ventures and other payment services providers.”

Additionally, preliminary research by the Israeli Securities Authority has shown that dozens of companies, at a minimum, could receive a work permit in Israel with minimal changes to their business models or technologies, per the report.

Bitcoin advocates go after Israeli banks

As previously reported by Cointelegraph, the nonprofit Israel Bitcoin Association has purportedly started a legal petition to make the Bank of Israel disclose local banks’ policies pertaining to crypto. An unnamed cryptocurrency investor has also started a class action suit against the Israel Bank Hapoalim, since they would not accept money deposits that were generated via Bitcoin (BTC) investments. 

The complainant’s lawyer, Lior Lahav, emphasized that this banking issue is a problem affecting tens of thousands of investors in the country:

“There are more than 70,000 bitcoin investors in Israel who are facing the same problem from their banks [...] 99 percent of them are ordinary people that invested in a thing that’s completely legal.”

(2019-08-19 Source: Cointelegraph)

A leading bank technology provider in Latin America is partnering with cryptocurrency exchange Bitex to facilitate cross-border payments over the bitcoin blockchain.

“The integration of Bitex into Bantotal program represents a major step in the breakthrough of blockchain technology in banking,” said Bitex Chief Marketing Officer Manuel Beaudroit.

Bantotal is a core banking service provider based in Uruguay that services over 60 different financial institutions across 14 different countries. According to a Bantotal spokesperson, an estimated 20 million people use Bantotal’s money management services.

“Bantotal is one of the biggest banking providers in Latin America and is a huge player not just in Latin American but the greater Pacific,” said Sebastián Olivera, founder of the Uruguayan Fintech Chamber. “For me, Bitex provides a great solution for payments and they will be boosted by the structure and name of Bantotal.”

The partnership means that Bantotal clients will be able to access Bitex services in a marketplace of other traditional financial services that Bantotal offers through its BDevelopers program.

“With this technology, banks can have access to an API and have control of the whole process of [cross-border] payment with visibility and reliability on the bitcoin blockchain,” said Beaudroit.

Calling it a “quantum leap” forward for local banks in Latin America, Beaudroit said that average fees associated with cross-border payments are up to five times cheaper using Bitex than international wire transfers.

What’s more, these transfers are significantly faster, according to Beaudroit, who said payment times for exporters between Argentina and Paraguay in one instance last February dropped from one month to one hour after switching to Bitex’s cross-border payment services.

The partnership in the eyes of competitors such as Stellar, which also specializes in cross-border payments leveraging its own blockchain network, is seen as a positive signal.

Lisa Nestor, the Stellar Development Foundation’s director of partnerships, told CoinDesk:

“We think this announcement further validates the value financial institutions are recognizing in digital assets and distributed ledger technology for executing core banking activities, like international payments. It’s also no coincidence these product partnerships are being launched in the [Latin American] market where cross-border payments, even in neighboring nations, can be slow and expensive.”

How Bitex works

Bitex essentially acts as a middleman for national and regional banks to convert fiat payments into bitcoin then back into fiat, as opposed to completing multiple fiat-to-fiat conversions.

“If I want to do a payment from Argentina to Chile, I don’t need to buy dollars with the Argentinian pesos then transfer the dollars to the U.S. then move the dollars to Chile and exchange them into Chilean pesos,” said Beaudroit. “I can just send a payment from Argentina to Chile directly [using bitcoin].”

Calling it a system of “peer-to-peer banking,” Beaudroit explained that Bitex handles the conversion of local currencies into and from bitcoin, as well as, its ultimate dispersion into regional or national bank accounts.

Normally, this process of transferring money across borders with local banks in Latin American can take anywhere from 48 to 96 hours depending on the specific bank branch and financial intermediaries used, according to Leo Elduayen, vice president of non-profit Bitcoin Argentina and founder of blockchain startup Koibanx.

Elduayen described the full process of cross-border payments using Bitex as an end-to-end solution for banks, saying:

“The purchase and [transfer] of bitcoin, Bitex does it all on your behalf. You as a user just send the money and Bitex takes care of the rest for you.”

‘A good first step’

With the Bantotal partnership, Elduayen suspects that accessibility to Bitex services for consumers in Latin American will dramatically increase though there are a number of hurdles still left “to get banks on board.”

To this, Olivera said that both know-your-customer (KYC) and anti-money laundering (AML) legislation is still a major issue for banks when it comes to using the bitcoin blockchain.

Federico Ast, CEO of Buenos Aires-based arbitration startup Kleros, agreed – adding that regulatory uncertainty and seeing cryptocurrencies “as a fad” are still major barriers to entry for Latin American banks.

