Circle Partners With Fintech Company To Tackle the Philippines’ $36,100,000,000 Remittance Industry

October 12, 2023 The Daily Hodl

Latvia central bank opens to fintech with ‘Innovation Hub’

September 19, 2023 Coin Telegraph

The Bank of Latvia has been quietly stepping up its game in providing assistance to fintech projects while employing the latest emerging technologies internally.

Fintech innovations and emerging technologies have swept the world, causing global lawmakers to rush to understand and regulate them.

While some countries like the United States and El Salvador have had a public relationship with adopting new technologies, others have quietly joined the game. Among these is Latvia, a small country located in the Baltics, neighboring Estonia and Lithuania.

Cointelegraph spoke with Marine Krasovska, the head of financial technology at Latvijas Banka (Bank of Latvia) — Latvia’s central bank — to better understand how regulators in the country are dealing with new technologies like cryptocurrencies and artificial intelligence (AI).

Unlike its neighbor Estonia, which was the first European country to provide clear regulations and guidelines for digital currencies, these assets remain unregulated in the Latvian landscape. The Latvian Personal Income Tax Act defines crypto as a capital asset subject to the general capital gains tax of 20%.

Back in 2020, one of the country’s financial regulators, the Financial and Capital Market Commission (FCMC), warned the public about crypto fraud — particularly given that in Latvia, crypto companies “operate in an infrastructure that is currently characterized by lower regulation than in the financial and capital markets.”

An upcoming hub of innovation

Since early warnings from the FCMC, Latvia has not developed new cryptocurrency regulations. However, Krasovska explained that in the last five years, the central bank, which is the primary regulator in Latvia, has been operating its Innovation Hub.

Krasovska said participation by fintech companies is not mandatory; however, the bank advises it as a “first entry point” to the Latvian market. The central bank offers this service free of charge for international companies and those originating from Latvia.

*Krasovka speaks at the Global Government Fintech Lab 2022 conference. Source: Global Government Fintech*

“When businesses come to the Innovation Hub and begin to describe their business model, sometimes we start to understand what companies actually need and don’t need,” she said.

She added that it’s an opportunity for businesses to talk in person with regulators to understand the business licensing needed and get risks assessed.

“We always suggest for companies to bring a lawyer to disclose interpretation risks. Interpretation of legislation is a very high-level responsibility.”

Within the Innovation Hub, the bank has also created a pre-licensing process. According to Krasovska, this was created to help fintech companies — particularly those dealing with digital assets — create a “package of documents” that they can receive feedback on regarding the quality.

“So when the official application goes in,” she said, “the license process will be focusing on the main ideas rather than the quality of the application. This new pre-licensing began last summer.”

“We want to see more innovation on the market. But we also want to see that the risks are managed in a proper way.”

Krasovska said that last year, the Innovation Hub had 72 consultations with around 40% of all participants from Latvia. She commented that the hub’s data reveals increased interest from companies in “crypto and electronic money institutions services.”

Adoption from the inside

Along with helping businesses thrive in the Latvian fintech landscape, Krasovska said that the Latvian central bank itself is adopting new technologies to streamline its processes from the inside.

This includes moving central bank data into the cloud and adopting AI technologies like OpenAI’s popular chatbot ChatGPT.

“We, as a central bank, will also start this year to integrate artificial intelligence and ChatGPT in our work. Not just not just trying to do some kind of studies as everyone is using it, but we’re starting to adapt it in terms of we have identified our needs.”

She said the central bank created an internal lab two years ago, which began experimenting with different kinds of technological solutions.

She highlighted ChatGPT feasibility studies the bank has conducted, which will help it summarize large quantities of documents, such as tax documents that she called “not structured information.”

Krasovska also said the bank employs AI to help with data direction projects and supervise code.

Synthetic data creation

When it comes to data, the fintech executive said the Bank of Latvia is spearheading a new project in relation to synthetic data.

She said that when newcomers or tech companies developing new solutions ask for a data set to train business models, it has nothing it can legally provide.

“This year and also next year, we will be working with the database ideas from which we can create this synthetic data that is like a synthetic lottery or something along those lines,” she said.

“Then companies can come and use these different types of data to understand how their tools work or don’t work before they scale the business and offer their solution to real customers.”

For example, businesses may need access to a large transaction database to understand how related monitoring tools work, “so what we’re doing right now is working on this integrated database,” she said.

Latvia and the current state of crypto

Over the summer, a report from the Latvian central bank said that local investments in crypto assets had declined by 50% over the past year.

