Forex

DeFi could solve Africa’s foreign exchange problems, neobank CEO says

The CEO and co-founder of neobank Canza Finance claims that utilizing Baki for foreign exchange trades in Africa creates a hub for African businesses to participate in intra-African and FX trades at a reduced cost.

Forex liquidity and currency swaps are hard to access for many in Africa, which limits the use of United States dollar-based services in the continent’s import-dependent economies. This creates a vacuum that decentralized finance (DeFi) could solve, leveraging cryptocurrencies, blockchain networks and services, according to the CEO of Canza Finance, Pascal Ntsama IV.

Speaking with Cointelegraph, the CEO and co-founder of Canza Finance — a neobank enabling decentralized cross-border payments for Africans — said that Canza’s new DeFi technology, Baki, aims to address this challenge by providing decentralized foreign exchange (FX) for African currencies, enabling slippage-free swaps at central bank rates.

When exchanging local African fiat currencies, funds exit Africa, causing inflation in the dollar value and increased costs due to currency slippages.

DeFi in Africa is projected to show an annual growth rate of 21.99% and reach over half a million users by 2027.

In response to whether Baki’s services would work in countries like Nigeria, where blockchain technology has yet to be broadly adopted even after approval, Ntsama said Baki is built to work with the current regulatory climate as it leverages existing user behaviors to tackle problems with blockchain technology.

T. Rowe Price, WisdomTree join Avalanche subnet for forex testing

If initial tests are successful, the firms will expand their activities into tokenized credit issuance and equities.

Financial market firms T. Rowe Price Associates, WisdomTree, Wellington Management, and Cumberland have joined an Avalanche (AVAX) subnet to test the idea of blockchain-based foreign exchange, according to an announcement from the Avalanche team. The new subnet is called “Spruce,” and is part of Avalanche’s Evergreen Subnet ecosystem.

Following last week’s Avalanche Evergreen announcement, today marks the launch of the Spruce Subnet!

Institutional partners including @TRowePrice, @WisdomTreeFunds, @Wellington_Mgmt & @CumberlandSays will use Spruce to test public blockchain applications. https://t.co/1KLzxcUCSB pic.twitter.com/xvaUmKO3BV

— Avalanche (@Avax) April 12, 2023

According to the announcement, institutions will initially use “valueless tokens” on Spruce to ensure they can conduct foreign exchange, or forex, transactions without losing capital. Interest-rate swaps will also be tested early on. Over the long run, successful tests will allow these firms to experiment with further attempts at blockchain settlement, including “the exploration of tokenized equity and credit issuance, trading, and fund management.”

The announcement said that Spruce offers compliance features to help keep institutions within the parameters of the law. Firms that want to use it must first pass Know Your Customer (KYC) verifications, and once they complete this process, they receive non-transferable tokens, or NTTs, identifying them on the network. Their wallet addresses are also whitelisted “at the chain level” after verification.

Will Peck, head of digital assets at WisdomTree, said that he believes Spruce will be an important step in bringing greater efficiency to traditional financial transactions:

“We believe tokenization and blockchain will play an important role in financial services going forward. Avalanche Spruce provides an opportunity to further explore the potential efficiencies and benefits of on-chain trading and settlement with other financial institutions. We are looking forward to experimenting in this EVM-based testing environment.”

On April 6, Avalanche announced the launch of the “Evergreen” subnet protocol, which allows institutions to create customized blockchains with compliance features. At the time, a representative from Ava Labs said these subnets were needed because previous solutions, such as Corda and Hyperledger, were not interoperable enough for the needs of large institutions.

Spruce is one of two Avalanche Evergreen subnets launched since the protocol was released and listed on the Avalanche website. Intain, an Evergreen subnet focused on structured finance, is the other.

A January joint study from Uniswap and Circle argued that the cost of forex could be reduced by as much as 80% by putting transactions on a blockchain network. Experts such as Ralf Kubli of the Casper Foundation have argued that tokenization may help to prevent a future financial crisis.

