Blockchain Technology Challenges: new Third-generation solutions

| 09-03-2021 | Carlo de Meijer | treasuryXL

Notwithstanding the various benefits of blockchain technology, there are still a number of big challenges to overcome before mass adoption can be realised. These range from low scalability to lack of regulation and limited  number of qualified people.

In some of my previous blocks I already went into more detail into these challenges and possible solutions to overcome them. In this blog I will limit myself to the main technological ones including scalability, privacy and interoperability that are limiting its uptake. But above all I will show what third generation solutions have been or are being implemented to tackle the various issues.

A. Scalability

One of the main problems related to blockchain’s technology is scalability, or better said the lack of scale. It refers to the limited rate at which transactions are being processed on blockchain compared to existing methods. Large blockchain networks like Bitcoin and Ethereum are not able to handle as a result of their technological set up. Caps are placed on the number of transactions that can be processed on-chain. This scalability issue is especially a problem for companies that have to process massive transactions and need networks that enable high transaction throughput while maintaining low latency.

Off-chain scaling solutions

For this reason, many view scalability as something to be achieved off-chain, while security and decentralization should be maximized on the blockchain itself. Off-chain scaling refers to approaches that allow for transactions to be executed without overcharging the blockchain. Protocols that plug into the chain allow users to send and receive funds, without the transactions appearing on the main chain.
There are a number of interesting off-chain solutions that are being explored to solve the scalability issue ranging from the implementation of so-called accelerated chips, the use of sidechains and sharding.

Accelerated chips

Accelerated chips could be used to speed up confirmation and transaction times. A forerunner in this is Skynet Core.

Skynet Core

Skynet aims to resolve the issues of blockchain adoption and the functionality of the Internet of Things (IoT). They aim to deliver an end-to-end system that includes a hyper-scalable IoT blockchain network and the licence free blockchain IoT chip named Skynet Core. The project that includes billions of licence free blockchain chips will deploy to devices worldwide, connecting via the Skynet blockchain network.
This blockchain chip can replace an existing CPU and features a core optimized for blockchain technology as well as the Internet of Things. The hardware makes it possible for Skynet Core devices to run blockchain networks with high throughput while providing secure protection from theft of cryptocurrency.  

Side Chains

Another tool to speed up scalability are so-called side chains. A sidechain is a separate blockchain. However, it is not a standalone platform, as it is pegged in some way to the main chain. The main chain and the sidechain are interoperable, meaning that assets can flow freely from one to the other

Side chains are aimed to reduce the load on a given blockchain by sending transactions via these connected sidechains and putting the end state of the transaction on the main blockchain – thereby offloading all the processing of transactions from the main blockchain. There are a number of ways to ensure that funds can be transferred. In some cases, assets are moved from the main chain by being deposited into a special address, and a matching amount is issued on the sidechain. A more straightforward (albeit centralized option) is to send funds to a custodian, who exchanges the deposit for funds on the sidechain.

Next to the first and second generation solutions like Bitcoin’s Lightning network and Ethereum’s Raiden Network, there are a growing number more advanced applications to upgrade scale including AION protocol and Neo’s Trinity.

Sharding

Another scaling solution being worked on is sharding. Main example is the Ethereum Blockchain. Sharding is a way of spreading out the computing and storage workload from a blockchain network into single nodes. This technology divides a blockchain network into many separate areas, called shards, with each shard assigned a small group of nodes to maintain. Each node no longer has to process the entire network’s transactional load. Each node will only maintain the info related to its specific partition or shards, removing the need for all nodes in a network to be apart of a transaction.

Sharding includes transaction sharding and state sharding. Transaction sharding refers to assigning different transactions to different shards. This way, parallel processing becomes possible, leading to high TPS. In contrast, state sharding allows the data state to be stored in different pieces on different nodes. In essence, it means that a single node is only responsible for saving a portion of the ledger.

Multi-layered structure

Another solution to upgrade scale is the use of a multi-layered structure, which is the isolation of transaction processing and data storage. Main projects are Cardano and CPCChain.

Cardano

Cardano (ADA) is the most well-known project which proposes this multi-layered structure. Cardano that can be categorized as a third-generation blockchain (with Bitcoin and Ethereum considered the first and second-generation chains.

Cardano is an open-source and decentralised blockchain project with a layered architecture that is composed of two main elements, the Cardano Settlement Layer (CLS) and the Cardano Computational Layer (CCL), which makes Cardano truly unique. Most other existing blockchain platforms only function with a single layer, which often causes network congestion, slows transactions and drives fees higher.

The settlement layer powers Cardano’s unit of account. This is where peer-to-peer transactions are facilitated, such as the transfer of tokens between users. The settlement layer is responsible for transaction confirmation and the flow of the coin. The computational layer maintains the chain’s security, deploys smart contracts and is programmed to recognize the ID of the data. This layer also serves as a framework that is designed to ensure regulatory compliance with various jurisdictions.

CPCChain

Another promising solution to tackle the scalability issue is CPCChain. CPChain, which is partnered with High Performance Blockchain (HPB), VeChain, Qtum, and ETP Metaverse, intends to build a blockchain-based data platform for next generation IoT systems in combination with distributed storage and encryption computation.

It is aimed to provide the whole process solution from data acquisition, storage, sharing to application, for large-scale distributed IoT systems, enabling high TPS and low transaction latency. CPChain thereby separates its blockchain layer from its application layer, so the blockchain only has to store data IDs (which are on a cloud) rather than the data itself – thereby reducing block sizes.

B. Privacy

Another important challenge to overcome is the privacy issue. Blockchain is built in such a way that all transaction are transparent while its actors can be identified. This is especially a problem for public blockchains, like Bitcoin and Ethereum, where the network ledger is open to anyone and all transactions are transparent – so they can be tracked. This lack of privacy might be an issue for certain types of transactions, for instance in the case of confidential corporate deals.

Protocols

In the meantime several protocols have been developed as alternatives to Bitcoin’s pseudo-anonymity. The three main ones being CoinJoin, Ring Signature and Zero-knowledge proof.

Coinjoin

CoinJoin is the technology used by Dash, developed to introduce a layer of privacy to otherwise public Bitcoin transactions. It is an anonymization strategy that protects the privacy of Bitcoin users when conducting transactions with each other. The protocol requires multiple parties to jointly sign an agreement to mix their coins in a single Bitcoin transaction, making the transaction more difficult to trace. The process is also known as coin mixing.

In the meantime, in order to prevent masternodes from being attacked, Dash introduced Chaining and Blinding, allowing senders to choose multiple masternodes randomly with which to send the transaction. The system enables the mixing of transactions among these master nodes, and transactions appear to be sent by the masternodes and not by the users themselves.