"The number of the people purchasing crypto-assets as well as making payments with payment cards to invest in crypto-assets in Latvia declines.

This can be explained by global developments such as the negative sentiment of investors, detected cases of fraud and cases of… pic.twitter.com/uOIbJvIlsi
— Joshua Rosenberg (@_jrosenberg) August 4, 2023

The report was based on findings from payment card usage, revealing that 4% of the population bought crypto assets in February 2023, compared to 8% in the same month of 2022.

When asked about the sentiment toward cryptocurrencies in Latvia, Krasovska pointed to the crypto market conditions in combination with slumping market trends globally: “Globally, the financial markets are the way they are right now, and of course, this is [excluding] the crypto [market].”

Magazine: Crypto lawyer Irina Heaver on death threats, lawsuit predictions: Hall of Flame

Aside from the rocky conditions for the crypto community brought on by the lingering bear market, regulatory difficulties in major markets have caused investor sentiment to become less optimistic.

However, Krasovska pointed toward the European Union’s adoption and implementation of the Markets in Crypto-Assets (MiCA) legislation as something the central bank can lean on.

“With the adoption of MiCA, we can ensure very high standards for financial services.”

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

India G20 confirms ‘active discussions’ around global crypto framework

September 6, 2023 Coin Telegraph

Coin Telegraph

Sitharaman said crypto was a “threat as well as an opportunity” while confirming that the G20 members are working toward this vision of establishing a global crypto framework.

Under India's G20 presidency, active discussions around establishing a global framework for cryptocurrencies are underway, India’s minister of finance Nirmala Sitharaman has said.

On Aug. 28, Indian Prime Minister Narendra Modi pushed for global collaboration on formulating crypto regulations among G20 (Group of 20) member states, which include 19 countries and the European Union. Modi believes that emerging technologies — like cryptocurrencies — that have global impact should be accompanied by regulations and framework that is adhered to globally.

Sitharaman confirmed that the G20 members are working toward this vision of establishing global crypto framework during the Global Fintech Fest on Sept 5.

*Indian Finance Minister Nirmala Sitharaman on establishing global crypto regulations. Source: Global Fintech Fest*

During the summit, Sitharaman said crypto was a “threat as well as an opportunity.” She highlighted the need for global co-operation to build a responsible financial ecosystem that can effectively help regulate cryptocurrencies worldwide. “Global co-operation is absolutely critical,” she added.

“In an inter-connected world, financial technology transcends broders, therefore, making cross-border partnerships absolutely crucial.”

Ever since India took over the G20 presidency in Q4 2022, the country consistently highlighted the need for global collaboration when it comes to financial security and stability. However, the finance minister confirmed that G20 members are together working on the the highly anticipated crypto regulations.

“India’s (G20) presidency has laid out issues related to regulating or understanding that there should be a framework for handling issues related to crypto assets. Active discussions are happening, content-rich papers from institutions like IMF, FSB, OECD are all being discussed on various issues.”

Sitharaman also confirmed that the International Monetary Fund (IMF) and the Financial Stability Board (FSB) have submitted their synthesis papers on cryptocurrency.

India’s rising interest in blockchain and crypto becomes more evident after the National Payments Corporation Of India’s (NPCI) recent job posting. NPCI, an initiative led by the Reserve Bank of India (RBI) and 247 Indian banking companies, is looking to hire a head of blockchain.

*NPCI’s job posting for a head of blockchain. Source: LinkedIn*

The ideal candidate will be a seasoned technologist with at least six years of experience in developing and implementing blockchain, who will be primarily tasked with identifying “avenues wherever blockchain-driven solutions can be used.”

Magazine: How to protect your crypto in a volatile market: Bitcoin OGs and experts weigh in

Oxford scientists develop GPU-accelerated limit order book sim to teach AI how to trade

September 5, 2023 Coin Telegraph

Coin Telegraph

The first-of-its-kind architecture gives up to a 7x speedup over traditional training methods.

A multidisciplinary research team from the University of Oxford recently developed a GPU-accelerated limit order book (LOB) simulator called JAX-LOB, the first of its kind.

JAX is a tool for training high-performance machine learning systems developed by Google. In the context of a LOB simulator, it allows artificial intelligence (AI) models to train directly on financial data.

The Oxford research team created a novel method by which JAX could be used to run a LOB simulator using only GPUs. Traditionally, LOB sims are run using computer processing units (CPUs). By running them directly on a GPU chain, where modern AI training occurs, AI models are able to skip several communication steps. According to the Oxford team’s pre-print research paper, this gives a speed increase of up to 7x.

