Deutsche Bank: Crypto to Replace Fiat Currencies by 2030, Bank of China Uses Blockchain to Issue $2.8B Worth of Financial Bonds, Ripple Raises $200M

December has been very interesting and super intense month in the Blockchain & Crypto world. California-based financial firm SoFi has acquired a BitLicense from the NYDFS, the Central Bank of France plans to pilot a central bank digital currency (CBDC) for financial institutions in 2020, Bakkt has launched the first regulated Bitcoin (BTC) options and cash-settled futures in the United States, to name just a few.

So without further ado, let us dive deeper into what was trending and hot in Blockchain and Cryptocurrency world past month.

SoFi Obtains BitLicense to Offer Crypto Trading Services in New York

The first week of December was really hot. It started with the news from California-based financial firm SoFi has acquired a BitLicense from the New York State Department of Financial Services (NYDFS), the regulator said in a statement on December 3.

SoFi is now one of 24 crypto-related firms that have obtained a BitLicense since 2015, Bloomberg Law’s crypto reporter Lydia Beyoud tweeted the same day.

Specifically, SoFi has acquired two licenses — a virtual currency license (BitLicense) and a money transmitter license — that will allow SoFi Digital Assets to offer crypto trading services to its New York customers. 

According to the announcement, the firm is authorized to support a total of six digital assets including Bitcoin, Ether, Bitcoin Cash, Ethereum Classic, Litecoin and Stellar. 

NYDFS Superintendent Linda Lacewell noted the authority’s commitment to fostering innovation in New York’s crypto ecosystem, stating, "The Department's approval of SoFi's virtual currency and money transmitter licenses provides consumers with more choices in a continuously evolving global financial services marketplace." 

SoFi CEO Anthony Noto said that the decision to pursue a BitLicense was a response to client demand:

Putting our members' interests first is our top priority at SoFi [...] That includes both offering individuals the products they want, like cryptocurrency within SoFi Invest, as well as protecting them, through a solid regulatory framework like that created by the NYDFS.

The news comes after the company launched zero-fee cryptocurrency trading to its platform SoFi Invest in September. SoFi, which has been in partnership with major American crypto exchange and wallet service Coinbase since February 2019, rolled out commission-free trading for BTC, ETH and LTC.

A BitLicense is a major business license for cryptocurrencies with a number of terms and conditions such as rules on operating with digital currencies, its control, administration, maintenance, storing and issuing, among others. Earlier this year, NYDFS granted a BitLicense to two subsidiaries of crypto derivatives firm Seed CX — Seed Digital Commodities Market LLC and Zero Hash LLC.

Blockchain Firm Figure Technologies Secures $58M, Aims for $103M

During the same week, San Francisco-based FinTech Figure Technologies has secured $58 million in a recent funding round which aims to raise a total of $103 million.

Thanks According to a filing with the United States Securities and Exchange Commission, Figure — which is the creator of Provenance, a blockchain platform to track supply chains — has raised over $58.8 million in a total equity offering of $103 million. 

In February, Figure raised $65 million in Series B equity funding, which brought the company’s total equity funding to over $120 million. At the time, the round was led by early-stage capital firm RPM Ventures and venture fund DST Global, with the participation of investment firms such as Morgan Creek, Ribbit Capital and Nimble Ventures, among others.

According to TechCrunch, Figure was founded by Mike Cagney — the founder of FinTech firm SoFi — and his wife June Ou, along with an ex-CEO of the Thiel Foundation, Alana Ackerson.

France to Test Its Central Bank Digital Currency in 1Q20

The, the central bank of France plans to pilot a central bank digital currency (CBDC) for financial institutions in 2020. Fran?ois Villeroy de Galhau, the governor of the Bank of France, announced that the bank will start testing the digital euro project by the end of the first quarter 2020, French financial publication Les Echos reports December 4.

The Bank of France confirmed the news on Twitter, noting that the announcement was made at a conference co-hosted by two major French financial regulators, the French Prudential Supervision and Resolution Authority and the Autorité des marchés financiers.

According to the report, the digital euro pilot will only target private financial sector players and won't involve retail payments made by individuals. Villeroy reportedly noted that a digital currency for retail customers would "be subject to special vigilance."

As reported by Les Echos, the initiative intends to strengthen the efficiency of the French financial system, while ensuring trust in the currency.

Moreover, the project aims to assert France’s sovereignty over private digital currency initiatives like Facebook’s stablecoin Libra, Villeroy reportedly said.

