The finance industry blockchain market may reach $462 billion by 2030, according to business information provider IHS Markit. The figure represents explosive growth when compared to the value of blockchain in the financial sector in 2017, at $1.9 billion.
The expected increase in the number of blockchain projects launched and their subsequent commercial deployment in the coming years should result in the aforementioned forecast. Don Tait, principal analyst at IHS Markit, said financial watchdogs in the US, UK, and Hong Kong, among others, are reacting positively towards the technology within the financial sector, which “bolsters the credibility of blockchain technology, helping it become more mainstream.”
Seed CX, an institutional platform for trading digital assets has focused on bridging emerging products with existing infrastructure and regulation. Brian Liston, Seed CX co-founder and COO, told The Industry Spread how positive their experience with regulators has been: “Ultimately, they are interested in learning about emerging technologies and their corresponding business lines, and how they fit into existing regulatory regimes. For example, distributed ledger technology is orthogonal to the idea of centralized clearing. To fully remove a CCP’s position in a market would be a huge leap – but there are a lot of settlement flows, accounting and transfer mechanics that should be replaced with blockchain technology, and those can fit within existing CCP rules nicely.”
The IHS Markit paper projects the global financial market, which includes fintech and insurance, to continue to be the largest value market using blockchain technology as it can be leveraged for cross-border payments, share trading and syndicated lending with greater speed, auditability, and cost-reduction.
“The global financial market has the opportunity to tap into this infrastructure and unlock huge value through broader asset tokenization. The ETF, for example, is an excellent tool used to reduce the cost of trading portfolios, structured products, commodities, and other financial products. Tokenized baskets traded and settled on a blockchain could be the next stage in that evolution”, said Brian Liston, whose company targets spot, derivatives and OTC settlement of digital assets.
The study goes on to say that even a small percentage of cost savings and efficiency gains can lead to significant business value for companies and industries that introduce blockchain technology. For example, the derivatives market is worth around $544 trillion a year and the market capitalization of all the world’s stock markets is equal to $73 trillion. The team at IHS Markit estimates that applying blockchain to the clearing and settlement of cash securities, investment companies could save up to $12 billion in fees. Firms can also reduce costs by cutting out many of the traditional middlemen.
Is $462 Billion Too Far-Fetched?
In regard to the “$462 billion by 2030” projection, GMEX CEO Hirander Misra is not surprised with the seemingly high figure provided as the world prepares to store its economy on blockchain technology.
“Whilst these numbers may seem rather high given that statistics can paint whatever picture one wants to get headlines, there is no doubt that blockchain will have a transformational impact on the financial services industry. A recent survey of executives and experts by the World Economic Forum predicted that 10% of Global GDP would be stored on blockchain technology by 2027. This based on 2018 amounts to around $USD8.5 trillion.
The WEF report mentioned by Misra, dubbed “Deep Shift Technology: Tipping Points and Societal Impact”, was published in September 2015, when the cryptocurrency market was worth $4 billion. It is now valued at $120 billion after peaking near $800 billion in early 2018. The document aggregates expectations of 800 experts such as an explosion in tradable assets; better property records in emerging markets, and the ability to make everything a tradable asset. It could also drive the disintermediation of financial institutions, as new services and value exchanges are created directly on the blockchain.
“The current intermediary model will be challenged and become more efficient despite the incumbents trying to create the same processes which exist with the incumbent model. This will be applicable to banking, payments, exchanges and post-trade market infrastructure to name but a few”, Misra added.
GMEX is a provider of multi-asset exchange trading and post-trade technology through a partnership-driven approach in order to create an ecosystem with exchanges and post-trade market infrastructure operators under a hybrid system. The firm has recently partnered with MINDEX to launch the first blockchain securities exchange in Mauritius. In late 2018, GMEX acquired a 30% stake in USAVE to build a secure digital exchange for physical gold.
The virtual currency businesses join leading crypto pioneers, including Ripple, Square, Coinbase, and BitPay, as BitLicense holders. The authorization granted by the New York State adds extra customer confidence to their businesses.
The New York State Department of Financial Services (DFS) has approved the applications of Robinhood Crypto LLC, a subsidiary of Robinhood Markets Inc., and Moon Inc., doing business as LibertyX, for virtual currency licenses.
