According to a newly released report by the FT, the adoption of digital payment systems is increasing at such a rapid rate that the People’s Bank of China (PBoC) is concerned about the declining relevance of cash.

An increasing number of merchants at tourist spots have started to stop accepting cash, solely relying on applications such as Alibaba’s Alipay and Tencent’s WeChat Pay to process payments.

Growth of Mobile Payments Cannot be Restricted

In late 2018, concerned by the declining usage of cash and the struggle of local banks to facilitate the flow of the Chinese yuan in the Chinese economy, the central bank of China had to remind merchants that refusing to accept the yuan is illegal based on existing regulations.

The PBoC — which has also repeatedly warned about the “risks” of public cryptocurrency applications — said:

In recent years, there have been problems with the circulation of renminbi cash, and the people’s response has been intense. Consumers at tourist areas, restaurants, and retail merchants have had their cash refused, which has damaged the renminbi’s legal status and consumers’ right to choose between payment methods.

Even as early as 2017, local publications reported that more than 90 percent of sales in certain parts of China were processed using fintech applications as both merchants and individuals shifted away from cash, which can be highly inefficient at times.

The rapid increase in the adoption of digital payments has led the valuation of apps like Alipay to exceed those of major banks.

In June 2018, Alipay raised $14 billion at a valuation of $150 billion. As of January 2019, the valuation of Goldman Sachs, one of the biggest investment banks in the U.S., is valued at $63 billion, less than 42 percent of Alipay’s market valuation.

In China, Alipay and WeChat Pay are used to cover every type of operation relating to payments. Employees receive their salaries with the fintech applications, shop for groceries with digital payments, and in some locations, local markets also primarily accept Alipay and WeChat Pay.

Luckin Coffee, for instance, a coffee chain valued at $2.2 billion, was involved in a scandal for refusing to accept cash in its stores. One staff member of a Luckin Coffee said “all the franchised outlets of Luckin should order on our app and pay online,” based on FT’s report.

What Increase in Mobile Payments Mean For Cash

alipay crypto mobile payments
Digital payment platforms like Alipay are quickly making cash obsolete in China, and the anti-crypto central bank is concerned about this trend.

By nature, cash is anonymous. Contrary to popular belief, the digitalization of money into privately-operated crypto tokens or other types of digital currency could provide more control to governments and financial authorities in monitoring transactions and implementing sophisticated surveillance systems.

But, the move from cash to digital payments may lead businesses and individual users to alternative means of payments such as Bitcoin and other public cryptocurrency networks.

Already, major financial institutions such as ICEFidelity, and Nasdaq have begun to build a strong infrastructure supporting Bitcoin and other crypto assets, enabling custodial solutions and operating strictly regulated investment vehicles.

Banks, which millennials generally feel disconnected from as recent reports by Facebook Research and other organizations have suggested, have struggled to meet the demand of new generation users.

Consequently, SquareStripe, and online payment processors have been able to secure a large market share over the digital payments sector and over the long run, more individuals may shift from banks to innovative fintech platforms.

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The fintech and crypto leader for Asia at PricewaterhouseCoopers says, “There are a lot of exciting things that the crypto ecosystem is looking forward to in 2019.”

Henri Arslanian, the crypto lead for Asia at PwC, the world’s second largest professional services network, with roughly 22% of its workforce in Asia, leads the company’s crypto efforts in the region and advises crypto exchanges, crypto funds and ICOs, as well as traditional financial institutions and regulators in relation to their crypto initiatives.

Moving into 2019, Arslanian says the crypto markets have cleared out the noise in the sector, paving the way for the entry of institutional players, whom he says are key for the struggling crypto economy.

The influx, he says, will come in different forms. Key players, such as Fidelity, will launch their own solutions and institutions will partner with crypto companies, as Nomura did with Ledger. Some will also opt to invest sizable amounts of capital into crypto-related companies, as Goldman Sachs did with BitGo.

The institutional entry is expected to go hand-in-hand with a critical development in the sector: regulatory clarity.

Says Arslanian,

“If you look at 2018, a number of jurisdictions provided more regulatory clarity than we had before. Countries from Hong Kong to Switzerland from Gibraltar to Malta. And I expect many of those to take place as well in 2019, and that will give more comfort to some of these – not only institutional investors – but institutional players as well.”

Regularly named one of the most influential individuals in fintech in Asia, Arslanian is also the chairman of the FinTech Association of Hong Kong.

