Category Archives: FinTech and Alternative Finance

News on China cryptocurrency and more reforms

Schulte Research | Paul Shulte | Aug 21, 2019

China coin crypto - News on China cryptocurrency and more reformsChina is barreling forward on reforms and rolling out the crypto currency. It will be the first central bank to do so.  This will give added momentum to Libra.

Libra could become a new anchor market for global IPOs. Take this seriously. Join if you can.  I’m pretty sure I’m right that it has backing from the very top of the US govt.

1. Cryptocurrency — The China coin is due to be rolled out in November. I hear that the distribution of the coin will be limited to 7 players:

  • The big banks: CCB, ICBC, BOC, ABC.
  • Alibaba and Tencent.   Positive momentum,,,
  • Union Pay.   Interesting — to keep this alive.

All others will be secondary.  The PBOC head did on SUnday make an explicit reference to Libra. As I suspected, China rightly sees Libra as a challenge to China’s early commanding lead in e commerce and payments in all of Asia and through the Silk Road. It clearly is.   Interestingly, HSBC and Stan Chart are cut out. No foreign banks in the consortium.    No foreign firms in Libra (except, weirdly,  Mercato Libra from Arge).

2. China yesterday doubled the size of the free trade zone in Shanghai and has allowed partial capital account convertibility in Shanghai.  This is big and a challenge to HK.  It will also drop duties in Shanghai.

3. ALibaba has cancelled the secondary listing in HK until further notice due to the instability. Big negative for HK.

4. Singapore has suspended all university exchange programs between Singapore and Hong Kong for this year due to the instability.  SO, people are stuck in Singapore to finish programs.

Check out Paul Schulte's new book: AI & Quantum Computing for Finance & Insurance: PRC VS US. https://www.worldscientific.com/worldscibooks/10.1142/11371

Related: 

 


NCFA Jan 2018 resize - News on China cryptocurrency and more reforms The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Exponential Group Joins NCFA as an Industry Partner | Interview with ExG Co-Founder, James Wallace

NCFA Canada | Craig Asano | Aug 20, 2019

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TORONTO, ON Aug 20, 2019  The National Crowdfunding & Fintech Association of Canada (NCFA) is pleased to announce that the Exponential Group (Exponential Ventures, Exponential Capital and Exponential Markets) has joined NCFA as an industry partner.

NCFA's industry partners are builders, investors and innovators who have provided a significant level of service and/or contribution towards the sustainability and growth of NCFA and related fintech sectors globally.  We encourage the fintech ecosystem to support and collaborate with NCFA's global network of industry partners by engaging directly with their ventures of mutual interest.

"Since founding NCFA in the summer of 2012, one of it's core missions has been working with communities of change that are passionate about enabling inclusive opportunities for 'big vision' companies seeking to change the world but need access to capital and resources to innovate competitive products and services that otherwise may not exist.  These companies often focus on new economies of scale that look beyond 'for profit' models alone.  Supporting and leading this change by developing new infrastructure and partnerships while leveraging new technologies can be a beacon of light resulting in massive transformation and change." - Craig Asano, Founder and CEO, NCFA

 

Meet James Wallace, Co-Founder of the Exponential Group

Exponential Group is the world's first fully integrated early-stage seed capital, business advisory, later stage capital raising, digital issuance and trading.

 

Q1. How did you get to where you are today?

James:  A whole lot of failures that led to a massive amount of learning.

 

 

Q2. What can you attribute your achievements to date to?

James:  Empathy for the excluded, plus grit and determination.

 

 

Q3. What’s the story behind founding Exponential Group and specifically what problems are you interested in solving as a Founder?

James:  An unwavering intention to migrate society to a free, inclusive and abundant paradigm by resolving government and financial exclusion.  Alleviate suffering and expand human potential to enable meaningful living.

 

 

Q4. Can you tell us more about the Digital Asset Impact Fund?