“I have to be honest. I think this is just the first conversation,” said Olivera. “It’s too early to say whether banks will choose to operate with Bitex but it’s a good first step.”

Rebuilding trust

At the very least, both Ast and Olivera see this partnership between Bantotal and Bitex as an opportunity to expose consumers in Latin American to the benefits of blockchain technology and help rebuild consumer trust in existing financial institutions.

“Historically, Latin America has had weak financial systems,” said Ast. “There’s a history of bank runs with some sad highlights of confiscation of people’s saving (e.g., Argentina in 2001). … This agreement will lead to lower costs for consumers and higher financial inclusion.”

Bitex’s Beaudroit has high hopes this partnership will also contributed to increasing the national GDPs of Latin American countries by enabling more commerce to flow “in a peer-to-peer fashion.”

In this way, Santiago Siri, founder of digital governance startup Democracy Earth and advisor to Bitex, said the work of Bitex went far beyond simply being a crypto exchange platform.

Said Siri:

 “It’s an ideal partner for banks to use bitcoin … as a way of connecting banks in a way that is not very common in the industry yet is fundamental for markets like Latin America.”

(2019-08-21 Source: FinTechNews)

China-based mobile phone manufacturer, Transsion, is partnering with Africa-Asia payment gateway, Wapi Capital, to find and fund young African fintech start-ups, Tech Crunch reports.

From September 2019, Transsion’s seed fund incubator, Future Hub, will provide equity-based investments of up to $100,000 and work with Wapi Capital to select the right recipients.

Wapi Capital, the venture fund of Kenyan fintech Wapi Pay, will contribute in industry knowledge rather than in money, vetting start-up’s viability, scale and deal flow from all 54 African countries.

According to Transsion Future Hub senior investor, Laura Li, the Hub will also be investing in adtech, e-commerce, logistics and media and entertainment start-ups.

Currently the Hub works with African companies including focused browser company Phoenix, content aggregator Scoop and music streaming service Boomplay.

Both companies have their own lofty ambitions too. Whilst Wapi Capital is looking to raise $10 million over the next three years, Transsion is on the verge of being listed on China’s new Nasdaq-style STAR Market tech exchange with an IPO in the wings.

(2019-08-19 Source: FinTech Futures)

Londoners can now access ultrafast 5G broadband internet in their homes through routers made by Chinese telecommunications company Huawei, after a major network upgrade from mobile operator Three.

Following the launch of Three's 5G home broadband in parts of the British capital, users can reap the benefits of the latest generation of network technology via the Huawei 5G CPE Pro Router.

There is no need for a landline to operate the router-residents simply need to connect the device to a power source and insert a micro SIM card.

"Three's 5G is going to revolutionize the home broadband experience," said Dave Dyson, chief executive of Three. "No more paying for landline rental, no more waiting for engineers, and even a same-day delivery option. It really is the straightforward plug and play broadband that customers have been waiting for. The ease and immediacy of it all means home broadband using 5G is going to be key to the future of the connected home."

The service is available in the London boroughs of Camden and Southwark. Hackney, Islington and Tower Hamlets will follow in the next few weeks.

Vodafone and EE have also commenced 5G rollouts in the United Kingdom, and Britain's fourth major mobile operator, O2, will launch 5G upgrades from October.

Three, Vodafone, and EE will use Huawei equipment in their radio access networks for 5G upgrades, even though Huawei kit could soon be banned from network infrastructure, if the UK government joins a US-led boycott of the Chinese company. O2 is working with Ericsson and Nokia as technology partners for its 5G rollout.

The United States has pressured the UK to ban Huawei participation in 5G upgrades, due to what the US claims are security concerns. The UK government was expected to reach a determination on whether it would join the Huawei boycott last month but the Conservative Party leadership contest delayed the decision.

On Friday, Huawei founder Ren Zhengfei said he was confident that the UK would allow the continued use of his company's technology in network upgrades.

"I noticed the third day that (Johnson) was in office, he said the UK should roll out 5G as soon as possible," Ren told Sky News. "I think they won't say no to us as long as they go through those rigorous tests and look at it in a serious manner and I think if they do say no, it won't be to us."

Upcoming releases of Huawei 5G smartphones by UK vendors have already been impacted by a US ruling that prevents Huawei devices from accessing updates on the Android operating system.

