The price per coin has so far been strong this year as traders and investors cheered the likes of Facebook and Apple showing interest in bitcoin, cryptocurrency and bitcoin's underlying blockchain technology. This weekend's drop was attributed to a lacklustre debut for the highly-anticipated Bakkt bitcoin and its cryptocurrency investment platform at the beginning of the week.
According to Forbes, the drop has caused panic among traders and investors who have been anticipated a drastic change for some months now. For the time being bullish Bitcoin traders are advising to buy as the markets look confused as ever, and there will be some results on the horizon. In addition, chief investment officer of Morgan Creek Capital, a US bitcoin and cryptocurrency investment company, suggests "buying the dip," clarifying that daily change sin the value of Bitcoin are rarely significant and should be ignored.
Daniele Mensi, CEO of Nexthash, the operating group of digital exchange platform Nexinter, commented on the price drop: "The volatility of cryptocurrencies is what makes them excellent conduits of growth for traders, investors, and growing businesses. What is important to remember is that Bitcoin is still up around 115% this year, so its short terms peaks and troughs are necessary to facilitate longer-term growth across the currency. It is important for new traders and investors to do their due diligence on each currency that they invest into to ensure that it is the right route for them, but institutional investors and high-growth companies will continue to look crypto and digital trading to facilitate international, fluid growth."
This week Finance Monthly hears from Simon Rodway, a solutions architect at Entersekt, on the potential and realistic impacts of Libra on the traditional banking system.
The social media giant Facebook announced in June that it has developed a cryptocurrency dubbed Libra and plans to launch it early next year. While some may dismiss it as just more hype, the sheer dominance of Facebook in people’s social lives gives it huge potential to disrupt banking and payments as we know it today.
The company claims that Libra will improve the way we send money online, making it faster and cheaper, as well as improving access to financial services – even for those without bank accounts or limited access to traditional banking. It will be based on a blockchain platform called the Libra Network and Facebook says that it will run faster than other cryptocurrencies, making it ideal for purchasing and sending money quickly. Importantly, Libra will not be managed by Facebook itself; rather, by the Libra Association – a not-for-profit organisation comprised of 28 companies (so far) from around the world such as Paypal, Lyft and Coinbase. It aims to sign up 100 companies by the time the cryptocurrency is launched.
One thing’s for sure: it’s going to be an interesting development to watch, especially in the wake of Facebook’s cryptocurrency wallet company Calibra’s David Marcus presenting his testimony to the United States Congress banking committee. The result was that Facebook would “take time to get this right” and there would be no launch until all concerns could be fully addressed.
So, even though it’s still early days, Libra has given us a lot to think about. Ill-informed speculation and click bait aside, there are legitimate concerns around fraud – with reports already of over one hundred fake domains being set up relating to Libra. There are also the money laundering and financial risk concerns.
In terms of the impact and financial risk, most of what we’re hearing is coming from within the more established financial sectors. They’re either dismissing Libra as noise or decrying it as a vehicle for potential terrorist activities – something, they say, that regulators won’t allow to happen, despite Calibra openly reporting its intention to work with said regulators and policymakers to ensure the platform is secure, auditable and resilient.
At the same time, of course, they’re defending the current system, claiming that it works well, is safe and secure, and doesn’t support terrorism. But, if we’re honest, Anti-Money Laundering (AML) systems have, to date, been largely unable to stop the vast amounts of laundered funds from moving around. In addition, our Know Your Customer (KYC) and Know Your Business (KYB) processes use data from the likes of Companies House, which has been heavily criticised for their own lack of data validation and governance.
All that aside, what’s become quite clear is that the existing system presents too many blockers for the poorer, under-banked members of our society. Those working in the UK, for example, and legitimately wanting to transfer their wages to their families in other countries, end up paying exorbitant banking fees, only to wait days for their funds to clear.
This is where Libra, with its vision for financial inclusion, could make a difference. And if Libra doesn’t make it happen this time around, the technology and conceptual design are essentially open source, so someone else will. The wheels are in motion, and financial institutions that ignore the trend do so at their peril.
Brexit and its surrounding political upheaval is of course much to blame. Here Ana Bencic, Founder & CEO of Nexthash, delves into the potential benefits cryptocurrencies could offer in situations like this.