Maria T. Vullo, Financial Services Superintendent at New York State DFS, commented:
“DFS continues to lead the way in responsibly supervising and advancing innovation in New York’s flourishing financial technology sector through a strong state-based regulatory regime,” said Superintendent Vullo. “Today’s approvals add to the growing list of responsible virtual currency providers who recognize and appreciate how a comprehensive regulatory framework fosters a competitive marketplace that benefits both consumers and industry.”
Robinhood has also been granted a money transmission license from the regulator. Robinhood Crypto is now authorized to offer services for buying, selling, and storing seven virtual currencies, including Bitcoin, Ether, Bitcoin Cash, and Litecoin. Parent company Robinhood allows U.S. based retail/individual customers to trade stocks and options on a commission-free basis through Robinhood Financial.
Vlad Tenev, Co-Founder and Co-CEO of Robinhood Markets, Inc, said:
“We’re delighted that Robinhood Crypto has been granted a virtual currency license and a money transmitter license in New York. This will complement the larger suite of investment services that New Yorkers already have access to on the Robinhood platform. The NYDFS has been very helpful throughout this process, and we look forward to their ongoing guidance as we prepare to launch Robinhood Crypto in New York.”
Cryptocurrency exchange LibertyX was granted a BitLicense in order to provide consumers the sale of Bitcoin through debit terminals as the company is the first DFS virtual currency licensee to allow customers to use debit cards to purchase Bitcoin from traditional ATMs.
Chris Yim ,Co-Founder and CEO of LibertyX, said: “After an extensive review process, we are delighted to receive the blessing of the NYDFS (BitLicense) and offer the first debit card Bitcoin purchasing options to New York State residents.”
“LibertyX loves New York bitcoiners. We are excited to bring them an instant way to buy Bitcoin at a nearby location”, added Kyle Powers, Co-Founder and Chairman of LibertyX.
The regulator has been busy providing BitLicenses over the past months. In late 2017, Ripple appointed the BitLicense architect to its Board of Directors. SeedCX has a pending BitLicense with NYDFS and a pending Broker-Dealer registration with FINRA. The DFS attributes licenses following a comprehensive and rigorous review of all applications which are subject to significant regulatory conditions.
Requirements to hold a BitLicense include:
– Implementing, monitoring and updating effective risk-based controls to prevent and respond to any potential or actual wrongful use of Bitcoin, including but not limited to its use in illegal activity, market manipulation, or other similar misconduct, as required by DFS’s February 7, 2018, “Guidance on Prevention of Market Manipulation and Other Wrongful Activity”;
– Complying with DFS’s transaction monitoring and cybersecurity regulations; and
– Maintaining policies and procedures for consumer protection and to promptly address and resolve customer complaints.
The Gibraltar Blockchain Exchange (GBX), a leading cryptocurrency exchange which has obtained a DLT license from the local financial watchdog, has announced the addition of Ripple (XRP) to its Digital Asset Exchange.
The digital asset exchange derives from the capital markets experience gained through the GBX’s parent company, the EU-regulated operator Gibraltar Stock Exchange (GSX). Gibraltar Blockchain Exchange announced a soft launch in June 2018 with the participation of 300 pre-qualified retail accounts and a select number of institutional participants trading a number of available digital assets.
Nick Cowan, Managing Director and Founder of GSX (Gibraltar Stock Exchange) Group Limited, commented: “Ripple is a major player within the blockchain industry. In ways similar to our work at the GSX Group, it aims to re-shape the old methods of finance and banking, transforming payments through blockchain technology. XRP is a globally traded token and by joining the GBX-DAX it further extends its liquidity and reach. In November last year, we were granted a full licence to operate by the Gibraltar Financial Services Commision (GFSC) and, following this, we introduced insurance coverage for assets listed on the GBX-DAX. As we move into 2019, we plan to build on this momentum with new digital assets listed on the GBX-DAX, with Ripple as the first of these new tokens.”
Ripple was created to bridge digital asset exchanges, payment providers, and banks via RippleNet for frictionless money transfers globally. XRP is said to become the best blockchain investment for the upcoming two years. A recent report published by InvestingHaven shows that Ripple, as an investment opportunity, presents the strongest case for being the token with the best return among other alternative blockchain projects.
