Payments and Banking Archives - Page 30 of 55 - treasuryXL

CurrencyCast Season 3 is live!

27-09-2022 | treasuryXL | Kantox | LinkedIn |

Season 3 of Kantox’s #CurrencyCast is live! In the first episode, they examine companies that manage their FX risk via spreadsheets and how they may be exposing their business to a whole other type of danger, spreadsheet risk.

Agustin Mackinlay breaks down the dangers and pitfalls of spreadsheet risk and how it can slowly erode your FX risk management processes.

He walks us through:

🔹 What is spreadsheet risk?

🔹 How to recognise this type of risk

🔹 Where it can arise in the currency management process

🔹 How to manage and eliminate spreadsheet risk

It’s an FX masterclass, all in under 10 minutes.

👉 Watch the episode and read Kantox’s key takeaways here

What’s the best hedging program for your business? Take Kantox’s 1-minute assessment

26-09-2022 | treasuryXL | Kantox | LinkedIn |

Have you seen Kantox’s Currency Management Toolkit?

With rising interest rates, increasing inflation and today’s highly volatile environment, it’s more important than ever for your company to be protected against currency risk.

Take Kantox’s 1-minute assessment and discover the best FX hedging program for your business. You’ll find out which program can most effectively handle your FX needs, help you achieve your goals, and keep you ahead of the curve.

👉 Get started here

Factsheet: The TIS Solution Suite

21-09-2022 | treasuryXL | TIS | LinkedIn |

Introducing CashOptix, PayOptix, and RiskOptix features from TIS (Treasury Intelligence Solutions), which offer enterprises of all sizes and industries improved capability to handle crucial cash management, payments, banking, security, and compliance demands. Find out more about the benefits of each suite right away in this unique factsheet.

Get to Know the TIS Solution Suite

TIS classifies the unique capabilities they offer clients into three distinct categories; CashOptix, PayOptix, and RiskOptix. When combined, this cloud-based suite provides organizations of all industries and sizes with superior functionality to address critical cash management, payments, banking, security, and compliance needs.

You can find the factsheet here

Instant Payments – for business use still a world to be won (Dutch Item)

20-09-2022 | treasuryXL | Enigma Consulting | LinkedIn |

Transfer money to the recipient’s account within seconds, at any time and on any day of the week. That is Instant Payments. For Dutch consumers, Instant Payments have become an integral part of the current payment landscape. Since its introduction in spring 2019, usage has grown tremendously. In 2021, for instance, around 25% of payments were Instant Payments (1). Looking only at single payments, even more than 90% were Instant Payments (2). An article by Pim Stam, senior consultant at Enigma Consulting.

Bij bedrijven valt het gebruik van Instant Payments echter tegen. Waarom is de adoptie zo laag bij zakelijk gebruik? Blijft dit in de toekomst zo of kunnen we de komende jaren een versnelling van het gebruik verwachten? En heeft dit impact voor financiële instellingen die betalingsverkeer aanbieden?

Waarom is de adoptie zo laag?

Ontbreken van Instant Batch

De belangrijkste reden waarom de adoptie onder zakelijke klanten laag is, komt door het ontbreken van de mogelijkheid om bulk betalingen direct uit te betalen op elk moment van de dag en elk moment van de week. Dit wordt in de markt de batch Instant Payments genoemd. Waar enkelvoudige betalingen binnen een paar seconden op de rekening van de begunstigde staan, worden bulkbetalingen nog niet altijd op dezelfde dag uitbetaald.

Naar aanleiding van klantvragen zijn een aantal van de grootbanken inmiddels begonnen met de oplevering van de batch Instant Payments. De verwachting is dat de eerste banken batch Instant Payments dit jaar nog opleveren. Voordeel voor de zakelijke klanten is dat zij de batch op het door hen gewenste tijdstip kunnen inschieten, maar de verwerking instant is voor de dag dat de batch uitbetaald wordt. Een voorbeeld is dat salarissen of uitbetalingen ook in het weekend kunnen plaatsvinden, terwijl het bedrijf de batch al voor het weekend heeft aangeleverd.

Interoperabiliteit

Een tweede reden waarom adoptie achter loopt, is dat de interoperabiliteit in Nederland en in Europa nog niet optimaal is. De Europese Centrale Bank (ECB) heeft banken de vrije keuze gegeven via welk Clearing and Settlement Mechanism (CSM) zij wilden aansluiten op het Instant Payment Netwerk. Er kon gekozen worden tussen de CSM van Worldline (partijen die alleen bereikbaarheid naar andere Nederlandse banken faciliteren ) en TIPS en EBA (partijen die de bereikbaarheid binnen Europa faciliteren ).

Door deze vrije keuze is er een gebrek aan uniformiteit ontstaan; sommige banken zijn bij alle CSM’s aangesloten en andere maar bij één. Het probleem wat hierdoor is ontstaat, is dat een bank die alleen bij Worldline is aangesloten geen betalingen kan uitwisselen met een bank die alleen bij EBA of TIPS is aangesloten. Dit probleem vindt niet alleen in Nederland plaats maar door heel Europa.

Het doel van de EU is om Europese burgers in staat te stellen real-time girale betalingen in euro te doen van en naar elk land. Dit doel wordt nu niet gehaald door beperkte interoperabiliteit. De ECB heeft daarop actie ondernomen en dwingt Europese banken volledig Europees bereikbaar te zijn. Banken hebben hier invulling aan gegeven door in ieder geval bereikbaar te zijn via de TIPS CSM. Dit betekent dat ze van elke Europese bank Instant Payments kunnen ontvangen.

De ECB heeft nog niet verplicht dat banken Instant Payments via TIPS moeten kunnen initiëren, het blijft daardoor de vraag via welke banken dit mogelijk is op dit moment. In Q4 van dit jaar wordt er wetgeving verwacht van de Europese Commissie die banken verplichten Instant Payments aan te bieden als zij ook regulier betalingsverkeer aanbieden. Dit zorgt er voor dat Instant Payments voor meer bedrijven beschikbaar wordt, waardoor de verwachting is dat het gebruik van Instant Payments alleen maar toeneemt.

Gebrek aan usecases

Een laatste factor van het beperkte gebruik van Instant Payments door bedrijven is de relatieve onbekendheid over het gebruik. Er zijn weinig bekende voorbeelden in de markt en de toepassing in de waardeketen staat te veel op zichzelf. Instant Payments worden beperkt gekoppeld aan- en toegepast in de bedrijfsprocessen (bijvoorbeeld digitale facturatie en instant uitkeringen van declaraties).