Figures taken on Tuesday 6 August show the pound trading for $1.2176 and €1.1199 respectively. The Brexit-related insecurity has been attributed listed as one of the factors behind the decline in the value of the pound, made worse by weak retail sales in June.
With the decline in the national currency and with Brexit on the horizon, questions are swirling around, about how the UK can maintain its attractiveness to foreign and domestic investors.
Investors who have been taking notice of the unpredictable nature of fiat currency’s’ value in relation to political events, as well as the near-constant rise in the value of several cryptocurrencies, will be looking at what makes cryptocurrency a viable alternative to traditional currency.
With more uncertainty than ever in the market, including the inability to hold above 1.27, the pound, it is clear that the value of pound sterling is predicated on political factors. In stark contrast, cryptocurrencies like Bitcoin and Ethereum appear to be unaffected by political upheaval. The value of Bitcoin has reached peaks of over $9000 and despite price drops, it appears to be gradually increasing in value over time. Investors who are wary of traditional currencies will be attracted to the fact that cryptocurrencies are not created by, or under the direct control of any financial institutions or third-party entities. Blockchain-based cryptocurrencies are decentralized and they use peer-to-peer technology to enable all functions such as currency issuance, transaction processing and verification to be carried out collectively by the network. While this decentralization renders cryptocurrencies free from manipulation or interference by a government or central bank, the flipside is that there is no central authority to ensure that things run smoothly or to back the value of a particular currency.
Additionally, Bitcoin effectively increases efficiencies, adds security to transactions and eliminates traditional methods of fraud. Some economic analysts predict a big change in crypto is forthcoming as institutional money enters the market. Moreover, there is the possibility that crypto will be floated on the Nasdaq, which would further add credibility to blockchain and its uses as an alternative to conventional currencies. Some predict that all that crypto needs is a verified exchange traded fund (ETF). An ETF would make it easier for people to invest in Bitcoin, but there still needs to be the demand to want to invest in crypto, which some say may not automatically be generated with a fund.
Cryptocurrencies are yet to reach their full potential, but this will come with time as traditional investors & traders start to use it more often and several major first-world nations pass legislation in support of cryptocurrency trade and investment. At this point, the crypto market is estimated to be worth $700 billion and the perception is that digital currencies are here for good.
Cryptocurrencies are yet to reach their full potential, but this will come with time as traditional investors & traders start to use it more often and several major first-world nations pass legislation in support of cryptocurrency trade and investment.
Countries with underdeveloped infrastructure and nations experiencing devaluation of their national currency can seize the advantages of cryptocurrencies- for the simple reason they can move money across their country’s borders with far greater ease than traditional currency.
Traders make use of cryptocurrencies as a peer-to-peer payment method, allowing them to send money in much less time than a bank transfer would take and with relatively low transfer fees when transferring funds internationally.
Blockchain based currencies will continue growing in popularity with traders and investors for their unique advantages of confidentiality, immutability, fast transaction times and a lack of external mediators.
Neither the launch of Facebook’s Libra cryptocurrency nor the rapid appreciation of Bitcoin - which has more than quadrupled in value in 2019 - has so far reversed the trend.
Just two years ago, jobseekers’ interest in Blockchain - the technology which underpins cryptocurrencies like Bitcoin and Libra - surged. In 2017 Indeed recorded a tenfold increase in the number of candidates searching for Blockchain jobs, coinciding with a 2,100% spike in the value of Bitcoin, which peaked at $20,000 in December that year.
Candidates’ interest in jobs mentioning ‘Blockchain’, ‘Bitcoin’ and ‘Cryptocurrencies’ surged in the first half of 2018, before tailing off sharply in the latter part of the year. Searches for these jobs have fallen further in 2019, with the monthly average this year sliding by 44% on its 2018 level.
The number of cryptocurrency job postings has also collapsed in 2019, with the June figure down 72% on the record high recorded in March 2018.
Interest in Blockchain, Bitcoin and cryptocurrencies plummets.
The falling interest coincides with extreme volatility in the value of cryptocurrencies. Bitcoin prices fell by nearly 80% in 2018, and though the best known cryptocurrency has rebounded in 2019 - surging past $13,000 at the end of last month - jobseeker interest in the crypto sector has not yet matched that resurgence.