He recently mapped out the new regulatory framework for crypto funds in Hong Kong.

He points to the rise of stablecoins and security tokens backed by real, live assets as a rising sector in 2019.

“For example, real estate. In those areas it allows us to bring liquidity in a space where, especially for large real estate projects, there’s not that much liquidity. But also, it allows us to streamline a lot of the corporate action and dividends, and that is actually very exciting and should help the broader sector.”

As the 5th-largest privately owned company in the US, PwC’s reach extends into 158 countries with 743 locations. The company offers accounting and professional services to 422 out of 500 Fortune 500 companies, plus 100,000 entrepreneurial and private businesses.

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Of all the complex ways blockchain and fintech companies are trying to spark mass adoption, Ohio-based startup Coin Ninja believes it’s very simple. The team of early Bitcoin enthusiasts has just launched a new mobile wallet called DropBit. Dubbed the ‘Venmo for Bitcoin’, the app was designed for simplicity.

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Coin Ninja ⚡@ninja_coin

The DropBit app is being called ‘Venmo for Bitcoin’. Check out how easy it is to text bitcoin to your friends! http://DropBit.app  for iOS and Android!

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The company says crypto will reach mass adoption once it’s super easy to use and when Bitcoin is easy to obtain. In order to get there “sending and receiving Bitcoin should be as easy as exchanging money using apps like Square Cash or PayPal.”

Vitalik Non-giver of Ether

@VitalikButerin

I think there’s too much emphasis on BTC/ETH/whatever ETFs, and not enough emphasis on making it easier for people to buy $5 to $100 in cryptocurrency via cards at corner stores. The former is better for pumping price, but the latter is much better for actual adoption.

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Coin Ninja refers to Coinbase as the most accessible access point for many first-time crypto users, but just signing up requires an involved 6-step process that may scare away the crypto curious.

DropBit allows users to essentially “text” people BTC. The 3-step process requires a user to select the amount of BTC they want to send, select a contact or the recipient’s phone number, and then send the transaction.

The recipient does not need to have an account or a wallet. They simply receive a message that says the BTC is waiting for them. To retrieve it, they download the DropBit app, write down 12 recovery words, and verify their phone number by entering an SMS code.

The sender is then notified and confirms the transaction when they reopen the app. The entire process takes about two minutes. If the receiver doesn’t claim their BTC by installing the app within 24 hours, the currency is returned to the sender.

There are no additional fees from DropBit, just the standard BTC mining fees.

The app is available on iOS and Android. Within the next six months, Coin Ninja plans to harness the Lightning Network and also build partnerships to sell BTC directly to customers.

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The central bank of Bahrain has kicked off a consultative process on cryptocurrency platforms in the kingdom by publishing the relevant draft regulations.

According to the Bahrain News Agency, the draft rules — which target the operations of crypto-asset platforms — aim to provide a regulatory framework for the supervision and licensing of these services. Additionally, the draft rules contain measures aimed at safeguarding the interests of customers, cybersecurity risk management, and technology standards.

“This regulatory framework will address the demand from the market for these services and the need to also recognise this innovation in financial services. The CBB’s experience with the participants within the Regulatory Sandbox was insightful in shaping these rules,” the executive director of banking supervision at the Central Bank of Bahrain, Khalid Hamad, said in a statement.

The Central Bank of Bahrain (CBB) expects to have received feedback on the draft cryptocurrency regulations by the last day of this year.

Bahrain Wants to Be an International Fintech Hub

This comes at a time when Bahrain has identified the fintech sector as crucial in helping the kingdom become a regional business and banking hub. Towards this end, the kingdom has launched a regulatory sandbox to allow financial institutions licensed by the CBB and other firms to “test their technology-based innovative solutions relevant to Fintech or the financial sector in general.”

In September last year, the CEO of the Kingdom’s Economic Development Board, Khalid Al Rumaihi, disclosed that Bahrain was keen on adopting cryptocurrencies and that a bitcoin exchange had already shown interest in setting up shop in the constitutional monarchy.