James:  The exchange-traded diversified digital asset impact fund will allow anyone access to a fund that holds a board basket of digital assets. These assets include tokenized real estate, currencies, precious metals, art, and venture capital. This is the easiest way to participate in migrating the economy to the digital asset world.

 

 

Q5. What role/impact do you think blockchain and digital securities will have on the future of financial services?

James:  Blockchain introduces trust to the Internet for the first time. Said another way, a trusted engagement is a secured value exchange, whether that’s an exchange of time reading content on a blog, giving personal data to your government, or trading any store of value such as a digital asset for fiat currency.

Different blockchains verify various aspects of user engagement online. As more and more blockchains connect to support the services of web users, non-blockchain equipped services will simply fall away, as they will not (and can never) be trusted.

Connections to web pages and native applications that are not secured and validated by blockchains will simply cease to exist over time. Bad players will slowly go extinct as blockchain-based services prevent their access to users.

The network of blockchains will eventually become the new Internet. And, because we believe absolute trust scales absolutely, ExV invests in platforms that create and grow trust with their users, in addition to adding significant value by solving a major problem.

 

Q6. What’s the greatest risks and challenges to improving mass adoption and education of blockchain and other technologies with the potential to impact great social change?

James:  Education and updating regulation. In parallel, we need to help everyday investors understand that there are only benefits to digital securities, as well as press the regulators to allow access to digital asset investments for retail investors. We believe the rest will happen naturally.

 

 

Q7. Where do you see Exponential Group in 3-5 years from today?  How can our community help out and get involved and where can we get more information?

James:  Exponential Group will continue to focus on expanding cross-border digital securities trading and as a result we believe in 3-5 years we will be one of the largest global investors, issuers and traders of digital securities.

Exponential Group is looking for dynamic founders to assist in issuing high quality digital securities and investors that wish to upgrade their investment portfolios to contain digital assets.

The best place to connect and get more information is at exgroup.ai.

 

Thanks to James and the Exponential Group for their support of the NCFA Community.  We look forward to collaborating and continuing to advance the development, adoption and growth of industry!

 


NCFA Jan 2018 resize - News on China cryptocurrency and more reforms The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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United States: The Fed’s Jump Into Real Time Payments Appears To Be Good News For Community Banks and FinTechs

Pryor Cashman | Jeffrey Alberts and Dustin N. Nofziger | Aug 13, 2019

cash payments - News on China cryptocurrency and more reformsThe Federal Reserve Board has announced plans to develop a real-time payment service that should appeal to FinTech companies and community banks. The Board announced last Monday that it will develop a new round-the-clock real time payment and settlement service to support faster payments in the United States. This new real-time gross settlement (RTGS) service, which will be known as the "FedNow Service," is anticipated to be available in 2023 or 2024. The Board is currently soliciting comments on all aspects of the proposed service in order to finalize its design and features. The Board's intention to operate a RTGS service is a win for community banks and FinTech companies, although it may threaten those FinTechs with business models centered around providing real time payments.

The Board's plans were not developed in a vacuum. The Clearing House (TCH), which is owned by 30 of the world's largest commercial banks, previously rolled out a RTGS system known as the "RTP network" in November 2017 – some six years before the Board anticipates that its FedNow Service may first become available. The RTP network reportedly cost over $1 billion to develop and already reaches over 50 percent of U.S. demand deposit accounts. TCH's Business Principles for the RTP Network provide that TCH runs the RTP network "as a utility for the benefit of the industry" and that it charges flat fees to all participants regardless of size or volume.

See:  New Regulatory Framework for Canadian Retail Payments Coming in 2019

It is fair to say that community banks have been skeptical of the intentions of the large commercial banks behind TCH and the RTP network. The Independent Community Bankers' Association of America (ICBA), for example, strongly advocated for the Board to operate a competing RTGS service. The ICBA argued that there was a need for competition in real-time payments and expressed concern about "the risk of having only one, for-profit, private sector settlement service run by the nation's largest and riskiest financial institutions." Due in part to these concerns, the Board's previously announced consideration of whether it should create a competing system reportedly slowed adoption of the RTP network by community banks.