Ring signature

Ring Signature as used by Monero is one of the most famous privacy protocols. A ring signature is a type of digital signature in which a group of possible signers are merged together to produce a distinctive signature that can authorize a transaction. It is composed of the actual signer, who is then combined with non-signers to form a ring. Monero utilizes ring signature technology to protect a user’s privacy in the input side of a transaction by helping the sender mask the origin of a transaction by ensuring that all inputs are indistinguishable from each other.

Because Monero makes use of ring signature technology, it must include a feature that allows for the verification of outputs that are being spent in a ring signature transaction, or else, a user would be able to spend the same transaction output twice i.e. a double-spend. This potential issue is addressed by Monero’s use of key images.

A key image is a cryptographically secure key that is derived from an output transaction being spent, and is made part of every ring signature transaction. This process masks the origin of the transaction, and ensure that all inputs are indistinguishable from each other. Only one key image exists for each transaction output on the Monero blockchain.

On top of the Ring Signature, Monero also utilizes Stealth Address technology to automatically generate one-time addresses for every transaction initiated on the Monero network to ensure the privacy of the recipient. It prevents outputs from being linked to a recipient’s public address. Thanks to Stealth Addresses, this transaction process occurs without publicly linking any transaction to the merchant’s wallet address.

Zero Knowledge Proof

Another solution for blockchain privacy issues, used by Zcash to allow anonymous transactions, is Zero Knowledge proof (ZKP). It is a technique by which a prover can convince the verifier of a fact without revealing the actual content. The technology automatically conceals transaction information, such as sender information, receiver information, and the amounts. Only users who own the private keys of the smart contract being performed have full access to the information. In such cases ZKP can ensure that others only know that a valid transaction has taken place, but no information is available to them about the sender, recipient and type/quantity of asset transferred.

Alternative Methods

At the same time other alternatives are available, such as Permissioned or private blockchain platforms like Quorum, Hyperledger Fabric and Corda, which provide the capability of executing private transactions between two or more participating nodes. This ensures that the transaction details pertaining to the sender and recipient are part of a private ledger and will not be revealed to unauthorized participants.

Or self-Sovereign Identity management platforms that provide the concept of pair-wise decentralized identifiers and verifiable claims that can be presented to third party service providers without revealing all the details of a person or entity and thus protecting privacy

C. Interoperability

While blockchain was conceived as a decentralized technology, individual blockchain networks are not inherently open and are not able to communicate properly to each other. There are a large number of blockchain projects, all of which have different characteristics – such as the type of transactions, hashing algorithms, or consensus models – and which focused on a particular area.

The problem is further deepened by different networks and financial institutions running completely different governance rules, blockchain technology versions and regulatory controls. This has resulted in a series of unconnected blockchain ecosystems operating alongside, but siloed from each other, preventing the industry from reaching its full potential.

Isolated inter-blockchain communication can put a strain to blockchain’s scalability and mainstream adoption. To solve this problem, various new-generation cross-chain technologies that could help different blockchains to interconnect are being explored.

Top Interoperability projects

Most blockchains enable the creation of sidechains, that are blockchains running in parallel to the main blockchain. Next to the more well-known examples of cross-chain communication that are mostly first- or second-generation, like the Bitcoin Lightning Network, or the Raiden Network of Ethereum and the Ripple Interledger Protocol, there is a growing number of interoperability projects that are exploring third-generation solutions such as Cosmos, NeoX and Polkadot blockchain.

Cosmos Blockchain

Cosmos blockchain is an interesting blockchain interoperability project, running on the fault tolerance protocol – Tendermint Byzantine. The blockchain project is aimed to become the hub of many projects  Cosmos blockchain architecture consists of several independent blockchains called Zones, attached to a central blockchain dubbed as the Hub. Zones, which are independent blockchains are plugged into the Cosmos Network. These zones can interact with each other because of the Cosmos Hub and new ones can be connected.

A salient feature of Cosmos is permitting zones to preserve their consensus mechanism. Tendermint Core that enables high-performance as well as consistent and secure Practical  Byzantine Fault Tolerance (PBFT)-like consensus engine, powers each zone in this case.

The cosmos Hub connects blockchain projects to enhance interoperability via the Inter-Blockchain communication protocol. Because of the interconnection, people can send tokens from one zone to another in real time and securely, without engaging the services of a third party. Cosmos blockchain can connect different zones from public to private project thanks to the IBC connection.

NeoX

NeoX is a protocol that implements cross-chain interoperability, to allow multiple participants to exchange assets across different chains and to ensure that all steps in the entire transaction process succeed or fail together. But instead of most protocols NeoX is divided into two parts: cross-chain assets exchange protocol and cross-chain distributed transaction protocol.

Essentially NeoX is the functionality of fusing the concept of Atomic Swaps with Smart Contracts. This means it can allow cross blockchain contract collaboration in a single smart contract. In order to achieve this function, one needs to use NeoContract function to create a contract account for each participant. If other blockchains are not compatible with NeoContract, they can be compatible with NeoX as long as they can provide simple smart contract functionality.

NeoX makes it possible for cross-chain smart contracts where a smart contract can perform different parts on multiple chains, either succeeding or reverting as a whole. This gives excellent possibilities for cross-chain collaborations

Polkadot blockchain

Polkadot blockchain is a high-profile multi-chain technology that is aiming to advance blockchain interoperability. It seeks to enhance the transfer of smart contract data through various blockchains. Polkadot’s ecosystem contains of multiple parachains which are individual blockchains thar differ in characteristics but have become part of the Polkadot environment. In Polkadot blockchain, transactions can be spread over a wide area given the number of chains in the network. All this is done while ensuring high levels of security on dealings. A relay chain is the central connector between these parachains.

Polkadot Blockchain interoperability project seeks to ensure a seamless connection between private chains, public networks, oracles as well as permission less interface. Aim is to enable an internet where independent blockchain solutions will be able to exchange information via a Polkadot relay chain. 

Blockchain Industrial Alliance (BIA): Teaming up

What we also see is that a growing number of these projects are teaming up in order to allow their blockchains to communicate with each other. One main example is the Blockchain Industrial Alliance formed by ICON, AION, and WANChain. This teaming up is aimed at solving the blockchain isolation problem. The Alliance has the shared goal of promoting interconnectivity between the isolated blockchain networks. The Alliance’s main priority is collaborate on research on interchain transactions and communication. The Alliance will focus on developing common industry standards, sharing researching, and protocol architecture. All three blockchain projects that are participating in BIA have the common goal of connecting blockchain protocols.

AION

The AION network is a multi-tier federated blockchain network designed to interconnect the various blockchain entities, making it possible to integrate disparate blockchain systems in multi-tier hub. AION aims to become the common protocol used for these blockchains, enabling more efficient and decentralized systems to be built.

At the core of AION blockchain is a “purpose-built, public, third-generation” blockchain called AION-1,  specifically designed to not only be self-sustaining but connect with other blockchains as well. The AION protocol enables the development of a federated blockchain network, making it possible to seamlessly integrate dissimilar blockchain systems in a multi-tier hub-and-spoke model, similar to the internet. This protocol will enable the transfer of value and data between all AION-compliant blockchains by utilizing bridges.