However, Facebook’s entry into the cryptocurrency market could inject new credibility and mainstream acceptance of the technology, and Indeed’s data reveals that a string of well-known tech and financial services firms continue to advertise Blockchain jobs.
The global banking giant JPMorgan Chase, one of the top 10 companies posting cryptocurrency jobs on Indeed, created the first US bank-backed cryptocurrency last year when it launched JPM Coin. Meanwhile, earlier this year, tech firm IBM created a global payments network to support transactions involving foreign currencies and cryptocurrencies.
Bill Richards, UK Managing Director at global job site Indeed, commented: “The mercurial rise - and then fall - in the value of Bitcoin sparked headlines and jobseeker responses in roughly equal measure.
“But while the rapid rise in value of Bitcoin so far this year has attracted investors, jobseekers have been more wary.
“Behind the froth of Bitcoin, the true potential of Blockchain is still being revealed, and it’s striking how many companies, including tech and banking heavyweights, are building teams of people with skills in this area.
“Facebook’s launch of Libra is set to extend the reach and acceptance of cryptocurrencies and could power a second boom in Blockchain jobs, but so far this is anything but a foregone conclusion.”
(Source: Indeed)
The comments from Nigel Green, founder and CEO of deVere Group, which launched its pioneering cryptocurrency trading app deVere Crypto last year, come after two days of congressional hearings this week to discuss Facebook’s planned digital currency, Libra.
It also follows Bitcoin’s impressive 9% jump on Thursday.
Mr Green affirms: “Many of the lawmakers’ stance on cryptocurrencies – which are almost universally regarded as the future of money – is out-dated and blinkered.
“Some of their comments in the congressional hearings suggest that they think cryptocurrencies are a passing fad. That is delusional.
“The demand for digital, global, borderless currencies is only going to increase. This is inevitable as the digitalisation of our economies and our daily lives grows further and picks up pace further still.”
He continues: “And because demand is set to soar over the next few years as retail and institutional investors pile into crypto, lawmakers now need to embrace them and bring them fully into the mainstream financial system with proper and robust regulation.
“It is bordering on negligent not to do so for three key reasons.
“First, it would provide further protection for the growing number of people using and investing in cryptocurrencies.
“Second, unless the US leads the way in the digital currency revolution, other countries - with perhaps counter values to those of America - will control it and it would be hard to ever take back that control.
“And third, there are enormous potential opportunities for higher economic growth by embracing cryptocurrencies. Why are lawmakers not seizing these with both hands?”
In a similar vein, the deVere CEO slammed President Trump last week when he criticised Bitcoin, the world’s largest cryptocurrency by market capitalisation. At the time he said: “Standing on the sidelines, or worse looking backwards, on the issue of cryptocurrencies - which are redefining and reshaping the financial system - is a baffling approach for the leader of the world’s largest economy to take.”
Mr Green concludes: “Digital currencies are the biggest innovation in payment systems in many decades. Facebook’s jump into the sector is a clear indication of the direction of travel in this regard and lawmakers must not put their heads in the sand and/or attack – that is futile and counterproductive.
“Instead they must work alongside stakeholders to make the market stronger still as investors continue to dive into the likes of Bitcoin, Ethereum, Ripple’s XRP and Litecoin.”
Nigel Green, the Founder and CEO of deVere Group, is speaking out after Donald Trump took to Twitter to say: “I am not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air.
“If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International,” he added.
The President’s tweets follow last month’s announcement by Facebook that it is to launch its own new digital currency to be called Libra. It is designed to be a low-volatility currency that will let its users buy things or send money to people with very low fees.
It will be backed by reserves managed by an independent organisation, called the Libra Association, made up of several leading tech firms and non-profits that give the token real-world value.
Nigel Green affirms: “President Trump is wrong and is placing himself on the wrong side of history on Bitcoin and other cryptocurrencies.
“The blistering pace of the digitalisation of economies and our lives underscores that there will be a growing demand for digital, global, borderless money.
“Indeed, it is now almost universally regarded as the future of money.
“This is why most major financial institutions globally already have or are preparing to establish crypto desks. It is why more and more retail and institutional investors are piling into the market. And it is why tech giants, like Facebook, are getting involved. And you can bet that where Facebook follows, other tech companies will do the same.