*Using JAX-LOB provided researchers a substantial improvement over CPUs. Source: Frey et al, 2023*

LOB dynamics are among the most scientifically studied facets of finance. In the stock market, for example, LOBs allow full-time traders to maintain liquidity throughout daily sessions. And in the cryptocurrency world, LOBs are embraced at nearly every level by professional investors.

Training an AI system to understand LOB dynamics is a difficult and data-intensive task that, due to the nature and complexity of the financial market, relies on simulations. And the more accurate and powerful the simulations, the more efficient and useful the models trained on them tend to be.

According to the Oxford team’s paper, finding ways to optimize this process is of the utmost importance:

“Due to their central role in the financial system, the ability to accurately and efficiently model LOB dynamics is extremely valuable. For example, it might allow a financial company to offer better services or may enable the government to predict the impact of financial regulation on the stability of the financial system.”

As the first of its kind, JAX-LOB is still in its infancy. The researchers stress the need for further study in their paper, but some experts are already predicting that it could have a positive impact in the fields of AI and fintech.

Jack Clark, co-founder of Anthropic, recently wrote:

“Software like JAX-LOB is interesting as it seems like the exact sort of thing that a future powerful AI may use to conduct its own financial experiments.”

Scientists warn the ‘quantum revolution’ may stagnate economic growth

July 19, 2023 Coin Telegraph

Coin Telegraph

There are “traps” lying in wait for innovators at the vanguard of fintech and quantum computing, according to researchers.

Quantum computing technologies are slowly beginning to trickle out of the laboratory setting and into commercial industries. While it remains to be seen when mainstream adoption will occur, a number of companies are currently engaged in experiments and trials with paying clients to develop quantum computing solutions.

According to a pair of researchers from the University of Cambridge and Bandung Institute of Technology, respectively, this represents a critical period wherein the world still has the opportunity to prepare itself for what they’re deeming “the quantum revolution.”

In a recently published commentary in the Nature journal, researchers Chander Velu and Fathiro Putra describe the ‘productivity paradox’ and explain how the mainstream adoption of quantum computing could slash economic growth for a decade or more.

Per their commentary:

“The digital revolution took decades and required businesses to replace expensive equipment and completely rethink how they operate. The quantum computing revolution could be much more painful.”

The productivity paradox is a business and finance term that explains why the introduction of new, better technology doesn’t usually result in an immediate increase in productivity.

We’ve seen this in nearly every aspect of the nascent blockchain and cryptocurrency industries. As the requirements for mining increase, for example, so do the costs associated with entering the space in any competitive capacity.

Less than a decade ago, it was fashionable to mine cryptocurrency with your desktop PC’s spare compute. As the rates of adoption have risen, so have corporate interests and the costs of entry.

Screenshot of chart showing mining hashrates over time on Blockchain.com

And, as fintech is one of the industries experts predict will experience immediate disruption from the quantum computing sector, it’s likely we’ll see direct integration with mining, blockchain and cryptocurrency technologies immediately.

To explain the productivity paradox, the researchers cite a period lasting from 1976 through 1990 where labor productivity growth — a measure of how productive individuals are at work over time — slowed to a crawl. The reason for this stagnation involved the onset of the computer era.

Essentially, the costs associated with the global switch from paper to computers combined with the need to retrain the entire workforce and create entirely solution ecosystems and workflows caused the trend of growth to stall out until the integration finally completed during the mid-1990s.

The researchers see a similar predicament occurring as quantum computers go from brushing up against usefulness to, potentially, becoming a backbone technology for business.

The two main roadblocks to a smooth transition into the quantum age, according to the researchers, are a lack of general understanding of the technology among leaders and risk aversion.

While businesses with a clear use case, such as shipping or pharmaceutical companies, may be quick to adopt quantum solutions, the rate-of-return might not appeal to risk-averse businesses looking for immediate impact.

To mitigate these concerns and accelerate the adoption of quantum computing, the researchers suggest a renewed focus from governments and researchers on illustrating the potential benefits of quantum computing and the development of language and terminology to explain the necessary concepts to the business community and the general public.

The researchers conclude by stating that the first order of business when it comes to preparing for the quantum computing future is to ensure that the “quantum internet” is ready for secure networking.

Crypto Memes and ‘Finfluencers’ To Be Targeted by Regulators in UK As New Rules Kick In

July 19, 2023 The Daily Hodl

HSBC trialing quantum-safe financial transaction network in the UK

July 5, 2023 Coin Telegraph

Coin Telegraph

The venerable British bank became the first to join BT (formerly British Telecom) and Toshiba’s secure quantum “metro” network in the United Kingdom.

