1. Home
  2. Money Transfers

Money Transfers

Ripple, Onafriq partner for new payment corridors for Africa, UK, Australia and Gulf

The deal aims to enable faster, cheaper payments between 27 African countries, working with three Onafriq partners.

Ripple will power new payment corridors between 27 African countries and Australia, the United Kingdom and the Gulf Cooperation Council (GCC) under a deal with African mobile payments provider Onafriq.

Onafriq will use Ripple Payments' blockchain technology along with with three partnering companies. Zazi Transfer will provide transfer services to Australia, PayAngel will serve the U.K. and Pyypl will serve GCC member states Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

Remittances make up a large part of cross-border payments to Africa. Ripple senior vice president of global customer success Aaron Sears told Cointelegraph:

“Sub-Saharan Africa has proven to be a bright spot of crypto adoption, with consumers in countries like Nigeria, Kenya, and South Africa employing digital assets for real-world, day-to-day purposes.”

Pyypl is already a Ripple partner in its on-demand liquidity (ODL) solution, and Onafriq is reported to have integrated ODL as well.

Related: Hashing It Out: What happens when crypto meets fintech in Africa?

Onafriq was known as MFS Africa until early November. It changed its name because of its purchase of U.S. mobile payment software developer Global Technology Partners in June 2022. MFS is a trademarked company name in the United States. Onafriq struck a deal with Western Union on cross-border transactions earlier this year.

Ripple Payments was known as RippleNet before its latest upgrade, which was announced at Ripple’s Swell customer event in Dubai on Nov. 8.

Magazine: Crypto Banter’s Ran Neuner says Ripple is ‘despicable,’ tips hat to ZachXBT: Hall of Flame

Crypto Analyst Issues Ethereum Alert, Says ETH Primed To Plunge Lower Against Bitcoin – Here Are His Targets

Tornado Cash dev Alex Pertsev set to be released from prison under surveillance

The Tornado Cash developer was arrested in August 2022 by Dutch authorities as part of a criminal investigation against the crypto mixer service.

Tornado Cash developer Alex Pertsev is set to be released from jail after spending nearly nine months in prison. Pertsev was arrested in August last year by Dutch authorities on suspicion of being involved in money laundering through the crypto mixing service Tornado Cash.

Cointelegraph confirmed the news with the people familiar with the matter, and Pertsev is all set to be back home by April 26, which also happens to be his birthday. The suspended release under surveillance means the jailed Tornado cash developer can Jail can await trial from home.

Pertsev was arrested shortly after the United States Treasury Department placed dozens of Tornado Cash addresses on the Office of Foreign Asset Control (OFAC) sanctions list on Aug. 8. 

The suspended release would see Pertsev put under supervision with an ankle monitor, according to Pertsev's wife who talked to Cointelegraph and expressed her happiness on the verdict:

"I believe that now we will be able to fully prepare the defense and prove that Alex did not do anything that he is accused of, and I am very sorry for the wasted time that he spent in prison. It had a powerful effect on him and on me, it cardinally changed our lives. But the main thing is that he will be free soon."

Earlier in November 2022, a Dutch court denied the developer's plea to be released under surveillance based on the prosecution's argument that Pertsev pose a flight risk. The prosecution has argued that  Pertsev acted as a central figure in Tornado Cash’s operation. The developer's bail was denied again in February earlier this year.

Crypto mixers or mixing services are platforms that are often used to obfuscate the origin of crypto transactions. The aim of these mixers is to make transactions anonymous and difficult to trace. These platforms often mix one cryptocurrency transaction with others and send them to different wallet addresses. Tornado Cash was one of the most popular mixing services before sanctions.

The news about Pertsev's release under surveillance was met with rejoicing in the crypto community. Crypto educator and founder of Crypto Canal, who attended the hearing said that the most important thing is that "he can walk around and work on his defence, something that was virtually impossible while detained."

Crypto Analyst Issues Ethereum Alert, Says ETH Primed To Plunge Lower Against Bitcoin – Here Are His Targets

Banks with crypto services require new Anti-Money Laundering capabilities

Large financial institutions are getting involved in digital assets by investing capital, time and effort into on-chain analytics solutions.