Ripple, the San Francisco-based technology company which develops the Ripple payment protocol and exchange network, has announced the appointment of former Ripple’s chief cryptographer David Schwartz as the new chief technology officer (CTO).
Kahina Van Dyke Joins Ripple As Senior VP Business and Corporate Development
Ripple is also welcoming Kahina Van Dyke, a banking and technology veteran with over 20 years of experience, as Senior Vice President of Business and Corporate Development. Van Dyke will focus on driving new, strategic partnerships for Ripple across the global financial services industry.
Brad Garlinghouse, Chief Executive Officer of Ripple, said:
Currencies Direct, a UK-based foreign exchange broker and international payment provider, has successfully completed an international payment over Ripple’s xRapid platform using XRP.
Currencies Direct followed the lead of Banco Santander in the pursuit of offering its customers fast and inexpensive international transactions. Santander was the earliest major retail use case of blockchain technology in the banking system as it rolled out ‘the ‘same day mobile international payments in 3 clicks and 40 seconds using distributed ledger technology’.
The adoption of Ripple’s xRapid platform for international payments marks a departure from the speculative trading of cryptocurrencies that has dominated the marketplace thus far and a shift towards the use of digital assets as a means of value transfer. During the trial, Currencies Direct conducted a number of transfers between pre-screened organizations in seconds, compared to the 3 to 5 day period that transfers currently take.
Brian Harris, Chief Product Officer at Currencies Direct, commented:
“Our trial with XRP was a resounding success. We’re currently assessing our next steps, but the evidence we’ve gathered indicates that the use of XRP is a game changer, making payments near-immediate and significantly improving service to our customers. Our goal is to offer the best possible service. We believe that utilizing cryptocurrencies in this way – as a transfer of value, rather than as a store of value – is the next logical step for our industry. It is, after all, the intended purpose of cryptocurrencies and we’re proud to be leveraging new technology to deliver the most convenient and seamless experience for our customers.”
Ripple’s xRapid connects directly to exchanges in both the sender’s and receiver’s countries, with the sender’s currency being exchanged into XRP. Then, in seconds, that XRP is exchanged into the destination currency in the second digital asset exchange. At the end of the tracked transaction, the funds are sent out to the recipient and arrive in their account in their native currency, resulting in the fastest cross-border payment.
Asheesh Birla, Senior Vice President of Product at Ripple, said:
“The results speak for themselves – xRapid leverages XRP to transform the way money moves by significantly lowering the cost and time it takes to make a cross-border payment. xRapid offers an enhanced payments experience, while also allowing payment providers to gain a competitive advantage in the market. This represents a revolutionary step for the industry and clearly shows how FinTech companies like Currencies Direct are helping to revolutionize the financial services sector,” explains Harris. “We’re proud to be early adopters of this technology.”
Bloomberg has announced the launch of the BGCI, an index designed to track the performance of the largest, most liquid portion of the cryptocurrency market.
This market capitalization-weighted index was designed together with leading digital asset management firm Galaxy Digital Capital Management LP. The BGCI measures the performance of ten USD-traded cryptocurrencies, including Bitcoin, Ethereum, Monero, Ripple, and Zcash.
Its constituents are diversified across different categories of digital assets, including stores of value, mediums of exchange, smart contract protocols, and privacy assets. The current cryptocurrency weightings have Bitcoin and Ethereum representing over half of the index, with 30% each, followed by Ripple with 14.14%, and Bitcoin Cash (10.65%). Other cryptocurrencies include EOS (6.11%), Litecoin (3.77%), Dash (1.67%), Monero (1.66%), Ethereum Classic (1%), and Zcash (1%).
This important step in the evolution of the digital assets space facilitates diversified exposure as well as independent benchmarking for investors. Owned and administered by Bloomberg Index Services Limited, the BGCI offers the first institutional grade benchmark for the cryptocurrency market.
Alan Campbell, Global Product Manager for Bloomberg Indices, commented:
“Today’s launch of the Bloomberg Galaxy Crypto Index reflects our clients’ growing interest in cryptocurrencies. The index brings our rigorous approach to index construction to cryptos and will provide investors with a transparent benchmark to gauge the performance of the broader market.”