Toch is de vraag naar Instant Payments in sommige sectoren aanwezig, maar wordt nog niet altijd aan de vraag voldaan. Denk bijvoorbeeld aan de automotive branche, waar dealers betaling en overdracht van de auto in het weekend willen laten plaatsvinden. Wanneer de bank nog geen Instant Payments heeft ingericht, kan deze overdracht alleen via traditionele betalingen voorafgaand aan het weekend plaatsvinden.

In de bredere context van dienstverlening willen banken hun klanten tevreden houden door aan deze vraag te voldoen. Maar het wordt moeilijk een businesscase rond te krijgen als klanttevredenheid het enige is wat het in stand houdt.

Impact voor financiële instellingen

Zoals eerder aangehaald hebben sommige banken Instant Payments nog niet in hun landschap ingericht. Het is voor deze groep banken een lastig verhaal richting hun klanten waarom hun betalingen niet binnen enkele seconden op de rekening van de begunstigde staat. Wanneer deze banken niet meegaan met het nieuwe normaal, is de verwachting dat het hen op den duur klanten gaat kosten. Echter, om aan deze klantwens te voldoen is er een flinke investering nodig. Er moeten namelijk in de hele transactieketen technische en procesmatige aanpassingen gedaan worden. Daarbij moet gekeken worden naar het bereik (alleen naar Nederlandse tegenrekeningen of ook Europese) als ook de manier waarop dat bereik (via welke Clearing) wordt gecreëerd. En dat dan ook nog 24/7, ook in het weekend. Daarnaast moet voorlopig de oude infrastructuur in stand gehouden worden voor het reguliere Europese betalingsverkeer en incasso’s.

Conclusie

Door de relatieve onbekendheid van Instant Payments, de afwezigheid ervan bij sommige banken, het ontbreken van Instant Batch en het gebrek aan uniformiteit in het Instant Payment landschap zijn nog weinig corporates overgestapt op het implementeren en omarmen van Instant Payments.

De komende jaren verandert dit zeker, doordat er op verschillende fronten veranderingen aankomen. Zo zal het bij de banken straks mogelijk zijn om naast enkelvoudige betalingen ook bulk betalingen Instant te doen en zal de interoperabiliteit in de komende tijd verbeteren. Onze verwachting is dat Instant Payments voor de bedrijven de norm worden en dat de migratie hiernaar toe in de komende jaren meer en meer gaat plaatsvinden.

Bronnen

Where did the treasury applicants go? | By Pieter de Kiewit

19-09-2022 treasuryXL | Pieter de Kiewit | Treasurer Search LinkedIn

As treasury recruiters, we should know enough about corporate treasury to do intakes and screen candidates. Also, we should know the latest about what’s happening in the field of recruitment and so we read the publications of Geert-Jan Waasdorp of The Intelligence Group. I would like to share his latest, very interesting article and build the treasury connection.

By Pieter de Kiewit

Labour market pressures are not equally distributed among all employers.

I left a link if you want to read the full article but this is roughly what he says. There is a huge growth in people working since before covid. In parallel, there is a huge decline in active applicants. This pressure in the labour market is not evenly distributed among all employers. The ones that can find new employees can do so because of a strong employer brand and increased investments in own or external recruitment. Also, they are willing to decide quick and offer a better package.

So what does this mean if we project these findings on the corporate treasury labour market? My personal observation is that treasury staff is, on average, less driven by the company brand and more by the job content than candidates from other job types. We learned this working for clients like Tesla and Nike. Employer branding specifically towards treasurers would also be hard, I cannot envision a corporate recruiter promoting his manufacturing company at Eurofinance.

How to adapt?

The obvious low-hanging fruit is that the hiring manager, already at the start of the process, has to organise and choose a mindset in the following: being able to decide quickly, from fewer candidates than before, and offering more than the old standard. Even highly skilled recruiters sometimes underestimate these aspects over time.

The judgement if the internal recruitment team is equipped to tackle the search or whether an external one should do the job – we, Treasurer Search – I will not elaborate on here. What I do want to mention is another obvious source that can be opened. For some of us that are considered a paradigm shift: bringing treasury talent in from abroad, from within the EU or even sponsoring a work permit. I am aware that some of us consider this topic highly political. What I can tell, both from our own organisation, as well as from successful placements with our clients, that this can be a very successful solution. In the Dutch labour market already the majority of candidates placed by us is non-Dutch. This is not a plea to open the borders and not be critical. Regretfully we have examples where this solution did not lead to success as coming to The Netherlands can be hard for the new employee. But also locally found candidates can fail in their new job.

My conclusion is that indeed, the world is different, as is the labour market. And given current demographic developments I do not expect a shift back. Luckily there are solutions but we will have to accept the consequences and cannot lean back. Those that do will shrink and go extinct.

Good luck in your search,

Pieter

Thanks for reading!

Pieter de Kiewit

Embracing the future

15-09-2022 | Cobase | treasuryXL | LinkedIn |

In the final blog in this series by Cobase, we look at how digital transformation impacts skills requirements, how APIs are enabling more accurate and timely decision-making, and key considerations around future bank connectivity.

Treasury teams have had to adjust rapidly to remote working conditions as a result of measures introduced to combat the spread of Covid. To facilitate these new working conditions, treasurers have accelerated their digital transformation efforts through the use of machine learning and artificial intelligence, APIs and cloud technology, and process automation.

Skills such as system integration, business development, data analytics and programming are increasingly valuable, while skills that can be automated are declining in importance.

Treasury teams may not require coding skills, but to maintain relevance they must become a centre of excellence, demonstrate expertise in how new systems work, and integrate with other systems and processes. Treasurers also need to be more proactive in terms of setting their organisation’s strategy and plans for digital transformation.

A simple implementation process that can be completed in days rather than months is seen as vital to the success of digitisation projects, alongside systems that can be implemented and then expand as the business grows.

If treasurers embrace change and build the skills needed to actively participate in digital transformation, they can make the treasury department indispensable and demonstrate why they deserve a seat at the table when digital and technology strategies are being decided.

In terms of specific technologies, the release of application protocol interfaces or APIs that enable connectivity between corporate accounting software, corporate middleware and bank portals has the potential to yield a variety of benefits for corporates, including the availability of balance and transaction information in (near) real-time to enable more accurate and timely decision making and further optimise cash and credit lines.

By allowing the transfer of information specific to the needs of the customer, APIs ensure that only the required data is transferred – meaning limited interface capacity is not wasted on the movement of irrelevant information. In addition, payments can be executed in real-time and connectivity to new banking partners can be achieved more quickly, especially for corporates who work via partners that maintain connections with a wide set of banks.