London–based HSBC, the eighth-largest bank in the world, will conduct a series of trials and experiments utitlizing quantum encryption technology in collaboration with Amazon Web Services, BT and Toshiba.

HSBC is the first bank to commit to trials on the new quantum “metro” network, a secure transaction system that utilizes unbreakable encryption to secure transactions via quantum cryptography.

Developed by Toshiba in partnership with telecom giant BT, the quantum metro network is designed to allow unconditionally secure transactions between institutions. HSBC will trial several use cases on the network, including financial transactions, video calls and edge computing.

One of the key quantum tech uses HSBC will experiment with is called “quantum key distribution” (QKD). This is essentially the secret sauce that allows two parties separated by distance to send information to one another in a secure manner.

QKDs are one-off encryption keys generated for both parties at the same time. Thanks to what Albert Einstein deemed “spooky action at a distance,” quantum states tend to collapse when measured. Thus, quantum data is deemed impenetrable.

For the purposes of QKD, this means any attempt by an external party to view, eavesdrop, intercept or modify an equipped transaction would be instantly detectable by both parties.

Currently, there are technological limitations on the distance QKDs can be sent. When people send classical data — information meant for use by a traditional, non-quantum computer — over long distances through fiber optics, people can boost the signal strength of the photons carrying the data.

However, photons carrying quantum data cannot be boosted, and they suffer from exponential loss due to the "noisy” nature of quantum information. This means that the longer the fiber optic network is, the less likely quantum data will survive transmission. Theoretically, the current limits can be overcome using higher-intensity photons, but scientists are just beginning to develop these solutions.

Scientists in China, for example, published research in May 2023 indicating they’d successfully sent QKDs across 1,000 kilometers (621 miles) of fiber optic cable, a new world record for non-relay QKD.

The HSBC trials being conducted on the BT-Toshiba metro network won’t need that much runway, though. Per the announcement, the tests will occur over 62 kilometers (38 miles) of fiber optic cables in England, connecting the bank’s global headquarters in Canary Wharf to a data center in Berkshire.

Robinhood buys credit card fintech X1 for $95M

June 22, 2023 Coin Telegraph

Robinhood buys credit card fintech X1 for M

Coin Telegraph

In 2022, X1 claimed to have 500,000 people on its waiting list for a credit card. Over the past two years, the startup has raised $62 million from venture capital firms.

Crypto and stock trading app Robinhood has taken a new step to diversify its business portfolio by acquiring the credit card startup X1 in a $95 million deal. The fintech firm offers an income-based credit card with rewards, along with free trial and single-use credit cards.

The deal is expected to be closed by the end of September, Robinhood said in a statement on June 22, adding that the move was “an important step” to a deep relationship with its existing customers.

Robinhood, which already offers debit cards to its customers, gains a new revenue stream with the acquisition. In a press release dated July 18, 2022, X1 reported $50 million in monthly volume and was expecting to reach $1 billion in annualized spend at year’s end.

Announcement incoming We’re acquiring @x1creditcard, a platform that offers a no fee, stainless steel credit card with rewards on every purchase, and an intuitive mobile app experience. This is an important step toward serving all of our customers' financial needs. More info:… pic.twitter.com/VCUjBxkpsM
— Robinhood (@RobinhoodApp) June 22, 2023

According to Robinhood’s latest earnings report, its monthly active users base fell from 16 million in the first quarter of 2022 to just under 12 million over the same period this year. The company also saw a 30% revenue decline year on year for its crypto trading business, with $38 million in crypto trading revenue in Q1 2023, down from $54 million in Q1 2022.

The fintech is Robinhood’s fifth acquisition in four years, according to Crunchbase. In 2019, the company acquired the daily financial newsletter MarketSnacks, followed by three deals in 2021 — the cross-exchange crypto trading platform Cove Markets, the hiring firm Binc and the shareholders’ platform Say. Before the crypto winter broke out, Robinhood acquired the United Kingdom-based crypto asset firm Ziglu in April 2022.

X1’s current valuation is unknown, but the company claimed to have 500,000 people on its waiting list for a credit card in 2022. Since 2020, the startup has raised over $60 million from venture capital firms such as Craft Ventures, Soma Capital and FPV, the venture firm of Google Analytics co-founder Wesley Chan, who is also an investor in Robinhood and financial services company Plaid.

Magazine: Tornado Cash 2.0 — The race to build safe and legal coin mixers

Google launches ‘Anti Money Laundering AI’ after successful HSBC trial

June 22, 2023 Coin Telegraph

Google claims the new tools are far more efficient than traditional rules-based approaches at detecting money laundering at scale.