In essence, AION allows networks to communicate with each other, allowing any DApp to run on any blockchain within the network. On top of that, AION will also allow the participating blockchains to create common chains between them in order to conduct on-chain transactions.

Through AION each participating blockchain will be able to transact with all the chains connected to the ecosystem. Along with solving the interoperability problem, AION also wants to create a system which can work with both private and public blockchains and help in solving scalability. In addition AION helps organizations create blockchains which are interoperable but can have its own unique consensus mechanisms, issuance, and participation.

ICON (ICX)

The second partner is ICON, an  interconnected  blockchain technology and network framework designed to allow independent blockchains to interact with each other. In other words a system of sidechains in order to connect all industry chains to the main network.

ICON is supported through a cryptocurrency token, ICX. Communities are connected to the ICON Network through a decentralized exchange. That allows for the maintenance of a verified ledger shared within the community network itself, allowing participants in a decentralized system to “converge” at a central point. That is done by connecting a community to other communities through the ICON Republic and Citizen Nodes.

WanChain

WANCchain is an online interoperable blockchain solution, with secure multi-party financial platform computing. It relies on a proprietary protocol, the WANBridge model, that allows interconnection of private, public and consortium chains, making it easy to transfer digital assets between different blockchains. The blockchain interoperability solution seeks to rebuild finance by housing all digital assets on one blockchain, aiming to unite the world in isolated digital assets. The current WanBridge model allows for digital assets and data to securely and cheaply be transferred between different ledgers using cross-chain smart contracts.

Based on Ethereum, WanChain enables the deployment of private blockchain smart contract execution aiming to unite the world’s isolated digital assets. Privacy on the blockchain is enhanced by the use of Ring signatures as well as one-time stealth addresses. The Wanchain DeFi ecosystem includes WanSwap and WanLend, as well as several other major products that are now under development such as WanFarm and other DeFi applications. This will allow for much more efficient use of collateral and for WanBridge technology to salescalablyably connect any number of different blockchains.

Forward looking

For blockchain technology to become mainstream and implemented at a larger scale, the bottlenecks current blockchain platforms suffer from – scalability, privacy, and interoperability – need to be addressed. While blockchain technology has undergone rapid improvement since its creation, it’s a relatively young technology and some of the main problems still remain today.

Fortunately, many projects are working on some of the solutions proposed above. As more efficient techniques get invented in the near future these technological barriers will likely be overcome sooner rather than later.

 

 

Carlo de Meijer

Economist and researcher

 

 

 

 

Source

Rent a Treasurer, Plans & Success

| 03-03-2020 | treasuryXL | Pieter de Kiewit

You might remember our previous blogs about the Rent a Treasurer. In this joint effort with Treasurer Search, we make high calibre treasury expertise available for organisations with treasury exposure without a specialist on board. Treasurer Search is in constant communication with the treasury labour market and knows who has what expertise and is available. treasuryXL has a wider network that includes CFOs of mid-sized companies and a very strong communication machine. Combining both enables the Rent a Treasurer service.

What we notice in our market research is that treasury is not well known by these CFOs, so they do not put it on their priority list. But CFOs do understand quickly the upside when speaking with and learning from a treasurer. Often not wanting extra headcount is mentioned as a reason not to act upon treasury opportunities. And many specialized treasury consultants are a better match with multi-billion corporates and costly. So mid-sized companies often rely on bankers and auditors. But many bankers focus too much on revenue and the knowledge of auditors is often not deep enough.

Currently we work with a core team of eight bringing the Rent a Treasurer concept to the next level. Six team members cover various subsets of treasury tasks and complement each other. Kendra represents treasuryXL and I work on behalf of Treasurer Search. We are the support. Our goal is to organise more meetings with CFOs and help them successfully save costs, mitigate risk and create opportunities through appropriate treasury solutions. We tell interesting stories, on a regular basis, to decision makers who might be interested and we will increasingly do so.

It gives me great pleasure to inform you that one of the team members,  Niki van Zanten, currently works as a Rent a Treasurer on two different assignments where FX risk has the most prominent focus. With the first client, he has been able to save substantially on cost already in his first week. Niki is the perfect example of an expert who learnt in the Champions League, with Cisco & Philips, and applies his knowledge helping mid-sized companies.

If you want to know more about Rent a Treasurer or introduce us to your business network, please let me know. I am convinced many more can benefit from good treasury. We will keep you updated.

 

 

Pieter de Kiewit

Owner at Treasurer Search

 

 

 

Bitcoin and Regulation: Towards a Balanced and Coordinated Approach

| 02-03-2021 | Carlo de Meijer | treasuryXL

Cryptocurrencies, especially Bitcoin, are facing increased regulatory scrutiny, and that is not strange. Warnings from regulatory watchdogs all over the globe have come amid a wildly volatile ride for Bitcoin and other crypto currencies. Bitcoin prices quadrupled in 12 months’ time reaching an all-time high of more than $ 40.000 on 8 January after falling back even below $30.000. This is feeding concerns by financial regulators over the lack of a robust and a clear regulatory framework for this rapid evolving crypto marketplace. Regulators worldwide are sharpening their focus on cryptocurrencies and are increasingly looking for a stable framework of regulations and monitoring.

Issues that come up are: why is regulation of the crypto market needed at all and what should be the best regulatory approach?

Existing regulatory patchwork

Crypto regulation in many countries is still lagging behind whereas crypto’s regulatory puzzle is far from complete. Many jurisdictions have looked into regulating cryptocurrency related operations. Thereby they however have taken different approaches on how to go about regulate these which has led to a regulatory patchwork.

These approaches range from a complete outright ban, to a wait-and see approach how matters would play out, while others have introduced some sort of regulation. Major countries and bodies continued introducing regulation just for one area or aspect of the cryptoasset industry at a time. And areas of crypto asset regulation vary from one nation to another, according to each nation’s priorities and values.

Many major countries haven’t yet introduced specific legislation or regulatory guidance that covers the sector as a whole, while others are taking a step-by-step approach. Looking at the G7 countries, they are in varying stages of implementing cryptocurrency regulation, revising existing laws, and providing more clarity to investors and companies in the space. But that is changing.

But why is crypto regulation needed at all?

There is increasingly conviction amongst regulators worldwide that crypto currencies in some form or another are here to stay and continue to play an increasingly normalised role for investors. So we are well beyond the stage where countries could completely ban crypto currencies or adopted a wait-and-see attitude.

We have reached a point where regulators should step in, motivated by the growing interest in cryptocurrency globally and the inherent risks associated with digital assets because they are largely unregulated. Cryptocurrencies should therefore come on the regulatory radar and be held the same standards as the rest of the financial world.

