13-09-2021 | treasuryXL | Pieter de Kiewit Just before starting my vacation I created a small overview of the recent successes of Team Treasurer Search. Next to the fact that we see the speed of placements picking up, I think it is striking how international our treasury labour market is. This is not only for […]
My regular blog readers know I like to take the layman perspective on what amazes me in (Corporate) Treasury. I have my personal archive with relevant news we use to discuss every second week in team meetings. What currently amazes me most are the completely unpredictable developments in what used to be the banking market. Just some recent news:
- Wise, formerly known as Transferwise does a direct listing in London and is valued at $11 billion. They will invest in further facilitating cross border payments thus offering a bank service substitute; read more
- The competition of Wise, Revolut receives further investments and is valued at GBP 21 billion. They will establish full banking services building direct competition; read more
- Mollie, a miniature Adyen, explicitly states that they will beat banks at their game; read more
- One can also see banks creating their own new brands and services. ABN started Aymz, entering the niche market where RNHB and others are financing real estate in not too big tickets: read more
- And Niels van Daatselaar, CEO of TreasurUp writes about banks and fintechs working together: read more
- My final example is Ebury being taken over by Santander: the old world takes over the new contender: read more
A few years ago, the Traditional banks had the upper hand and would buy all parties that threatened them. By now, many Fintechs have a much higher valuation than banks. The extreme liquidity in the markets and willingness to invest leads to a situation that predicting what will be next is hard. I think that future winners find a right balance between applying newest technology, understanding potential clients, choose a clear strategy and move forward at highest speed. Many markets are winner takes all, making the game extra exciting.
I have not found a journalist or researcher who was able to solve this market equation and predict which of the various “eat or being eaten” scenarios will occur. The constant flow of new market entrants will continue. My expectations are that Apple, Microsoft, Google or Amazon entering this market with very substantial investments might be the next game changer. But why would I know?
What do you think will happen?
Owner at Treasurer Search
This is a blog by someone who does not own bitcoins or other crypto currencies and does not intend to purchase any soon. Someone who is not a subject matter expert. Someone who told his colleagues not to consider the topic relevant for corporate treasury for a long time. Someone who thought bitcoins are only relevant for extortionists or those who speculate, gamble and hope to get rich quickly. You understand, that someone would be me.
Slowly I am getting this “One wrong-way driver? I see dozens!”-feeling. Newspapers are filling up with blockchain news. Pension funds start seeing crypto currencies as a relevant asset class. Auction houses start accepting payments (Tesla stopped again) and in countries with hyperinflation in South America, people are fleeing into cryptocurrencies, especially stable coins. After a first attempt with the Libra, Facebook is introducing a stable coin with the so-called Diem that seems to be connected to the US dollar.
My main objection always was that I did not see the underlying value. Real estate is bricks, shares are a piece of ownership, bonds should be paid back and with fiat currencies you can buy in a store. I cannot live in bitcoins and my baker does not accept them as payment. But with gold I cannot buy bread either. It has some practical use as a metal but that does not justify its current value. So why measure bitcoins in practical use and underlying value?
The core discussion is about speculation and trust. There used to be times we knew a dollar or gulden could be exchanged for gold, so we trusted our money. But the gold standard is not so standard anymore. Of course the prices of dogecoins, ethereum and bitcoins are extremely volatile but how about the rates of Argentine Pesos, Venezuelan Bolivars, Turkish Liras or pre WOII German Deutschmarks? When you cannot stand the heat, stay out of the crypto currency kitchen but I do not consider volatility a reason to disqualify the asset class.
As to myself, perhaps I just have to accept that I am a laggard or at best member of the late majority in accepting the technology/solution. As to corporate treasurers, the survey shows they have the ambition to educate themselves better on the topic. Of course to be able to answer questions from their colleagues and perhaps to initiate some form of a practical application of crypto currencies. I hope that, next to the Tesla example, in further blogs we can inform you about relevant business cases. About successful implementation but of course also about the bottlenecks like taxation and reporting. There will be enough happening for many future blogs. And I will be someone who communicates differently about crypto currencies.
PS You might enjoy the slides of a recent presentation by Tristan Verhagen, recent Register Treasurer graduate, a great introduction into Bitcoins with provoking insights. See link.
Take care, Pieter
Owner at Treasurer Search
About a month ago I moderated a well-attended webinar “Bitcoin. Is this the new reality in corporate treasury or is it a hoax”. The majority of the participants were members of the corporate treasury community.