When it comes to this future connectivity, corporates also need to consider whether their provider will be able to move to the open banking APIs once the banks make them available and will be able to provide APIs to their ERP environment. Determining whether providers can facilitate such a move involves checking on their ability to handle external APIs (from banks, for instance) and whether they have the right licences and capabilities to connect via APIs to these banks’ and corporates’ systems once they are ready.

The potential of blockchain technology to enable banks to design new instruments and new ecosystems to support the great need of securing and financing trade operations – notably for SMEs – while reducing the constraints and costs of traditional instruments such as letters of credit is also intriguing.

The 7 habits of highly effective treasurers

Why are some treasury teams more adept at managing the financial challenges faced by their enterprises than others? We decided to identify some of the factors that contribute to intelligent treasury management and operational excellence and created an e-book which we would like to share with you. If you follow the habits outlined in this e-book, you will be well on the way to better cash flow and working capital management.

Meet our partners at the EuroFinance next week!

14-09-2022 | treasuryXL | EuroFinance| LinkedIn

The EuroFinance will finally open their doors in exactly one week. After two years everyone can meet in person again at the largest and most senior gathering of corporate treasurers worldwide.

For over 30 years, EuroFinance is where best-in-class treasury teams come together with the most innovative fintechs and renowned financial institutions to share experiences, discuss best practices and collaborate to solve the challenges of the day.

Schedule your EuroFinance program in advance

Benefit from the extensive expertise of 150 world-class speakers across 3 days of thought-provoking keynotes, lively debates, in-depth case studies and technical discovery labs providing practical insights and key skills to advance your treasury.

With such a great number of high quality sessions it’s wise to schedule your session program in advance.

Click here for the full agenda

Click here for the speakers overview

The line-up of 150 world speakers includes:

Kristina Moller, Treasury director, Spotify
Wendy Venema, Assistant treasurer, Tata Steel
Elise le Clerc Director global treasury Willis Tower Watson
Jean-Baptiste Disdet, Treasury technology director, Japan Tobacco International
Kristina Moller, Treasury director, Spotify
Mack Makode, VP, treasurer, Under Armour
Mandana Sadigh, SVP, corporate treasurer, Mattel
Victor Pausin, Treasurer – Americas, Nissan Motors
Clive Bailey, Treasurer, FCE Bank

Connect with our highly valued partners for a chat and a coffee

We are happy to announce that the partners that are highlighted below will host a booth at the expo. Together with them we build the treasuryXL community by delivering daily treasury news, blogs, events and vacancies.

They would love to welcome you at the expo and invite you for a quick chat. You can also book your appointment in advance to secure some extra time. Contact me directly and I will introduce you personally.

Technology sponsors plus

Kyriba

Technology sponsors

TIS

I wish you a great time at the EuroFinance. Safe travels and enjoy!

Kendra Keydeniers

DeFi and banks: Is this the end of traditional banking?

13-09-2022 | Carlo de Meijer | treasuryXL | LinkedIn |

The unregulated DeFi market has experienced remarkable growth in 2021. DeFi use cases bring a number of benefits and may remove a number of the shortcomings of the traditional financial ecosystem.

By Carlo de Meijer

Next to that the attitude of a growing group of new generation consumers is changing triggered by higher yields and the emergence of alternative digital and crypto assets. This paper attempts to answer a number of questions such as: what does DeFi mean for the traditional financial system?; should traditional financial institutions worry and why?; should they adapt to the new Defi environment?; what steps could be taken?; and finally, what will the new financial ecosystem look like?

INTRODUCTION

Decentralised finance or DeFi caught a lot of attention in 2021 from both regulators and traditional banks. The advent of this, until now unregulated, DeFi system has raised a new wave of investors and possibilities that the financial markets never envisioned. This has led to a massive inflow of liquidity since the summer of 2021. This paper will go into more detail as to what this could mean for the traditional financial world. The main questions are: will DeFi be sustainable in the long run and should traditional banks worry? Or is DeFi a new chance for the traditional banks to solve their present shortcomings by bridging the gap between CeFi and DeFi?

SHORTCOMINGS OF THE TRADITIONAL FINANCIAL MARKET

To understand the new DeFi world and its spectacular growth, the roots of the problem with the current financial system need to be examined. For a long time, traditional finance has been largely reliant on intermediaries, like banks, insurance companies and stock exchanges, thereby governed by strict regulation. For their operational needs and day-to-day transactions regular consumers need to deal with a raft of financial middlemen to get access to everything from loans and mortgages to trading stocks and bonds. They are then governed by strict regulation and controls. A business would have to complete anti-money laundering and ‘know your customer’ checks for every source of capital. These rules have been increasing to the point that compliance is often one of the biggest cost centres for many banks. Given the various diferences in national regulations, conducting a cross-border money transfer through a financial institution may be a long process with possible delays, making it more expensive. As a result, the current market is not as efficient as desired, especially when it comes to inclusiveness and accessibility. This financial system is also not transparent about what is happening, with customers having no control over their assets. This keeps the risk and control of money, financial products and financial services at the centre of these systems.

NEW GENERATION CONSUMERS: MILLENNIALS AND GEN Z

Triggered by these shortcomings and upcoming technological financial innovations, as well as the lack of attractive yields in traditional financial products, a growing group of consumers, especially the Millennials and Gen Z, is fundamentally changing their attitudes. They are increasingly looking for alternative loans and assets to invest in. Many consumers are thereby searching for systems that are more flexible and less restrictive than the traditional ones. These new technologies have led to changes in financial products. Many of the existing traditional assets move to digital or have digital equivalents. A growing group of consumers is increasingly looking for and experimenting with these more attractive financial assets, thereby driving the under current of interest in DeFi.

In order to provide investors with more secure and easier access to crypto-assets, other platforms seek to bridge the gap between blockchain-based finance and traditional capital markets. Some companies are currently exploring this new marketniche by providing crypto-services to those who want to ‘take a safer road’, preferring to turn to ‘regulated’ institutions that trade and store crypto-assets on their behalf. In a way, these platforms create a bank-like environment meant to give crypto-beginners a sense of security — albeit a distorted one, as the companies’ accounts have been hacked more than once.

WHAT IS DEFI?