Main stream adoption

There is increased interest by institutional investors in crypto and expectations are that this will continue, triggered by the growing number of new use cases and wider acceptance by traditional banks and financial institutions. This has attracted a strongly growing number of private investors and as aa result to mainstream adoption.

Bitcoin and other cryptocurrencies are increasingly seen as a legitimate hedge against fiat currency weakness and inflation risk, and low returns from traditional safe havens such as sovereign debt. As a result investors are looking more closely at cryptocurrencies. So these cannot be neglected anymore by regulators.

Protection to investors

Though their total market value is still limited compared to fiat currencies Bitcoin and other cryptocurrencies are described by central banks and regulators not as a currency, but much more as a highly volatile and speculative asset. Cryptocurrencies’ volatility are largely a function of thin market volumes and concentrated holdings, possibly in the hands of a few early-adopters known as ‘whales.’ Retail investors should be protected against too much volatility. Providing a regulatory framework will give protection to investors and stakeholders

Closer interaction with the real world

Another argument for more regulation is that, on an increasing basis, cryptocurrencies are becoming part of the incumbent financial system and are increasingly integrated into the existing financial infrastructure. Cryptocurrencies took a step closer to interacting with the real world in October last year when PayPal announced that its US customers can buy, sell or hold four cryptocurrencies: Bitcoin, Ethereum, Bitcoin Cash and Litecoin.

Combat illegal activity

Because of its cross-border crossing character and the lack of surveillance regulators suspect that these cryptocurrencies can be used for criminal activities like money laundering. How many Bitcoin are from a criminal order is hard to predict. But estimates range from 1 percent to 44 percent. Regulators should therefore provide assurances and impose requirements on operators to follow stringent rules to combat illegal activity.

Changing regulatory attitude

But the attitude of regulators worldwide is changing. Recent developments have triggered officials all over the world, including the G7, ECP president Christine Lagarde and the UK CFA, to express their worries about the unregulated growth of Bitcoins and other cryptocurrencies.

The overarching regulatory trend in 2021 will be for governments and regulators to be more favourable towards crypto, increasingly shape crypto into a consumer-friendly and less risky product.

Regulators increasingly recognize that cryptocurrency is here to stay, realizing the true potential of the crypto sector, with their actions being adapted accordingly. They highlighted the need to intensify their work for more stringent robust regulations for cryptocurrencies and create a much improved regulatory landscape to control the crypto markets.

G7 Meeting

At its recent meeting early January the G7 finance ministers and central bank governors reiterated support for their joint statement on digital payments issued in October underlining the need to regulate cryptocurrencies. They discussed ongoing responses to the evolving landscape of crypto assets and other digital assets and national authorities’ work to prevent their use for malign purposes and illicit activities.

ECB President Christine Lagarde

At that same G7 meeting Christine Lagarde, president of the ECB, warned investors about the risk of these cryptocurrencies such as Bitcoin. She also dismissed Bitcoin’s claim as a currency. According to her there is urgent need to implement legislation relative to cryptocurrencies.

“Bitcoin is a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity”. Christine Lagarde

UK Financial Conduct Authority

In the UK, the Financial Conduct Authority (FCA), issued a stark warning for consumers and retail investors about high-risk crypto investments and the surge of related scams in the industry. The FCA’s concerns include price volatility, the complexity of products offered and the lack of consumer protection regulation around many of the products. Consumers have no recourse to UK regulators for “cryptocurrency bets that turn sour”.

“If consumers invest in these types of product, they should be prepared to lose all their money.” CFA

US Treasury Secretary Janet Yellen

Crypto regulation will also be a top priority for the Biden team. The Biden Administration is expected to bring a renewed focus on regulation and enforcement of the crypto market. The new US Treasury Secretary Janet Yellen – former Federal Reserve Chair – described Bitcoin as a ‘highly speculative’ and not a stable store of value’ when still at the Fed in 2017.

New regulatory initiatives

From a G7 perspective, we already have seen some interesting examples of regulatory initiatives in both the EU and the UK, while the new Biden Administration is certainly coming with their proposals.

European Commission: Markets in Crypto Assets Regulation

The European Commission recently published its first draft for Markets in Crypto Assets or MiCA. A package of legislative proposals for the regulation of crypto-assets, updating certain financial market. The draft regulation should create a clear legal framework for crypto assets and more broadly for Distributed Ledger Technology (DLT), providing regulatory clarity for the industry and ensure unified legislation on cryptocurrencies throughout the EU.

It wants to support innovation while also creating a secure and trustworthy framework for cryptocurrencies, with the same level of protection for consumers and investors as for traditional financial products. The legislative process for MICA within the EU will continue before this becomes a definitive regulation. Expectations are that this draft regulation will be finalized in legal texts in 1,5 to 2 years’ time.

Basic principles

MiCA wants to create the same safe framework as the one we already know from classic financial services. This is mirrored in many of the principles that MiCA imposes on issuers and service providers of crypto assets, such as the prohibition of insider trading and market manipulation.

MiCA is primarily creating a new licensing system for crypto asset issuers and service providers at a European level. It provides substantive rules of conduct and many aspects of consumer protection. MiCA is also introducing a new EU-wide passport for operators licensed under the MiCA regime in their own Member State.

Pilot regime for market infrastructures

The European Commission therefor proposed a pilot regime for market infrastructures that wish to try to trade and settle transactions in financial instruments in crypto-asset form. The pilot regime allows for exemptions from existing rules and allows regulators and companies to test innovative solutions utilising blockchains.

For other crypto-assets that do not qualify as “financial instruments” such as utility tokens or payment tokens, the Commission proposed a specific new framework that would replace all other EU rules and national rules currently governing the issuance, trading and storing of such crypto assets. The proposed regulation covers not only entities issuing crypto-assets but also firms providing services around these crypto-assets such as firms operating digital wallets, as well as cryptocurrency exchanges.

UK Treasury: crypto consultation paper

The UK Treasury has launched a consultation paper that details a series of proposals addressing the crypto community. With the consultation, the Treasury is initiating a “regulatory approach to cryptoassets and stablecoins” for 2021. Aim of this consultation paper is to gather feedback from stakeholders concerning the government’s regulatory approach to crypto asset and stablecoins in payments and investment, as well as the use of blockchain or distributed ledger technology in financial markets.

More broadly, the UK intends to take a “staged and proportionate approach” to new crypto asset developments. Underlying the UK approach is a desire to avoid applying “disproportionate or overly burdensome regulation to entities”, particularly where the financial stability risks are low, stressing the importance of a risk-led approach to regulation.

The Treasury expects to collect insights from the “industry and stakeholders” in the crypto sphere until March 21, 2021. Input received will feed into the government’s response, which will include more detail on how the proposed approach may be implemented in law. The legislation would take the form of high-level principles, leaving it for financial regulators to specify detailed requirements through rules or codes of practice.