Foundation of the meeting was research done by PGO student Tristan Verhagen. He presented his findings and kicked off with a thorough description, including timeline, of Bitcoin developments so far. Not being the expert, I found his presentation very helpful in getting up to speed. His presentation evolved and brought some very interesting insights that were the basis for an discussion at academic level. The meeting was very well reviewed, a poll showed that participants have an increased interest in finding out if there is room for Bitcoin applications in their firm.
It was a conscious choice not to record the session. Given recent developments in the Bitcoin and crypto currency market and the quality of his presentation, I am happy Tristan allows us to share his slides (see below). I hope you will enjoy his writings as I did.
| 09-07-2019 | by Patrick Kunz |
This title makes it sounds like it’s a fight. To be honest: it is! The market for international payments is huge and its lucrative. In a McKinsey report the 2018 market size for payment revenues was close to 2 Billion. Not strange everybody wants a slice of that.
Fintech & Banks
Traditionally the market for international payments was dominated by banks. Recent years and technological advancements has shown that banks are slow to adapt to new technology and market requirements. In some cases it still takes days to transfer money from Europe to Asia, while an email, FB message or picture can be send in seconds. Fintech has tried to fill the gap with innovative tech solutions that solve these problems. Often these companies are lean and mean and adapt to market changes much quicker than the big stable banks. They provide cloud solutions, link to every bank possible and make you more bank independent. Lately we have seen consolidation in the fintech market where players are merging, growing or being taken over by banks. Some banks have started their own fintech. But often fintech only solved a part of the problem and is build on the existing (bank) infrastructure. Banks are also working on innovation: instant payments, swift GPI and PSD2 api’s are helping the customer paying faster and easier. These initiatives are great but have taken years to be implemented.
Then there is a third group of players: big tech. These are the google, facebook and alixpress of our world. These are traditionally IT companies who have a big client base but these companies where not involved in payments (yet). Their edge is size, market access and fast adoption. What happens if they enter the market for payments? Are they likely to win? Look at Alipay, massively successful in China but growing immensely outside Asia to. Why ? because it is easy to use, innovative, low cost and probably most importantly connected with an existing service of the bigtech (alixpress – shopping). The company provides the full customer journey: shopping for product and paying the goods in the most easy way without moving away from the website. Not only via desktop but also via mobile. On the go they make it possible to pay by scanning a QR code, in a grocery store or in a cab. Who needs cash OR a debit card, you only need your mobile phone and an app! Why was this successful? Because the existing customer base was already there they just vertically integrated into the customer journey; easier for the customer and therefore extra revenue for Ali. But also more power for Ali.
Looking at Facebook and their Stablecoin Libra. Digital currency, unregulated, not based on the traditional banking/payment infrastructure. There are big and significant differences with Bitcoin but the idea is the same: sending and receiving money worldwide in an instant as digital currency. There should be no speculation on the Libra-Rate as the rate of exchange is based on a basket of currencies (EUR, USD, JPY etc). Similar to the old tech Special Drawing Rights from the IMF. So what makes libra different to bitcoin and the other coins? I am not going into the technical differences as that is beyond my scope and would bore you. The main difference is the easy of adoption. New to bitcoin and want to use it: you have to open a wallet, trading account and learn have to transfer the BTC to somebody and the receivers also needs a wallet; a barrier for most. Using Libra will be much easier as it is just an extension of the services of Facebook. Libra potentially has 2,4 billion users (the number of facebook accounts). This is a big competitive advantage. Compared with smart marketing (facebook knows that) and combining it with existing products there is a big potential. Sending money to your facebook friends in Australia or Japan? No problem: in-an-instant via Libra. Besides facebook it is also supported by other big players like Visa, Spotify, Paypall, Mastercard, Vodafone. Is there a future without Libra ? And how many facebook users are there without an bank account. There are 2,4 billion facebook users and 1,7 billion people without a bank account in this world. The reach is already huge so there is low barrier for adoption.
Does this mean bigtech will be ‘winning’? In my opinion hard to say. That battle is being fought the coming years. Don’t forgot the power and influence of regulator and governments. Digital payments are unregulated and unknown and could influence the power of governments and the whole banking infrastructure of money regulation, central bank money creation and some even fear de-stabilization of the monetary system as a whole. Regulators could stop/limit the quick steps forward by bigtech.
The coming years will be exiting to see the technological advancements in the battle for payment revenue. The winner will be the consumer; easy of paying will increase further and more importantly the speed will increase. Paying how we want and within a blink of an eye, and this worldwide, will be the new standard within several years.