The new year began with the news that notable Web3 entrepreneur Kevin Rose fell victim to a phishing scam in which he lost over $1 million worth of nonfungible tokens (NFTs). 

As mainstream financial institutions begin to provide services related to Web3, crypto and NFTs, they would be custodians of client assets. They must protect their clients from bad actors and identify whether client assets have been obtained through illicit activities.

The crypto industry hasn’t made it easy for Anti-Money Laundering (AML) functions within organizations. The sector has innovated constructs like cross-chain bridges, mixers and privacy chains, which hackers and crypto thieves can use to obfuscate stolen assets. Very few technical tools or frameworks can help navigate this rabbit hole.

Regulators have recently come down hard on some crypto platforms, pressuring centralized exchanges to delist privacy tokens. In August 2022, Dutch police arrested Tornado Cash developer Alexey Pertsev, and they have worked on controlling transactions through mixers since then.

While centralized governance is considered antithetical to the Web3 ethos, the pendulum may have to swing in the other direction before reaching a balanced middle ground that protects users and doesn’t curtail innovation.

And while large institutions and banks have to grapple with the technological complexities of Web3 to provide digital assets services to their clients, they will only be able to provide suitable customer protection if they have a robust AML framework.

AML frameworks will need several capabilities that banks must evaluate and build. These capabilities could be built in-house or achieved by collaborating with third-party solutions.

A few vendors in this space are Solidus Labs, Moralis, Cipher Blade, Elliptic, Quantumstamp, TRM Labs, Crystal Chain and Chainalysis. These firms are focused on delivering holistic (full-stack) AML frameworks to banks and financial institutions.

For these vendor platforms to deliver a holistic approach to AML around digital assets, they must have several inputs. The vendor provides several of these, while others are sourced from the bank or institution they work with.

Data sources and inputs

Institutions need a ton of data from varied sources to effectively identify AML risks. The breadth and depth of data an institution can access will decide the effectiveness of its AML function. Some of the key inputs needed for AML and fraud detection are below.

The AML policy is often a broad definition of what a firm should watch for. This is generally broken down into rules and thresholds that will help implement the policy. 

An AML policy could state that all digital assets linked to a sanctioned nation-state like North Korea must be flagged and addressed.

The policy could also provide that transactions would be flagged if more than 10% of the transaction value could be traced back to a wallet address that contains the proceeds of a known theft of assets.

For instance, if 1 Bitcoin (BTC) is sent for custody with a tier-one bank, and if 0.2 BTC had its source in a wallet containing the proceeds of the Mt. Gox hack, even if attempts had been made to hide the source by running it through 10 or more hops before reaching the bank, that would raise an AML red flag to alert the bank to this potential risk.

Recent: Death in the metaverse: Web3 aims to offer new answers to old questions

AML platforms use several methods to label wallets and identify the source of transactions. These include consulting third-party intelligence such as government lists (sanctions and other bad actors); web scraping crypto addresses, the darknet, terrorist financing websites or Facebook pages; employing common spend heuristics that can identify crypto addresses controlled by the same person; and machine learning techniques like clustering that can identify cryptocurrency addresses controlled by the same person or group.

Data gathered through these techniques are the building block to the fundamental capabilities AML functions within banks and financial services institutions must create to deal with digital assets.

Wallet monitoring and screening

Banks will need to perform proactive monitoring and screening of customer wallets, wherein they can assess whether a wallet has interacted directly or indirectly with illicit actors like hackers, sanctions, terrorist networks, mixers and so on.

Illustration of assets in a wallet categorized and labeled. Source: Elliptic

Once labels are tagged to wallets, AML rules are applied to ensure the wallet screening is within the risk limits.

Blockchain investigation

Blockchain investigation is critical to ensure transactions happening on the network do not involve any illicit activities.

An investigation is performed on blockchain transactions from ultimate source to ultimate destination. Vendor platforms offer functionalities such as filtering on transaction value, number of hops or even the ability to identify on-off ramp transactions as part of an investigation automatically.

Illustration of Elliptic platform tracing a transaction back to the dark web. Source: Elliptic

Platforms offer a pictorial hop chart showing every single hop a digital asset has taken through the network to get from the first to the most recent wallet. Platforms like Elliptic can identify transactions that even stem from the dark web.