Focus on stablecoins

The consultation focuses particularly on developing a “sound regulatory environment” for stablecoins, which the U.K. government considers have most “urgent” risks and opportunities. Stable coins could “pose a range of risks to consumers and, depending on their uptake, to the stability of the financial system. It is not proposing to regulate further any other types of cryptoasset for now, except in relation to financial promotions (in relation to which it has already consulted and will report in due course).

This approach stands in stark contrast to the European Commission’s legislative proposals which already include a comprehensive framework to regulate the entire crypto industry (MiCA) as well as a pilot regime for the creation and testing of digital security infrastructure.

Biden Administration

The regulatory landscape took on new uncertainty as a result of the power shift in Washington to President Joe Biden and a Democratically controlled Congress.

The new US President Joe Biden has frozen all federal regulatory proposals from Trump’s Administration, including some controversial proposed rules from former Treasury Secretary Steve Mnuchin’s on self-hostedcrypto wallets, until his new administration can review them. Former Treasury Secretary Steven Mnuchin drew heavy criticism from cryptocurrency insiders with his privacy-hostile regulatory proposals.

President Biden is putting together a team of financial leaders that should provide more clarity and guidelines for crypto regulations, get clear rules for the entire crypto industry and a better coordination between the various agencies like SEC, CFTC and. The new team brings their stated support for reasonable and equally balanced cryptocurrency regulatory model.

Three of Biden’s top-level financial staff members, including Janet Yellen, the new US Treasure and former Fed chair, Gary Gensler, the new head of the Securities Exchange Commission (SEC) and former chair of the US Commodity Futures Trading Commission (CFTC), and professor Chris Brummer as new chairman of the CFTC  all have a proven understanding of how blockchain and cryptocurrency assets actually work.

Yellen pledged to do a deep review of cryptocurrency markets in collaboration with many other banking and finance regulators, hoping to establish an effective set of rules that limits “malign and illegal activities” while supporting powerful fintech innovations based on blockchain technologies.

What regulatory approach is really needed?

Notwithstanding these new regulatory initiatives, there are still many challenges. At the heart of the legal challenge is how to define cryptocurrencies; as a currency, security on par with stocks and options, tradeable commodity, or a brand new asset class of its own. Settling the thorny issues of legality, taxation, and trading rules will take time, adding to the uncertainty and volatility of the global crypto market.

To be really effective, also given its cross border character, any future regulation asks for both a balanced and above all global approach. Intelligent, well thought-out regulation communicated effectively and uniformly applied can help level the playing field and unleash innovation and further mainstream adoption.

Balanced approach

Providing a balanced regulatory framework should be a necessity for jurisdictions to protect themselves from abuse, while recognising that legal certainty can also be provided through a regulatory regime, which will in turn enable the sector to flourish. Just looking at cryptocurrencies for regulatory purposes may frustrate the underlying technology and its innovative character. The real value in cryptocurrencies is not the currency itself but the potentially disruptive technology that makes them possible, which has the potential to drive innovations. Next to that, because with cryptocurrencies, the technology behind it may develop at a space that is much faster than regulations develop, any regulation would need to be capable of continuous development.

Global coordinated approach

Global regulation continues to be top of mind at the recent G7 meeting. ECB president Lagarde also emphasized the need for countries to work together to regulate Bitcoin. Instead of competing in terms of who can provide the most attractive regulatory regime for the crypto industry, as we have seen in the past, more global regulatory cooperation and coordination and multilateral action is urgently needed. As cryptocurrencies move further into the mainstream, Lagarde therefore called for regulations of Bitcoin and other currencies to be agreed “at a global level”, potentially at the G7 or G20 groups of rich countries.

We are not there yet!

If done in this way, such balanced and coordinated regulation will help protect investors, enable growing competition, tackle cryptocurrency criminality, reduce the potential possibility of disrupting global financial stability stimulate continued innovation.

Looking at these recent regulatory initiatives, one may conclude that there are still big differences in each approaches. The European Commission proposals are the nearest to become effective meeting both the requirements of balance and overall and unified approach in the EU countries. In the UK, whilst new regulations have been introduced, they are still largely behind all the new developments happening in the crypto space. And for the US we still have to wait till the Biden Administration is coming into action. We are not there yet!

 

Carlo de Meijer

Economist and researcher

 

 

 

 

Source

Kyriba Webinar: How Connectivity-as-a-Service Can Help In ERP Migration

25-02-2021 | treasuryXL | Kyriba |

4th March • 2pm GMT • 3pm CET

In this webinar Kyriba and Deloitte will discuss some of the challenges and time constraints faced in bank connectivity and outline how Kyriba’s Connectivity-As-A-Service can accelerate global banking connectivity projects by more than 80%.

The agenda will follow:

  • The Connectivity-as-a-Service challenges
  • The Kyriba Connectivity Network
  • A case study on implementation with Deloitte

REGISTER NOW to understand more of the issues related to cost-control, deployment, security and bank connectivity when embarking on large-scale ERP cloud migration projects.

Date:

March 4, 2pm GMT/ 3pm CET

Contact:

From Practice: Transferable Letters of Credit…. something to try? (Dutch Item)

| 23-02-2021 | Ger van Rosmalen | treasuryXL

In een eerder gepubliceerd artikel heb ik hier al eens aandacht aan besteed. Steeds vaker word ik gevraagd om bedrijven te begeleiden bij transacties op basis van een Transferable Letter of Credit, soms met een onverwachte uitkomst.

Zo ook een bedrijf  dat op het punt stond een groot contract af te sluiten van enkele miljoenen euro’s. Het bedrijf kan een mooie deal doen met Corona gerelateerde producten en kan dat vanuit de huidige financiële situatie niet zelf financieren. Men wilde gebruik maken van een Transferable Letter of Credit. Aan mij het verzoek voor het opzetten van de transactie. Uiteraard wil ik hen graag helpen. Tijdens een plezierige kennismaking met een aantal enthousiaste directieleden licht ik mijn werkwijze toe. Want voordat een interessant betalingsinstrument als een Transferable Letter of Credit kan worden ingezet, vind ik het van groot belang dat de ondernemer weloverwogen keuzes kan maken op basis van eigen opgedane kennis. Die was hier (nog) niet aanwezig. Ik neem de ondernemer daarom eerst graag mee langs alle mogelijkheden en valkuilen. Daarna is de ondernemer beter in staat om juiste keuzes te maken, wat zorgt voor meer comfort en minder risico’s.

Na dit kennismakingsgesprek ga ik aan de slag met de inhoud van het contract en de toestemming van de ondernemer om zelf direct met zijn bankier contact op te mogen nemen om de transactie te bespreken. Hij informeert zijn bank dat hij TradelinQ Solutions heeft ingeschakeld hem te begeleiden.

