Europe’s MiCA will take effect on Sunday, ushering in a new age of transparent crypto regulation
MiCA provides regulatory clarity to the entire digital assets market across the Eurozone, making Europe one of the first Western countries to implement a clear framework that crypto exchanges, digital assets companies, and stablecoin issuers can adopt to remain compliant.
The framework aims to protect European investors from the fraud and risks plaguing the crypto markets while fostering innovation, economic competitiveness, and the interest of the Eurozone.
MiCA pushes for innovation in its stipulations around stablecoins, which will allow Euro-denominated stablecoins to replace the dollar-denominated variant. Under the new rules, stablecoins will be treated as electronic money, subjecting issuers to the same levels of compliance as traditional banks and money transmitters, including a 1:1 redemption to the Euro.
While the framework pushes for bold reforms, it also emphasizes protecting the European investor by mandating digital service providers obtain licenses as either digital asset service providers (DASP), virtual asset service providers (VASP), or crypto asset service providers (CASP).
Global stablecoins are not allowed under MiCA, and stablecoins pegged to other cryptocurrencies must primarily comply with European e-money licensing requirements. This would entail abiding by prudential, financial-crime compliance, and other rules.
To boost job and economic growth, licensed entities must maintain a local presence within the EU, which will serve as a base for their European operations.
While MiCA is a step forward, it is not without fault. Some of its faults include the cost of compliance, which could be burdensome on smaller crypto exchanges and service providers, vague (virtually non-existent) stipulations around decentralised finance, and a lack of flexibility in some stipulations, like those around stablecoins.
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Read more: Coin Journal
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Less Than 1 in 10 Firms Are Fully Prepared for MiCA With 25% Having Made No Preparations
The first stage of the European Union‘s Markets in Crypto Assets Regulation (MiCA) will come into play on 30 June. However, a new report by Acuiti, the management intelligence platform, and conducted by Eventus, the trade surveillance software provider, has found that a move to establish market surveillance systems is underway as firms find themselves underprepared.
MiCA represents one of the first comprehensive regulatory frameworks for crypto trading to be developed in a major financial jurisdiction, and its adoption will increase requirements for market participants in a range of areas.
The study, The Impact of MiCA on Crypto Market Surveillance: Insights and Challenges, was based on a survey and series of interviews with senior executives at 68 firms engaged in crypto trade across the buy-side, sell-side and exchanges. It found that, of the firms that were in scope for MiCA, just nine per cent were fully prepared, and a quarter of firms had not begun preparations.
With MiCA coming into full effect at the end of the year, it is important that firms identify whether they are in scope now and begin preparations to comply.
In terms of market surveillance, the MiCA regulation is based upon requirements set out in the EU’s Market Abuse Regulation (MAR). For many firms, particularly crypto-native firms coming into scope for the first time, there will be a significant operational lift to put in place the systems required to be compliant. This study found that there were still high levels of firms that were not sure if they were in scope.
“For firms that are not already operating under MIFID II, MiCA will present a significant operational lift to become compliant, and it is no surprise that we found that firms were looking to third-party vendors to assist them in their preparations,” says Ross Lancaster headof research at Acuiti.
“There is a relative lack of awareness among some areas in the market as to who is in scope, which will need to be addressed if firms are going to have time to get ready for compliance.”
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Read more: The FinTech Times
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US Dollar to Get Re-Priced from ‘Widely Overvalued’ Levels, Massive Impact on Gold, Bitcoin Targets | Youtube
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IBKR’s ForecastEx secures CFTC approval to launch prediction market
The Commodity Futures Trading Commission (CFTC) has approved ForecastEx LLC’s application to operate a contract market and derivative clearing organization.
ForecastEx, a wholly-owned subsidiary of Interactive Brokers, starts operations on Monday, July 8, 2024.
Interactive Brokers clients from eligible countries will have immediate access, the brokerage firm announced as it is the first Futures Commission Merchant to join as an exchange member.
“Markets are the most direct ways of expressing our unbiased expectations”
After its initial launch, ForecastEx will expand internationally and cover additional local and controversial global issues, the firm stated.
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Read more: Finance Feeds
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UK is 3 months away from transition away from US dollar LIBOR
The Financial Conduct Authority has reminded market participants of the expected cessation of the remaining synthetic US dollar LIBOR settings at the end of September 2024.
“We have no intention to use our powers to compel IBA to continue to publish the settings beyond this date”, the regulator stated. “Market participants with outstanding US dollar LIBOR exposures must make sure they are prepared for these remaining synthetic US dollar LIBOR settings to cease by the expected deadline.”
The FCA further warned that parties to contracts still referencing US dollar LIBOR should be taking steps to transition to appropriate, robust reference rates, renegotiating with counterparties where necessary.
The FCA and BoE have been taking steps to promote the switch from LIBOR to SONIA. Throughout the last few years, they actively provided guidance to lenders, borrowers, and investors who are amending their documentation to reference SONIA.
Nevertheless, the transition from US dollar LIBOR remains of critical importance globally, including in the UK where many firms are active in US dollar interest rate markets.
LIBOR, which underpins more than $300 trillion in derivatives and other instruments, is set to be replaced worldwide with the Bank of England’s Sonia rate for sterling-denominated swaps, loans, and futures.
Instead of interbank offered rates, the FCA notes that overnight SONIA is now fully embedded across FX markets. Successful CCP conversion processes saw some of the largest single day amendments to financial contracts, with in excess of £13 trillion LIBOR-referencing contracts converted to SONIA.
This shift is expected to boost liquidity in these products, which aided relevant providers in achieving the Working Group’s key milestone of ceasing LIBOR-linked derivatives.