??All You Need to Know About Facebook's Upcoming Cryptocurrency?? 

Villeroy’s stance falls in line with previous statements by French finance minister Bruno Le Maire, who argued that regulators cannot allow the launch of Libra on European soil due to monetary sovereignty concerns.

According to some reports, France led the anti-Libra effort alongside Germany, Italy, Spain and the Netherlands.

According to a tweet by the Bank of France, its governor emphasized that France should become the first country in the world to issue a CBDC and provide an exemplary model to other jurisdictions. He stated:

I see the interest in rapidly advancing the issuance of at least one central bank digital currency in order to be the leading issuer globally and get the benefits associated with providing an exemplary central bank digital currency.

Deutsche Bank: Crypto to Replace Fiat Currencies by 2030

By 2030, the demand for alternative currencies will rise, with digital currencies eventually replacing cash, according to recent research from Deutsche Bank, publish in early December.

In the “Imagine 2030” report, Deutsche Bank strategist Jim Reid raised awareness of the challenges the existing fiat system has encountered in recent years, specifically with the emergence of cryptocurrencies. Reid stipulated that people’s heightened demand for dematerialized means of payment and anonymity could drive more individuals to digital currencies.

In order to gain wider acceptance, digital assets need to overcome three major hurdles. These include perceived legitimacy in the eyes of governments and regulators, which entails price stability and allows for global reach in the payment market. According to Reid, the establishment of alliances with key stakeholders like mobile apps and card providers will enable this development.

At the same time, Reid pointed out that with mainstream adoption, new challenges will arise. Among major threats to the purported digital currency-based financial system, Reid named dependence on electricity, cyberattacks and a digital war. “As that occurs, the line between cryptocurrencies, financial institutions, and public and private sectors may become blurred,” Reid wrote.

In the meantime, world governments have been actively debating the need to develop national digital currencies. Earlier today, Bank of Japan Governor Haruhiko Kuroda said that there is no public demand for a central bank digital currency (CBDC) in the country. Kuroda noted the increasing demand for cash payments and added that the bank had been conducting technical and legal research into the matter.

The central bank of France plans to pilot a CBDC for financial institutions in 2020.

Microsoft Azure Announces Blockchain Token and Data Management Service

Finally, the week was closed by Microsoft, which shared that its blockchain-enabled cloud service Microsoft Azure announced new tokenization and blockchain data management services.

In a post published on the official Microsoft Azure blog on December 6, the IT service giant announced the Azure Blockchain Tokens and blockchain data manager.

The Azure Blockchain Tokens service aims to simplify the definition, creation and management of compliant tokens built to industry standards. The firm also provides pre-built templates for common uses and hosts a gallery for templates created by partners, which are expected to be added in the future. The announcement reads:

With this latest offering, we can now offer customers an end-to-end experience of easily creating and managing tokens for physical or digital assets via Azure Blockchain Tokens (preview), in addition to managing the blockchain network itself via Azure Blockchain Service.

The other service announced, blockchain data manager, is a new Azure Blockchain Service feature designed to allow its users to capture blockchain ledger data, transform and decrypt it if it is encrypted and deliver it to multiple sources. Per the announcement, this new functionality simplifies “the cumbersome task of integrating existing applications with data that sits on a blockchain ledger.”

Earlier this week, Microsoft Azure also announced Azure Heroes non-fungible blockchain tokens aimed at rewarding its developer community.

Bakkt Launches 1st Regulated BTC Options

The 2nd week of December was equally exciting. It began with the news from The Intercontinental Exchange (ICE)’s digital asset platform Bakkt that has launched the first regulated Bitcoin (BTC) options and cash-settled futures in the United States.

According to an announcement on December 9, Bakkt is now using its physically settled Bitcoin contracts as a benchmark to build complementary products.

The news was announced in a blog post by Bakkt COO Adam White. The post stated:

By starting with the physically delivered Bakkt Bitcoin (USD) Monthly Futures, we have a benchmark contract that provides the foundation for us to develop complementary products based on the needs of our customers.

The two new products include Bakkt Bitcoin (USD) Monthly Options and Bakkt Bitcoin (USD) Cash-Settled Futures.

According to the post, the Bakkt’s monthly options product is the first regulated Bitcoin futures contract regulated by the United States Commodity Futures Trading Commission. Price discovery occurs within a federally regulated market and has no exposure to unregulated Bitcoin spot markets, the announcement notes.