Na bestudering van het contract stel ik vast dat de producten voor dit bedrijf geen branchevreemde producten zijn. Deze zijn namelijk passend binnen de huidige activiteiten van dit bedrijf. Daarnaast wordt er in het contract gesproken over de leveringsconditie DDP en dient er een inspectie plaats te vinden. Voor ik met de bank ga praten stem ik eerst e.e.a. af met andere experts. TradelinQ Solutions werkt samen met een groep van specialisten op het gebied van o.a. Incoterms, Douane, Compliance, (Krediet) verzekeringen, Inspecties, Factoring, Credit Management, Culturele verschillen, Cash Management en Treasury.

De leverancier van de producten geeft aan voor inspectie zorg te dragen maar onze klant wil dat graag zelf regelen en ons samenwerkend inspectiebureau kan de kwaliteit en kwantiteit van deze producten bij de oorsprong (producent) controleren. De leveringsconditie DDP wil zeggen dat de leverancier de goederen ingeklaard maar niet uitgeladen voor de deur van onze klant moet afleveren. Ook hier heb ik wel wat vragen over, zo ook wat de klant zelf al heeft gedaan om meer te achterhalen over de leverancier. Daarna stem ik e.e.a. af met de Compliance experts.

Ik heb inmiddels een behoorlijke vragenlijst die ik ga voorleggen aan de ondernemer. Voorafgaand heb ik contact gehad met de bank van de klant om af te stemmen hoe de bank tegen deze transactie aankijkt. De bank heeft duidelijke richtlijnen en is terughoudend als het aankomt op het gebruik van Transferable Letters of Credit. Heeft een klant geen kennis en ervaring dan is de bank extra terughoudend omdat er naast een mogelijk financieel risico ook reputationele risico’s en risico’s vanuit Compliance/AML (Anti Money Laundering) aanwezig zijn. Op voorwaarde dat Tradelinq Solutions dit bedrijf begeleidt met de hiervoor toegelichte  “training on the job” geeft de bank groen licht, want ook de producten zijn passend en de winstmarge is verklaarbaar. Wel geldt een voorbehoud van nog uit te voeren Compliance checks door de bank. Onder andere welke partijen zijn hierbij betrokken? Ik spreek af alle informatie aan te leveren, en ga eerst op zoek naar de antwoorden op mijn aanvullende vragen bij de ondernemer.

De ondernemer heeft wel informatie over de leverancier maar die is (te) summier. Ik heb hier al vaker aangegeven dat je als ondernemer niet meer wegkomt met slechts wat Google checks en financiële informatie. De informatie die ik heb gevonden roept vragen op die we bespreken. De leverancier blijkt een klein bedrijf in Europa te zijn terwijl de goederen uit het Verre Oosten komen. Deze leverancier wil volgens het contract een Transferable Letter of Credit  en overdragen naar de uiteindelijke producent in het Verre Oosten. Ik weet uit ervaring dat dit geen haalbare optie is in combinatie met DDP als leveringsconditie. Bovendien staat in het contract dat mijn klant invoerrechten, BTW en eventuele andere kosten moet betalen en dat rijmt niet eens met DDP. Weet de leverancier wel waarover hij spreekt? Deze ondernemer loopt nu vast want hij verwacht zelf Transferable Letters of Credit van zijn afnemer(s) die hij wil overdragen naar de leverancier. De leverancier wil het L/C overdragen naar de uiteindelijke producent. Maar daar gaat het mis! Een Transferable Letter of Credit kan maar een keer worden overdragen en hier blijken er dus 2 “tussenpartijen” te zijn. Voor een Transferable Letter of Credit is er dat een teveel! Dat levert nieuwe uitdagingen op want het contract blijkt al te zijn getekend. Daarnaast blijkt een afgesproken inspectie van de goederen na aankomst in Nederland van weinig waarde te zijn. De betaling heeft dan nl. al onder het L/C plaatsgevonden. Door nog een aantal andere bevindingen komt de ondernemer uiteindelijk zelf tot de conclusie dat hij onder het contract uit wil nu hij meer kennis en begrip van de materie heeft en blijkt er gelukkig nog een escape te zijn.

Jammer dat ik niet toekwam aan een concept Transferable Letter of Credit,  maar er waren in dit geval teveel risico’s financieel en reputationeel voor de ondernemer. Ik werd bedankt voor dit leerzame traject. Het heeft hen de ogen geopend en zelf laten inzien dat ze hier zeker door het extern inschakelen van kennis zijn behoed voor een mogelijk financieel fiasco.

Enkele aandachtspunten:

  1. Teken een contract pas nadat je de mogelijkheden met je bank hebt besproken.
  2. Heb je niet alle kennis in huis? Schakel experts in die je begeleiden om zelf de juiste keuzes te kunnen maken.
  3. Zijn de goederen passend binnen de activiteiten van het bedrijf?
  4. Welke mogelijkheden zijn er nog meer om ALLE beschikbare informatie over specifieke afnemers en leveranciers te verzamelen?

 

TradelinQ Solutions begeleidt bedrijven als geen ander met focus op de transactie en oog voor de risico’s. Informatie of even sparren?  bel 06-13377921 of mail naar [email protected]

 

 

Ger van Rosmalen

Trade Finance Specialist

 

 

VU ‘Treasury Management & Corporate Finance’ Programme – Online Open Evening

| 22-02-2020 | VU Amsterdam |

Deepening treasury knowledge and increasing the treasurer population would benefit many organisations. We are fan of the post-graduate Executive Treasury Management & Corporate Finance Programme. VU Amsterdam is excited to invite you to the Executive Education Online Open Evening on Thursday 20 May 2021. Their Professors, lecturers, scientists and international colleagues of various Executive programmes will be online available to answer all your questions.

Date, time and registration

Date: 20 May, 2021

More Information will follow soon!

Register Now and safe your virtual seat!

 

 

Who sets the rates? Common questions about currency exchange rates

18-02-2021 | treasuryXL | XE |

Ever wondered where the rates come from, and how they can impact you?
We answer some common questions in this guide to exchange rates.

Who’s in charge of setting currency exchange rates? If you’ve ever sent money overseas or checked the rates, this is a question that may have definitely crossed your mind. Who decides what is the value of money, and why do rates fluctuate that much during the day?

It’s normal to wonder, and fortunately for you, we’ve got the answers to those questions and more.

How do currency exchange rates work?

Every country in the world has its own currency, and each of these currencies is valued differently. When you exchange one currency for another, you’re actually buying money, just in a different currency than the one used in your country.

The exchange rate tells you how much the currency used in your country is worth in foreign currency. The rates constantly change for some countries, whereas others use fixed exchange rates. As a rule of thumb, a country’s social and economic outlook is the main factor that influences the currency exchange rate.

That’s the quick answer. If you’re in the mood for a more in-depth look, check out our previous blog post.

What are the main types of exchange rates?

The main types of rates are variable (or flexible) and fixed rates.

Most countries have variable currency exchange rates, which are determined by the foreign exchange market. Because these rates are flexible, they fluctuate every minute, often influenced by market movements, political events, economic forecasts, and more.