Multiasset monitoring

Monitoring risk where multiple tokens are used to launder money on the same blockchain is another critical capability that AML platforms must have. Most layer 1 protocols have several applications that have their own tokens. Illicit transactions could happen using any of these tokens, and monitoring must be broader than just one base token.

Cross-chain monitoring

Cross-chain transaction monitoring has come to haunt data analysts and AML experts for a while. Apart from mixers and dark web transactions, cross-chain transactions are perhaps the hardest problem to solve. Unlike mixers and dark web transactions, cross-chain asset transfers are commonplace and a genuine use case that drives interoperability.

Also, wallets that hold assets that hopped through mixers and the dark web can be labeled and red-flagged, as these are considered amber flags from an AML perspective straightaway. It wouldn’t be possible just to flag a cross-chain transaction, as it is fundamental to interoperability.

AML initiatives around cross-chain transactions in the past have been a challenge as cross-chain bridges can be opaque in the way they move assets from one blockchain to another. As a result, Elliptic has come up with a multitiered approach to solving this problem.

An illustration of how a cross-chain transaction between Polygon and Ethereum is identified as having its source with a crypto mixer — a sanctioned entity. Source: Elliptic

The simplest scenario is when the bridge provides end-to-end transparency across chains for every transaction, and the AML platform can pick that up from the chains. Where such traceability is not possible due to the nature of the bridge, AML algorithms use time value matching, where assets that left a chain and arrived at another are matched using the time of transfer and the value of the transfer.

The most challenging scenario is where none of those techniques can be used. For instance, asset transfers to the Bitcoin Lightning Network from Ethereum can be opaque. In such cases, cross-bridge transactions can be treated like those into mixers and the dark web, and will generally be flagged by the algorithm due to the lack of transparency.

Smart contract screening 

Smart contract screening is another crucial area to protect decentralized finance (DeFi) users. Here, smart contracts are checked to ensure there are no illicit activities with the smart contracts that institutions must be aware of.

This is perhaps most relevant for hedge funds wanting to participate in liquidity pools in a DeFi solution. It is less important for banks at this point, as they generally do not participate directly in DeFi activities. However, as banks get involved with institutional DeFi, smart contract-level screening would become extremely critical.

VASP due diligence

Exchanges are classed as Virtual assets service providers (VASPs). Due diligence will look at the exchange’s overall exposure based on all addresses associated with the exchange.

Some AML vendor platforms provide a view of risk based on the country of incorporation, Know Your Customer requirements and, in some cases, the state of financial crime programs. Unlike previous capabilities, VASP checks involve both on-chain and off-chain data.

Recent: Tel Aviv Stock Exchange’s crypto trading proposal a ‘closed-loop system’

AML and on-chain analytics is a fast-evolving space. Several platforms are working toward solving some of the most complex technology problems that would help institutions safeguard their client assets. Yet, this is a work in progress, and much needs to be done to have robust AML controls for digital assets.

Crypto Analyst Issues Ethereum Alert, Says ETH Primed To Plunge Lower Against Bitcoin – Here Are His Targets

DMI finds CBDCs not targeting cross-border payments, huge potential in Metaverse

The Digital Money Institute’s third annual payments report looks at CBDCs for the first time, as well as other payment methods, through the lens of cross-border payment utility.

Central bank digital currency (CBDC) development aims squarely at inclusion, both for the central bank in the national economy and for the people it serves. Meanwhile, the technology for cross-border payments is being developed elsewhere for the most part, according to a new report on the payments industry. 

The Digital Money Institute (DMI), part of the Official Monetary and Financial Institutions Forum think tank, released its third annual Future of Payments report on Dec. 8. The report was sponsored by several payments companies and crypto exchange Binance, and those companies penned sections that supplemented DMI's findings. This was the first time it included a survey of central banks.

The DMI staff found in its survey that CBDC development was “gaining momentum,” with two-thirds of central banks expecting to have CBDCs within a decade. Another 12% of central bank respondents said they did not expect to issue a CBDC at all. When asked about their objectives, more than a quarter of central banks mentioned preserving their roles in money provision and more than 10% mentioned financial inclusion. “Other” was indicated more often.