(2019-08-22 Source: China Daily)

The US tech giant Microsoft seems to have finally unveiled the ambition behind its artificial intelligence robot Xiaoice, by announcing that its first-generation AI framework -- which enables Xiaoice to chat, sing songs and draw pictures -- will be made available to other companies.

The move is part of the US company's broader efforts to establish a foothold in building a platform to empower new generation AI-enabled human-machine interaction.

Xiaoice, which started as a chatting robot in 2014, has already been "talking" with more than 660 million users, published two collections of poetry, released and composed dozens of songs, as well as held a painting exhibition.

All these endeavors have helped it accumulate more than 5 million followers on a Chinese micro blog, as Microsoft continues to experiment with how AI can use emotional intelligence to serve as a companion for people and how AI can be used to upgrade traditional sectors.

Now Microsoft unveiled the Avatar Framework, the first AI tool kit developed by the Xiaoice team, in Beijing. The Avatar Framework kit can empower other companies to quickly have multiple AI capabilities on their products, such as functioning as an voice-activated AI assistant to control home appliances or smartphones, being a chatbot to accompany consumers, or singing songs, drawing pictures or designing clothing patterns, said Li Di, who is in charge of the development of Xiaoice at Microsoft's Software Technology Center in Asia.

"We want to build a platform to empower others to improve their AI capabilities," Li said.

In the past year, Xiaoice has already been functioning as a voice-activated virtual assistant in 450 million units of third-party smart hardware, including smartphones and smart speakers, through its partnership with Huawei Technologies Co, Xiaomi Corp and other companies, Microsoft said.

Li from Microsoft said: "We are building a half-open ecosystem where on one hand, we will help our partners build their own AI capabilities, such as voice-activated assistants. On the other hand, we will also incorporate Xiaoice into their products as an alternative assistant to ensure good experience."

The company announced last week that Xiaoice will soon be present in the smartphones of major Chinese handset makers Vivo and Oppo, the WeChat platform of Tencent, and the news service of Beijing Bytedance Technology Co Ltd.

Microsoft also said Xiaoice will be used in cars to offer voice-activated services after cooperating with major Japanese automakers for more two to three years.

(2019-08-22 Source: China Daily)

The word’s second-largest exchange group, Intercontinental Exchange (ICE), has announced its new cryptocurrency trading platform, Bakkt, is “cleared to launch” its trading in bitcoin futures next month.

After nearly a year of regulatory delays, the Atlanta-based Bakkt announced on Friday it would launch two physically delivered bitcoin futures contracts, one monthly and one daily, on 23 September.

The announcement was sparked by the company receiving a New York state trust charter through the New York State Department of Financial Services (NYDFS), following approval from the Commodity Futures Trading Commission (CFTC) which allows it to begin user acceptance testing.

The contracts, which are protected by $125 million in insurance, were a result of demands to ICE from Wall Street clients who typically trade ICE’s commodity, currency and stock index contracts.

“Uniquely, Bakkt bitcoin futures contracts will not rely upon unregulated spot markets for settlement prices, thus serving as a transparent price discovery mechanism for the benchmark price for bitcoin,” says Bakkt CEO, Kelly Loeffler.

She adds: “The importance of this differentiator is only amplified by reports of significant manipulative spot market activity, and other concerns such as inconsistent anti-money-laundering policies and weak compliance controls.”

For Loeffler, it was important to offer a daily contract so traders could operate within a federally regulated exchange when transacting on the futures exchange, whilst also offering a monthly contract will give the ability to take snapshots at different times throughout the next year so it adds spread trading.

(2019-08-19 Source: FinTech Futures)

Line, one of Japan’s most frequently used messaging platforms and Nomura, have launched an online brokerage venture which will charge zero commissions for trading in Japanese shares, according to Bloomberg.

Line Securities Corporation will make money from the bid/ask spreads on the trades, as reported by the co-CEO, Yoshikazu Yonenaga, at a press conference on Tuesday.

Line is betting that backing from Nomura will help it diversify into the online brokerage business and monetise its 81 million domestic subscribers, as well as reduce reliance on advertising.

Nomura is looking to the venture to attract younger, digital-savvy clients.

The new venture will offer trading in major Japanese firms such as Toyota and Mizuho Financial Group, according to a statement.

Japanese retail investors are increasingly turning to online brokerages to trade stocks, eroding the market share of traditional face-to-face brokers such as Nomura and Daiwa Securities Group.

Nomura already has an online service with about 3.5 million customer accounts, but its CEO, Koji Nagai, called the offering “uncool” in an interview late last year and said the firm needs to take more steps to make it attractive to younger people.

(2019-08-20 Source: FinTech Futures)