CCN@CryptoCoinsNews

Bahrain’s Government is Keen on Adopting Bitcoin, Reveals Official https://www.cryptocoinsnews.com/bahrains-government-keen-adopting-bitcoin/ 

Bahrain’s Government is Keen on Adopting Bitcoin, Reveals Official

Bahrain is interested in adopting digital currencies like bitcoin amid a wider impetus toward a ‘country level’ adoption of blockchain technologies.

ccn.com

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Besides cryptocurrency, Bahrain has also been keen to adopt blockchain technology. Last year in February, Al Rumaihi stated that the constitutional monarchy was in talks with the central bank of Singapore and others with a view of adopting distributed ledger technology and becoming a regional leader in the space, as CCN reported at the time:

“Blockchain will unlock so many different possibilities for business in the way email and internet did years ago. What would prevent Bahrain from becoming a leader in this space in the same way Singapore is?”

‘True Mark of Progress’

And three months ago, Bahrain’s electricity and water affairs minister, Dr. Abdulhussain Mirza, called for the adoption of blockchain technology by the private sector in the country:

“Technologies such as blockchain take us a huge step forward in finding a secure way to facilitate transactions,” Mirza said. “Blockchain’s ability to protect user’s data is a true mark of progress, because it can be applied in different companies from different industries including cybersecurity.”

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The issue of Islamic classification of cryptocurrency has been ongoing since the rise of bitcoin’s popularity, with debate over whether or not bitcoin and other cryptocurrencies are considered halal (permitted) or haram (forbidden).

This is due to the stringent guidelines regarding monetary classification laid out in the Muslim faith, with conditions forbidding usury (the act of lending for profit on interest) as well as currency backed by nothing considered to be of value. The fractional reserve banking practices which led to the 2008 global financial crisis and the collapse of the US housing market, for example, are completely forbidden by Islamic law, and Muslim bankers and financial professionals cannot engage in them in accordance with their faith.

CCN has covered previous cryptocurrency developments in Islam such as the first ever mosque in Britain to accept cryptocurrency for alms-giving and the declaration that bitcoin is halal, or Sharia-compliant, according to certain scholars. Today, further progress has been made with Swiss financial technology firm X8 AG becoming certified by Islamic scholars for its digital currency, a certification that will be necessary to accommodate the company’s planned expansion into the Middle East.

Many other fintech firms are applying for and pursuing Sharia-compliant recognition that will grant them access to the Muslim banking world, and Middle Eastern regulators and exchanges are equally open to attracting international business pending scholarly approval. The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) conference of Sharia scholars met in Bahrain earlier this year with the classification of cryptocurrencies one of the major items on the agenda.

x8 cryptocurrency crypto

X8’s Ethereum-based cryptocurrency is backed by a basket of eight fiat currencies and gold, which helps the requirements for currency in terms of being backed by commodities or resources deemed to be inherently valuable. This distinction can be a shaky one — fiat currencies like the dollar are typically unbacked by gold these days and are simply deemed valuable by virtue of mainstream social acceptance and adoption, and indeed gold is valued higher than its utility as a conductor due to socially-held beliefs that it is a precious metal.

The Islamic requirement that cryptocurrencies are only valuable if society agrees may seem like a catch-22, but this is essentially a more formal version of the same process for Western valuation of cryptocurrency as well. In this case, X8’s cryptocurrency and related tokens have been certified by the Shariyah Review Bureau(SRB), an Islamic advisory firm licensed by Bahrain’s central bank.

X8 director and co-founder Francesca Greco said:

“The Gulf region is a really good place for financial technology companies, because they all want to become hubs for fintech,” adding the company would open a regional office in the Middle East later this month.”

Regional Gulf regulators have encouraged fintech innovation over the past few years but are still wary of cryptocurrencies, which Greco states is an opportunity for stablecoins to step in and fulfill their use case of reducing volatility. Equally, Switzerland has embraced blockchain with open arms, establishing the small city of Zug as one of the world’s leading blockchain hubs, collaborating with other nations on blockchain regulation, and rolling out blockchain voting prototype systems.

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Rick Klink, a top fintech executive from Melbourne, is now heading up the Malta Digital Exchange, a company that is about to launch a security token exchange.

 

Rick Klink, a top Australian fintech executive, has joined Malta Digital Exchange (MDX), a security token exchange which is about to launch, as its CEO, MDX said in a statement. Klink, who has founded Paritech, which develops stock market brokerage systems, and Open Markets, the largest independent trading platform in Australia with an annual trading volume of over A$50 billion, will integrate the technologies from his companies into MDX.