Countries such as the U.S., the United Kingdom, Canada, Japan, and Mexico all use flexible exchange rates. It’s important to note that even though government policies can influence currency exchange rates, the government can’t actually regulate them. The rates are always determined by Forex traders on the foreign exchange market.

Several countries use fixed currency rates, and that is because the government dictates when the rates change. This is the case for the Saudi Arabian riyal, for example. The fixed rates are pegged to the U.S. dollar, and the central bank in the countries that use this system holds U.S. dollars to keep the rate fixed.

How do forex traders establish currency exchange rates?

The market forces of supply and demand are the main factors that determine currency exchange rates. The level of demand for a currency determines its value in relationship with other currencies. For example, if the demand for British pounds by Americans increases, the supply-demand forces will cause an increase of the British pound’s price in relation to the dollar.

The exchange rates between two countries are affected by countless factors, both geopolitical and economic. Some of the most common of them include:

  • Inflation reports

  • Interest rate changes

  • Gross domestic product numbers

  • Unemployment rates.

Forex traders take all these factors and more into account when establishing currency exchange rates. If a country has a strong economy that’s growing, investors will be interested in buying its goods and services, which means that they’ll need more of its currency.

On the other hand, when a country has an unstable economy, investors will be put off and less willing to invest, which means that the currency will not be highly valued. Investors always want to make sure they will get paid back before deciding to hold government bonds in a particular currency.

How do exchange rates affect you?

The value of money affects every individual on a daily basis, as the prices of essentials such as groceries and gas at the pump are correlated to it. When the value of money declines steadily over time, it causes inflation, and the result of that is a price increase for everything, including basic goods.

If you’re traveling or making a payment to another country that uses a different currency, it’s important to check for exchange rate values and plan your finances accordingly. Many people check whether the currency of the country of their destination is strong or weak before booking a vacation. That’s because a weak currency in the destination country means that you can buy more of it with your own currency, so you have more money to spend on your trip.

How can you get the best rates when sending money overseas?

As we’ve said before, unfortunately there’s no specific time where you can guarantee you’ll get a great rate. But there are a few things you can do to help yourself out.

If you’re transferring money to someone in another country, you need to look carefully at your options, as some transfer methods are more expensive than others. For example, if you’re using your bank to make a transfer, you’ll often need to pay a fee on top of the exchange rates set by the bank, which are usually disadvantageous.

By using an online money transfer service such as Xe, you can save money on fees and get great exchange rates. Your money will also reach its destination faster, and the entire process of making the transfer is easy both on the website and the mobile app.

Are you curious to know more about XE?
Maurits Houthoff, senior business development manager at XE.com, is always in for a cup of coffee, mail or call to provide you detailed information.

 

 

Visit XE.com

Visit XE partner page

 

 

 

‘International Cash Management’, offered by VU Amsterdam

| 17-02-2021 | VU Amsterdam |

The Vrije Universiteit offers mutliple helpful education sources to study more about the field of Treasury. Is the Register Treasurer programme too much for you (now) but you do want to invest in education. Consider doing the Module Cash Management.

Managing cash is one of the core responsibilities of a treasurer. It implies that a company at all times must have sufficient balances available to meet its obligations. The module International Cash Management is one of the six modules of the postgraduate Treasury Management & Corporate Finance programme.  This module can also be followed as a separate module.

For Whom? This module is meant for professionals who have working experience in the field of treasury/cash management.

Start date, Fee and Duration

Date: 15 April, 2021

Fee: € 5400,-(for DACT members € 4500,-)

Duration: 9 Weeks

For more Information & How to Register, Click Here 

 

 

Blockchain and the Corporate Treasurer: towards Smart Treasuries

| 16-02-2021 | Carlo de Meijer | treasuryXL

Blockchain is gaining growing attention in the Treasury world. Corporate treasurers are intensively looking at blockchain use cases to improve the effectiveness of their treasury management activities.

Notwithstanding the various benefits for corporate treasuries, there is still a great reluctance to adopt blockchain technology in their treasury departments. And that for various reasons. The technology is still immature, most of the projects are still in the conceptual phase while tangible real-world blockchain applications for the corporate treasurer’s day-to-day activities are still scarce. But that is – slowly – changing. A growing number of tangible treasury solutions are moving forward and being brought to the market. And there is increasing awareness amongst blockchain solution providers to come up with more integrated smart treasury solutions.

Complex treasury environment

Today’s business environment for internationally operating corporates is highly complex from a treasury point of view. These corporates have undergone many transformations in their treasury organisations triggered by technology innovations, regulatory initiatives and changed client behaviours.

In order to gain greatest visibility over their business critical functions and reach greater strategic control, corporate treasurers are significantly increasing their spending on treasury technology and innovations, to speed up and streamline their company’s cash, liquidity, risk and working capital management. Key challenge is to obtain consolidated real-time insight in group-wide multi-currency cash positions across a fragmented banking network in a timely manner, and manage credit facilities across all bank accounts of the group. Today’s model of international correspondent banking thereby strongly limits the ability to manage cash in a real-time environment.

As a result many corporate treasurers are still mainly using manual processes for their global activities.  Especially the world of international payments looks cumbersome. They are slow, expensive and hard to track. Operating in multiple currencies has a substantial impact on the operational capabilities of  treasury teams, and on the treasury’s ability to work efficiently.

From isolated proof-of-concept projects ……

The emergence of new technologies such as blockchain would enable corporate treasurers to take smarter, more data-driven approaches to core processes and better support the strategic side of the business.

During the past few years we have seen many blockchain Proof of Concept (PoC) trials for various use cases in corporate treasuries. Corporate treasury-related areas with potential use cases for blockchain range far and wide. From activities such as cross border payments, trade finance, electronic bank management, reconciliation, data storage and smart contracts to supply chain management, KYC, financial reporting, regulatory compliance intra-day liquidity management and cash management. But they mostly remained in the proof-of-concept stage. A majority of these projects have not even gone beyond the testing phase. And those that have made it and past that stage are yet to see extensive usage. Besides that most of the blockchain-based applications are focused on single parts of the treasury activity. They are mostly isolated and are not interoperable – so do not communicate with each other.

……. to practical treasury-focused Blockchain solutions

Blockchain development is however entering a new phase. Slowly, but definitely, the focus of many blockchain developers and providers is now turning from proof of concept projects to proof of work trials and further to the creation of more practical, treasury-focused blockchain solutions. Thereby they are trying to solve the various challenges such as interoperability, scalability etc. As global trades evolve and become more intertwined, we are also seeing the upcoming of collaborative blockchain models that can streamline and automate complex processes – like many aspects of treasury, thereby bypassing the cumbersome correspondent banking system.

Over time, a growing number of authentic real-world blockchain-based solutions – worthwhile looking at – have been introduced thereby using collaborative models like Ripple (global payments), R3 Corda (data management), Marco Polo (trade finance) and We.Trade (trade finance) to name a few.