French regulator AMF blacklists only two crypto websites in the whole year

The AMF and ACPR have blacklisted only two crypto-related websites amid the bear market of 2022 versus 24 such websites last year.

Financial regulators in France continue flagging illicit players on the foreign exchange (forex) and cryptocurrency markets, blacklisting a fresh batch of related websites.

The French stock markets regulator, the Autorité des Marchés Financiers (AMF), and the Prudential Supervision and Resolution Authority (ACPR), on Dec. 21, updated a blacklist of websites identified as unauthorized investments in forex and crypto assets.

Out of the 15 newly-blacklisted websites, only two sites imply a direct connection with crypto in their name. These websites include 24cryptoforextrading.net and cryptoneyx.io.

According to the announcement, the AMF and ACPR have flagged significantly fewer crypto-related websites year-over-year. In 2022, the authorities blacklisted a total of two websites in the crypto derivatives category, down 92% from 24 sites last year.

In contrast, the regulators added a total of 49 names to the list of sites that are not authorized to offer forex investments vs 61 of such websites in 2021.

The AMF and ACPR urged investors to be careful and ensure that intermediaries offering financial products or services are authorized to operate in France. The regulators noted that investors should consult with the official register of authorized investment service providers and the list of authorized intermediaries in the financial investment adviser or crowdfunding categories.

A significant decrease in the amount of crypto-related websites flagged by the AMF in 2022 may apparently be attributed to the ongoing cryptocurrency winter. Since 2021, the cryptocurrency market has shrunk more than 70% since November 2021, causing massive losses for crypto investors.

The AMF press office did not immediately respond to Cointelegraph’s request for comment.

As previously reported, the French government is known for its friendly stance on the digital asset industry, issuing multiple approvals to major global cryptocurrency firms. In May, the AMF issued registration to major global crypto exchange Binance, officially allowing the firm to provide crypto-related services in France.

DeFi protocol raises $10M from Bitfinex, Ava Labs despite turbulent market

The prolonged market volatility has not stopped investors from backing a new protocol that merges DeFi and the foreign exchange market.

The ongoing crypto bear market has proven itself to be a builders market as investments continue to find projects with promise.

Onomy, a Cosmos blockchain-based ecosystem, just secured millions from investors for the development of its new protocol. The project merges decentralized finance (DeFi) and the foreign exchange market to bring the latter on-chain.

According to the developers, the latest funding round garnered $10 million from big industry players such as Bitfinex, Ava Labs, the Maker Foundation and CMS Holdings among others.

Lalo Bazzi, co-founder of Onomy, said the underlying goal of building a decentralized autonomous organization with a public infrastructure should serve the “core tenant of crypto — self-custody — without sacrificing on the user experience.”

Both DeFi and self-custody have been hot topics in the crypto community due to the FTX liquidity-bankruptcy scandal. Some experts have said that one of the major lessons to take away from the situation is the value of DeFi platforms compared to centralized gatekeepers.

Forecasts for the near future of the industry have shown a mixture of another tough year while still holding investors’ interest.

According to a Coinbase-sponsored survey that was conducted between Sept. 21 and Oct. 27, institutional investors are still keen on the space. It revealed that 62% of surveyed institutional investors with crypto investments increased their positions in the past year.

On Nov. 9, just days into the FTX scandal, Cathie Wood of ARK Investment added an additional $12.1 million to the company’s existing shares in Coinbase. Additionally, banks continue to show interest in the industry, with JP Morgan using DeFi for cross-border transactions and BNY Mellon launching its own Digital Asset Custody Platform.

Still, some research predicts a continuation of tough conditions for the blockchain industry, which have the potential to last into the upcoming year.

Singapore bank DBS uses DeFi to trade FX and state securities

Major Asian financial institution DBS Bank has applied DeFi technology for a project backed by the Monetary Authority of Singapore.

DBS Bank, a major financial services group in Asia, is applying decentralized finance (DeFi) for a project backed by Singapore’s central bank.

DBS has started a trading test of foreign exchange (FX) and government securities using permissioned, or private, DeFi liquidity pools, the firm announced on Nov. 2.