Treasury, Finance & Risk Consultant/ Owner Pecunia Treasury & Finance BV
| 11-01-2018 | Carlo de Meijer |
2017 was a year of interesting developments in the blockchain area. Not all happened as was expected. Many, including me, predicted 2017 to be the year that blockchain would move from proof-of-concepts into real world production. Yes, we did see some great successes here, like IBM, R3CEV, … But the number of real world applications that entered the market was far less than anticipated. On the other hand there were some unexpected ones. This year the concept of blockchain started to capture also people’s attention. But that was triggered by the specular and unexpected rise of the Bitcoin and other cryptocurrencies. And also the ICO boom came out of the blue. Now we are nearing the new year, it is time to look forward. What will bring 2018 for blockchain and distributed ledger technology? How will Bitcoin and other cryptocurrencies develop. And how the acceptance of blockchain technology will evolve in 2018? In this blog I like to share my ideas and opinions on what trends and developments to look for in 2018. Let’s go!
1. Another chaotic year for cryptocurrencies
2017 was the year of the cryptocurrency hype. This is expected to continue for some time. 2018 will be another booming year for cryptocurrency yet, but with many hiccups. Bitcoin and cryptocurrencies as a whole will continue to experience great volatility though 2018 and may experience a significant correction. The main question is: where will Bitcoin’s floor be when it lack of utility becomes apparent to investors? We will see further widespread buying of Bitcoin and other cryptocurrencies. It has been primarily retail investors pushing the price of bitcoin and other cryptocurrencies. But with a futures market and options to reduce the risk profile, more institutional investors will finally be able to start jumping in. Private investors however should be aware. For Bitcoin to sustain its rally, scaling solutions must work in the real world. And that is not expected to happen overnight. None of these cryptocurrencies are suited to playing the most basic role of currency, as a relatively stable medium of exchange. We are therefore not going to see Bitcoin or other cryptocurrencies emerge as a payment network. It will just be used as a speculative asset and store of value.
2. Regulators are stepping in
2008 will be the year of increasing regulation in a growing number of countries. This year legislators and regulators worldwide already stepped in especially in the cryptocurrency area and ICOs. The South Korean government recently announced new rules to regulate the trade in Bitcoins. South Korea, an important hub for Bitcoins, aims to regulate the trade in Bitcoins, forbid anonymous Bitcoins accounts and wish to have the possibility to close trading houses. Earlier China announced the closing of a number of these trading houses. While British and American supervisors expressed similar warnings. Europe is still on the regulatory exploration phase. But there are increasing signs that they will also become more active. The Central Banks of Germany and France have expressed their wish to reign in cryptocurrencies. Also the European Commission has plead for “increased vigilance” towards cryptocurrencies. In 2018 legislators and regulators worldwide will intensify their watchdog role on both blockchain and cryptocurrencies. As a result we will see a growing number of regulators come with regulatory measures to close the gaps where blockchain and cryptocurrencies was violating existing law. Crypto exchanges will get audited and regulated. Some will even be taken down. This may cause heavy corrections in the Bitcoin and other cryptocurrencies rates.
3. Not the end of the ICO
One of the spectacular and unexpected developments in 2017 was the ICO boom and the launch of tokens. Regulators worldwide have started to reign in ICO’s in order to protect investors. And we will see further regulation tightening on ICOs in 2018 in a growing number of countries. Though this will not mean the end of ICOs, there will be a shakeout in ICOs and a capital flight to quality. ICOs will be cleaner and tighter, and investors will level for governance and put of their due diligence. It will be harder to get funding simply on the back of a white paper. Investors will demand sound business plans and high levels of transparency, with all that entails. Regulation will trigger traditional players to get involved. There will be a lot more institutional capital that will all go to the highest quality projects. We will also see the rise of securities tokens in response to increased regulation. Especial people with experience and expertise in the IPO world are expected to embrace tokenization as a technical platform. Despite an increase in regulation in the crypto space, it is expected that blockchain as a technology will not be hindered by heavy regulation. Based on this, we see even bigger achievements on the horizon for 2018, with blockchain becoming a more widely adopted mainstream technology not only in the financial sector but also beyond including retail, logistics and healthcare. We will increasingly observe a wider range of use cases for blockchain — across small and large-scale applications and across a wide range of industries within both the public and private sector.
