Deutsche Bank Report Claims Demand for Crypto to Accelerate in the Next Decade

Banking giant Deutsche Bank has recently published its outlook for the decade ahead – the ‘Imagine 2030’ report – highlighting the dangers of the forces holding the fiat money system unravelling in the next decade, thus fostering the demand for crypto.

According the recent research report from Deutsche Bank, by 2030, the demand for alternative currencies will rise, with digital currencies eventually replacing fiat money.

Deutsche Bank strategist Jim Reid raised awareness, in the recent report, of the challenges the existing fiat system has encountered in recent years, specifically with the emergence of cryptocurrencies. He further claimed that people’s heightened demand for dematerialized means of payment and anonymity could lead to more individuals switching to digital currencies.

According to data provided by the banking giant, nearly two thirds of consumers prefer dematerialized to cash payments and a third are concerned about anonymity, two things unique to digital currencies.

Whilst digital currencies may not have gained as much traction as a means of payment despite their well-known benefits, such as security, speed, minimal transaction fees, ease of storage and relevance in the digital era, this may change in the next decade.

In the meantime, the researcher report noted that cryptocurrencies need to overcome three main hurdles in order to gain wider acceptance. Firstly, digital currencies must become legitimate in the eyes of governments and regulators, which requires bringing stability to the price as well as advantages to both consumers and merchants.

Secondly, cryptocurrencies must allow for global reach in the payment market. According to the report, this could be achieved by forging alliances with key stakeholders. For instance, mobile apps such as Apple Pay, Google Pay, card providers such as Visa and Mastercard, and retailers, such as Amazon and Walmart.

Last but not least, to realize a smooth transition to a fully digitalized platform, the financial system needs to be ready to overcome any kind of electricity shutdown or cyberattack. These are challenges that may arise with mainstream adoption and Reid pointed out that “as that occurs, the line between cryptocurrencies, financial institutions, and public and private sectors may become blurred.”

Deutsche Bank further noted in its research report how prone to inflation and unstable fiat money could be, further suggesting the possibility that inflation could become more embedded in our system and doubts will rise about the sustainability of fiat money.

“Politically it is always too tempting to create money when nothing is backing it. That this current fiat system has survived so long has required a fortuitous set of global forces across multiple decades that have created sizeable natural offsetting disinflationary forces,” they said.

Researchers estimate that by 2030 there could be 200m blockchain wallet users and digital currencies might eventually replace cash , granted that governments back cryptocurrencies, and consumers want them, and if current trends continue.

However, currently, political support remains far from clear. Buying and selling cryptocurrency in countries like China and India is still banned, with the former adopting a singularly hard stance of late.

FinTech Firm SoFi Receives BitLicense from NYDFS

San Francisco-based financial firm SoFi has announced that it was granted a BitLicense from the New York State Department of Financial Services (NYDFS).

According to a press release, the fintech firm confirmed that the NYDFS granted a BitLicense, which would allow its users in the state of New York to trade digital currencies through its SoFi Digital Assets subsidiary.

The BitLicense acquisition comes just a couple of months after the firm launched in September its cryptocurrency trading services within its investment platform.

SoFi launched as a student loan refinancing platform and has ever since offered a varied portfolio of fintech services including online lending, such as student loans and mortgages. In addition to that, the platform also facilitates investing in other securities such as ETFs and stocks as well as robo-investing.

Following the announcement, SoFi will be authorized to support a total of six digital assets including Bitcoin (BTC), Ether (ETH), Bitcoin Cash (BCH), Ethereum Classic (ETC), Litecoin (LTC) and Stellar (XLM). SoFi’s cryptocurrency offering sits alongside other investment vehicles including stocks and ETFs on its SoFi Invest application, released earlier this year.

In addition to the BitLicense, SoFi has acquired another license – a money transmitter license, which will help the firm offer crypto trading service to its clients.

“After a rigorous application process, SoFi can now provide its members in the state of New York a trusted, secure platform to trade crypto,” stated SoFi in a press release.