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Read more: Finance Feeds
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Digital Assets
Analysis: How the Fed’s rate policy spurred crypto adoption in Africa
Increases in U.S. interest rates are historically considered to generate adverse spillovers to emerging market economies (EMEs), including those in Africa. However, whether these rate hikes are detrimental depends on their underlying causes.
Higher rates resulting from stronger U.S. growth generate only modest spillovers to African financial markets. In contrast, rate hikes stemming from hawkish Federal Reserve policy or inflationary pressures are much more disruptive, often leading to capital outflows and currency depreciation.
African currencies have struggled against the U.S. dollar over the last two years, and they are unlikely to see recoveries soon as long as the Federal Reserve continues to delay cutting interest rates. This sustained pressure has driven many Africans to seek refuge in cryptocurrencies, which are perceived as less susceptible to the Fed’s monetary policy changes.
According to Chainalysis, Africa received $117.1 billion in on-chain crypto transactions between July 2022 and June 2023. Although it has consistently been one of the smallest cryptocurrency markets, a closer analysis reveals that crypto has penetrated key markets and become an important part of many residents’ day-to-day lives. The Fed’s higher interest rates have indirectly contributed to this trend by exacerbating economic conditions in these countries, prompting people to seek financial alternatives.
That said, experts on the ground also observed that crypto fans in Africa have shifted their focus from Bitcoin to stablecoins due to their lower price volatility compared to the original cryptocurrency.
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Read more: Finance Feeds
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Trade finance to play major role in $30 trillion tokenised assets market
Demand for tokenised real-world assets could reach $30.1 trillion by 2034, with trade finance assets making up a significant part of the market, predicts a paper from Standard Chartered and Synpulse.
Currently, the tokenised assets sector is mainly made up of traditional assets like US treasuries and money market funds. However, the supply side is still in its infancy, with the total value of tokenised assets (excluding stablecoins) standing at just $5 billion in early 2024.
However, the paper argues that growing industry digitisation and the specific features of real-world trade finance assets, make it an ideal category to originate tokens.
Currently, trade finance assets are underinvested due to lack of familiarity, pricing inconsistency and operational intensity. Tokenisation has the potential to address these challenges, whilst also reducing information asymmetry and offering transparency to investors.
By 2034, trade finance assets could become one of the top three tokenised assets globally, at 16% of the $30.1 trillion total, predict the authors.
Kai Fehr, global head, trade, Standard Chartered, says: “We see the next three years as a critical junction for tokenisation, with trade finance assets coming to the fore as a new asset class.
“To unlock this trillion-dollar opportunity, industry-wide collaboration among all stakeholders, from investors and financial institutions to governments and regulators is critical. Banks need to increasingly take on the role of bridging the existing traditional financial markets with a newer and more open token-enabled market infrastructure.”
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Read more: FinExtra
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Techcombank launches AI-powered banking
Techcombank launched AI-powered banking at the Techcombank Keynote event in Hanoi on Friday, aiming to become a leading bank in Vietnam with innovative digital solutions.
Techcombank’s first Keynote event, titled “Pioneering Innovation: Reaching for New Heights,” showcased the bank’s most innovative new solutions for individual, business, and corporate customers and highlighted how it is harnessing the power of data and AI to create meaningful experiences for customers and deliver unprecedented growth for Techcombank.
Kicking off the event, CEO Jens Lottner highlighted the investment made by Techcombank over the first three years of its 2021–2025 transformation plan to create a number of first-in-the-market innovations.
Techcombank has applied data analysis and AI across the bank, and most major systems have been transitioned to the cloud.
This puts it around three years ahead of its competitors in Vietnam and is enabling the bank to harness the power of data and AI in order to drive unique business outcomes.
Lottner said that this year the bank has accelerated its drive towards leveraging digital platforms, new data, and AI capabilities, creating more hyper-personalized experiences for customers.
“We are now redefining banking in Vietnam with our product innovations and personalized experiences,” said Lottner.
Its new loyalty ecosystem offers rewards and experiences tailored to individual customers’s preferences and lifestyles.
It is already one of the largest and most diverse loyalty programs in the Vietnamese banking industry, encompassing over 19,000 points of sale with over 300 brands where customers can earn reward points.
“With the strong support of our partners and shareholders, we have built one of the best banking platforms in Asia. We are now ready to go to the next level, to compete and win over customers to realize our vision, Change Banking, Change Lives,” Abraham said.
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Read more: Vietnam Express
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China-Serbia FTA to take effect on July 1, further facilitates bilateral exchanges
The free trade agreement (FTA) between China and Serbia will officially take effect on July 1, 2024, as the two sides will gradually eliminate tariffs on 90 percent of products in the tariff lines. Tariffs for more than 60 percent of products will be suspended immediately on the same day, China’s Ministry of Commerce (MOFCOM) said on Friday in a statement.
The FTA was signed on October 17, 2023, and both countries have completed the respective approval procedures.
The final proportion of zero-tariff imports on both sides will reach about 95 percent, covering major trade commodities. The import tariffs on the Serbian side will be gradually reduced to zero from the current 5 to 20 percent for Chinese products such as automobiles, photovoltaic modules, lithium batteries, telecommunication equipment, machinery and equipment, refractory materials and some agricultural and aquatic products, according to a separate MOFOCM statement on Friday, citing an official.
China will also reduce the 5-20 percent tariffs to zero for major Serbian imports, including generators, electric motors, tires, beef, wine, nuts and other products.
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Read more: Global Times
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Newshound’s Podcast June 28, 2024 on XRP and Ripple
Audio below
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