Google Cloud recently announced the launch of its “Anti Money Laundering AI” (AMLAI) service after a successful trial with London-based financial services group HSBC.

AMLAI uses machine learning to create risk profiles, monitor transactions, and analyze data. Per a blog post from Google Cloud:

“AI transaction monitoring replaces the manually defined, rules-based approach and harnesses the power of financial institutions’ own data to train advanced machine learning (ML) models to provide a comprehensive view of risk scores.”

In practice, Google Cloud claims its trial partner, HSBC, saw an increase of two to four times the number of positive alerts and a 60% reduction in false positives.

The service’s cost will vary depending on the number of customers serviced daily with the AML and risk scoring systems and how many customers are included in the training dataset used to spin the model up.

AMLAI’s launch signifies the furtherance of Google and Google Cloud’s ambitions in the fintech space. While the current AI zeitgeist centers around generative AI products such as Google’s Bard chatbot, the company has quietly been making its presence felt as both a fintech developer and banking services vendor.

During the COVID-19 pandemic, Google rapidly deployed a paycheck protection program loan processing tool. Over the years, the company has dabbled in alternative payment solutions such as its widely-adopted Google Pay service and the advent of Google-sponsored debit cards featuring NFC connectivity.

Google’s further involvement in the anti-money laundering sector could be a positive sign for the growing industry. According to an analysis from BlueWeave consulting, the global AML market size was estimated at roughly $3 billion in 2022 and is expected to reach nearly $8 billion by the decade's end.

Mitigating factors causing the projected growth include the rise of non-traditional payments, an ever-changing regulatory landscape, and a steadily creeping increase in the number of money laundering cases globally.

Prime Trust subsidiary Banq files for bankruptcy amid BitGo acquisition deal

June 14, 2023 Coin Telegraph

Coin Telegraph

Prime Trust payment subsidiary Banq files for bankruptcy, citing “unauthorized’ asset transfers to Fortress Group.

The payments subsidiary of crypto custodian Prime Trust, Banq, filed for bankruptcy protection in the United States on June 13, court documents show..

The move comes just days after wallet infrastructure provider and digital asset custodian BitGo signed a non-binding letter of intent to acquire Prime Trust, which was announced on June 8.

Banq’s bankruptcy filing listed $17.72 million and liabilities of $5.4 million and cited the “unauthorized transfer” of $17.5 million in assets to Fortress NFT Group as well as the illicit transmission of trade secrets and proprietary information to Fortress.

*Excerpt from Banq's bankruptcy filing detailing summary of assets and liabilities.*

Fortress NFT Group was set up by Banq’s former CEO, CTO and CPO, reports say, and Banq is currently in arbitration with Fortress NFT Group over these allegations.

The timing of the filing, just after the BitGo acquisition deal of Banq’s parent Prime Trust was announced, raises questions about how it might affect the agreement.

While the terms of the deal were not disclosed, if it goes through, BitGo will acquire Prime Trust’s payment rails and cryptocurrency IRA fund and increase its wealth management offerings.

Prime Trust’s Nevada Trust Company will also join BitGo’s network of regulated trust companies in South Dakota, New York, Germany, and Switzerland. Prime Trust’s API infrastructure and exchange network will “map over 1:1” with BitGo services. BitGo stated:

“This acquisition makes BitGo the first global digital asset company to provide a full suite of solutions for institutions and fintech platforms.”

The crypto custody market is evolving rapidly, with recent deals including Ripples acquisition of Swiss digital asset custody provider Metaco in May for $250 million.

The BitGo/Prime Trust deal, if it goes ahead, comes just as the United States Securities and Exchange Commission has proposed rule changes that would make it harder for crypto companies to act as custodians of their customers’ funds.

Prime Trust has been under pressure for a while, having reportedly laid off a third of its staff in January. Later, it stepped in to hold Binance.US customer funds through a network of partner banks after the banking crisis in March.

It was the center of a scandal in the U.S. state of Oregon last year when it was identified as the source of a $500,000 contribution to the state Democratic Party that later turned out to have come from FTX executive Nishad Singh.

BitGo itself was close to being acquired by Galaxy Digital for $1.2 billion last year and sued Galaxy for acquisition breach after the deal was canceled.

Magazine: ‘Account abstraction’ supercharges Ethereum wallets: Dummies guide

Fintech

An upcoming hub of innovation

Adoption from the inside

Synthetic data creation

Latvia and the current state of crypto

Share this video