None of the banks chose “aid cross-border payments” as one of their objectives. Nonetheless, almost 35% of the banks saw interlinking CBDCs as the most promising way to improve those payments. When asked about stablecoins, nearly 90% of banks identified it as “an opportunity to make cross-border payments more efficient.”

Related: Global think tank suggests blockchain in public finance can help reduce fraud

Fiat-based cross-border payment systems are developing rapidly. However, there are significant hurdles to achieving global reach, especially data exchange, as only around 70 countries have adopted the ISO20022 messaging standard. The DMI report assures that “Regionally integrated payment networks offer an exciting prospect.” Still, 80% of African cross-border transactions are processed off the continent. In general, payments are “unlikely to be a ‘winner-takes-all’ kind of fight," the report said. "The variety of payments systems will grow, creating competition and diversity in the marketplace."

Cryptocurrency and stablecoins are making their greatest strides in emerging economies, as they offer the advantages of disintermediation (which enables faster settlement across time zones), cost savings and accessibility, but have the potential downsides of volatility and unreliability. In the authors’ opinion:

“Vulnerable nations should invest in bringing down the cost of remittances and broadening access to financial services to reduce the exposure of vulnerable economic groups to volatile and unsafe cryptocurrency products.”

Finally, the report looks at the metaverse from a payments perspective, calling it “first and foremost, a model for a digital economy.” Here, cross-platform interoperability is key and will likely require “major changes to business models.” In turn:

“Developing the infrastructure to make metaverse payments stable, secure, interoperable and free from financial crime will have a huge impact on the broader payments landscape.”

The report cites a Citi estimate that the Metaverse addressable market could reach $13 trillion.

Crypto Analyst Issues Ethereum Alert, Says ETH Primed To Plunge Lower Against Bitcoin – Here Are His Targets

Crypto adoption via regulation: Setting rules for centralized exchanges

While some security issues do exist, major internet outages like the one witnessed across the EU recently cannot really threaten cryptocurrencies or their associated networks.

Centralized cryptocurrency exchanges have become the backbone of the nascent crypto ecosystem, making way for retail and institutional traders to trade cryptocurrencies despite a constant fear of government crackdowns and lack of support from policymakers. 

These crypto exchanges over the years have managed to put self-regulatory checks and implemented policies in line with the local financial regulations to grow despite the looming uncertainty.

Cryptocurrency regulation continues to occupy mainstream debates and experts’ opinions, but despite public demand and requests from stakeholders of the nascent ecosystem, policymakers continue to overlook the rapidly growing sector that reached a market capitalization of $3 trillion at the peak of the bull run in 2021.

Over the past five years, many local and national governments have shown interest in regulating the crypto market but often got perplexed by the vast ecosystem and complexities involved in regulating certain decentralized aspects of the market. As a result, most of the governments that have issued some guidelines or rules related to crypto have done so based on the existing financial regulations, but the evolving market has proven too fast-paced.

Some countries have moved to recognize crypto trading as a legal activity, while others have approved Bitcoin (BTC)-based exchange-traded funds. Many countries have also made way for crypto platforms to operate with a license, but the strict requirements often deter certain small platforms to stay away. As a result, there is no universal blueprint for regulators to adhere to, and experts believe leading centralized crypto exchanges can change that.

In traditional markets, it is perfectly normal for regulators to work closely with industry participants, including exchanges, to ensure that regulations and guidance work well and keep pace with fast-changing technological advances. However, the same can’t be said for the crypto market, as regulators have maintained a safe distance from the nascent industry.

Oliver Linch, CEO of global crypto exchange Bittrex Global, said that the regulators must interact with service providers of the crypto ecosystem to get a better grasp of the industry. He cited the example of Bermuda and Liechtenstein, where the crypto exchange has been working with local lawmakers to make way for positive regulations.

He noted that even though decentralized exchanges continue to remain the flag bearer of crypto’s decentralized ethos, which are thus more complex to regulate, centralized exchanges will be key to major adoption:

“Centralized exchanges have perhaps the most important role to play here. While decentralized exchanges tend to be the ‘poster boys’ for the industry’s cutting edge, they are naturally hesitant to get involved in regulatory matters. In any event, the majority of activity, especially for ordinary retail users (who are front of mind for regulators) happens on centralized exchanges.”