Decentralised Finance, (1) or DeFi for short, encompasses a new type of emerging financial ecosystem enabling decentralised financial applications, such as trading, borrowing and lending activities, powered by public blockchain or distributed ledger technology (DLT) networks and using cryptocurrencies. DeFi refers to replicating traditional financial services used today in a decentralised way. The goal of DeFi is to create an open and transparent financial ecosystem that can be accessible (via the internet) to everyone anywhere across the globe. DeFi allows users (buyers, sellers and borrowers) to interact directly with each other, so peer-to-peer, via decentralised platforms without a sign-up process. This is by building trust in the technology and the governance behind it. DeFi seeks to improve the efficiency of financial transactions by replacing traditional middlemen with automated or smart contracts built on blockchains. These are coded, self-executing agreements where users directly interact with the application. From borrowing platforms to stable coins (disposable tokens), the DeFi ecosystem consists of a vast network of integrated protocols and financial instruments.

Users could access DeFi products through decentralised applications (DApps), or other programs called peer-to-peer protocols, which are web-based applications powered by smart contracts and secured by blockchain technology. These require no access rights for easy lending, borrowing or trading of financial tools. As a result, anyone can transfer or lend money to another party without a bank, making these transactions easier, more affordable and more accessible. The vast majority of these DeFi platforms and most applications are hosted on the Ethereum network, but many alternative public networks are emerging.

DEFI USE CASES/APPLICATIONS

DeFi is making its way into a wide variety of simple and complex financial transactions (2). They encompass nearly everything that can be done at a bank with regular old (non-crypto) currency. These range from DeFi-based lending and borrowing including overcollateralised loans, decentralised trading, staking to yield-aggregating or yield farming (earning) and liquidity mining. Margin trading and insurance and even NFTs or non-fungible tokens are also possible through DeFi protocols. DeFi developers are actively exploring and building more and new services to the ecosystem.

Overcollateralisation

This segment of the DeFi lending and borrowing space is rapidly growing. The lender and the borrower come together on a DeFi lending platform and execute smart contracts. By using DeFi lending protocols, crypto holdings can be used to obtain a loan. Most DeFi lending protocols do not allow for traditional credit checks on potential borrowers.

Traditional finance loans in DeFi however are commonly secured by overcollateralisation.

In the absence of a credit-approval process, posting collateral is typically essential to mitigate credit and fraud risks. The borrower gives his crypto as collateral and obtains a loan from the platform, while the lender gives his fiat money to the platform to earn some interest. Borrowers leverage their trading by holding an existing asset in a vault and use the borrowed asset to trade or compose more complex lending, borrowing and staking activities with the same collateral base.

Staking

A typical example of DeFi use cases is staking, (3) a way of earning rewards for holding certain cryptocurrencies. This involves ‘staking’ (lending or investing) digital assets into a proof-of-stake platform, a consensus mechanism, and earning a percentage-rate reward over time. This usually happens via a ‘staking pool’, which can be thought of as being similar to an interest-bearing savings account, ensuring that all transactions are verified and secured without a bank or processor in the middle. Staking enables money to be borrowed against this stake and a small amount of interest to be paid, which is probably going to be beaten by the appreciation in the staking earnings. It eliminates almost all of the traditional finance concerns that people have.

Yield farming

Another DeFi use case and one of the most promising is yield farming. (4) Yield farming involves providing liquidity or lending out cryptocurrency to a DeFi protocol that puts it in a smart contract-based (trading or lending) liquidity pool in exchange for interest or trading fees plus liquidity provider tokens that can then be staked in a yield farm to earn additional yield. These returns are expressed as an annual percentage yield (APY). Often the amount of interest earned or paid is less important than the amount of governance tokens one can earn by lending or borrowing (or both). Users earn tokens by locking cryptocurrencies in smart contracts running on the exchange’s trading plat forms. This protocol essentially means that a crypto-holder can farm for more crypto-tokens by using the existing tokens. There are a lot of diferent and sometimes very complex strategies to do this type of farming. However, the most popular one is where a platform consistently moves the user’s tokens between a number of lending platforms in search for a higher return on a blockchain like Ethereum.

Liquidity mining

Another area that is likely to grow in importance is liquidity mining. Providing liquidity is hugely important for the healthy running of decentralised exchanges (DExs), although it is currently held back by the threat of impermanent loss (where providers risk losing some of their initial investment due to price changes). Reducing impermanent loss is imperative to the development of liquidity mining. New formulae for automatic market makers that reduce impermanent loss are being developed, and the results look promising.

Prediction markets

Prediction markets are platforms where individuals can make predictions on the realisation of future events. These markets allow people to bet on the price of a currency, stock prices or the results of a future event like sporting events or elections and more. DeFi opens these markets for participation. In DeFi, prediction markets are intermediary-free, more accessible and typically have lower fees compared to centralised prediction markets.

THE DEFI ECOSYSTEM

With the emergence of DeFi, a completely new ecosystem of platforms, working applications and protocols is developing through which borrowers, lenders and investors can undertake bank-like transactions with out banks. Decentralised platforms entered the financial scene including decentralised banks (lending and borrowing), decentralised exchanges, decentralised insurances, etc. This has also attracted a growing number of fintech companies, challenger banks and neobanks or cryptobanks that are disrupting the traditional financial system across the world with more agile, cheaper and more inclusive services. DeFi banks: Lending and borrowing Lending platforms are one of the most popular DeFi applications. Because borrowers do not need personal checks, they can access loans faster and geographical barriers do not apply, making loans more obtain able. All they must do is deposit collateral. Lenders can lock cryptocurrency into these platforms to earn interest, while users can borrow stablecoins by putting up collateral — 150 per cent of the amount borrowed is common to account for price volatility. There are various platforms that deliver decentralised lending and borrowing services mostly using the Ethereum network. These include protocols like Aave, Bancor, Compound and MakerDAO, with tens of billions in market size.

Decentralised exchanges

DeFi also gave birth to decentralised exchanges or DExs that are popping up at a growing rate. These exchanges benefit from being independent and not being controlled by any regulatory authority. Right now, most cryptocurrency investors still use centralised exchanges like Coinbase or Gemini. At DExs however there is no company operating it. With the emergence of decentralised exchanges, holders of crypto do not need to leave the crypto space to swap their tokens. Decentralised exchanges allow users to exchange or swap tokens with other assets, without a centralised intermediary or custodian. The extra cost on each transaction is another negative aspect of centralised exchanges (CExs), which DExs address, where there are fewer parties taking a cut of a transaction.

DExs also do not require users to deposit funds to start trading. They facilitate peer to-peer financial transactions with the help of smart contracts and function according to defined pricing mechanisms and let users retain control over their money. The most prominent example of a DEx is Uniswap, which allows people to trade crypto-tokens and swap tokens (5) that run on the Ethereum network. Other examples include Curve, PancakeSwap and dYdX.