“When everything from voting to music to books is already digital, dismissing digital currencies in a digital era is, frankly, bizarre and looks depressingly archaic.
“Does the President seriously think that traditional, fiat currencies are the way forward?”
Mr Green continues: “However, I agree with Mr Trump that Facebook’s new Libra project should be scrutinised.
“But, being the social media monolith that it is, it is surely expecting this level of scrutiny. I would suggest that it is prepared for it, has the resources for it, and will welcome it, as it will make its cryptocurrency stronger.”
He goes on to add: “The wider point here is regulation. Cryptocurrencies are already becoming mainstream. As such they should adhere to the same standards as the rest of the financial system.
“Regulation is necessary as it will provide further protection for the growing number of people using cryptocurrencies, the less likely it will be that criminals will use these digital payment methods, the less potential risk there will be for the disruption of global financial stability, and the more potential opportunities there will be for higher economic growth and activity in those countries which introduce it.
“And it is surely on its way, judging by the activities of regulators around the world.”
The deVere Group CEO concludes: “Standing on the sidelines, or worse looking backwards, on the issue of cryptocurrencies - which are redefining and reshaping the financial system - is a baffling approach for the leader of the world’s largest economy to take.”
(Source: deVere Group)
They're not called Zuckerbucks but Facebook just reinvented digital money. Facebook's Libra cryptocurrency that will launch early next year is more like PayPal than Bitcoin — it's designed to be easy enough for everyone to use. But it's still complicated to understand so I'm going to break it down for you nice and simple.
Crypto assets have been discussed in the mainstream media for almost two years now and in that short period of time, we have seen rapid change in the sub-culture spawned out of them, adoption by some commercial entities and adaptation of laws across the globe.
In this article, Thomas Anthony Hulme explores the existing laws that affect the crypto asset markets in both China and South Korea, compares each of them and then applies the law to the current crypto asset market, whilst also briefly discussing Facebook’s recently announced crypto asset, Libra.
The law in China
The primary regulator to monitor crypto asset regulation in China is the People’s Bank of China (the “PBOC”). Since the rise in interest and respective price of crypto assets towards the end of 2017, different concepts and activities have been created by the crypto asset market participants. Some of these activities include the creation and issue of different types of crypto asset such as Security Tokens, Stable Coins and Exchange Coins.
The concept of crypto asset mining is a regular and profitable (for some) activity, which involves owners of powerful computers connected to particular blockchains and mining particular crypto assets.
The increase in popularity has led to the creation of a large number of crypto assets with speculative prices, which were then traded on crypto asset exchanges in exchange for FIAT currency or another crypto asset.
These activities encouraged the PBOC to regulate the market. It is important to distinguish what exactly is prohibited in China and what is not.
Initial Coin Offerings (ICO) or activities undertaken for fundraising purposes with a crypto asset element are prohibited. This is due to widespread criminal activity and fraud, which accompanied the ICO trend in early 2018. Issuing new crypto assets is not prohibited, however, issuing them in exchange for mass funding is.
Financing activities and trading relating to crypto assets are also prohibited. This includes crypto asset exchanges, which allows for the public purchase and sale of crypto assets for FIAT currency; this is due to the similarities between conducting activities in this way and typical financial trading activities.
The PBOC has provided guidance on crypto assets generally but greatly in respect to Bitcoin alone. Crypto assets are not banned and the government appears to be encouraging the development of blockchain technology associated with crypto assets but putting much emphasis on the application of the technology as a centralised piece of technology.
The government has made a certain distinction between “sovereign” crypto assets, which the PBOC would wish to issue, and “non-sovereign” crypto assets.
The law in South Korea
South Korea’s approach is not as stringent as China’s; however, they still have a couple of important laws to note.
Firstly, much like China, ICOs of any type are prohibited for similar reasons as China. Crypto asset trading is not banned, however, there are laws that state that crypto asset purchasing and trading must not be leveraged and therefore the crypto asset exchanges cannot offer derivative crypto asset products with built-in leverage or margined accounts.
The concept of crypto asset mining is a regular and profitable (for some) activity, which involves owners of powerful computers connected to particular blockchains and mining particular crypto assets.
