ALTCOIN, BLOCKCHAIN

Wells Fargo to Pilot Settlement Service Using Blockchain

Wells Fargo & Company announced plans to pilot an internal settlement service, Wells Fargo Digital Cash, which will run on Wells Fargo’s first blockchain platform.

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Wells Fargo Digital Cash will allow Wells Fargo to complete internal book transfers of cross-border payments within its global network using digitized cash — and for those international locations to exchange that digitized cash among themselves.

To date, Wells Fargo has successfully proven the concept of moving value between the U.S. and Canada. The internal DLT network will be a reusable enterprise utility for Wells Fargo to build and deploy multiple DLT-based applications.

“As a result of the increasing digitization of banking services globally, we see a growing demand to further reduce friction regarding traditional borders, and today’s technology puts us in a strong position to do that,” said Lisa Frazier, head of the Innovation Group at Wells Fargo.

“We believe Distributed Ledger technology (DLT) holds promise for a variety of use cases, and we’re energized to take this significant step in applying the technology to banking in a material and scalable way. Wells Fargo Digital Cash has the potential to enable Wells Fargo to remove barriers to real-time financial interactions across multiple accounts in multiple marketplaces around the world.”

DLT provides a permanent, highly secure and trusted record of transactions.

Wells Fargo Digital Cash will run on DLT and will help Wells Fargo achieve near real-time money movement without impact to the underlying account, transaction postings or reconcilement infrastructure with international transactions (where platforms and process differ).

Wells Fargo global locations will be able to exchange funds in expanded operating hours without limitations from traditional posting infrastructure or differences in infrastructure across the network.

RELATED: NASA to Hire Data Scientist With Blockchain Background

Final settlement will occur without the need for third parties, reducing transfer time and costs. Corporate clients will not have to change their payment processes, cash management responsibilities or relationship management practices to benefit.

The pilot, planned for 2020, is expected to complete USD transfers initially, with a goal to expand to multi-currency transfers and the entire global Wells Fargo branch network.

The internal DLT network is proprietary and will not be connected to any other digital cash solutions emerging in the financial services markets today.

Wells Fargo & Company is a diversified, community-based financial services company with $1.9 trillion in assets.

Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially.

Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, investment and mortgage products and services, as well as consumer and commercial finance, through 7,600 locations, more than 13,000 ATMs, the internet and mobile banking, and has offices in 32 countries and territories to support customers who conduct business in the global economy.

With approximately 263,000 team members, Wells Fargo serves one in three households in the United States.

Wells Fargo & Company was ranked No. 29 on Fortune’s 2019 rankings of America’s largest corporations.

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BLOCKCHAIN

NASA to Hire Data Scientist With Blockchain Background

NASA is looking to hire a candidate with experience with cryptocurrency and blockchain technology at its Jet Propulsion Laboratory in California, according to the agency’s LinkedIn.

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The Data Scientist position requires knowledge in one or more related fields including big data, machine learning, Internet of Things, analytics, statistics and cloud computing.

According to the listing, the potential candidate will have the opportunity to “conceptualize and develop innovative applications for cross cutting areas of the laboratory including robotics, artificial intelligence, multi-mission systems, mission assurance, cloud computing, next generation flight hardware, and intelligent digital assistants.”

RELATED: NASA to Utilize Blockchain Technology to Secure Flight Data

The listed qualifications are supposed to be implemented by the data scientist in designing and implementing a program for analyzing complex, large-scale data sets used for research, modeling, data mining and predictive analysis at NASA, the agency wrote.

NASA LogoThis is not NASA’s first time mentioning blockchain.

In January, the agency proposed an air traffic management blockchain framework in order to enable secure, private and anonymous communication with air traffic services.

In April 2018, NASA awarded a grant to be used to develop a blockchain-based, autonomous spacecraft to make decisions without human involvement.

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BITCOIN, BLOCKCHAIN

CME Group to Launch Bitcoin Options in Q1 2020

CHICAGO – CME Group today announced it will launch options on its bitcoin futures contracts in Q1 2020, pending regulatory review.

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Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products.
Tim McCourt

“Based on increasing client demand and robust growth in our Bitcoin futures markets, we believe the launch of options will provide our clients with additional flexibility to trade and hedge their bitcoin price risk,” said Tim McCourt, CME Group Global Head of Equity Index and Alternative Investment Products.

“These new products are designed to help institutions and professional traders to manage spot market bitcoin exposure, as well as hedge Bitcoin futures positions in a regulated exchange environment.”

Since their launch in December 2017, market users have rapidly adopted CME Bitcoin futures for their hedging and trading needs.

There have been 20 successful futures expiration settlements and more than 3,300 individual accounts have traded the product since inception.

Year to date, nearly 7,000 CME Bitcoin futures contracts (equivalent to about 35,000 bitcoin) have traded on average each day.

At the same time, institutional interest continues to build with the number of large open interest holders reaching a record 56 in July.

CME Group is the only derivatives marketplace where customers can hedge or trade benchmark options on futures across every investable asset class, with average daily volume of 4.3 million in 2019 to date.

By launching Bitcoin options, the company is providing clients with additional tools for precision hedging and trading.

As the world’s leading and most diverse derivatives marketplace, CME Group enables clients to trade futures, options, cash and OTC markets, optimize portfolios, and analyze data – empowering market participants worldwide to efficiently manage risk and capture opportunities.

CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indexes, foreign exchange, energy, agricultural products and metals.

The company offers futures and options on futures trading through the CME Globex® platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform.

In addition, it operates one of the world’s leading central counterparty clearing providers, CME Clearing.

With a range of pre- and post-trade products and services underpinning the entire lifecycle of a trade, CME Group also offers optimization and reconciliation services through TriOptima, and trade processing services through Traiana.