DeFi insurances

Thanks to the popularity of decentralised banks and exchanges there are now even crypto-insurances that may insure their DeFi investment for a percentage of the yield they generate. They offer insurances that cover bugs in smart contracts. Decentralised insurances are still in origin stages. One example is Nexus Mutual, which is designing a decentralised alternative to insurance by allowing virtual communities to come together to pool their funds and share risks. As these platforms are built on self executing smart contracts, more options would be created sometime in the future, bringing further opportunities for the public. It is anticipated that larger and more sophisticated insurance models may emerge in the DeFi space in the years to come.

Decentralised asset management, another evolving class of service offered by DeFi is decentralised asset management. This trading or creating of complex financial products and management of assets nowadays falls into the sector of traditional investment banks. Decentralised asset management intends to make investing faster, less expensive and more democratised. Transparency delivered by DeFi promises to make information accessible and secure, composable to enjoy hyper-customisation of portfolios and trustless to allow access to historically illiquid assets and manage their investment regardless of location. Ampleforth is an asset management protocol of DeFi designed to be synthetic and smart commodity-money. It aims to provide a non-collateralised digital asset that helps traders and investors diversify their crypto portfolios. Ampleforth adjusts its tokens’ supply daily to match the market demand using a smart contract.

THE PRESENT STATE OF THE DEFI MARKET

The DeFi market has shown spectacular growth over the past two years. DeFi growth accelerated since mid-last year when services became more mainstream for the crypto-community. Decentralised finance has thereby developed into a complex ecosystem of platforms, working applications and protocols through which borrowers, lenders and investors can under take bank-like transactions without banks. Today, billions of US$ have been put into the DeFi-ecosystem, locked on the various DeFi platforms (6).

According to DeFi Pulse, the total value locked in DeFi contracts that was injected in diferent DeFi protocols/services as of the end of last year was almost US$100bn compared to US$500m in early 2020 — a staggering 1,000 per cent growth in the past two years. The recent hype around DeFi apps is driven by the growth of lending and borrowing protocols, especially those built on the Ethereum network. Lending currently represents nearly half of the DeFi market. There are hundreds of examples of DeFi applications on the Ethereum ecosystem today. The majority of these are based on DeFi lenders Aave, Compound and Maker showing the concentration of lending and borrowing markets within DeFi. This demand is especially evident amongst Millennials and Gen Z who will expect such services to be offered.

ASSESSING THE PROS AND CONS OF DEFI

DeFi is quickly emerging as a transparent and permissionless way for users to interact directly with each other. The DeFi system offers a number of benefits for crypto-traders and investors that are currently not provided by the conventional financial intermediaries, including speed, efficiency and lower cost. DeFi may thereby eliminate many of the traditional finance concerns that people have.

Despite the various benefits and opportunities, the DeFi industry is still in a nascent stage, and has not been stress-tested by long or widespread use. It faces many challenges much related to its non-regulated stance and the resulting lack of consumer protection that need to be tackled for a real break through. These challenges still make many traditional banks and consumers reluctant to enter the DeFi space.

More accessible versus attraction of malicious players

DeFi could greatly reduce the barriers to entry. By eliminating the need for centralised financial institutions and intermediaries, being replaced by self-executing programs, DeFi makes financial services more accessible and more inclusive, regardless of credit history, networth, geographical location or class. The anonymity of DeFi users and the absence of checks however could attract malicious actors that may use DeFi services to launder money and fund criminal operations and fraud.

Faster and more (cost) efficient versus congestion (7)

DeFi may enable to handle the management of finance in a faster, more efficient way, eliminating the high costs associated with regulation and poor infrastructures. The lack of intermediaries and the use of smart contracts could greatly reduce operational costs and delays. Furthermore, decentralised finance services are available 24/7. As a result, DeFi may surpass the present banking system in terms of speed. But there are some negatives such as the concentration risk. Decision-making power on DeFi blockchains runs the risk of being concentrated in a small group of large investors. Concentration can facilitate collusion and limit blockchain viability. Large validators could also congest the blockchain with artificial trades between their own wallets or risk insider trading.

Financial sovereignty control versus lack of consumer protection

Financial sovereignty is another advantage of decentralised finance. As intermediaries do not need to be relied on, people have full control over their assets and view their storage location and use. The existing lack of consumer knowledge could make it a breeding ground for fraud and manipulation by malicious developers, while the anonymity of DeFi users could attract actors that may use DeFi services to launder money and fund criminal operations and fraud. With DeFi being unregulated there is however no consumer protection if something goes wrong.

Higher yields versus market risks DeFi may give users incentives for their financial activities. DeFi offers more opportunities than traditional markets to earn higher yields, while the absence of intermediaries may considerably reduce the interest on loans procured on DeFi platforms. Consumers that currently participate in DeFi do so at a great(er) risk and may sufer losses. First, there is the investors’ risk, the sheer volatility of the crypto-asset markets. Cryptocurren cies are often subject to extreme volatility in the valuations of various digital assets. If there is a downturn, the crypto-assets used as collateral may sharply decline in value and some investors may see their positions liquidated.

Read here the article in which Carlo provides his opinion on what the expected conclusion is of crypto volatility for corporate Treasury

Stable coins versus illiquidity

Stable coins are increasingly being used to facilitate transactions on DeFi platforms. The growing use of stable coins may contribute to more stability. There are possible vulnerabilities with stablecoins. Stablecoins like Tether (USDT) risk liquidity mismatches because they are backed by commercial paper, which are short-term securities with mostly illiquid secondary markets. The present cryptomarket is also very illiquid. Every small quantity of ‘buy’ or ‘sell’ of these assets may hugely impact their value. Given the typically (over) collateralised nature of the activities, volatility in the valuations of various digital assets posted as collateral could translate into volatility in the valuations of the digital assets acquired.

Address cybersecurity versus security risk

DeFi also has the potential to address cyber security challenges. The decentralised blockchain makes financial transactions secure and provides more transparency for users, maintaining a high level of privacy. This is through the protocols that provide the assets, allowing anyone to inspect the code or the product, reducing the margin for human error. While a blockchain may be nearly impossible to alter, the lack of regulation could make other aspects of the DeFi system, like the open source of smart contracts, vulnerable for hacks, cryptocurrency investment scams, fraud and mishaps, which can lead to funds’ theft. Smart contract risks, such as bugs in the code, could lead to losses for users, as demonstrated by certain protocols in recent months.

SHOULD BANKS WORRY?

