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Banks In The US To Allow Customers to Buy, Sell, Hold Bitcoin Through Existing Bank Accounts

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Hundreds of banks in the U.S. will reportedly start offering access to bitcoin to their customers this year, thanks to a partnership between Fidelity National Information Services and the New York Digital Investment Group.

Hundreds of banks have enrolled to participate in the program as they see funds moving from bank accounts to crypto exchanges.

Customers of hundreds of banks in the U.S. will soon be able to buy, hold and sell bitcoin through their existing accounts, CNBC reported on Wednesday.

This will be made possible thanks to a partnership between fintech giant Fidelity National Information Services (FIS) and the New York Digital Investment Group (NYDIG), the bitcoin investment arm of $10 billion New York-based Stone Ridge Asset Management. The two firms said that the collaboration is “to enable U.S. banks to offer bitcoin in the coming months,” the publication conveyed. FIS is a vendor to banks with nearly 300 million checking accounts.

Patrick Sells, head of bank solutions at NYDIG, said that hundreds of banks are already enrolled in the program. While noting that the firm is in talks with some of the biggest banks in the country about offering the bitcoin service, he said most banks that have enrolled are smaller banks. He was quoted as saying; “What we’re doing is making it simple for everyday Americans and corporations to be able to buy bitcoin through their existing bank relationships. If I’m using my mobile application to do all of my banking, now I have the ability to buy, sell and hold bitcoin”.

Yan Zhao, president of NYDIG, explained that banks used to steer clear of bitcoin but they are now asking about providing crypto investment services because they can see their customers moving money out of their bank accounts to crypto exchanges. She opined; “This is not just the banks thinking that their clients want bitcoin, they’re saying. ‘We need to do this because we see the data.’ They’re seeing deposits going to the Coinbases and Galaxies and Krakens of the world.”

Rob Lee, head of digital banking at FIS, expects major banks like JPMorgan Chase and Bank of America to come under pressure to offer crypto investments to retail banking customers when they see hundreds of smaller banks provide the crypto service.

Some major investment banks have already begun providing wealthy clients access to bitcoin investments. Morgan Stanley announced in March that it will begin offering bitcoin funds to wealthy clients. Goldman Sachs then said that it will offer a full spectrum of bitcoin investments. JPMorgan is also reportedly looking at its own product in conjunction with NYDIG.

“Most people can’t invest in things that institutional investors get to invest in. With bitcoin available through your bank to be purchased with as little as $1, now you have an attractive asset that’s available to be owned by anyone in any amount. We think that’s huge for economic empowerment.”

FIS will handle the link to lenders while NYDIG, not banks, will take care of bitcoin custody and trade execution, the publication noted. Zhao explained that the cryptocurrency will not be FDIC-insured. Sells further shared that NYDIG plans to provide other services, including debit card rewards paid in bitcoin, and a new type of bank account that is FDIC insured, but pays interest in bitcoin.

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eNaira

Official eNaira Website Goes Live

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The Central Bank of Nigeria’s (CBN) eNaira website has gone live a week before the planned launch of the digital currency.

The website promises easier financial transactions for users of eNaira, offers opportunity for peer-to-peer payments which allows users to send money to one another through a linked bank account or card; allows customers to move money from their bank account to their eNaira wallet with ease; can monitor their eNaira wallet, check balances and view transaction history; and make in-store payment using their eNaira wallet by scanning QR codes.

In addition, customers are allowed to scan the QR Code on the website to get started.

CBN Governor, Mr. Godwin Emefiele, while speaking to a gathering of foreign investors in New York, recently, had told his audience that because of activities surrounding the country’s Independence celebration on October 1, the earlier planned launch of the eNaira on same date would likely be rescheduled to October 4, 2021.
“The central bank would not want the event to take the shine away from the Independence celebration,” he said.

“We are going to be the first country in Africa to launch a digital currency. It is a novel idea because we think it will facilitate trade, Nigeria being the biggest economy in Africa, this will set the tone to tell Africa that we are ready to lead and we would indeed lead in trade and we would make sure that happens.

“Between all central bankers in ECOWAS, we are already working on certain collaboration to make trade, payment and banking system integrate in such a way to set example on the African Continental Free Trade Area (AfCFTA),” he added.

In line with global trend, the CBN recently took a major step towards the launch of its digital currency with its formal announcement of its engagement of global fintech company, Bitt Inc. as its technical partner for the project. To choose the technical partner, the CBN went through a rigorous vendor selection process in line with the Public Procurement Act, conducted by seven departmental directors and a Deputy Governor whereby several companies were evaluated. The evaluation was based on the following criteria: technology ownership and control; implementation timeline; efficiency, ease of adoption; support for anti-money laundering and combating the financing of terrorism (AML/CFT); platform security; interoperability; implementation experience.

Emefiele expressed optimism that the eNaira, would bring about increased cross-border trade, accelerate financial inclusion and lead to cheaper and faster remittance inflow. He said the digital money would lead to easier targeted social interventions, as well as improvement in monetary policy effectiveness, payment systems efficiency, and tax collection.

According to him, after its unveiling, Nigerians should be able to download the eNaira app from either Google plays store or Apple app store, on board themselves and fund their eNaira wallet using their bank account or with cash at a registered agent location.