He added that regulating the entire crypto market will follow, but the approach of “Liechtenstein, Bermuda and now the European Union, of regulating service providers, including centralized exchanges, is a good starting place. By properly regulating centralized exchanges, regulators and legislators create a legitimate path for users — from individuals to giant corporates — to get involved in crypto in a safe and regulated manner.”

A Binance spokesperson told Cointelegraph that being a centralized exchange, it needs a centralized entity to work well with regulators.

“Binance believes it has a fundamental responsibility to work with regulators and believes that a well-regulated crypto market provides greater protection for everyday users. We strongly believe that a stable regulatory environment can support innovation and is essential to establishing trust in the industry that will lead to long-term growth,” the spokesperson added.

Centralized exchanges prove to be regulators’ allies

In major economies and developed countries, regulators have not been very keen on involving industry players, but those nations that see the future in the nascent tech have actively partnered and on-boarded leading centralized crypto exchanges to not only help them build the infrastructure but also assist them with formulating right policies for the crypto market.

Binance recently signed a memorandum of understanding with Kazakhstan to help fight financial crimes. The program further aims to identify and block digital assets obtained illegally and used to launder criminal proceeds and finance terrorism. Similarly, Busan onboarded Huobi to develop blockchain infrastructure in the region.

Many countries already regulate centralized exchanges, but there is still a lot of uncertainty about what regimes apply and how they will be enforced. For example, United States-based exchanges operate under licenses from the Financial Crimes Enforcement Network but have been alleged to list tokens and offer financial products (like derivatives, staking and interest-bearing deposits) that fall under the purview of the Securities and Exchange Commission or the Commodity Futures Trading Commission.

The Lummis–Gillibrand bill is considered one of the most comprehensive pieces of legislation proposed on crypto in the United States. South Africa recently classified crypto as a financial product and will be regulating it accordingly. South Korea implemented strict regulations last year that require exchanges to track all transfers to and from their platform, including identifying the owners of wallets. As a result, exchanges there restricted transfers to and from unverified private wallets.

Thus, it is evident from existing regulations that centralized exchanges have become the main point of interaction for not just traders but regulators as well.

Mohammed AlKaff AlHashmi, co-founder of Islamic Coin, told Cointelegraph that regulating centralized exchanges will help in regulating the broader crypto market, explaining:

“Firstly, it’s Know Your Customer and Anti-Money Laundering. I see that most of the exchanges will outsource it to very famous and authentic KYC/AML entities, as it will bring more reliability and trust rather than doing these procedures by exchanges themselves. Secondly, taxation is an important theme when we talk about regulation. Many countries will regulate crypto if they can do the taxation, and I suggest that exchanges will develop the taxation on the crypto transactions and be the one who collects this data and hand it over to the government.”

Habeeb Syed, senior associate attorney at Vicente Sederberg and co-organizer of the Blockchain Technology, Law and Policy Meetup, told Cointelegraph, “Crypto exchanges often determine the winners and losers of the crypto world, as listed on one is an almost surefire way to raise your token price and provide early investors an opportunity for liquidity. Well-thought-out regulation of centralized exchanges could also ripple out into the broader ecosystem.”

He added that regulating crypto exchanges would force legitimate projects to know they can’t engage in certain acts “if they ever want to list a token on say Binance, FTX or Coinbase, which would be a powerful motivating force. With regulated options for trading, staking and lending, actors could choose to forego riskier and unregulated DeFi ecosystems.”

Regulators must proceed with caution

Crypto exchanges play a central role in the vast crypto ecosystem, as they have numerous services and facilities with many trying to become an all-in-one platform. Some experts are of the opinion that, while regulating centralized exchanges can certainly be the first step toward broader crypto market regulations, that is not enough to ensure smooth operations for the whole industry.

Aleksandra Shelepova, head of legal at crypto-backed loan service provider CoinLoan, told Cointelegraph:

“When it comes to imposing regulations to any new and evolving market, everything should be done step-by-step. Moreover, the regulators should have a proper understanding of how this market operates in detail, technological aspects included. Regulation should come from the middle-bottom, meaning the contribution of the market’s participants’ know-how is crucial.”