Malta Digital Exchange plans to become a preferred security token exchange by both investors and token issuers, aiming to ensure a higher degree of market efficiency, liquidity, accessibility, and transparency.

Security tokens represent a digital form of securities, generally stored on a type of distributed ledger technology (DLT), of which blockchain is the most popular. The tokens can be backed by ownership of private equity, real estate or other real-world assets.

Besides security tokens, Malta Digital Exchange intends to operate with virtual financial assets (VFA), thus becoming a multi-asset digital exchange. The company picked Malta as the location for its headquarters and business operations given the countrys blockchain-friendly legal and regulatory framework.

It’s a very exciting time in the digital assets space with the rapid emergence of security tokens. Malta Digital Exchange is at the forefront of the current Capital Markets 2.0 wave, Klink commented.

The crypto and blockchain industry noticed an impressive expansion last year. Today, the markets are moving towards regulation, which should ensure a safe ecosystem for both retail and institutional investors.

Some countries, such as Malta, are speeding up blockchain adoption by developing favorable laws. The Maltese government is working on three crypto and blockchain laws.

MDX will use the technology provided by Paritech, which develops and integrates low touch and affordable stock market brokerage systems. Some of the exchanges features will be instant order matching T+0, limited and unlimited orders, minimum and partial executions, and adjustable and special fees.

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Robinhood, a red-hot investing app that launched cryptocurrency trading in February, is planning an initial public offering (IPO). CEO Baiju Bhatt made the announcement during a talk at TechCrunch Disrupt SF. He says the company is currently looking for a CFO to lead the effort.

Robinhood currently has 5 million customers and roughly 250 employees. The startup is valued at an estimated $5.6 billion, up from $1.3 billion last year when it had 2 million customers.

What separates Robinhood from other trading platforms is that they collect zero commissions, making all trades free.

“We believe that the financial system should work for the rest of us, not just the wealthy […] We’ve cut the fat that makes other brokerages costly, like manual account management and hundreds of storefront locations, so we can offer zero commission trading.”

These perks have created enough momentum for the startup to land on two major media lists. It ranked #6 on LinkedIn’s 2018 Top Startups list, Robinhood, just ahead of cryptocurrency giant Ripple and just behind the popular scooter app Bird.

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Robinhood Crypto also earned an honorable mention from Fast Company, which just announced its Innovation by Design awards for apps and games.

Robinhood

@RobinhoodApp

Robinhood Crypto received an honorable mention in @FastCompany’s 2018 Innovation By Design Awards. Be on the lookout as we continue improving Crypto for all of you–while keeping it commission free.https://www.fastcompany.com/innovation-by-design/2018/category/apps-and-games 

These Are the 397 Most Inspiring, Innovative Designs of 2018 | Fast Company

When it comes to solving problems, these trailblazing businesses are doing it as simply and as beautifully as possible. Meet the 2018 Innovation by Design honorees.

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Founded in 2013, Robinhood is planning its IPO after five years of solid growth and revenue streams. The company generates revenue through its margin trading subscription service, Robinhood Gold, and by collecting interest on stored investor funds.

 

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The United Arab Emirates (UAE) has approved a draft of regulations governing Initial Coin Offerings (ICO), local media outlet WAM reported Sunday, September 9 citing government sources.

The reported move comes in addition to lawmakers in the country adopting plans for a regulatory sandbox aimed at attracting greater fintech activity.

“The sandbox will act as an environment that attracts innovators to test innovative products, services, solutions and business models in a controlled space,” a report from the Securities and Commodities Authority (SCA) published September 4 reads, adding:

“This can be achieved by adopting an approach of relaxing and / or waving regulatory requirements for participants in the sandbox, while at the same time, ensuring that appropriate consumer protection safeguards are in place.”

The regulatory proposals regarding ICOs gained approval from the SCA in July, while WAM now reports the agreement will enter into law upon its imminent publication in the UAE’s Official Gazette, an official periodical containing all the country’s legislation.

“The SCA Board of Directors has approved the SCA plan to regulate the ICOs and recognise them as securities,” WAM stated, noting:

“The Board of Directors, having reviewed a study on the best international practices in this regard, has issued a directive that the procedures for trading digital token are to be regulated. The plan developed by the SCA includes a set of mechanisms as part of an integrated project to regulate digital securities and commodities.”

The UAE has pursued an in-depth policy of fintech integration in recent years, with a particular emphasis on blockchain at both municipal and state level.

 

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