The cash-settled futures product is a new contract that will be initially available on ICE Futures Singapore, an approved exchange in Singapore. The contract is based on the settlement price of the benchmark Bakkt Bitcoin monthly future contract and provides an option for participants who are unable to trade our physically delivered contract, the blog post reads.

The news comes after Bakkt CEO Kelly Loeffler was appointed to a U.S. Senate seat. According to media reports, Loeffler will replace Sen. Johnny Isakson (R-GA), who plans to retire at the end of the year.

Bakkt platform is one of the most promising cryptocurrency-related initiatives to date as its physically settled Bitcoin futures have become one of the most talked-about products in crypto.

Bank of China Uses Blockchain to Issue $2.8B Worth of Financial Bonds

The adoption rate of blockchain technology in China continues to impress as the Bank of China has reportedly issued 20 billion yuan ($2.8 billion) in blockchain-based special financial bonds for small and micro-enterprises, announced during the same week.

According to local news outlet Sina Finance in early December, the funds are specifically used to issue loans to these Chinese small and micro-sized companies to support their continued development in the economy.

As of the end of September, the Bank of China issued around 404 billion yuan ($57.7 billion) to 410,000 small and micro enterprise customers, representing an increase of 35% since a year ago.

As a reference, micro-enterprises generally have fewer than 10 employees, while small companies have up to 50 employees.

The news comes as the Chinese government is attaching an ever-increasing level of importance to the digital economy. Earlier in December, Forkast Insights, the research arm of Asia-based Forkast, took an in-depth, comprehensive look at how blockchain technology is integrated in China.

The report pointed out that blockchain technology is rapidly maturing in China and has a slew of “real-world, practical use cases that are far beyond the experimental stage.” 

Twitter is Developing Decentralized Standard for Social Media

Further, Jack Dorsey, the founder and CEO of Twitter and payments operator Square, has revealed that Twitter is funding a dedicated team to develop a decentralized standard for social media.

In a series of tweets on December 11, Dorsey set forth a number of challenges social media networks face in their operations. These include the shift away from content hosting and removal to recommendation algorithms directing users’ attention, and content that sparks controversy and outrage rather than healthy and informative conversations.

Dorsey went on to address new challenges centralized solutions are struggling to meet, specifically saying that “centralized enforcement of global policy to address abuse and misleading information is unlikely to scale over the long-term without placing far too much burden on people.”

To address these challenges, Dorsey suggested the creation of a decentralized standard for social media, alongside the development of an open community including companies and organizations, researchers, civil society leaders, among others.

As such, Twitter is funding an independent dedicated team of up to five open source architects, engineers, and designers. Dorsey further said: “It will take many years to develop a sound, scalable, and usable decentralized standard for social media that paves the path to solving the challenges listed above.”

Libra Updates White Paper, Removes Dividends for Libra Association

Finally, the week was closed by Facebook. The white paper for Facebook’s proposed Libra currency has been quietly updated, according to a December 10 article written by Georgetown University law professor, Chris Brummer. Aside from expected amendments reflecting the revised Libra Association members, the biggest change is the removal of dividends payable to those early investors.

While the initial Libra white paper published in June specified that interest on the reserve assets would be used to cover system costs, keep transaction fees low, support growth, and pay dividends to the early investors i.e. Libra Association members, mention of dividends has now been removed, so it now reads: 

Interest on the reserve assets will be used to cover the costs of the system, ensure low transaction fees, and support further growth and adoption.

The problem with awarding dividends, and potentially the reason for the change according to Brummer, is that it created a potential conflict of interest between Libra Association members, and end-users of the currency.

??All You Need to Know About Facebook's Upcoming Cryptocurrency??

To encourage uptake of Libra, the reserve assets with which they are backed should be stable. However, if dividends are paid from the interest on these assets, this gives an incentive to load the reserve with higher-risk assets.

This in turn would reduce trust in and uptake of Libra, because the supposed stablecoins could lose their value.

There is also the possibility that the changes are in some way addressing concerns that Libra may be classified as a security.

Circle Sells OTC Desk to Kraken to Focus On Stablecoin

During the 3rd week of December, San Francisco-based cryptocurrency exchange Kraken announced that it has acquired Circle’s over-the-counter (OTC) desk.