FinTech companies may also benefit from the availability of a real time payments networks. Consumers increasingly expect real time payments, and FinTech companies have expressed frustration about the difficulty of providing payments services in the United States that can meet this expectation. Of course, those FinTech companies whose primary service is the provision of faster payments may face a future threat from the FedNow Service.

Continue to the full article --> here

 


NCFA Jan 2018 resize - News on China cryptocurrency and more reforms The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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The Solution To The Fintech IPO Shortage

Forbes | Ron Shevlin | July 1, 2019

fintech IPO shortage - News on China cryptocurrency and more reformsOBSERVATIONS FROM THE FINTECH SNARK TANK

A Seeking Alpha article titled Why Fintech May Not Be Fit For Public Consumption states:

The year 2019 seems set to be a record-setting one for venture capitalist exit value capture by means of tech IPOs. But fintech doesn't seem to be a part of this picture. VCs are certainly putting money into fintech startups. There were 170 financings in the US in the first quarter of 2019. But, as Pitchbook says, 'not one of the most valuable fintech companies in the world seems particularly close to an offering.' "

The article chalks this up to three primary causes:

1. Poor IPO performance in 2018. According to the article, "One reason nobody is in a hurry to go public is that the results of the last crop of fintech concerns that did go public have been unimpressive. Adyen and IntegraFin are prospering, but neither GreenSky nor EverQuote is "lighting up the heavens" according to Seeking Alpha.

See:  OurCrowd Double IPO Success Provides Crowdfunding Validation

2. Mega-round financing. Seeking Alpha postulates that investor interest in mega-rounds--e.g., Qatar Investment Authority's investment of $500 million in SoFi and Tiger Capital leading a round that raised $300 million for Coinbase--is another factor dampening interest in IPOs. According to Jim Marous, publisher of the Digital Banking Report:

With all of the mega-round investment in fintech firms, you would think more fintech players would cash out and go the IPO route. But why would successful fintechs, who appear to have a bottomless pit of funding at their disposal, subject themselves to the massive scrutiny that comes from going public? Fintech firms don't see a slowdown of the funding fire hose and have no desire to lose control of their vision."

3. Lack of scale. Seeking Alpha asserts that fintech "doesn't scale as easily as other sorts of tech," making fintech startups less likely to be IPO candidates. According to one veteran of the fintech startup scene (a founder and angel investor who now heads up technology innovation at a large bank, which is why he prefers to remain anonymous):

People underestimate the scale dynamics of financial services. You need a lot more maturity across all measurable KPIs before you can be successful in the long-term. In an ecosystem with these scale dynamics, if a fintech startup can use private capital at favorable costs to grow operations and monetize employee equity, and avoid the distracting microscope of quarterly filings, it's going to do so."

Pascal Bouvier, Managing Partner of Middlegame Ventures echoes this sentiment, but points out that there are startups who have achieved scale and still not gone public:

Stripe is an example of a fintech that should already be public--they've achieved scale. But for others, operational readiness at massive scale is key in order to go public. If you do not achieve repeatability in your core business you end up suffering post-IPO.”

 

The Business Model Factor

Scale is certainly a big part of the equation--but why aren't many fintech startups able to achieve scale? The answer may be their lack of a sustainable, viable business model. According to Brad Leimer, co-founder of Unconventional Ventures:

It's much easier for companies like Ayden and Klarna to go public because they have a profitable model out of the gate--they only need to achieve market share to achieve escape velocity. Fintechs have to figure out that there are alternative business models to the ones banks leverage today. The path toward more IPOs in fintech is to think differently about where the industry derives value in exchange for what they create for the consumer of business."

Interestingly, Leimer's two examples are B2B--not B2C--companies, and that might hold a clue to the dearth of fintech IPOs.