Economist and researcher
| 08-01-2018 | Lionel Pavey |
Having spent my working life in international finance, I have patiently listened to all the news about the Bitcoin over the last few years. During 2017 whilst the Bitcoin was on a spectacular price rise, my interest was awakened in this new phenomenon – is this the future? I attended seminars, read articles, learnt the difference between the Bitcoin and the Blockchain, searched and investigated via the web, and tried to form an opinion. These are my findings:
Here is a technology that has recently been created – started in 2009 – that has caused a huge debate and led to passionate arguments on its merits or demerits. Those in the know understand its concept – the rest are baffled by its very existence. At essence it is a digital currency – there are no coins or notes in existence. It is decentralized – there are no governments controlling it. If you own it, your identity is anonymous to others – transactions take place via encryption keys. The supply is limited – protocol dictates that a maximum of 21 million Bitcoins can be produced. At the end of 2017 there were 16,774,500 coins in circulation – roughly 80% of the maximum allowed. So, the supply is clearly limited, but they have no real intrinsic value – they do not represent a claim on an asset.
My main area of interest has been on the price – the rise in 2017 of more than 1,400% is astounding. I decided to collate some information and have a chart showing Bitcoins price of the last 2 years.
Such a stellar performance should mean that the trade volume has increased dramatically.
Well……. here is another chart
The daily volume in September 2017 when the price was about $4,000 was the same as the start of February 2016 when the price was about $400. I had to create this chart as all the data I could find related to the $ value of turnover – which was phenomenal – and not the actual number of Bitcoins traded. Normally, when an asset sees a huge increase in price, this goes together with a corresponding increase in turnover. Clearly this has not happened with Bitcoin – why?
There appears to be a “strategy” of buying Bitcoin to hoard them. There does not appear to be a sizeable free float of Bitcoin. If there is more demand than supply, then obviously the price will increase dramatically. Bitcoin is touted as an alternative currency, yet the advocates do not seem to want to spread it around with everybody else. It is a currency that is not used to settle transactions – this makes it difficult to consider Bitcoin becoming a recognized mechanism for payments. One of the criteria of money is that it is a “medium of exchange” – yet again Bitcoin, which appears to be hoarded, does not meet the criteria.
How can a cryptocurrency replace a conventional fiat currency if it is not freely tradeable? Furthermore, if you hold Bitcoin and want to take your profit, then this will be realized in a fiat currency. As Bitcoin is generally quoted and traded in $, this means receiving your profit in an antiquated currency that your cryptocurrency wishes to replace – ironic?
The underlying technology – Blockchain – is here to stay. As to whether Bitcoin is here to stay – if people hoard Bitcoin, it will exist. What the value of Bitcoin should be – whatever someone is prepared to pay for it. Will it replace fiat currency – maybe one day, but not in its present Bitcoin form.
Cash Management and Treasury Specialist
| 20-12-2017 | Carlo de Meijer |
During our stay in South Africa I was reading an article in Die Burger (newspaper for Afrikaners) where a spokesman of Cape town-based PWC gave his ideas on the recent rise of Bitcoin and the future of Blokketting (Afrikaans for Blockchain). This inspired me to write this blog. Since I started writing about blockchain I categorically refused to use the term Bitcoin. But this time it is different. As Bitcoin nears the end of a record-breaking year, it seems an appropriate time to dive into this – by many traditional players said – over-hyped thing. Others describe this fascination for Bitcoins as a “speculative mania”. The broader public has discovered this phenomenon. I will not say it is (already) the end of the rise in Bitcoins or other crypto currencies. But let me be clear: Bitcoin is a lot not!
Bitcoin rate explodes
Since April this year the Bitcoin (but also crypto currencies like Ether and Bitcoin Cash) is showing a continuous rising trend and in the past few months it even exploded to unexpected levels. In one month time the rate of the Bitcoin almost doubled. In the meantime the Bitcoin rate increased further to reach almost 20.000 dollar, before falling back to 16.000 dollar. But now it is back at 19.000 dollar. At the beginning of this year the Bitcoin rate was not even 1000 dollar. The total market capitalisation of Bitcoin is now exceeding that of a company like Boeing and that of New Zeeland’s GDP.