The development is part of Project Guardian, a collaborative cross-industry effort pioneered by the Monetary Authority of Singapore (MAS). Conducted on a public blockchain, the trade included the purchase and sale of tokenized Singapore government securities (SGS), the Singapore dollar (SGD), Japanese government bonds and the Japanese yen (JPY).

A spokesperson for DBS told Cointelegraph that Project Guardian was performed on the Polygon mainnet using a fork of Uniswap v2 protocol. The representative also pointed the two key implementations that need to occur to move a step closer to an institutional-grade DeFi protocol, including verifiable credentials and price oracles.

The project has shown that trading on a private DeFi protocol enables simultaneous operations of instant trading, settlement, clearing and custody. The initiative could potentially transform the existing trading processes by providing better liquidity across multiple financial assets and markets, DBS said.

According to DBS’ head of strategy Han Kwee Juan, the latest Project Guardian developments lay the foundations for building global institutional liquidity pools enabling faster trading, greater transparency, lower settlement risks and other benefits. Han noted that smart contracts show a lot of promise for trading execution and verification, stating:

“Smart contracts will reshape how execution can be achieved in a highly trusted manner, especially if it takes place in a permissioned market where all anonymous wallets are verified by trust anchors such as Know Your Customer processes.”

Han also pointed out that a highly liquid market attracts more investors and adds efficiency by bypassing intermediaries. “Currently, FX and government securities are primarily transacted in the over-the-counter markets involving multiple intermediaries resulting in friction in the settlement process,” he added.

DBS Bank made a massive move into the crypto industry in recent years, launching an institutional cryptocurrency exchange in December 2020. The company has also been working to expand its crypto trading platform to retail investors.

The latest milestone in Project Guardian is yet another example of the growing trend involving a combination of DeFi technology with centralized finance tools. According to Swiss central bank official Thomas Moser, DeFi can work well with central bank digital currencies, complementing each other in terms of stability and liquidity.

New York-based forex broker Oanda launches crypto trading services in US

The broker’s partnership with Paxos will enable U.S.-based investors to spot-trade cryptocurrencies on Paxos’ itBit exchange through Oanda’s mobile platform.

New York-based multi-asset trading services Oanda has launched a new cryptocurrency trading service in the United States. This latest addition, developed in partnership with regulated blockchain infrastructure provider Paxos Trust Company, is designed to give investors easy access to crypto alongside their existing forex portfolios in a secure environment.

The collaboration will enable U.S.-based investors to spot-trade cryptocurrencies on Paxos’s itBit exchange through Oanda’s mobile platform, the broker said. Investors will be able open and fund trading accounts, as well as access major cryptocurrencies such as Bitcoin (BTC) and Ether (ETH). According to Oanda, users will benefit from the company’s long track record in the forex and derivatives markets.

Oanda’s partner Paxos is a regulated blockchain infrastructure provider that uses technology to tokenize, trade and settle assets. Paxos builds enterprise blockchain solutions for companies like PayPal, Interactive Brokers, Meta, Mastercard, MercadoLibre, Nubank, Bank of America, Credit Suisse and Societe Generale .

Gavin Bambury, the chief executive officer of Oanda, said the partnership with Paxos gives his firm a regulated partner in which to grow its crypto offerings.

Oanda executive Jessica Bestead said the decision to offer crypto trading services was “in response to the needs of active traders,” a sign that more market participants were looking to gain exposure to digital assets.

Founded in 1996, Oanda claims to be the first company to share exchange rate data free of charge on the internet, launching a forex trading platform that helped to pioneer the development of web-based currency trading five years later.

In recent years, platforms offering foreign exchange trading and other traditional assets have broadened their services to include crypto. As reported by Cointelegraph, major U.S. trading platform Interactive Brokers entered the crypto market in mid-2021 to capitalize on the growing demand. Former forex brokers from Jeffries Financial Group also launched a new crypto exchange for institutional investors.

A16z-backed CoinSwitch exchange raided over alleged forex law breaches

The Andreessen Horowitz-backed crypto exchange is the latest on the Enforcement Directorate’s anti-money laundering hit list.