The debates around decentralised finance are heating up. If DeFi could become main stream, it might pose big challenges to traditional banks. DeFi may prove a disruptive force for traditional financial companies and would have a great impact on how banks operate in the future. It will certainly revolutionise the way finance would be handled. DeFi also has the potential to change the structure of financial systems, completely shake up and potentially even replace the current financial system.

DeFi: Still a tiny market

But within the present environment that would be a step too far. Numerically DeFi does not pose an imminent threat to traditional lenders. While the DeFi market has grown significantly in historical terms, encompassing remittance, trading, lending, borrowing and various other types of transactions, their market size is still very small compared to traditional banking. The decentralised finance sector currently represents only a tiny 0.1 per cent of the trillion-dollar traditional finance industry. Its potential for disrupting the larger financial system in the short term remains low.

DeFi: Upcoming solutions

In the meantime, a lot of work is already being done to overcome these hurdles. Thereby changes are being made towards a more acceptable view of DeFi by both consumers and traditional banks.

Within the DeFi space

Within the DeFi space there is a growing number of initiatives that are especially aimed at removing hurdles such as collateral requirements and volatile digital assets. Companies including Aave are working on permitting uncollateralised loans akin to traditional finance. And in 2022 there will be increasing interoperability between DExs, which is vital for improving liquidity. The German financial services firm Paycer is developing a bridge protocol to combine DeFi and cross-chain crypto services to integrate them with traditional (centralised) finance (CeFi) services. This should support full interoperability across multiple blockchains.

Education

Also on the education issue, there is a massive effort to upgrade the level. There is a growing number of educational institutions that are trying to improve the education of potential DeFi users and lower the high knowledge barriers. This will certainly help traditional bankers and regulators to become familiar with blockchain technology. And there are initiatives such as DeFi for the People that can help industries identify how to integrate DeFi into their existing business models.

Compliance

There is a growing consensus from both the traditional financial world and DeFi parties that DeFi products and services must be compliant, secure and appropriately audited and monitored to ensure users’ security and privacy. More DeFi platforms featuring KYC tools and compliant reporting systems to protect the DeFi market from regulatory uncertainties and to lure traditional financial institutions are being seen. Concordium (8) and Verum Capital AG are collaborating to launch the first lab focused on developing regulated decentralised finance products.

Formal regulation

Formal regulation is expected to come to the DeFi market in 2022 and beyond. Multiple policymakers and regulators world wide are already keeping a close eye on the growth of DeFi and its potential negative impacts and are making up their minds. A positive signal is the growing trend among regulators worldwide to develop a collaborative approach.

The EU’s upcoming Regulation of Markets in Cryptoassets (MiCA) (9) is expected to have strong implications for the DeFi sector. There is increased scrutiny from the US Securities and Exchange Commis sion and the US government, which will require protocols and platforms to significantly improve. But it is very likely that they will also come with regulatory solutions to ensure consumer protection while the innovative potential of DeFi may bring overall benefits to finance.

WHY SHOULD BANKS REACT?

DeFi is here to stay and is expected to fundamentally change traditional banking. Bringing more real-world assets and financial products on-chain will certainly expand in the DeFi ecosystem, attracting more investors and traders alike. New types of DeFi assets, more regulatory clarity and lower costs for transacting will further increase mainstream adoption of DeFi. It is yet to attract more traditional financial institutions. But once greater access to DeFi gets easier, traditional banks might have a real reason to worry. Should recent DeFi trials prove successful, and more product offerings take off, these protocols could start competing with traditional banks, presenting a main threat for them. Ignoring this trend might lead to a wake-up call in the future but by then it may be too late (10, 11). DeFi and the benefits it brings to the industry should be seen an opportunity rather than a threat for traditional banks. This goes especially for those banks that are willing to adapt. Financial institutions should therefore understand DeFi and start making big changes to their existing business model and fix those issues that DeFI corrects.

THE BANKING INDUSTRY IS AWAKENING

The banking industry, especially the larger institutions, increasingly sees DeFi as a potentially significant growth engine and disruptive force, challenging traditional banking. As DeFi further grows in size, and thus economic importance, they are increasingly seeking involvement in this sector, thereby exploring how they might engage with DeFi and the crypto-markets.

Most already have large crypto research divisions investigating to understand the ins and outs of DeFi and the various use cases. They are considering the advantages and risks of DLT solutions, thereby monitoring developments in the DeFi market and are beginning to see DeFi’s potential to overhaul the inflexibility of present processes. Because of heightened consumer and institutional investor demand for DeFi triggered by much better results compared to stretched valuations and low yields in conventional markets, established banks and hedge funds are increasing their exposure (12) to the DeFi ecosystem.

WHAT STEPS SHOULD BANKS TAKE?

But to be effective, what steps should the traditional financial sector take in order to survive? As on the scale of global finance, DeFi is still tiny, they should react in a phased way (13). Traditional finance should accept some DeFi products for existing customers, embrace DeFi and help shape the regulatory environment, create bridges and develop middle-way options and finally cooperate with the DeFi industry through partnerships with leading fintech firms.

Meet customers’ DeFi demands

A first step for traditional banks is to allow consumers wider access to DeFi via their banking services. Many customers are looking for more flexible, beneficial and less controlled ways to meet their financial wishes. If banks want to embrace DeFi, they need to embrace this shift by acknowledging that both DeFi and crypto are here to stay. DeFi’s superior yield and transparency should not be seen as a disadvantage, but more as an asset to banks and other financial institutions. The main condition is that they move quickly enough to custody digital assets and offer users the ability to earn returns on those assets through DeFi. Banks will primarily compete to offer users the best access to DeFi in the near future. For that, financial infrastructures should be prepared to interface with smart contracts and blockchains now. This will require financial institutions to allocate and train separate teams dedicated to managing this new asset class and adopt DeFi products that provide the best yield.

Serve new generation customers: Millennials and Gen Z

Another way to get involved in the DeFi ecosystem and to get ahead of the DeFi curve is to engage or partner with the group of new generation customers that are looking for more sophisticated products. These are increasingly being served by challenger and cryptobanks. DeFi could be seen by traditional banks as the next step in providing their new customers with the type of financial services they want to have. Just like in the 1990s when the internet was introduced. This group of risk-taking investors such as Millennials and Gen Z, which is nowadays underserved, increasingly sees value in digital and crypto-assets instead of the traditional low-return assets offered by traditional banks. Looking ahead, a next step will be offering asset management tools that simplify managing crypto for the wider retail investor market. Given the complexity of investing in digital assets, the development of asset management funds that both democratise and streamline crypto-investment seems a logical next step for banks.