She added that regulating just the exchanges is not enough since there are many popular and widely used crypto products, including crypto loans, deposits, etc. that must be regulated as well. Expanding regulation to all aspects of the crypto environment ensures a unified understanding of the products themselves.

While monitoring centralized exchanges can definitely pave the way for a better understanding of the crypto market, regulators should refrain from a “one size fits all” formula.

Nicole Valentine, fintech director at Milken Institute, told Cointelegraph that regulators should be more focused on decentralized platforms:

“Just like there is variation in the digital assets themselves, there is variation in the types of exchanges that enable buyers and sellers to trade those digital assets. Although regulating centralized exchanges can be seen as helpful, there are nuances in decentralized exchanges that should be considered, including the use of digital wallets and smart contracts.” 

Centralized exchanges are a key part of the cryptocurrency ecosystem; they are where most new crypto users go to buy their first coins. Many leading centralized exchanges already have strict onboarding and identification procedures in place and would welcome more clarity from regulators on questions such as whether or not digital assets are securities.

Increased regulation for centralized exchanges is a double-edged sword where, on one hand, it would lead to more new interactions and greater adoption, but on the other hand, increased regulation may drive the more experienced crypto users toward decentralized exchanges, something that experts believe regulators would have a hard time dealing with.

Crypto Analyst Issues Ethereum Alert, Says ETH Primed To Plunge Lower Against Bitcoin – Here Are His Targets

9 years after the first Bitcoin ATM, there are now 38,804 globally

From one Candian coffee shop to a worldwide network of nearly 39,000, crypto ATMs have turned nine years old and are only expected to continue growing.

On Oct. 29, 2013, a coffee shop in downtown Vancouver, Canada opened what is understood to be the world’s first publicly available Bitcoin (BTC) automatic teller machine (ATM) operated by Robocoin. 

The crypto ATM saw 348 transactions and $100,000 transacted in its first week of operation.

As of Oct. 30, 2022 — nine years and one day on — Robocoin has ceased operations and the first crypto ATM has likely been removed or replaced, but crypto ATMs have continued to increase in number with 38,804 cryptocurrency ATMs in existence today, according to Coin ATM Radar.

The global hub for crypto ATMs has since moved however, with the United States now housing nearly 88% of the world’s supply of crypto ATMs and taking credit for 90% of all newly installed ATMs over the past few months.

In October alone, 129 of the world’s newly installed ATMs were located in the United States out of a total of 205.

Canada, home to the first crypto ATM, has only seen that number creep to 566 after nine years, though it’s still placing in second at 6.6% of the total, as per Coin ATM Radar data.

Meanwhile, Spain became the third-largest crypto ATM hub on Oct. 22 with its 0.6% share across 215 ATMs.

A July report from Research and Markets estimates the crypto ATM space is now valued at $46.4 million, which will grow more than 10 times to  $472 million by 2027, driven by remittances and increased crypto ATM installations.

However, like many crypto-related products, crypto ATM installations have been challenged this year as a result of the crypto bear market.

Crypto ATM installations slowed between January and May before a slight recovery between June and August, but September saw net crypto ATMs drop globally for the first time ever after 459 machines were removed from the global network.

Related: How Bitcoin ATMs in Greece fare during a record-breaking tourist season

Bitcoin is still the most popular cryptocurrency transacted across crypto-enabled ATMs with nearly 100% supporting BTC transactions per Coin ATM Radar. However, other cryptos also appear to be supported across the network.

Litecoin (LTC) is popular with almost 81% of ATMs supporting the crypto, and Ether (ETH) closely follows at almost 74%, Dogecoin (DOGE) sits in fourth place with just under 40% supporting the so-called memecoin.

In early October U.S. authorities warned crypto ATMs were emerging as a popular method for scammers to receive value and defraud victims most often in “pig butchering” scams where the attacker poses as a potential romantic partner, gaining trust and asking the victim to send them money, or in some cases, cryptocurrency.

Crypto Analyst Issues Ethereum Alert, Says ETH Primed To Plunge Lower Against Bitcoin – Here Are His Targets

Crypto’s adaptability, openness key to ideal monetary system, say BIS execs

Some of the biggest flaws preventing present-day cryptocurrencies from mainstream adoption, pointed out by the BIS execs, are bottleneck congestion in DeFi and the reliance on volatile assets.