Whilst sharing more details about the license, CEO SoFi Anthony Noto noted that the decision to pursue a BitLicense was a result from client demand:

“Putting our members’ interests first is our top priority at SoFi. That includes both offering individuals the products they want, like cryptocurrency within SoFi Invest, as well as protecting them, through a solid regulatory framework like that created by the New York State Department of Financial Services. We’re thrilled to now be able to offer the trading of cryptocurrency, in addition to active and automated investing, as part of SoFi Invest in New York State, in addition to the full suite of SoFi products that help our members borrow, save, spend, invest, and protect their money.”

Noto further added that the approval is proof to SoFi’s ongoing commitment to earning the trust of regulators and stakeholders as the platform tries to expand their line of services and products targeted at investors.

As it is known, a BitLicense serves a major business license for cryptocurrencies with a number of terms and conditions such as rules on operating with digital currencies, its control, administration, maintenance, storing and issuing, among others.

The California-based financial firm is now one of 24 crypto-related firms that have been granted a BitLicense since 2015, including exchanges like Gemini and trading operations like Tagomi. Earlier this year, NYDFS granted a BitLicense to two subsidiaries of crypto derivatives firm Seed CX — Seed Digital Commodities Market LLC and Zero Hash LLC.

Germany: Proposed Bill Set to Introduce Cryptocurrencies at Local Banks

Cryptocurrencies might get the same treatment as fiat money in Germany. A newly introduced bill hints at authorities looking to allow German banks to sell cryptocurrencies and provide custody solutions.

According to local news agency Handelsblatt the new bill was proposed for voting in the Bundestag, the German parliament and has seen positive reception. Now, it requires consensus across the country’s 16 federal states to be successfully implemented.

As it stands, banks and financial institutions are restricted from allowing transactions related to cryptocurrencies for clients. The proposed legislation, if approved, will make a monumental difference for cryptocurrency availability in the country.

If the states agree upon the legislation, German citizens will be able to buy and hold Bitcoin, Ethereum, along other cryptocurrencies directly with their banks. The whole spectrum of banking services might be available for cryptocurrencies as well.

Banks have been eager to get into the cryptocurrency industry as the interest for digital currencies seems to be mounting both from consumers as well as governments and corporations. The bill is set to be implemented in 2020, as Handelsblatt outlines:

“​​Starting in 2020, financial institutions will be able to offer their customers online banking, virtually at the touch of a button, along with classic securities such as stocks and bonds, as well as cryptocurrencies.”

The new legislation has seen wide support and enthusiasm from the domestic industry. The Association of German Banks — a major lobbying group representing over 200 financial institutions — is a huge advocate of the bill, arguing that established financial institutions have the experience and risk mechanisms in place to safeguard client assets.

In October, the Association released a paper arguing that the European economy may benefit from a programmable digital euro.

At the same time, there have been mixed signals towards cryptocurrencies from various governments. The Bundestag has recently shared an opinion that cryptocurrencies such as Bitcoin are not real money, citing their volatility and allegedly limited use for payments. Concurrently, nation states have been quick to dampen the development of Facebook’s stablecoin, fearing a potential disruption of the existing monetary system.

The European Central Bank has also been stringent on digital currencies, stating that global stablecoin payments raise potential risks across a broad range of policy domains, which is the primary objective of a central bank.

Singapore Central Bank Develops Cross-Border Payment Rail with JPMorgan

The Monetary Authority of Singapore (MAS), the country’s central bank, in collaboration with investment bank JPMorgan has developed a blockchain-based prototype for multi-currency payments.

According to an official release on Monday, MAS stated that the latest development for its Project Ubin allows for payments to be executed in different currencies on the same network, enabling cross-border payments. This is the fifth phase of the project, which was developed in collaboration with JP Morgan and Temasek – a government-owned investment company.

Started as a collaborative project to test the viability of blockchain and distributed ledger technology, MAS states that the novel implementation is bringing cost and speed benefits.