Proactively embrace DeFi

Traditional banks could also align themselves with the DeFi activities and be more proactive. This may ensure having an active and prominent role in shaping future regulation via technical instruments. There are various options for banks to take a more proactive approach to DeFi. These may include developing so-called greenfield DeFi propositions in collaboration with the DeFi community, and collaborating with regulators to work out how to build regulation while still preserving the decentralised nature of DeFi.

For banks, viewing DeFi through an innovationlens is key to enable DeFi to fulfil its potential at large. For that they need to evolve their own internal compliance work flows to connect their banking services and the wider fiat economy to the opportunities that DeFi is likely to offer. One potential way forward is to shift the culture within banks’ compliance departments away from the present risk-averse approach to an innovation-first approach. This could be done by breaking down silos and encouraging compliance teams to work with engineers, designers and product people to test different compliance frameworks and try to innovate within those spaces.

Bridging the gap

As DeFi becomes mainstream, there will be a growing need to make this ecosystem compatible with traditional finance (14). Traditional banks could try to create a bridge between the traditional centralised financial services ecosystem (CeFi) and the new DeFi world. This will be done by developing credible and trustworthy pathways between both financial ecosystems.

Up until now, any significant moves to develop a bridge between traditional finance and cryptocurrency have come from centralised crypto-players like Coinbase and DeFi Alliance. These are establishing themselves as the kind of bridge-building industry thought leader and pioneer that banks should strive to reach. Coinbase is stimulating major banks to follow suit and offer an equivalent product allowing customers interested in cryptocurrency trading to have a wider choice of platforms. Another interesting player in this sector that focuses on bridging CeFi to DeFi is the Alkemi Network. This platform features an institution-grade liquidity network, offering CeFi institutions a professional avenue to invest in DeFi. Alkemi’s flagship product, ‘Alkemi Earn’, is a lending and borrowing platform that allows institutions to access DeFi through its permission pool. This particular pool features a KYC framework and compliant reporting systems to enable institutions to navigate the — up until now still obscure — DeFi market.

FUTURE FINANCIAL ECOSYSTEM: CONVERGENCE CEFI-DEFI

Decentralising financial products at scale is increasingly becoming a reality. It is still in the early stages and although DeFi is promising, it still has some way to go before it is widely accepted by customers and financial institutions. But in the end DeFi could open a completely new ecosystem. What will that look like?

To survive in the long term, traditional financial institutions should move and adjust to the new financial realities and start preparing (15) by adopting some DeFi principles and follow a phased approach. They should find ways to integrate DeFi into their systems and achieve coexistence.

In the short and medium term, CeFi and DeFi will behave as competitive or oppositional forces, which both have their own advantages. Banks could try to start bridging the gap by adopting compliant ecosystems, transforming the stream of old money into new digital and crypto-assets. But DeFi’s distance from the traditional finance system is also likely to narrow as participants in traditional markets look to expand into crypto, thereby strengthening the links between both (16).

Ultimately the two may converge in a ‘competitive battle’, whereby the blockchain based principles that DeFi relies on are likely to become fused with the underlying architecture of global finance. Banks should think of the emergence of the internet in the 1980s and 1990s and the rise in the number of fintechs. After some time needed to adjust to the new situation most of these fintechs were absorbed by the big financial institutions. That might now also be the scenario.

Carlo de Meijer

Economist and researcher

References

(1) Wojno, M., 2022, ‘What is DeFi? Everything you need to know about the future of decentralized finance’ available at https://www.zdnet.com/article/what is-defi-everything-you-need-to-know about-the-future-of-decentralised-finance/ (accessed 23rd March, 2022).

(2) Cryptotract, 2022, ‘What is DeFi? Should you jump into this evolving crypt segment?’ available at https://cryptotract.io/ what-is-defi-should-you-jump-into-this evolving-crypto-segment/ (accessed 23rd March, 2022).

(3) ‘Legacy banks should learn staking and DeFi or risk and kick’, 30 May 2021, available at https://www.investing.com/news/ cryptocurrency-news/legacy-banks-should learn-about-staking-and-defi-or-risk extinction-2518821 (accessed 23rd March, 2022).

(4) Banerjee, A., ‘Staking vs yield farming vs liquidity mining — What’s the diference?’ available at https://www.blockchain council.org/defi/staking-vs-yield-farming vs-liquidity-mining/ (accessed 23rd March, 2022).

(5) Lee, P., 2021, ‘New DeFi swaps could transform, conventional finance’ available at https://www.euromoney.com/ article/29b5w8wge0prncr8u4nwg/capital markets/new-defi-swaps-could-transform conventional-finance (accessed 23rd March, 2022).

(6) ‘DeFi trends in 2022: Growing interest, regulation & new roles for DAOs, DExes, NFTs, and gaming’, 26th December, 2012 available at https://blocknewsmedia.com/ index.php/2021/12/26/growing-interest regulation-new-roles-for-daos-dexes-nfts and-gaming/ (accessed 23rd March, 2022).

(7) ‘DeFi News: Better, faster, safer: How DeFi will kill the retail bank’, 25th June, 2021 available at https://www.fxstreet.com/ amp/cryptocurrencies/news/better-faster cheaper-how-defi-will-kill-the-retail bank-202106251143 (accessed 23rd March, 2022).

(8) Concordium, 2021, ‘Concordium will launch a DeFi lab focused on creating regulated decentralised financial products’ available at https://www.prnewswire.co.uk/news-releases/concordium-will-launch a defi-lab-focused-on-creating-regulated decentralized-financial-products-804302101. html (accessed 23rd March, 2022).

(9) De Meijer, C.R.W., 2021, ‘DeFi and regulation: the European Approach, Finextra’ available at https://www.finextra.com/ blogposting/20516/defi-and-regulation the-european-approach (accessed 23rd March, 2022).

(10) IBM Contribution, 2021, ‘Is DeFi the end of the traditional bank as we know it?’ available at https://www.ibtimes.com/ defi-end-traditional-bank-we-know-it 3260305 (accessed 23rd March, 2022).

(11) Hodgson, F., 2021, ‘How traditional finance can survive DeFi’ available at https://fcpp. org/2021/07/14/how-traditional-finance can-survive-defi/ (accessed 23rd March, 2022).

(12) ‘DeFi opens new possibilities for banks to embrace change’, 30th November, 2021 available at https://www.pymnts.com/ digital-first-banking/2021/defi-opens new-possibilities-banks-willing-embrace change/ (accessed 23rd March, 2022). (13) Ibid.

(14) Knegtel, J., 2021, ‘Crypto banks: The intersection of traditional finance and DeFi?’ available at (accessed 30th March, 2022).

