Payment Expert’s Blockchain Bulletin analyses how the world of blockchain is constantly evolving and having a major impact on the payment industry, with cryptocurrencies, NFTs and the metaverse revolutionising the space.
This week, Michele Tucci of Credolab shared his insight into the risk mitigation ‘missing link’ cryptocurrency lenders should be aware of and what more they can learn from fiat currency counterparts.
‘Crypto lenders have to mitigate counterparty risk, and potential fraud’
As crypto regulatory calls intensify after a whirlwind 2022 for the sector, security is at the forefront of thoughts for policymakers and investors.
Michele Tucci, Chief Strategy Officer and Managing Director, Americas, at Credolab, wrote for Payment Expert imploring crypto lenders to ramp up their risk management and mitigation measures to ensure that protection and security is to the level of fiat currency-based measures.
Tucci shared: “The advances in risk mitigation being achieved (in crypto) using analytics by conventional banks and credit card issuers has not fully filtered through here. It’s a puzzle, as crypto lenders have an even greater incentive to address risk, as blockchain-based currencies are well-known for their volatile nature.
“Things are starting to change. We are working with crypto lenders who are keen to learn lessons about risk mitigation using behavioural analytics. But there is still a wide gulf.”
Democrat rep ‘deeply concerned’ over PayPal’s stablecoin
PayPal’s launch of its PYUSD stablecoin has been touted as a landmark moment for the cryptocurrency space. However, Democratic lead on the House Financial Service Committee, Maxine Waters is ‘deeply concerned’ over its potential.
Waters stated that because of the chaotic nature of the US’ current crypto regulatory landscape, combined with the recent turbulence of the sector, believes this may not lead to greater consumer protection.
PYUSD is 1:1 pegged to the US dollar. Like most stablecoins, it is pegged to a fiat currency in order to maintain its stability and avoid any collapses in valuation.
The Payment Expert team joined the SBC iGaming Daily Podcast to discuss PYUSD, Waters’ concerns and the crypto regulatory landscape as a whole.
Singapore braces for wider stablecoin adoption
In other stablecoin news, Singapore has announced a regulatory framework that would ensure that stablecoins in the country can flourish under correct guidance.
The Monetary Authority of Singapore (MAS) listed several key requirements for issuers to abide by – disclosure and value stability included – as the country looks to digitally transform its financial service capabilities.
Deputy Managing Director, Ho Hern Shin, stated: “MAS’ stablecoin regulatory framework aims to facilitate the use of stablecoins as a credit digital medium of exchange, and as a bridge between the fiat and digital asset ecosystems.
Coinbase doubles down on the potential of the Canadian market
Whilst its position in the US continues to be a battle, Coinbase has been accelerating its foothold in Canada having launched in the country this month.
The crypto exchange has wasted no time in developing the country’s crypto ecosystem, partnering with payment service Trustly to provide account-to-account deposit and withdrawal capabilities, powered by Open Banking.
Additionally, Coinbase joined forces with the Peoples Trust Company to enable Interac e-Transfers to become accessible to Canadian investors who seek secure transactions.
SBF bail revoked and sent back to prison as he awaits trial
Former FTX CEO Sam Bankman-Fried has been sent back to jail as he awaits trial on multiple counts of fraud and wire fraud in October.
The disgraced founder was allegedly reaching out to witnesses set to testify against him in an effort to sway their decision, with Judge Lewis Kaplan giving the final order to place him in jail last Friday despite Bankman-Fried denying any claims.
Some of the details provided by prosecutors revealed that Bankman-Fried was involved in around 1,000 press phone calls in recent months despite being barred by Judge Kaplan from speaking publicly about the case as this may influence public opinion and hence interfere with the trial.
Canada taking cautious approach to CBDCs reveals recent paper
Despite embracing the crypto sector Canada is taking a more cautious approach when it comes to Central Bank Digital Currencies (CBDCs).
A Bank of Canada paper exploring the potential impact of CBDCs on the payment ecosystem has highlighted that there would need to be widespread engagement with the digital currency for its benefits to reach the whole economy.
The all-encompassing paper shone a light on the importance of financial inclusion, something it claimed would still be addressed in a cashless environment.