See: 

Many Fintech Startups Aren't Meeting The Criteria For Sustainable Growth

What must a fintech (or any) startup do to succeed for the long-term? To oversimplify matters, it must first either offer a new product or service to fulfill unmet needs or provide an existing product or service with innovations to marketing, distribution, service, and/or product and service features that enable it to compete with incumbents. And then second, it must either expand the market size and/or its set of offerings to sustain growth.

Too many B2C-focused fintech startups have come to market with existing products or services whose "innovation" is digital distribution and service. That's not enough of an innovation to thrive. The world of B2C fintech in the US is characterized by:

  • Digital tunnel vision. Too many fintech startups suffer from Bank Displacement Syndrome--the belief that traditional banks can be displaced with nothing more than a digital product offering. Consumers who opened accounts with digital banks have done so because they want rewards, better interest rates, and/or better PFM tools--not because they want a "branchless" bank.
  • Featurization. A number of fintech startups have hung their point of differentiation on capabilities like providing a "safe to spend" feature or getting one's paycheck a day early. Savings tools like Digit and Qapital do a great job of helping people save, but the service is tied to some larger solution (i.e., checking account) that they don't provide. This "featurization" of fintech is creating firms with business models that won't provide sustainable growth--and the market is not ready to believe that these firms can expand product-wise.
  • High-risk lending strategies. After hitting a high of $25 per share in December 2014, Lending Club's stock price has been trading for less than $10 since the beginning of 2016. It shouldn't be a surprise. According to Pascal Bouvier, "Lending Club is an example of a fintech that should not have gone public--its credit portfolio wasn't mature enough." That's being generous. The firm's portfolio has been heavily weighted to credit card consolidation from sub-prime borrowers, and it hasn't successfully expanded market size or its offerings to create and sustain growth. The same can be said for some digital-only small business lenders.

Is there hope for the fintech IPO shortage?

Continue to the full article --> here


NCFA Jan 2018 resize - News on China cryptocurrency and more reforms The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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How AI may help solve banks’ customer relationship issues

TechRepublic | Mary Shacklett | July 23, 2019

banking with AI - News on China cryptocurrency and more reformsLearn how artificial intelligence and analytics can be used to improve customer service in banking.

When I was a CIO for a financial institution, I worked with executives on the operations side to see how we could improve relationships with customers at our branches.

Our front-line tellers at these branches were more like order takers—they did what customers asked, but no more. These employees were in low-wage positions, and they often had limited skills. One of the skills we wanted was interpersonal engagement with customers that you would typically find in a salesperson.

We decided to hire people with retail and/or people-facing experience, figuring that we could train them to be tellers. We implemented systems that would prompt a teller to ask a customer about new products the customer might be interested in, and we offered financial incentives for enrolling customers in new products.

The experiment yielded mixed results and likely would have gone better if we'd had some of the analytics and artificial intelligence (AI) automation tools that are available today.

See:  How Jack Ma’s $290b SME credit engine is changing Chinese banking

"Most customers tend to keep their accounts with the bank even if they are not too happy," said Eran Livneh, VP of Marketing at Personetics, which provides AI solutions for the financial services industry. "However, there are now many banking and non-banking alternatives available that were not available in the past that customers can also consider. Millennials also expect more personalization and technology-driven interactions with their financial institutions."

Livneh believes that over time, bank customers will take an increasing portion of their financial relationships and activities to alternative investment platforms; this will erode banks' ability to maintain these relationships and grow new ones. "We are already seeing flat or decreasing deposits for many of the US regional banks as a result," Livneh said.

This is where AI comes in and where banks have an advantage because of all of the data they already have on their customers.

"AI can help identify customer personal behavior patterns in their financial transactions and highlight the products, services, and areas of interest that are most important and useful to each customer at a given moment," said Livneh. "It can also be used to turn the experience from looking in the rearview mirror into forward-looking insights and advice, empowering customers to make better financial decisions."