In a December 17 blog post, Kraken said that the company has bought “one of the most recognized OTC desks in crypto.” Circle co-founders Sean Neville and Jeremy Allaire confirmed the sale of the Circle Trade OTC business to Kraken, saying:

We have known and admired Jesse and his team at Kraken for many years, and we have every confidence and expectation that Circle Trade customers and partners will continue to find best-in-class OTC liquidity service and responsiveness through Kraken going forward. Circle Trade represents an enormous success for the industry as well as for Circle, and we’re excited to see Kraken grow it further.

According to Neville and Allaire the sale of Circle’s OTC desk is part of its “sharpened 2020 product roadmap,” in which the company states that it needs to focus effectively on its stablecoin platforms by reducing complexity, tightening its product portfolio, and reorganize its teams to execute with greater agility. A Circle spokesperson elaborated:

It’s clear that there’s more interest than ever before in stablecoins and central bank digital currencies, in part because significant global technology companies like Facebook and major economies like China have advanced plans for creating digital currencies. Also, a factor is the significant growth of stablecoins like Tether, USDC, and others. All of these factors combined are forcing economic leaders around the world to grapple with the economic and societal implications of crypto assets—which is why 2020 is going to be the year for stablecoins.

Kraken expects this acquisition to “significantly bolster” its services, as it hopes to provide new global trading partners, deeper liquidity and tighter spreads across all supported assets, and improved trader tools that will help streamline the trade process from quote to settlement.

Major Asian Shipping Terminal Joins IBM and Maersk’s Blockchain Platform

Further, Cái Mép International Terminal (CMIT), located in Ho Chi Minh City, Vietnam, announced December 19, that it had joined the TradeLens blockchain platform.

CMIT is one of the largest terminals in the Cái Mép-Th? V?i deep-water gateway port complex, providing a direct link from Vietnam to European, North American and Asian markets. CMIT general director, Jan Bandstra said that the decision to join the blockchain-based program was driven by customer demand for instant shipping data.

Having transparent, accessible cargo data is essential for the complexities of the global shipping industry, as CMIT deputy director Nguyen Xuan Ky illustrated:

A seafood container export from Vietnam to the U.S. has more than 30 shipping milestones and shipment data at more than 10 relevant entities with requirement of close tracking [...] real-time information sharing at different stages by different entities in global supply chain will increase considerable efficiency for global trade flows.

The TradeLens platform is quickly becoming the industry standard in the global shipping industry. Developed in partnership by IBM and Maersk, the open and neutral blockchain-based platform aims to streamline labyrinthine supply chains. 

It is now supported by over 100 diverse organizations within the industry, recently adding Global Container Terminals, a North American container terminal operator, and the Thai customs authority to its client base.

Ripple Raises $200M, Calls 2019 Its Strongest Year of Growth

Finally, the week was closed by Ripple, the blockchain payments firm behind XRP, the third biggest altcoin by market cap, that has raised $200 million in a new funding round.

Led by closed-ended investment company Tetragon, the new Series C funding round was also joined by Ripple’s major Japanese partner SBI Holdings and venture capital firm Route 66 Ventures, the firm announced on December20.

The new funding will reportedly help Ripple to continue improving its global payments network and the broader utility of the digital asset XRP and the XRP Ledger, the announcement reads.

The new investment is claimed to mark a record year for the business as Ripple reportedly saw its “strongest year of growth to date in 2019.”

Ripple CEO Brad Garlinghouse said that the company has continued to gain momentum and accelerate industry leadership, while “others in the blockchain space have slowed their growth or even shut down.”

To date, Ripple is claimed to have customers in over 45 countries and six continents, with payout capabilities in more than 70 countries. The company has reportedly seen a 10-fold year-over-year growth in transactions, while the firm’s global payments network RippleNet grew to more than 300 customers worldwide.

While Ripple claims that 2019 has become its strongest year so far, the company has seen a significant drop in sales in the third quarter of 2019. In mid-October, Ripple’s Q3 2019 sales were down over 73% compared to the record sale of $251.51 million in Q2.

Earlier this year, Ripple entered a partnership with the world’s second-largest remittances firm, MoneyGram, with Garlinghouse claiming that MoneyGram using Ripple’s xRapid liquidity product is a bigger deal than Facebook’s stablecoin project Libra. In late November, MoneyGram secured a $20 million equity investment from Ripple as part of its original $50 million equity investment commitment.

Thomson Reuters Partners With Verady To Tackle Crypto Taxes

During the last week of December, Thomson Reuters, the multinational media conglomerate, announced on December 19 a partnership with Verady, a firm that specializes in the accounting and reporting of cryptocurrencies and blockchain assets. The two companies will collaborate on bringing a new cryptocurrency tax tool to market.