Major Indian crypto exchange CoinSwitch Kuber had five of its premises searched by Anti-Money Laundering agents on Thursday over alleged violations of forex laws.

According to a Thursday report from Bloomberg, India’s Enforcement Directorate searched CoinSwitch Kuber’s offices as well as the residences of its directors and CEO Ashish Singhal.

A source told the publication the crypto exchange is under suspicion of acquiring shares worth more than $250 million in contravention of forex laws, as well as being non-compliant with certain Know Your Customer (KYC) requirements.

The Directorate of Enforcement is a federal enforcement and intelligence agency operating under the Ministry of Finance. According to its website, the agency’s primary objective is the enforcement of acts including the Foreign Exchange Management Act and the Prevention of Money Laundering Act.

CoinSwitch Kuber said in a statement: “We receive queries from various government agencies. Our approach has always been that of transparency:”

“Crypto is an early stage industry with a lot of potential and we continuously engage with all stakeholders.”

Launched in India in 2020, CoinSwitch Kuber is one of the largest crypto exchanges in India, alongside WazirX and CoinDCX, with over 18 million registered users.

CoinSwitch Kuber reached unicorn status last year after raising $260 million in a Series C funding round led by Coinbase venture capital arm Coinbase Ventures and Andreessen Horowitz. The company is also backed by Sequoia, Paradigm, Ribbit and Tiger Global.

The actions follow a continued clampdown on the cryptocurrency space in India.

Earlier this month, Enforcement Directorate froze roughly $8.1 million in funds from crypto exchange WazirX, alleging that the crypto exchange facilitated transactions by unnamed fintech firms “to purchase crypto assets and then launder them abroad.”

This year has also seen the government introduce two new laws demanding crippling taxes on crypto-related unrealized gains and transactions.

In a recent survey conducted with 2042 Indian cryptocurrency investors by crypto exchange KuCoin, 33% of survey respondents noted they were concerned by ambiguous government regulations that could deter potential investors from crypto.

CFTC labels 34 crypto and forex firms as unregistered foreign entities

“Customers engaged in transactions with these entities may not receive the benefit of the customer protections, safeguards, and guardrails,” said CFTC commissioner Kristin Johnson.

The United States Commodity Futures Trading Commission, or CFTC, has added 34 unregistered foreign entities to its Registration Deficient List, including at least six providing crypto-related services.

In a Thursday announcement, the CFTC said it had expanded its list of firms that it requires to register with the CFTC for providing services including trading binary options, foreign currency or other products such as cryptocurrencies. The additions to the Registration Deficient List, or RED list, include B.O TradeFinancials, CryptoBO, Bitpay Options, CryptoSphereFX, Direct Cryptos and Prime Crypto FX.

Since 2015, the CFTC has placed 202 companies on the RED List, warning U.S.-based investors to be cautious “when participating in products or markets that historically have seen a large number of fraud complaints.” Some of the websites linked to the crypto firms added on Thursday were not live at the time of publication.

“Because they are not registered with the CFTC, customers engaged in transactions with these entities may not receive the benefit of the customer protections, safeguards and guardrails long-adopted and deeply embedded in the CFTC’s oversight of the markets,” said CFTC commissioner Kristin Johnson. “Transacting with unregistered entities, particularly those operating without such oversight and beyond our borders, may expose U.S. customers to significant and concerning risks.”

NEWS: The RED List provides information to U.S. customers about unregistered foreign entities acting in a capacity that requires registration with the CFTC. Thirty-four new entities were added to the list today. Learn more at https://t.co/gMw4UGxfyp.

— CFTC (@CFTC) July 14, 2022

Along with the Securities and Exchange Commission, the CFTC is one of the few U.S. government departments with the authority to bring enforcement actions in cases involving crypto firms. However, due to the lack of a clear framework for digital assets, many industry experts have voiced concerns about the patchwork nature of regulations needed to operate in the United States. In June, lawmakers introduced a bill aimed at addressing how the SEC and CFTC could handle different responsibilities in the digital asset space.