Governments across the globe see central bank digital currencies (CBDC) as a means to improve the existing fiat ecosystem. Cryptocurrency’s technical prowess supported by the central bank’s underlying trust is key to enabling a rich monetary ecosystem, suggests an International Monetary Fund (IMF) publication. 

“Digital technologies promise a bright future for the monetary system,” reads the publication attributed to IMF deputy managing director Agustín Carstens and BIS executives Jon Frost and Hyun Song Shin.

A BIS study from June revealed that cryptocurrencies outdo fiat ecosystems when it comes to achieving the high-level goals of a future monetary system.

Some of the most significant flaws preventing present-day cryptocurrencies from mainstream adoption, pointed out by the BIS execs, are bottleneck congestion in decentralized finance (DeFi) and the reliance on volatile assets.

Both wholesale and retail CBDCs can potentially inherit abilities from the crypto ecosystem that benefit end users, the post highlighted:

“By embracing the core of trust provided by central bank money, the private sector can adopt the best new technologies to foster a rich and diverse monetary ecosystem.”

It further recommended central banks utilize innovations such as tokenization to allow purchases using multiple fiat currencies — further benefiting merchants and customers.

Related: India cooperates with IMF on crypto consultation paper

The IMF’s gloomy forecast predicting a global economic slowdown raised concerns about an incoming recession in the crypto markets. Cointelegraph previously reported that Bitcoin (BTC) markets were likely to recover when the uncertainty about the current state of the economy and geopolitical tensions are resolved.

However, the IMF pointed out that the various liquidations, bankruptcies and losses at major firms like Celsius, Three Arrows Capital and Voyager Digital Holdings had only a minor impact on traditional financial systems.

Crypto Analyst Issues Ethereum Alert, Says ETH Primed To Plunge Lower Against Bitcoin – Here Are His Targets

MoneyGram to open transfer platform with Stellar, eyes wallet deal in El Salvador

MoneyGram CEO Alex Holmes said the international remittances stalwart wants to be a bridge between the crypto and fiat worlds.

MoneyGram International, one of the world’s largest cross-border transfer services, is partnering with the Stellar blockchain to create a stablecoin-based platform for money transfers. The new service will allow Stellar wallet users to send Circle’s USD Coin (USDC) to recipients, who will be able to cash them out for fiat currency through the MoneyGram network.

“We’re trying to be a bridge from the crypto world to the fiat world,” MoneyGram CEO Alex Holmes said in an interview.

Holmes also said MoneyGram is in talks with third-party companies that provide digital wallets in El Salvador alongside the government-backed Chivo wallets that were introduced when the country made Bitcoin (BTC) legal tender last year. Through a deal with one of those companies, MoneyGram would be able to compete for BTC transfers as well.

“If a country like El Salvador is going to make Bitcoin seamless with US dollars in country, I think that consumers, through MoneyGram, should be able to transfer Bitcoin to El Salvador or transfer dollars and convert them to Bitcoin,” Holmes told Bloomberg. “If that’s where the world is going, let’s participate in that world and let’s see how we can help fulfill that opportunity.”

Related: Moneygram buys 4% stake in crypto ATM operator Coinme

MoneyGram had a previous deal with Ripple Labs, which once owned a large package of its stock. Ripple and MoneyGram severed their relationship in March 2021 shortly after the United States Securities and Exchange Commission filed a lawsuit against Ripple. MoneyGram’s involvement with Ripple resulted in a class-action suit against the payment service in March 2021.

MoneyGram and Stellar began working together in October 2021 and launched a pilot program in November. Earlier that summer reports circulated that Stellar was interested in a takeover of MoneyGram.

Crypto Analyst Issues Ethereum Alert, Says ETH Primed To Plunge Lower Against Bitcoin – Here Are His Targets

WEF 2022: Bankers at WEF see the need for caution and speed on central bank digital currencies

Experts point out sticking points as well as greatest needs in the creation of central bank digital currencies for domestic and cross-border, wholesale and retail, uses.

The process of introducing a central bank digital currency (CBDC) is fraught with unknowns, some of which were elucidated in a panel of experts gathered Monday at the World Economic Forum in Davos, Switzerland. The panel concluded that good design is key to a successful CBDC, and there are fewer challenges for wholesale CBDC introduction.