Bitcoins traded on futures market
The recent firm rate rise of the Bitcoin has much to do with the launch of Bitcoin future contracts. Before that Bitcoins could only be sold or bought via internet platforms. Last week the trade of future contracts in Bitcoin started on the Chicago Options Exchange ( CBOE). These futures enable speculators (without having Bitcoins) to buy or sell Bitcoins by betting via the leverage instrument on future increases of the Bitcoin or an eventual decrease thereby hedging against fluctuations. In total 500 contracts were traded on the first trading session. The rate of Bitcoins increased nearly 2.000 dollar to 18.700 dollar. On the American market place Coinbase the Bitcoin even reached 20.000 dollar, after having raised 40% in the two previous days. This indicates that investors do not (yet) expect a crash short term.
In the meantime also the Chicago CME, the world’s largest exchange, started trading Bitcoin futures and the Nasdaq is also in the race to enable the trade in these future contracts. Many professional investors however did not yet enter this market because the difference between bid and offer rates is still much too large. This indicates there is too less liquidity in this market. There is also insufficient clarity of the required margins, trade limits, stress tests and clearing.
What is Bitcoin not?
Economist and researcher
| 06-12-2017 | Lionel Pavey |
As the price of Bitcoin reaches ever higher – more than $11,000 at the moment – Governments are starting to look at what regulation needs to be put into place. Bitcoin has gained a reputation as the currency of choice for tax evaders and drug traders due to its anonymity. It is a market with little or no regulation and, obviously, Governments are looking at lost revenue. Yesterday the UK Treasury stated the current anti-money regulations needs to be updated to encompass all virtual currencies.
It has been reported that criminals and terrorists have used virtual currencies to purchase illegal commodities via dark webs – ensuring complete anonymity. The proposal from the UK Treasury would mean that traders would be registered. At present, there are almost 100 ATM machines for Bitcoin transactions in the UK – with more than 70 in London. Cash can be entered into the machines and converted into Bitcoins. One transaction involved a customer paying in GBP 14,000 in cash.
For Governments, regulation would mean that the Treasury would be able to identify the owner of the money and investigate the source of the funds. Tax evasion would therefore be reduced. Naturally there are genuine investors who want to buy Bitcoin, but this can already be done via an electronic exchange.
To increase acceptance as a genuine alternative currency there needs to be a growth in financial products related to virtual currencies. Yesterday, the CBOE (Chicago Board Options Exchange) announced that it will start trading Bitcoin futures this coming Monday. Initial margins for trading will be 30 per cent and price limits will be put in place.
However, there are still many hurdles before complete acceptance can occur. It is still not a recognized currency – the retail outlets that accept payment in Bitcoin is still very small. In America, only 3 of the top 500 online retailers accept Bitcoin. Whilst the price of Bitcoin has surged in 2017, this very large price increase is having a negative effect on acceptance by retailers. As the currency has increased in value so much, there appears to be a reluctance among owners of Bitcoin to use Bitcoin to transact. It has become easier to speculate on its value than to trade for goods. This is a serious problem for a virtual currency to gain worldwide acceptance.
Another area of concern regards the transaction time. Confirmation of a transaction can take up to 20 minutes – if you ordered a coffee, then it would be cold before you could drink it!
Virtual currencies are certainly something that should be considered for the future, but until they are backed and trusted by the Government and residents of a country, they will only have a small niche marketplace.
Cash Management and Treasury Specialist
| 29-9-2017 | Carlo de Meijer |
One of the hottest – and also one of the most controversial – things in the crypto currency environment are so-called Initial Coin Offerings or ICOs. ICOs, which employ the use of crypto currencies, have become a popular means of fundraising for start-ups in recent months. The increasing need of blockchain technology and the lack of regulation allows them to raise money quickly in return to so-called tokens (also described as digital certificates). This hype has driven a steep rise in this sector’s market value, reaching a high of $177 bn.
The latest cryptocurrency boom however is beginning to stall as a growing number of regulators worldwide turn their attention to the ICOs world and have decided to come into action. China recently decided even to ban these ICOs. And others such as the US SEC, Singapore, Hong Kong, Russia and others followed soon though in a more lighter variant.
Is this the end of fundraising via ICOs or should it be seen as the beginning of a healthy market?
ICOs have become highly popular. In the past months there has been a complete hype around ICOs. ICOs have allowed digital currency start-ups, to raise millions of dollars quickly, in many cases from ordinary investors. The ICO fever is especially triggered by the success of Ethereum, the platform that invented the digital currency Ether. Already in 2014 Ethereum arranged a very successful ICO.
More than $1,6 billion has been raised worldwide from these ICOs up till now. China for example has seen 65 ICOs and 2.62 billion yuan ($400 million) raised from more than 100.000 individuals so far in 2017.
Economist and researcher