The AI works by aggregating and categorizing customer account activity to provide an integrated view of a customer's financial history. Analytics are then added to highlight exceptions and important events in the customer's history.

The AI engine works on this data to develop prescriptive product and service recommendations for bank frontline personnel to present to customers. This AI can also be integrated into online applications to enable self-service recommendations, which are favored by millennials.

See:  The Case for Open Banking: Benefiting The Underserved

By using AI, banks have improved performance against KPIs by increasing customer engagement, improving customer satisfaction, reducing customer attrition, and increasing deposits and product adoption.

"Royal Bank of Canada recently launched an AI-powered budgeting tool that offers personalized advice to its mobile app customers," said Livneh. "Within the first month of launching, 230,000 budgets have been set up, and customers have been able to save over $83 million total."

This is just one example of how advanced analytics capabilities like AI are making a difference in the quality of customer relationships that are impactive and long-lasting.

To move forward with AI, banks can start by collecting and analyzing both transactional and non-transactional big data on their customers, training their frontline personnel to use these AI engines (which can be integrated into teller applications), and creating easy-to-use online apps for customers who prefer to bank electronically.

Continue to the full article --> here

 


NCFA Jan 2018 resize - News on China cryptocurrency and more reforms The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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Crowdfunding for a Startup: How it Builds a Business’ Credibility

Guest Post | Aug 14, 2019

Funding meeting - News on China cryptocurrency and more reformsYou see a need. You know that your new business can fill that need.

The problem is that it takes an incredible amount of capital to start a business. Besides purchasing equipment, raw materials, and computer systems, you also have the expenses that no one ever thinks about when opening a shop. Did you figure in the cost of hiring an accountant, a lawyer, and paying for workers compensation insurance?

Instead of heading to the bank with your business plan in hand, you may consider whether working with a crowdfunding site might be another feasible way to raise cash for your business expenses.

Here’s how crowdfunding sites work.

Cash in Exchange for Equity

Have you seen Shark Tank? On this TV show, investors decide whether or not they would like to provide capital for startups in exchange for a piece of the company. Sometimes the hosts compete against each other for the opportunity to invest. Sometimes they pool resources and form investment partnerships for a portion of ownership in the company. Occasionally budding entrepreneurs are sent away empty-handed.

See:  Regulation Crowdfunding Surpasses $250,000,000 in Commitments The Model is Working but its Potential is Much Greater

Equity crowdfunding works in the same way. Using a crowdfunding website such as FrontFundr, your investors provide you with funding to move your business forward for a portion of the future profits.

Donations

Perhaps your business may provide a needed service or product for a blighted area. Maybe you are interested in starting a nonprofit group to serve the greater good. If this describes your scenario, you could seek donations from crowdfunding sites. The gifts can be used to get your idea up and running, and of course, there is nothing to repay.  Interested?  Check out FundRazr, Canada's leading donation-based platform, that has helped raise north of $130 million dollars for individuals and organizations.

Donations - News on China cryptocurrency and more reforms

Borrowing from Individuals

Instead of borrowing money from a traditional bank, you could borrow money from individuals leveraging the compliance and match making services of a platform like Lending Loop. You will still pay a set annual percentage rate like you would when taking out a conventional loan.

Rewards

Some investors are inspired to fund new businesses by an offer of a product, service, or gift they will receive in exchange for the cash donation. For example, if you are opening a car wash, perhaps investors will give you a set amount of money for you to purchase equipment with the idea that they will receive free car washes for six months after the business is up and running.

See:  OurCrowd Double IPO Success Provides Crowdfunding Validation

If you had told someone twenty years ago that they would be able to collect cash from strangers over the internet to open a business or pursue a creative endeavor, they would have thought you were crazy. You could have found investors for your business, but only among your friends or family. Otherwise, entrepreneurs were forced to work with traditional banks who may not have been open to offering cash for products they couldn’t understand.