“There is growing evidence now that blockchain-based payments networks are able to enhance cost efficiencies and create new opportunities for businesses,” said Sopnendu Mohanty, chief fintech officer of MAS.

In its fifth phase, the prototype developed allows for payments settlement and clearing with different currencies. The payments network will also provide an interface for other blockchains to connect and will support delivery-versus-payment (DvP) settlement with private exchanes, conditional payments, escrow as well as payments commitments for trade finance.

Beyond technical experimentation, the fifth phase of Project Ubin sought to determine the commercial viability and value of the blockchain-based payments network. Until now, MAS and its partners have engaged more than 40 financial and commercial companies to explore the potential benefits of the blockchain-based network.

“The inclusion of non-financial services companies has demonstrated applicability of blockchain technology beyond capital markets and trade finance. We look forward to deeper collaboration and support for Singapore’s pioneering efforts in the blockchain space,” stated Chia Song Hwee, Chief Operating Officer at Temasek.

Investment bank JP Morgan, part of project Ubin, acts as the infrastructure provider for the prototype’s development. The banking giant has tipped its toes in the blockchain industry with various initiatives, including the inter-bank settlement network with its own stablecoin JPM Coin.

“J.P. Morgan is excited to be an infrastructure partner of MAS and Temasek for Phase 5 of Project Ubin. By leveraging our key learnings from building the Interbank Information Network® (IIN) and the JPM Coin, J.P. Morgan is well-positioned to support the development of a blockchain-based payments network and operate at scale.” John Hunter, Global Head of Clearing and Interbank Information Network.

Consultancy firm Accenture is set to publish a detailed report with the results of the prototype by early 2020, which will also indicate additional features that could be provided by the network.

Singapore officials hope that the success of their trial will motivate other central banks to explore blockchain-based settlement networks as well. Recently, People’s Bank of China (PBoC) revealed the development of its own digital currency, while the European Union is considering the issuance of a digital Euro.

Standard Chartered Joins Other Banking Giants at Enterprise Ethereum Alliance

British multinational banking giant Standard Chartered, with over $685 billion in total assets, has just announced its partnership with Enterprise Ethereum Alliance – a member-operated organization that works in the development of blockchain technology for consumers and businesses across the globe.

According to a post on the official website, Standard Chartered announced the partnership with EEA, stating that its main goal is to further develop blockchain technology research and its application in the banking sector. In addition to that, the EEA’s charter has indicated that its intent is to develop open blockchain frameworks to push interoperability between businesses and consumers.

Following the announcement, Standard Chartered joins other industry leaders, which are members of the EEA that wish to strengthen blockchain research and its application in the banking sector. Other banking giants include JP Morgan, ING, Citi, and Spanish bank BBVA. The alliance comprises of around 100 other members, all working towards encouraging the use of Ethereum blockchain as an open-standard to empower enterprises.

The post further reads that the bank strongly believes blockchain to be the best way for central banking and commerce as it would allow transactions to be verified, secure, and processed in real-time. Upon the announcement, Dr. Michael Gorriz – Chief Information Officer at Standard Chartered – stated:

“We are excited to be a part of the EEA and look forward to opportunities where we can collaborate to deepen blockchain research and application in the banking sector.”

Certainly, this is not Standard Chartered’s first venture into blockchain technology. The post has cited a lot of global collaboration projects with fintech firms to explore financial systems’ efficiency improvements, build blockchain-enabled financing solutions for supply chain, and assist cross-border remittance services between Hong Kong and the Philippines using blockchain technology.

The bank is a founding member of the blockchain- based trading platform Voltron and has also recently completed its first international letter of credit (LC) transaction on the platform for the oil industry.

The British bank has also invested in blockchain payments firm Ripple and is currently working with China-based Linklogis to develop a blockchain-based supply chain financing solutions. In addition to that, the bank is currently working with the Central Bank of Thailand to aid them in creating a CBDC, as well as backing the Monetary Authority of Singapore’ s initiative to explore DLT use for payment settlements.