South Korea’s securities laws are much like the ones adopted by the majority of countries in the world who have a form of crypto asset regulation; if the crypto asset acts as a security, it will be treated as one.
How does each jurisdiction compare?
The laws in each country are not too dissimilar. The most important difference is the trading activity, which is lightly regulated in South Korea, in comparison to China where it’s totally banned.
In my view, this is linked to China’s approach to ICOs and the string of illegal and anti-consumer friendly activities that happened as a result of the fallout of the ICOs.
However, as crypto assets are growing in popularity generally around the globe, it appears that the masses are beginning to adopt the idea of crypto assets.
China will need to monitor this progression as if they continue to ban crypto asset exchanges and trading, it may stun growth in China’s crypto asset market.
The future of crypto assets
The crypto asset market has developed and grown since the hype, which ensued in late 2017. There is now a better understanding and a clear distinction between private blockchain, public blockchain and crypto assets with particular characteristics.
It is a growing trend that crypto assets are used for their fundamental value - the blockchain technology as a piece of financial technology to allow access to digital payments to a larger portion of the world that currently has access to it and the transfer of wealth with minimal delay and cost.
The first major example of this was JP Morgan announcing that they intend to produce an internal, private blockchain crypto asset, which will be available for clients to transfer wealth internally more efficiently whilst reducing general overheads.
More recently it was announced that Facebook is to release their own crypto asset named Libra; Libra will be a crypto asset used to send wealth in a much more accessible way.
Libra will allow users of certain messaging apps, such as Facebook and WhatsApp, to send Libra over messages as if it were a picture.
It is probable that with the announcement of Libra and the interest the Chinese people appear to have in the announcement, this concept of Libra could be replicated in China and a similar crypto asset could be sent across their messaging app WeChat.
It will be priced in US Dollars however its price will be derived from a basket of investments and securities. Libra will essentially be an Exchange Traded Fund, which can be held as a digital asset and transferred with greater accessibility and liquidity.
The intention is that Libra will be able to be used in exchange for real products from the business that wish to prescribe to its infrastructure, therefore it will need to be bought and sold by providers but also exchanged on an exchange.
If this is an example of the direction crypto assets are heading, China may need to re-evaluate their approach to exchanges and trading crypto assets in order to facilitate this movement and growth.
It is probable that with the announcement of Libra and the interest the Chinese people appear to have in the announcement, this concept of Libra could be replicated in China and a similar crypto asset could be sent across their messaging app WeChat.
Like South Korea, allowing exchanges to operate, but under greater scrutiny and rules, is likely to be the best approach moving forward, contemplating the changes in the crypto asset industry to allow its progression to the point where crypto assets are just another asset in everyone’s day-to-day life.
The cryptocurrency jumped nearly 200% since the beginning of April.
Michael Novogratz, CEO of Galaxy Digital, joins "Squawk Box" to discuss what might be behind the surge.
The comments come ahead of the recent TV debate between Boris Johnson and his rivals to be the next leader of the Conservative party and British Prime Minister.
Mr Johnson has been publicly open about a no-deal Brexit, which has weighed heavily on the pound.
The deVere CEO’s observation also comes at a time as Bitcoin, the world’s largest cryptocurrency, hit a 13-month price high on Sunday above $9,300, with predictions of the next crypto bull run making headlines. Bitcoin prices have soared more than 200 per cent over the last several months.
Mr Green comments: “It looks almost certain that Boris Johnson will be Britain’s next Prime Minister. His vow to leave the EU in October — deal or no-deal — has prompted a decline in the value of the pound.
“Sterling has lost almost 5% of its value against the US dollar since the start of May. Similarly, it continues six straight weeks of falls against the euro.
“As Mr Johnson’s campaign moves up a gear – as it moves into the next phase to win over the party’s grassroots – we can expect him to also up his hard Brexit rhetoric and this will likely drive sterling even lower.”
He continues: “We are already seeing that UK and international investors in UK assets are responding to the Brexit-fuelled uncertainties by considering removing their wealth from the UK.
“One such way that many are looking to diversify their portfolios and hedge against legitimate risks posed by Brexit is by investing in crypto assets, such as Bitcoin.
“Crypto assets are often used around the world as alternatives to mitigate geopolitical threats to investment portfolios.”