Rewards - News on China cryptocurrency and more reforms

But when you receive money for your idea through crowdfunding, that means that you not only won the backing of a single loan officer at a lending institution. It means that dozens, hundreds, or even thousands of people think that your idea is good enough to support.

Crowdfunding sites have different specialties. Kickstarter connects creative people with resources they can use to bring their ideas to life. Kickstarter has helped artists, musicians, filmmakers, and designers. You no longer have to be a millionaire to be considered a patron of the arts.

Inventors often use Indiegogo, a crowdfunding website that has allowed entrepreneurs to raise over 1 billion dollars. Investors can receive equity in the company or receive a share in the revenue.

All you techies out there will appreciate Crowdsupply, a crowdfunding website for hardware designers and innovators. The hardware must be original, useful, and respectful.

Perhaps you already have a following, and you know you could increase your cash flow by offering exclusive content or behind-the-scenes experiences for your fan base. You may want to check out Patreon.

See:  What You Should Know About Crowdfunding Your Start-up

Designing a campaign - News on China cryptocurrency and more reforms

There are several websites you can visit to help raise money for a nonprofit entity. Go Fund Me was started by Indiegogo. You could also visit StartSomeGood, which allows you to submit your project for free as long as you agree to pay a service fee of 5% of your project is fully funded.

If you are seeking funds to open a business, take a look at WeFunder. This website has more than 150,000 who are interested in keeping the American Dream alive. The site is quick to tell investors that they may undoubtedly lose their money on the investments since so many small businesses fail.

Do you have a dream, but you need to raise some capital to see it to fruition? Consider seeking the help of family, friends, and strangers through a crowdfunding website.

 


NCFA Jan 2018 resize - News on China cryptocurrency and more reforms The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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China’s digital fiat currency is ‘nearly ready’ for launch: PBOC official

TechNode | Nicole Jao | Aug 12, 2019

Peoples bank of China - News on China cryptocurrency and more reformsChina’s planned digital fiat currency is nearly ready for release after five years of research and development, a senior official at the central bank said (in Chinese) at a forum on Saturday in Beijing without confirming a timeframe.

Why it matters: The People‘s Bank of China (PBOC) aims to steal a march on global counterparts by accelerating the development of its national digital currency.

  • The central bank has been researching and developing a digital currency since 2014, though specific details remain scant.
  • The government’s fast-tracking of the national digital currency was reportedly prompted by fears that the emergence of cryptocurrency projects like Facebook’s Libra will bring disruption to its economy.

“As one can imagine, to issue digital fiat currency in a country as big as China, the employment of pure blockchain architecture cannot fulfill the throughput required for retail usage. Eventually, we decided that, at the level of the central bank, we should remain technology-neutral and not preset a technology roadmap, meaning not relying on a specific technology.”

Mu Changchun, the deputy chief of central bank’s payment and settlement

See:  Central banks should consider using digital currencies: China think tank

Details: Mu Changchun said the currency would not rely entirely purely on blockchain architecture, in a speech at the China Finance 40 Forum held by the PBOC on Saturday.

  • Mu said the country would instead employ a two-tier structure, with the central bank on top and commercial banks below, for the digital fiat currency, which he referred to as the digital currency/electronic payment (DC/EP) system.
  • The DC/EP will serve as a replacement for M0 (money issued directly by the central bank). It will flow easily like cash and will aid the yuan’s internationalization, he said.
  • The PBOC will also implement real-name verification as well as measures to counter illegal activities such as money laundering, terrorism financing, and tax evasion.
  • The two-tier architecture is meant to offload some of the risks from the PBOC.
  • The central bank insists that the DC/EP will adopt a centralized management model.

Continue to the full article --> here


NCFA Jan 2018 resize - News on China cryptocurrency and more reforms The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - News on China cryptocurrency and more reformsFF Logo 400 v3 - News on China cryptocurrency and more reformscommunity social impact - News on China cryptocurrency and more reforms
NCFA Fintech Confidential Issue 2 FINAL COVER - News on China cryptocurrency and more reforms