(15) Popa, A., 2022, ‘The opportunities of DeFi for the financial sector explained’ available at https://thepaypers.com/expert opinion/the-opportunities-of-defi-for the-financial-sector-explained—1253966 (accessed 23rd March, 2022).

(16) BIS Quarterly Review, 2021, ‘DeFi’s decentralisation is an illusion’ available at https://www.bis.org/publ/qtrpdf/r_ qt2112b.pdf (accessed 23rd March, 2022).

Could Stablecoins Drive Payment Innovation?

12-09-2022 | treasuryXL | Kyriba | LinkedIn |

Despite the current market volatility, cryptocurrencies⁽¹⁾ are slowly seeping into everyday transactions,⁽²⁾ driven largely by small businesses. There are an estimated tens of thousands of businesses that are accepting cryptocurrencies as payments roughly representing about 0.01% of businesses worldwide.

By Rishi Munjal, Vice President Product Strategy, Payments, Kyriba

Source

Large corporations have stayed away from cryptocurrencies with a few exceptions⁽³⁾ where the use is limited to holding cryptocurrencies in treasury. The treatment of cryptocurrencies as an “indefinite-lived intangible asset”⁽⁴⁾ poses an accounting risk, forcing companies to write down⁽⁵⁾ the value of these assets when their value plummets.

The level of adoption is by no means impressive. Meanwhile, challenges with high-fees, scalability and volatility will continue to limit broad adoption of cryptocurrencies as a form of payment. Such limitations pose an important question for CFOs and treasurers: Are cryptocurrencies worth paying attention to?

Stablecoins and the Future of Payments

The answer is yes, given the potential for innovations that can shape the future of payments for corporates and merchants alike. This is especially true for Stablecoins⁽⁶⁾, as they present an opportunity to lower fees, reduce barriers and drive better services like instant cross-border payments. The promise hinges on a stablecoin’s ability to maintain its peg to a specified asset (typically U.S. dollars), or a pool or basket of assets, and provide perceived stability when compared to the high volatility of unbacked crypto-assets.

Since the launch of BitUSD in 2014 on the BitShare⁽⁷⁾ blockchain, stablecoins have evolved into public and private stablecoins. Public stablecoins exist in two forms. Reserve-backed or custodial stablecoins are backed by cash-equivalent reserves such as deposits, Treasury bills and commercial paper. These are issued by intermediaries who serve as the custodians of the cash equivalent assets and offer a 1-for-1 redemption of their stablecoin liabilities for the asset it is pegged against.

Algorithmic stablecoins (e.g.,UST) rely on mechanisms other than cash-equivalent reserves to stabilize their price. The peg to a specified asset is achieved by overcollateralized crypto and/or smart contracts that defend the peg by automatically buying or selling the stablecoin. These public stablecoins provide liquidity across the thousands of cryptocurrencies currently in the market. The private institutional stablecoins use tokenized deposits held by the bank for efficiently providing internal liquidity or liquidity for the bank’s wholesale clients between accounts held at the same bank. These coins (e.g., JP Coin) form a closed loop payment network similar to the ones offered by wallet providers like PayPal.

Stablecoin Guidance

Stablecoins have had their share of troubles⁽⁸⁾ and collapses⁽⁹⁾ in their short history. These risks were well understood by regulatory agencies. However, the explosive growth in cryptocurrencies has made it difficult if not impossible for regulators⁽¹⁰⁾ to keep up. Outside of the ad-hoc enforcement actions against crypto firms by the SEC⁽¹¹⁾, the industry continues to operate largely outside of regulations. Given the complexity of the crypto ecosystem, it is pragmatic for regulators to start with Stablecoins as they are relatively simpler and have real applications. It is therefore not a surprise, that despite the market turmoil, New York became the first U.S. state to issue guidance for Stablecoin issuers.

The Virtual Currency Guidance⁽¹²⁾ provided by the New York Department of Financial Services (DFS) outlines redeemability, reserve and attestation requirements for entities issuing U.S. dollar-backed stablecoins. The industry has been waiting for long-overdue commonsense regulations for reducing systemic risk and providing a fertile ground for stablecoin issuers and other fintechs to drive broad innovation in financial services and payments.

Table 1: Key points from The Virtual Currency Guidance provided by the New York DFS

Backing and Redeemability	Fully backed by safe reserve assets like T-Bills, Notes and Bonds Market value of the reserve is at least equal to the nominal value of all outstanding units of the stablecoin as of the end of each business day
Reserve	Segregation of reserves from the proprietary assets of the issuing entity Must be held in custody with U.S. state or federally chartered depository institutions and/or asset custodians.
Attestation	American Institute of Certified Public Accountants (“AICPA”) standard Examination of management’s assertions at least once per month by an independent Certified Public Accountant (“CPA”) licensed in the US

Kyriba has taken a forward looking posture in this space, for example via partnership with Copper to offer corporate treasury direct access to Copper’s award winning digital asset investment platform, and the ability to manage liquidity across fiat, crypto and money market funds.

While the specific time-horizon on when a trend would become meaningful is not easy to predict, CFOs and treasurers can preserve optionality by partnering with providers that stay at the forefront of payment market trends.

References

⁽¹⁾ FSB defines all private sector digital assets that depend primarily on cryptography and distributed ledger or similar technology as crypto-assets and not currencies; for this article the two terms are being used interchangeably.
⁽²⁾ Map of Cryptocurrency ATMs and Merchants, Coinmap.org
⁽³⁾ Public companies holding bitcoin, Coingecko.com
⁽⁴⁾ Accounting for and auditing of digital assets
⁽⁵⁾ MicroStrategy Posts a Loss After Taking Bitcoin Impairment, Bloomberg 2/22
⁽⁶⁾ Financial Stability Board, Crypto-assets and Global “Stablecoins”
⁽⁷⁾ Whitepaper: BitShares – A peer-to-peer polymorphic Digital Asset Exchange
⁽⁸⁾ Terra Luna timeline; TerraLuna UST collapse – What Happened?
⁽⁹⁾ CFTC fines Tether and Bitfinex for misleading claims; Panics and Death Spirals: A history of- failed stablecoins
⁽¹⁰⁾ Stablecoin risks and potential regulations, BIS Working Paper 11/2020
⁽¹¹⁾ Crypto Assets and Cyber Enforcement Actions, notes seven enforcement action for the period Jan – April 2022
⁽¹²⁾ Guidance on issuance of US Dollar backed stablecoins, New York Department of Financial Services, Jun 2022

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Quickly refresh your treasury knowledge? Download our eBook: What is Treasury?

08-09-2022 | treasuryXL | LinkedIn |

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