Weekly Analysis And Opinion Highlights – 2 January 2023

Happy New Year! And we’re kicking off the first new week of the new year with new analysis and opinions on fintech with super-powered artificial intelligence, DeFi, open banking, and more. Dive into the latest fintech insights and have a great start to the week! 

In Crypto: How can NFT ‘rugging’ victims claim justice? (Business Cloud)
The notoriety and value of non-fungible tokens has increased exponentially this year, leading many people to invest amid a fear of missing out. The similarities with cryptocurrencies do not end there: many projects ultimately falter, leaving investors out of pocket. While this is to be expected in a nascent market – not to mention startups in general – there are many instances where the motives of the founders behind NFT projects can be called into question. Just this week, for example, OnlyFans model and former Love Island star Vanessa Sierra closed her SmolBoyzLand NFT project amid claims of a ‘rug pull’. Launched in March, it raised 127 ETH (worth up to $400,000 at the time) in mint funds which the founders subsequently transferred to their own wallets. Like any other business, failure to obtain necessary legal advice and undertake due diligence could easily expose a business to unnecessary risk, which could result in not only the failure of the project but also in personal liability. Read more

What are the benefits of blockchain in financial services? (Global Fintech)
With the rise of new digital technologies that are disrupting the financial market, many industry participants are keen to learn more. What benefits does blockchain offer? In a recent post by Moody’s Analytics, the company outlined how the technology has the potential to truly disrupt finance and help fix challenges in the sector at the same time. Blockchain has a range of applications, including AML compliance, Moody’s highlighted. For example, regulated firms can record on-chain when their business verification checks are performed, who performed them, and what the results were. Furthermore, blockchain tech has also become increasingly valuable for audit and KYC compliance. They can store a range of information – such as inventory, identification, and legal contracts – in a secure, traceable, and verifiable system. This provides a strong audit trail that includes immutable records of due diligence tasks, procedures, and shared documents. Read more

Does DeFi still have a future in regulated form? (Euro Money
As the crypto edifice teeters, there is still one last chance for decentralized finance. If it can encode regulatory compliance into real-world financial assets issued in tokenized form and then trade, clear and settle in seconds at negligible cost and low risk, it might just survive. There are the delicious images of the young billionaire in grey T-shirt, shorts and socks staring at his phone and barely noticing the besuited former US president Bill Clinton and ex-UK prime minister Tony Blair paid to sit next to him and tout crypto at the firm’s conference in the Bahamas; the grotesque TV ads with American football player Tom Brady, now a defendant in a class action lawsuit from investors gulled into investing on the failed crypto exchange; perhaps most entertaining of all the humiliation of investing firms such as Sequoia Capital, Temasek, Tiger Global, BlackRock and Ontario Teachers Pension Plan that together decided in October 2021 that FTX was worth $25 billion. Read more

Is Australia Clamping Down on Crypto Firms? (The Fintech News)
The Australian Securities & Investments Commission (ASIC) is suing digital asset trading firm Finder Wallet for offering an unlicensed financial product to consumers. Finder Wallet offered its ‘Finder Earn’ service to customers between February and 10 November 2022. Users of the service could deposit Australian dollars into their accounts to be converted into ‘stablecoin’ TAUD. Finder Wallet could then use the coin for its own working capital. In return for the investment, Finder Wallet paid customers an annual compounding interest of either 4.01 per cent or 6.01 per cent. All interest was paid back to investors in Australian dollars. An ASIC statement explains that the product offering should technically be classified as a debenture. As such, Finder Wallet should have acquired the relevant licenses before offering the service. Read more

Stablecoin On-Chain Settlement May Surpass That of Visa in 2023 (Be in Crypto)
This year has been a massive downward trend for the crypto market, but stablecoin usage and adoption are still increasing. Stablecoin adoption has grown quickly in 2022 despite crypto markets crashing more than 70%. According to CoinMetrics, the total value settled by them in 2021 was just over $6 trillion. In 2022, the value settled could top $8 trillion, maybe more. On Dec. 21, co-head of venture at Brevan Howard Digital, Peter Johnson, compared the stablecoin settlements to those of leading credit cards. He noted that stablecoin settlements had already surpassed MasterCard and American Express. Furthermore, he predicted that on-chain stablecoin volumes would surpass those of Visa next year. Read more

Why Indian Fintech Startups Struggle With KYC Compliance (inc42)
The last quarter saw several of India’s leading fintech companies getting notices or receiving penalties and fines from the Reserve Bank of India (RBI) for their failure to comply fully with the ‘Know Your Customer’ (KYC) rules issued by the regulator. As the news spread, muted protests and grumbles were heard over excessive regulatory oversight, even as fintech companies with compliance loopholes rushed to put their internal processes in order. Read more

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