Thomson Reuters GoSystem Tax RS product will soon include a “Virtual Currency Organizer” for individuals reporting cryptocurrency transactions on tax form 1040. According to Thomson Reuters, the tax tool will serve as a single point of data entry and review for virtual currency transactions including exchanges, forks, purchases and payment for services rendered.

This will provide accounting professionals with the correct data necessary when helping clients reconcile cryptocurrency transactions. Moreover, users of Varady’s Ledgible blockchain accounting platform will be able to create reports that are ready for Thomson Reuters’ GoSystem Tax and Ultra Tax products.

Kell Canty, CEO of Verady, commented:

Once Ledgible users have integrated their wallet and exchange activity, they’ll be able to notify their accounting professionals that the data is ready to go. Tax preparers can then bring that data into the GoSystem Tax product, placing it in the virtual currency organizer.

According to Canty, Thomson Reuters plans to premier the Virtual Currency Organizer sometime this year. The cryptocurrency tax tool will serve as Thomson Reuters latest crypto-focused product.

The company already provides a price data feed for virtual currencies known as “Cryptocurrency Real Time Rates.” In June of last year, Thomas Reuters also launched a new version of its MarketPsych Indices (TRMI) to include market sentiment data for the top 100 cryptocurrencies.

While the Virtual Currency Organizer will be extremely helpful for crypto holders tackling taxes this year, it remains a challenge to gather trusted data for cryptocurrencies due to their decentralized nature.

Canty explained that a main reason Thomson Reuters formed the partnership with Verady was to ensure that reliable data is acquired.

Thomson Reuters formed this partnership with us partly due to our impressive background in the field of tracking, reporting, and accounting of cryptocurrency and blockchain assets. This is a huge endorsement for what we are doing to provide integrated reporting of cryptocurrency data across different data sources.

Canty pointed out that Verady has been helping financial institutions and organizations account for blockchain assets since 2014. He also mentioned that the company helped with the first audit of Bitpay in 2014.

SEC-Licensed Broker-Dealer BitOoda Secures $7M Seed Funding

Further, United States-based cryptocurrency brokerage BitOoda has secured $7 million funding from major investors including former senior investment exec at JPMorgan.

Founded in 2017, BitOoda positions itself as a digital asset financial services platform that combines digital finance and applied science.

According to an official announcement on December 23, BitOoda’s new seed round featured founder of international energy analytics firm PIRA Energy Gary Ross, who is also a former head of global oil analytics and chief energy economist at S&P Global Platts. Other investors included Roy Salame, former managing director and head of global investment opportunities group at JPMorgan, as well as Calvin Schlenker, former senior executive at British Petroleum.

As noted in the announcement, the firm has purportedly distinguished itself by designing and executing two major products including financial swap the BitOoda Difficulty and physical hashpower contract the BitOoda Hash.

The firm’s operations include registration as a broker-dealer with the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority, as well as registration as an introducing broker with the Commodity Futures Trading Commission and the National Futures Association.

BitOoda founder and CEO Tim Kelly noted that the seed round unlocks major growth opportunities including the company’s considerations to expand operations both in the U.S. as well as Asia and Europe. According to Kelly, BitOoda sees particular growth in demand for its services in Asia. The executive said:

We are seeing significant interest out of Asia as well as in our advisory services business. Our funding round is critical in building the capacity to capitalize on these opportunities.

Chinese Internet Giant Tencent Plans to Create Digital Currency Research Group

Finally, the month was closed by Tencent, the operator of Chinese social media app WeChat, which is planning to create a digital currency research group for the further advancement of blockchain technology research projects.

On December 23, Chinese media outlet iFeng reported that the Chinese internet giant released a statement to its employees saying that the company is currently on the lookout for the new head of the research group.

The yet-to-be-established digital currency research group will reportedly focus on Tencent’s further advancement in the digital payment industry by utilizing blockchain technology. 

Just recently, Tencent announced a new partnership with the world’s largest diamond mining firm, Russia’s Alrosa, and blockchain platform Everledger, to launch a new diamond-focused retail mini-program aimed at WeChat’s one billion active users. 

The collaboration between the three companies aims to improve transparency and consumer trust across the diamond supply chain, enabling social media users to purchase diamonds with full knowledge of their origin, characteristics and ownership history.

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About: I am a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at a global payments startup where I'm leading company's expansion into Europe , I'm an active member of FinTech community and a TechFin evangelist.

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