Adjoint’s Smart Treasury

One of the most interesting recent blockchain offerings for corporate treasurers is Smart Treasury launched by Boston-based fintech Adjoint. Adjoint has combined blockchain technology with related smart contracts and APIs (or application programming interfaces) to create a solution that aims to dramatically speed up settling intercompany transactions in a secured way while significantly reducing the costs.

Table 1 Key features of Smart Treasury

Adjoint’s Smart Treasury is implemented as an overlay and should be seen as a multi-bank, multi-currency virtual account platform for real-time gross settlement and continuous reconciliation. This should allow corporate treasurers to untap liquidity in their various subsidiaries’ bank accounts thereby improving the liquidity management of the corporate treasurer.

Smart Treasury does not seek to replace existing ERP and TMS systems but rather compliment them by using APIs and by speeding up transaction settlement so that the data is much more timely and secure. Thereby pushing and pulling data to connected enterprise (ERP) and treasury management systems (TMS), and creating a real-time window to treasury management. Workflow might be streamlined across various use cases, and can be automated — such as for generating international transfers, calculating accrued interest, generating invoices for a loan payment, and submitting to the systems of records to ensure accuracy and reconciled data.

 What may Smart Treasury bring?

The Adjoint Smart Treasury solution could bring a number of important benefits for the corporate treasurer thanks to greater transparency, improved efficiency in current treasury processes, reduced risk and as a result much lower costs.

Table 2 Benefits of Smart Treasury

First of all Smart Treasury will contribute to improved liquidity management thanks to greater transparency, allowing greater control over key treasury workflows. It may enable real-time insight in a corporate’s liquidity position and in how quickly they can provide liquidity to the corporate. Treasurers may see balances across the corporate group, across multiple entities, corporate departments and banks (accounts), in different geographies, and at any point in time. Via using Smart Treasury, this visibility may expand to partners, subsidiaries, vendors and customers allowing them access. The insight gained may further help drive more reliable cash flow forecasts for corporate treasurers.

Using Smart Treasury may significantly reduce current complications in the various treasury processes, including cross-border payments and billing. Using smart contracts could thereby streamline present cumbersome processes and eliminate costly third-party transactions. It allows tracking transaction status and confirmations in real-time, thanks to the greater transparency brought about by blockchain technology between the various players. As a result such transfers can be done much quicker and in some instances even instantly, thereby optimising the whole reconciliation process across various subsidiaries ERPs in terms of time spent and manual effort.

By removing the long chain of disintermediation, Smart Treasury allows outside companies within the supply chain to pull relevant information directly from the blockchain with no settlement network in between. This may create significant collateral savings thanks to shortened (or even instant) settlement cycles. Intra-group obligations may be settled instantly and at no cost. Smart Treasury will also enable full-auditability of transactions, thereby realising greater savings in both time and costs. Such immutable auditable record of transactions may for instance provide real-time ownership of underlying cash, so there will be no double spending of cash. Also intra-company loans are auditable “for arms-length transaction history” by time-stamping reference able FX conversion rates.

Smart Stream can help corporate treasuries improve risk management through data redundancy, auditability and smart-contract permissions. As the credibility of debtors and creditors is supposed to be known at all participants it will contribute to more security, while blockchain will also enable secure data storage across nodes to prevent a single point of failure. The transactions’ regulatory and compliance requirements are automatically satisfied by smart contracts, and application programming interfaces (APIs) transfer information and data between siloed corporate entities and their banks and data providers.

But also from a strategic point-of-view, Smart Treasury could bring a number of great benefits. Having a clear and real-time picture of assets and cash flows, finance has the ability to make strategic investments in a shorter period of time, helping to capitalize on potential investment opportunities and evaluate important future transactions, thereby expanding the types of transactions that can be done. In international operating companies, smart contracts may help the treasury play a critical role in successfully conducting business overseas. All these improvements could ultimately lead to a firm reduction in costs. Large savings could thereby be got from transaction costs and labour costs (esp. back office), while corporates could significantly reduce fees and costs to third parties.

Forward thinking

Adjoint’s Smart Treasury is a very interesting proposition. Some see this blockchain-based solution as a game-changer for corporate  treasuries. If well used it could bring great benefits while solving a number of present challenges.

But Smart Treasury however will not be the only proposition in this field. Still, looking further into the future, we will see the arriving of more collaborative global and interoperable blockchain networks offering more mature real-world applications that will meet the actual challenges of scalability, interoperability, and as a result lead to greater confidence at and more mainstream adoption by corporate treasures. Treasurers would thus do well to keep up-to-date with new solutions that may leverage this blockchain technology, bringing process efficiencies and improve their new role, that has become much more strategic.

Table 1 Key features of Smart Treasury

  • Auto reconciliation
  • Virtual accounts
  • In-house self-service bank
  • Smart Treasury Dashboard
  • Smart contracts
  • API integration with ERP/TMS systems
  • API integration with banks

Table 2 Benefits for corporate treasuries

  • Optimize liquidity management
  • Optimize reconciliation process
  • Shorten settlement cycle
  • Full auditability of transactions
  • Improve risk management
  • Strategic benefits
  • Cost reduction

 

Carlo de Meijer

Economist and researcher

 

 

 

Nomentia Webinar: Payment Templates

| 15-02-2021 | treasuryXL | OpusCapita |

Live Demo: Unleash your payments with payment templates

Maybe not quite unleash but the better word might be superpower. Because payment templates are truly what will take your set-up to the next level. We are continuing our popular live demo webinar set-up where our solution managers will provide a quick deep dive into one topic and how this is working in our solution.


Payment templates allow you to publish templates for manual payment that you can use to process payments.

In this webinar we will show you how you can:

  • Lock and hide fields, and mark the desired fields required. You can also define whether a section is automatically expanded or not when a payment template is selected.
  • What type of security settings you can and possibly should set up for payment templates.

And on top of that we will provide a practical application to how those templates can make your daily life easier.

When?

  • February 18th, 2021
  • 13:00 CET / 14:00 EET

Who should attend?

Cash Managers, Treasurers, and anyone looking to optimize their payment processes.

Meet the speaker

Jouni Round

Jouni Kirjola

Jouni is Solution Manager at Nomentia and has over 10 years of experience in corporate cash management and has deep expertise in cash forecasting, payment factories and in-house banking, and process development. Previously Jouni has worked in product management, consulting and R&D.

Register Here

About Nomentia

Nomentia is a Nordic powerhouse for global cash management. We believe in a world in which businesses can make the right decisions no matter how unpredictable the times are. Our SaaS-based platform offers solutions for cash forecasting and visibility, global payments with bank connectivity, reconciliation, in-house banking, guarantees, and FX dealing. We serve 2,300+ clients in over 100 countries processing more than 200 billion euros annually. Cash is king!