He goes on to add: “The no-deal Brexit issue might be the catalyst for new investors in this way, but they are likely, too, to be aware that many established indicators and analysts are pointing towards a currently new crypto bull run.
“As such, they might think this is now the time to jump into cryptocurrencies - which are almost universally regarded as the future of money.”
In May this year, deVere carried out a global survey that found that more than two-thirds of HNWs - classified in this context as having more than £1m (or equivalent) in investable assets - will be invested in cryptocurrencies in the next three years.
The poll found that 68% of participants are now already invested in or will make investments in cryptocurrencies before the end of 2022.
Of the survey’s findings, Nigel Green commented at the time: “Crypto is to money what Amazon was to retail. Those surveyed clearly will not want to be the last one on the boat.”
The deVere CEO concludes: “As Boris and Brexit continue to dominate the agenda, Bitcoin and the wider cryptocurrency sector could experience a boost as investors seek to protect – and build – their wealth by hedging against the geopolitical risks they pose.”
(Source: deVere Group)
To help them take the first steps in creating their own strategic approach, Mobey Forum’s Executive Director, Elina Mattila, explores some of the most important and influential developments that banks need to know about the industry today.
Outside of the main financial services realm, a multi-billion-dollar global virtual currencies market has rapidly evolved and continues to gather pace. But, whilst virtual currencies have been ‘on the list’ of banks for some years, to date most have taken a hands-off approach.
This is now changing. Some of the larger financial institutions are beginning to formalize their positions. And, thanks to a combination of factors, now is a good time for banks everywhere to follow suit and move the strategic evaluation of this market higher up the priority list.
So, what are the factors at play and what do banks need to know about virtual currencies to enable them to form a clear, long-term strategy?
The crypto-crossover with traditional banking
The world now has programmable money in the form of cryptocurrencies, which are being used globally to exchange value outside of the conventional banking system. Crypto makes up the vast majority of volume in the virtual currency market but only a small percentage of the global money supply. Nevertheless, the numbers are large enough for banks to take notice and investment continues at pace.
Digital currencies may know no borders, but banks have always had perimeter control – whether they have chosen to actively engage or not – as they essentially own the transfer of ‘virtual value’ back into the conventional ecosystem, and vice versa. Now, facilities exist that support crypto trading without a wallet, for example, Bitcoin ETFs (Exchange Traded Funds), bank accounts and futures. In other words, anyone can now trade cryptocurrencies easily through banks or new entrants.
Capitalizing on this, some larger traditional players are starting to establish exchange and custody infrastructure for their clients, a trend which could see major banks exerting far greater influence and control.
Regulation is coming
Of course, there is greater risk associated with trading virtual currencies compared to conventional currencies. New regulations like Anti-Money Laundering 5 (AML5), however, are increasing medium-term clarity. The fact that virtual currencies, including cryptocurrencies, have been brought within the scope of new regulation is creating a competitive advantage for banks. A closely regulated environment plays to their deep regulatory experience and will make it easier for them to forge partnerships with other cryptocurrency stakeholders.
At the same time, new regulations are making it easier for virtual currency companies and exchanges to get access to bank services. This has been considered by crypto stakeholders to be one of the sector’s biggest hurdles to overcome, so banks may now begin to benefit from increased demand from these firms.
Regulation is, therefore, effectively priming the virtual currencies ecosystem for banks to engage by increasing transparency, reducing some of the associated risk, and lowering the barriers to entry. All of this will make it easier for banks to establish a role and to design new payment products.
ICOs and investments
An ICO is an Initial Coin Offering, also called a ‘token sale’. It is a public offering of a new token or cryptocurrency where investors typically, but not always, pay with another cryptocurrency, such as Bitcoin or Ether. ICOs are channeling venture capital investment and associated revenues away from traditional banking systems to crypto exchanges. Their growth demonstrates that virtual currencies, together with the technologies that underpin them, can provide more than just an alternative means of exchange. If jurisdictional challenges can be overcome, these have the potential to disrupt other traditional financial services.
With regulation, however, banks may now begin to evaluate ICOs as a possible investment option for customers.
Gaps are being bridged
The development of decentralized exchanges has triggered a recent surge of activity around creation of stablecoins. Put simply, stablecoins are cryptocurrencies that are either pegged directly, backed by another asset or programmed to ascertain stability against another asset. What’s exciting is that they have the potential to bridge between traditional and crypto assets, and promote stability in an otherwise volatile cryptocurrency market.