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ALTCOIN, BLOCKCHAIN

International Monetary Fund Releases Statement on Cryptocurrency, Stablecoins

The International Monetary Fund (IMF) released a statement regarding potential use cases and risks associated with cryptocurrency, including stablecoins


By Tobias Adrian and Tommaso Mancini-Griffoli

A battle is raging for your wallet. New entrants want to occupy the space once used by paper bills or your debit card.

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The adoption of new, digital payment methods could bring significant benefits to customers and society: improved efficiency, greater competition, broader financial inclusion, and more innovation. But it could invite risks to financial stability and integrity, monetary policy effectiveness, and competition standards, as outlined in a recent IMF staff paper, the first of a new series of Fintech Notes.

“Adoption of new forms of money will depend on their attractiveness as a store of value and means of payment.”

Stablecoin adoption

Adoption of new forms of money will depend on their attractiveness as a store of value and a means of payment. New entrants like stablecoins, however, are significantly different from the popular incumbents: cash or bank deposits.

RELATED: Christine Lagarde: Central Banks Should Explore Issuing Digital Currency

While many stablecoins continue to be claims on the issuing institution or its underlying assets, and many also offer redemption guarantees at face value (a coin bought for 10 euros can be exchanged back for a 10-euro note, like a bank account), government-backing is absent. Trust must be generated privately by backing coin issuance with safe and liquid assets. And the settlement technology is usually decentralized, based on the blockchain model.

Times are changing. USD Coin recently launched in 85 countries, Facebook announced Libra, and centralized variants of the stablecoin business model are becoming widespread. So why are stablecoins taking off?

The strength of stablecoins is their attractiveness as a means of payment. Low costs, global reach, and speed are all huge potential benefits. Moreover, stablecoins could allow seamless payments of blockchain-based assets, and can be embedded into digital applications thanks to their open architecture, as opposed to the proprietary legacy systems of banks.

But the strongest attraction comes from the networks that promise to make transacting as easy as using social media. Payments are more than the mere act of transferring money. They are a fundamentally social experience linking people. Stablecoins offer the potential for better integration into our digital lives and are designed by firms that thrive on user-centric design. Large technology firms with enormous global user bases offer a ready-made network over which new payment services can quickly spread.

Risks of stablecoins

Risks abound, however—so policymakers must create an environment that maximizes benefits and minimizes risks. Policymakers will need to innovate and collaborate across countries, but also across functions. Here are six observations for them to consider.

First, banks may lose their place as intermediaries if they lose deposits to stablecoin providers. But banks are not sitting ducks. They will surely try to compete by offering their own innovations (and higher interest rates). Also, stablecoin providers could recycle their funds into the banking system, or decide to engage in lending by extending deposits themselves. In short, banks are unlikely to disappear.

Second, new monopolies could arise. Tech giants could use their networks to shut out competitors and monetize information, using proprietary access to data on customer transactions. New standards are needed for data protection, portability, control, and ownership. And services need to be interoperable to facilitate entry.

Third, weaker currencies could face threats. In countries with high inflation and weak institutions, local currencies might be shunned in favor of stablecoins in foreign currency. This would be a new form of “dollarization” and might undermine monetary policy, financial development, and economic growth. As countries are forced to improve their monetary and fiscal policies, they will have to decide whether to restrict foreign-currency stablecoins.

Fourth, stablecoins could promote illicit activities. Providers must show how they will prevent the use of their networks for activities like money laundering and terrorist financing by enforcing international standards. New technologies offer opportunities to improve monitoring, however supervisors will need to adapt to the more fragmented and geographically diverse value chain of stablecoins.

Fifth, stablecoins could provoke the loss of “seigniorage,” where central banks capture profits from the difference between a currency’s face value and its manufacturing cost. Issuers could siphon off profits if their stablecoins do not carry interest but if the hard currency backing them earns a return. One way to address this issue is to promote competition so issuers of coins would eventually pay interest.

Sixth, policymakers must reinforce consumer protection and financial stability. Customer funds must be safe and protected from bank runs. This calls for legal clarity on what kind of financial instruments stablecoins represent. One approach would be to regulate stablecoins like money market funds that guarantee fixed nominal returns, requiring providers to maintain sufficient liquidity and capital.

Stablecoins thus present as many conundrums as they do potential benefits—and policymakers would be wise to envision far-sighted regulatory regimes that will meet the challenge. The policies adopted today will mold the world of tomorrow. We explore one such avenue in our next blog.

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BITCOIN, BLOCKCHAIN

CBOE Withdraws VanEck Bitcoin Exchange-Traded Fund Proposal

The Chicago Board Options Exchange’s (CBOE) BZX Equity Exchange withdrew its bitcoin exchange-traded fund (ETF) proposal before the U.S. Securities and Exchange Commission (SEC) on Tuesday.

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The SEC published a notice confirming the application withdraw for the VanEck/SolidX bitcoin ETF.

The SEC had already delayed their decision but faced a new final deadline of Oct. 18 to either approve or deny the recently withdrawn proposal. No explanation was given regarding the decision.

Gabor Gurbacs
Gabor Gurbacs

“We are committed to support Bitcoin and Bitcoin-focused financial innovation,” stated Gabor Gurbacs, Director of Digital Asset Strategies at VanEck.

“Bringing to market a physical, liquid and insured ETF remains a top priority. We continue to work closely with regulators & market participants to get one step closer every day.”

VanEck Associates CEO, Jan Van Eck, stated the company has financial products with exposure to bitcoin, but the products are not currently available to the public.

The VanEck SolidX Bitcoin Trust 144A Shares product will trade over-the-counter and not on a national securities exchange.

The new trust has only garnered the support of a total evaluation of roughly 4 BTC since its launch in the beginning of September.

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