Michael Novogratz, CEO and Founder of Galaxy Digital Capital Management, added:
“The Bloomberg Galaxy Crypto Index brings unprecedented transparency to the crypto markets. We are excited to help drive the decentralized revolution forward through the creation of BGCI.”
Steve Kurz, Head of Asset Management at Galaxy Digital Capital Management, said:
“We are thrilled to partner with Bloomberg on the BGCI. The index’s independent, rules-based methodology provides a strong foundation on which the cryptocurrency ecosystem will continue to grow and mature.”
Chicago-based proprietary trading firm Hehmeyer Trading + Investments announced in March the launch of its cryptocurrency index fund. The service provides access to the cryptocurrency market by investing in a fund that aims to track the performance of the proprietary Hehmeyer Cryptocurrency Index (HCI).
Last month, former Bloomberg executive Jamie Bogen was appointed Director of Execution Services at Dash Financial, not to be confused with the cryptocurrency that holds the same name and represents 1.67% of the BGCI index.
“However, Bitcoin, the original cryptocurrency, retains its huge market dominance; it’s the one everyone talks about. I believe that investors need to broaden their outlook on cryptocurrencies beyond Bitcoin. This is why we have launched this new promotion. Despite Bitcoin’s show-stopping performance in 2017 (1,300 percent), it underperformed its lesser-known rivals, such as Ethereum (8,500 percent) and Ripple (~30,000 percent).”
Global retail Fx broker, FxOpen has extended the list of its crypto offering to its crypto accounts. Strengthening its crypto offering, FxOpen has added 8 new crypto pairs amidst growing client demands in the industry. It has added Bitcoin Cash, Ethereum Classic, Ripple, Monero, NEO, IOTA, EOS and OMNI to crypto accounts.
Including the latest additions, FxOpen now offers a total of 39 cryptocurrency pairs through the list of contracts-for-difference (CFD) which can be traded against US Dollar, EURO and Bitcoin. It has also set a margin call on such pairs at 30 percent and Stop out at 15 percent.
FxOpen has also made some minor improvements to the crypto accounts:
• Decreased minimum lot sizes for symbols with LTC, DSH, ETH from 1 unit to 0.1 units of the base currency
• Decreased minimum lot sizes for EMC pairs from 10 units to 1 unit of the base currency
• The maximum slippage for EMC/BTC pair has been changed from 3 to 10 points
FxOpen is strengthening its Cryptocurrency CFD offering through its (Percentage Allocation Master Module) PAMM accounts which allows cryptocurrency traders to follow other seasoned traders and their trading strategies. The PAMM products have been significantly contributing to the volumes of the groups in traditional markets as well as cryptocurrency markets. The latest additions signify the broker’s commitment to the crypto community amidst changing trading dynamics of the industry.
Coinbase refutes charges on duplicate transaction
Meanwhile, Coinbase has refuted the charges of the issue of duplicate transactions on cards of some users was caused by them. The US-based exchange has said issuing the statement in its Medium blog.
“Over the last two days, some customers who used a credit or debit card at Coinbase may have seen duplicate transactions posted to their cardholder accounts. This issue was not caused by Coinbase,”
Payment processor, Worldpay and VISA are believed to have started the reversal entries of duplicate transactions for the affected clients. Worldpay serves as a medium for Coinbase to use the VISA’s network. Both Worldpay and Coinbase have taken the issue with VISA officials to ensure duplicate transactions are reversed. A joint statement issued by VISA and WorldPay elaborates:
“All reversal transactions have now been issued, and should appear on customers’ credit card and debit card accounts within the next few days. We believe the majority of these reversals have already posted to accounts. If you continue to have problems with your credit or debit card account after this reversal period, including issues relating to card fees or charges, we encourage you to contact your card issuing bank. We deeply regret any inconvenience this may have caused customers.”
In the last few day, users of Coinbase have started reporting the incident of duplicate transactions to social media platforms like Reddit and Twitter. The U.S. Commodity Futures Trading Commission is also looking into the issue of double charging of Coinbase users.
The Consumer Financial Protection Bureau said in a statement: “We are aware of the reports, and expect companies to comply with all applicable laws regarding the treatment of consumers’ funds. Consumers who find unauthorized charges in their bank account or credit card should contact their financial institution immediately.”