Stablecoins represent a far more familiar and serviceable industry for traditional banks, offering them the ability to unlock revenue generation from the cryptocurrency ecosystem, as well as the potential to operate traditional services with new efficiencies.
This is an emerging trend that may have implications for banks in the coming years, and so they may see their roles start to evolve quickly.
What’s next?
There are some credible, greenfield opportunities for banks to explore as they define their role within the virtual currencies market. Whilst the exact future remains difficult to foresee, a combination of these factors, and others, means that banks and financial institutions can now start to make decisions about how to move forward.
To support banks in their strategy creation, Mobey Forum, has released a report entitled: ‘What Banks Need to Know About Virtual Currencies Right Now’. This report, created by the Virtual Currencies Expert Group, provides detailed considerations for banks and financial institutions who are looking to get involved in the virtual currencies market.
The card uses a customer’s balance in Bitcoin or any other virtual currency and converts it into pounds or euro when paying in physical stores or online. It is the first crypto-based debit card to link directly with a cryptocurrency exchange in the UK and EU, as previously available crypto cards “required users to pre-load a specified amount of crypto onto their card, adding a point of friction to the process."
Why is the launch of the card important and how will it affect the crypto industry?
Making cryptocurrency usage easier
Along with Coinbase’s Visa card, the crypto exchange is also launching an app which will allow users to choose which cryptocurrency wallets should be connected to their purchases. The app will also allow customers to receive instant receipts, transaction summaries and access to spending categories. The process of converting users’ cryptocurrency into fiat is quite simple – “crypto, equivalent to the amount spent, is liquidated immediately into fiat ensuring the correct value is captured at the time of the transaction. Funds are debited immediately from the customer’s account”, explained Zeeshan Feroz, Coinbase UK CEO.
Rolling out Coinbase’s Visa card means opening up cryptocurrency payments to a large swath of users who are eagerly anticipating mainstream acceptance of cryptocurrency payments for everyday purchases.
The card will be first available in the UK only, with the view to soon be introduced across all European markets in which Coinbase operates. “The UK is a great first market for the Coinbase card with its thriving FinTech ecosystem and consumer willingness to try new ideas. The Coinbase Card will initially be available in the UK with a view to going live, in the coming months”, said Feroz.
What does it mean for the industry?
Rolling out Coinbase’s Visa card means opening up cryptocurrency payments to a large swath of users who are eagerly anticipating mainstream acceptance of cryptocurrency payments for everyday purchases and it goes without saying that any route that allows users to spend crypto in traditional ways is great for the crypto industry. Niv Abramovich, VP of Product at Coti, believes that utilising the card scheme will increase the popularity of cryptocurrencies. “Making digital currencies more accessible to consumers together with the ability to spend cryptocurrency in the real world could be the next phase to mass adoption and mass market of building digital economies and using digital money”.
“Making digital currencies more accessible to consumers together with the ability to spend cryptocurrency in the real world could be the next phase to mass adoption and mass market of building digital economies and using digital money.”
However, Richard Dennis, Founder and Senior Cryptography Adviser at temtum points out that since a Bitcoin transaction takes at least 10 minutes to enter a block, and 60 minutes to be fully confirmed on the blockchain, the payment processes and exchanges involved are risky. “There is a real possibility that a transaction might fail for a number of reasons, and there is nothing that Coinbase would be able to do about it if it does”, he says. So while the new Coinbase card is a significant step forward to using cryptocurrencies as a medium of exchange for daily purchases, as was the original vision of Bitcoin, Dennis thinks that the current generation of blockchain architecture is not able to completely remove the risk from the payment providers.
Steven Parker, CEO of Crypterium, on the other hand, admits that the card is a good ‘starting point’, however, he argues that the solution is still quite narrow because it will be only available to customers in the UK. “There’s no doubt that crypto debit cards are one of the easiest ways to bridge the gap between the crypto and traditional economies, enabling holders to spend digital assets with the same ease as fiat currencies. Big players like Coinbase play a vital role in spreading the word about this product, but ultimately, companies with more inclusive propositions will conquer the market”, concludes Parker.