“If you are a bank customer and you have say N10 million in your bank account, for your comfort of spending and making purchase, you can tell the bank to load N2 million out of your N10 million into your wallet.

“So, your bank balance in physical cash drops to N8 million, while your e-wallet carries N2 million. With that you can make purchases both within and across the country.
“There are so many variance of the eNaira. But this is where we would start because we are not going to pretend that there are not risks in opening your system up. We would look at the various products, determine the risk, determine the best way to mitigate the risk before we now open it up more and more,” Emefiele added.

Also shedding more light on Bitts, he said, “we chose them as a partner. In some other climes where they are, they have their software and they earn their money. But we chose that they would establish their company in Nigeria. “The CBN will own substantially stake in that company. It is a company that will be established in Nigeria and majority holding will be the CBN,” he added.

On his part, the CBN’s Director, Corporate Communications Department, Mr. Osita Nwanisobi, explained that the eNaira project had been a long and thorough process for the apex bank following its resolve in 2017, to digitise the local currency after extensive research and exploration.

Meanwhile, China’s central bank last weekend announced that all transactions of crypto-currencies are illegal, effectively banning digital tokens such as Bitcoin.

“Virtual currency-related business activities are illegal financial activities,” the BBC quoted People’s Bank of China to have said, warning it “seriously endangers the safety of people’s assets”. China is one of the world’s largest crypto-currency markets. Fluctuations there often impact the global price of crypto-currencies.

The price of Bitcoin fell by more than $2,000 (£1,460) in the wake of the Chinese announcement.

It was the latest in China’s national crackdown on what it sees as a volatile, speculative investment at best – and a way to launder money at worst. Trading crypto-currency had officially been banned in China since 2019, but had continued online through foreign exchanges. However, there has been a significant crackdown this year.

In May, Chinese state intuitions warned buyers they would have no protection for continuing to trade Bitcoin and other currencies online, as government officials vowed to increase pressure on the industry.

In June, it told banks and payment platforms to stop facilitating transactions and issued bans on “mining” the currencies – the trade of using powerful computers to make new coins.

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Cryptocurrency

Cryptocurrency Exchanges Rush to Cut Ties With Chinese Users After Fresh Crackdown

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Cryptocurrency exchanges and providers of crypto services are scrambling to sever business ties with mainland Chinese clients, after Beijing last Friday issued a blanket ban on all crypto trading and mining.

In a culmination of years of efforts to rein in the sector, 10 powerful Chinese government bodies including the central bank, said overseas exchanges were barred from providing services to mainland investors via the internet – a previously grey area – and vowed to jointly root out “illegal” cryptocurrency activities.

Huobi Global and Binance, two of the world’s largest exchanges and popular with Chinese users, have stopped new registrations of accounts by mainland customers. Huobi also said it would clean up existing ones by the end of the year.

“On the very day we saw the notice, we started to take corrective measures,” Du Jun, Huobi Group co-founder said in a statement to Reuters.

Du did not give an estimate how many of its users would be affected, saying only that Huobi, once the world’s biggest crypto exchange, had embarked on a global expansion strategy many years ago and seen steady growth in Southeast Asia and Europe.

Shares in crypto-related firms tumbled on Monday with crypto asset manager and trading firm Huobi Tech plunging 23% and OKG Technology Holdings Ltd, a fintech company majority owned by Xu Mingxing, the founder of cryptoexchange OKcoin, losing 12%.

TokenPocket, a popular service provider of crypto wallets, also said in a notice to clients that it would terminate services to mainland Chinese clients that risk violating Chinese policies and would “actively embrace” regulation. It added it welcomes cooperation from China in blockchain technologies.

Many Chinese crypto exchanges shut down or moved offshore in 2017, after China, once the world’s biggest bitcoin trading and mining centre, banned such platforms from converting legal tender into cryptocurrencies and vice versa. Then in May this year, China’s State Council vowed to ban bitcoin trading and mining.

Amid the crackdown, other types of Chinese crypto companies have been moving out of China over the past few months, said Flex Yang, founder and CEO of Babel Finance, adding that the impact from the latest policy would be “limited”.

The Chinese crypto financial services provider this month opened new business headquarters in Singapore.

Cobo, a crypto asset management and custodian platform, also recently moved its headquarters from Beijing to Singapore.

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Cryptocurrency

Coinbase Bonds Fall Again After China Bans Cryptocurrency

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Coinbase Global Inc.’s debut junk-bond sale fell to fresh lows after the Chinese government banned all crypto transactions and vowed to stop illegal crypto mining.

Paper losses for investors that bought the two tranches of notes at par now stand at roughly $100 million.

The $1 billion 10-year 3.625% bonds dropped more than 1.5 points overnight to 94.5 cents on the dollar, while the $1 billion seven-year 3.375% notes fell more than a point to 95.5 cents, according to Trace bond pricing data.

Coinbase’s bonds had already whipsawed since pricing on Sept. 14 as markets traded down over fears that the Evergrande contagion could affect global markets, and after dropping plans to launch a new crypto lending platform after the U.S. Securities and Exchange Commission raised concerns over the plan.

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