Bank of Thailand governor Sethaput Suthiwartnarueput said that although many central banks are considering CBDC, there is little practical experience with them. The Thai national bank began proof of concept programs in 2018. Its mBridge project began as an experiment in establishing a cross-border wholesale payment corridor with the Hong Kong Monetary Authority and has grown to include the Bank of China, the United Arab Emirates and Bank for International Settlements. Cross-border transactions using traditional banking technology can take days to complete, while CBDC transactions are much faster.

Suthiwartnarueput said the use of blockchain technology can have unintended consequences. It is good for transparency, he said, but anonymity affects scalability. There is risk in a CBDC’s design because smart contracts require that the handling of every situation be specified ahead of time. He cited the current sanctions on Russia as an example of a potential challenge to CBDC design. The Thai central bank is looking at a “limited pilot” for retail CBDC in the fourth quarter of this year.

International transactions between persons, especially remittances from workers located in other countries, which make up a market of $48 billion per year, are one of the most pressing use cases for CBDCs. Suthiwartnarueput said CBDCs can carry out such transactions 50% more cheaply and 68% faster than current money transfer technology. Currently, the average fee for a transfer of this type is 6.3% of the transaction sum.

Related: WEF 2022: Crypto remittances must have allure of cash without regulatory constraints — Jeremy Allaire

Credit Suisse chairman Axel Lehmann pointed out the rapid progress being made by non-blockchain fast payment technologies and raised questions for domestic retail CBDCs, such as whether accounts with central banks would pay interest. Privacy and intermediation are other thorny issues for retail CBDC. International Monetary Fund managing director Kristalina Georgieva said, “We feel a little behind the curve” in the creation of retail CBDC, and Bank of France governor François Villeroy de Galhau agreed, saying, “CBDC is not the monopoly on progress,” and central banks should not waste time in introducing it.

Suthiwartnarueput and the French central banker agreed that cross-border wholesale CBDC settlements may become a reality within five years.

Crypto Analyst Issues Ethereum Alert, Says ETH Primed To Plunge Lower Against Bitcoin – Here Are His Targets

SWIFT, Capgemini team up to test using the international network for CBDC transfers

The bank messaging service, which dates back to the 1970s, is looking to connect CBDCs to each other and to traditional currencies as it tries to stay up to date.

The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, the Belgian financial messaging network used by banks in international money transfers, announced Thursday that it is teaming up with French IT company Capgemini to conduct experiments with cross-border central bank digital currency (CBDC) payments. This is SWIFT’s second research project on CBDC.

SWIFT and Capgemini are testing ways to link multiple CBDC networks, as well as CBDC and traditional currency networks, as a proof of concept. The majority of central banks worldwide are working on creating CBDCs, “with numerous central banks developing their own digital currencies based on different technologies, standards and protocols,” Thomas Zschach, SWIFT chief innovation officer, said in a statement.

According to the company’s statement, it is developing a gateway for domestic CBDC networks to intercept, translate and forward them to the SWIFT platform for onward transmission. The system will use existing SWIFT standards, authentication models and infrastructure. SWIFT connects over 11,000 financial institutions in over 200 countries.

SWIFT’s new alliance is a continuation of the efforts begun last year with American professional services company Accenture. That collaboration succeeded in creating a cross-border transaction between a CBDC network and “an established real-time gross settlement (RTGS) system.”

“If the experiments are successful, it will demonstrate that SWIFT has the capability and technical components to interlink different networks,”

SWIFT head of innovation Nick Kerigan said. “This would help solve a huge technology and industry challenge facing CBDCs. And it could enable us to help central banks make their own CBDC networks cross-border payment ready.”

Related: EU will cut off 7 Russian banks from SWIFT, with ordinary Russians facing consequences

SWIFT processed 42 million messages a day last year, but transactions on the network can take several days to complete. It is striving to maintain its relevance in the international economic order, especially in regard to CBDCs. Many developers foresee CBDCs interacting outside the traditional network, potentially with the aid of Ripple’s (XRP).

Crypto Analyst Issues Ethereum Alert, Says ETH Primed To Plunge Lower Against Bitcoin – Here Are His Targets