Payments

Circle exec to join US Congressional committee hearing on stablecoin payments, legislation

The Financial Services Committee issued a memorandum to announce an upcoming hearing titled “Understanding Stablecoins’ Role in Payments and the Need for Legislation.”

The United States House Committee on Financial Services will hold a hearing on April 19 to discuss stablecoins’ position as a means of payment and whether the ecosystem needs supporting legislation.

The committee issued a memorandum to announce an upcoming hearing titled: “Understanding Stablecoins’ Role in Payments and the Need for Legislation.” The hearing will include information collected by various federal government agencies over the last year.

List of individuals testifying at the upcoming House Financial Services Committee hearing. Source: house.gov

Participants testifying at the hearing include Circle’s chief strategy officer and head of global policy, Dante Disparte. Last month, on March 11, Circle’s in-house stablecoin offering, USD Coin (USDC), depegged from the U.S. dollar after it revealed it had $3.3 billion of funds stuck at the collapsed Silicon Valley Bank (SVB).

However, following a bailout of SVB depositors by the U.S. government, USDC repegged its value to the U.S. dollar. During this timeline, hackers managed to gain access to Disparte’s Twitter account and started promoting fake loyalty rewards to long-time users of USDC.

The upcoming committee hearing will focus on various stablecoins and their use in the payments landscape. Moreover, the committee will explore the need for stablecoin legislation depending on their underlying collateral structures.

Related: Circle and BlockFi questioned on banking with SVB by Warren and AOC

Just days before the upcoming hearing, a draft bill providing a framework for stablecoins in the United States was published in the House of Representatives document repository.

Draft of the bill, including stablecoin regulations. Source: docs.house.gov

Speaking about the draft bill, Circle’s CEO Jeremy Allaire said, “There is clearly the need for deep, bi-partisan support for laws that ensure that digital dollars on the internet are safely issued, backed and operated.“

As Cointelegraph reported, the draft further allows the U.S. government to establish standards for interoperability between stablecoins.

Magazine: Bitcoin in Senegal: Why is this African country using BTC?

Crypto could eliminate 97% of traditional remittance fees: Coinbase

United States consumers sending international bank transfers pay more than $12 billion annually in remittance fees alone.

A recent blog post from cryptocurrency exchange Coinbase indicates the vast majority of United States remittance fees for international transfers wouldn’t apply to similar transactions conducted using cryptocurrency. 

According to the exchange’s research, “The US average fee rate of 6.18%, means Americans’ average yearly spend is likely close to $12 billion on remittance fees.” The post goes on to state that the average transaction time for such remittances ranges from one to 10 days, while similar cryptocurrency transactions usually take around 10 minutes.

Remittance payments represent a sort of “double whammy” for international transactions as, typically, they require both a sending fee and a conversion fee to exchange between currencies.

Cryptocurrency transactions, however, tend to cost significantly less. According to Coinbase, Bitcoin (BTC) transaction fees average approximately $1.50 and Ether (ETH) averages $0.75. Such fees are potentially much lower than traditional remittance fees, which, according to 6he World Bank, average 6.3%. By Coinbase’s estimates, sending money via BTC and ETH is 96.7% cheaper than traditional remittance methods. 

While the report doesn’t appear to have the rigor of a scientific study, it does illuminate some of the difficulties faced by the more than 1 billion people who rely on remittances and how global cryptocurrency adoption could change the financial landscape. U.S. senders, for example, were responsible for 94.9% of all remittances sent to Mexico in 2022, according to Wilson Center, a D.C.-based research institute.

Related: 9 years after the first Bitcoin ATM, there are now 38,804 globally

It’s estimated that approximately 6% of U.S. adults currently hold some form of cryptocurrency with adoption rates continuing to rise since at least 2019 — with the exception of two quarters’ worth of downturn at the end of 2022. If these rates can increase or maintain the status quo, a trickling exodus from traditional remittances to cryptocurrency-based international transactions could eventually disrupt how the global financial industry handles associated fees.

Who paid for Twitter Blue verification? Here’s how to find out

Under the direction of Elon Musk, Twitter rolled out the “Twitter Blue” subscription to discourage spam bots and fake accounts on the platform.

With Twitter allowing users to verify their accounts for a monthly fee, the number of accounts with a blue checkmark — previously associated with prominent figures — has flooded the social media platform. A browser extension available for Chrome, Firefox and Safari aims to bring back the balance by revealing the accounts that have paid $8 for subscribing to Twitter Blue.

Under the direction of Elon Musk, Twitter rolled out the “Twitter Blue” subscription to discourage spam bots and fake accounts on the platform. However, when the service was initially launched in November 2022, trolls took it as an opportunity to verify parody accounts and propagate fake information.

While a subsequent Know Your Customer requirement stifled the account verification of suspicious accounts, the number of verified accounts on Twitter skyrocketed, reintroducing user doubt. A browser extension named “Eight Dollars” allows users to spot the difference between actual verified accounts and Twitter Blue users.

The extension shows how each account gained its verification badge. For users that paid for the Twitter Blue subscription, the extension will display a “paid” text right next to the blue checkmark. For the rest, it will simply show “verified.“

The Eight Dollars extension shows a fake verified account impersonating Elon Musk. Source: Eight Dollars 

The above screenshot shows an example of how an account parodying Elon Musk paid for verification. As a result, the extension helps identify scam accounts.

Public reviews of people using the Eight Dollars extension. Source: chrome.google.com

Moreover, Twitter users supported the software extension as it effectively reinstates transparency across the social media platform, as evidenced by the screenshot of the reviews above.

Related: ‘CryptoGPT’ Twitter accounts spring up as hashtag trends on Twitter

Meanwhile, Musk, and more than 2,600 tech industry leaders and researchers signed an open letter calling for a halt to artificial intelligence development.

The letter split opinions, with many notable entrepreneurs opposing it.

Coinbase CEO Brian Armstrong believes that every technology poses a certain amount of danger, and the goal should be to keep moving forward.

Magazine: Simon Dixon on bankruptcies, Celsius and Elon Musk: Crypto Twitter Hall of Flame

BUSD deposits and withdrawals via OCBS suspended on Binance.US

Binance.US said it temporarily disabled the One Common Billing System and BUSD stablecoin pairs after halting Apple Pay and Google Pay deposits.

Amid the ongoing uncertainty around the global banking turmoil, Binance’s United States-based arm Binance.US is halting some services.

According to the Binance.US status dashboard, on March 31, the U.S. crypto exchange disabled Binance USD (BUSD) stablecoin pairs via the One Common Billing System, referred to as OCBS.

The affected services include BUSD crypto deposits and withdrawals or buying, selling and converting crypto options, the status notice says.

Binance.US said that the firm is currently investigating the issue, noting that the services are “suspended temporarily.”

Binance.US status dashboard. Source: Binance.US 

The OCBS and BUSD issues on Binance.US came shortly after the firm halted certain U.S. dollar deposit services on March 30. According to the dashboard, Binance.US temporarily suspended Apple Pay and Google Pay deposits due to the company “transitioning to new banking and payment service providers over the next several weeks.”

For up to 5% of Binance.US customers, the platform has also halted debit card deposits starting from March 30, 2023. “We are working to restore all services as soon as possible,” Binance.US stated.

Related: Kraken to suspend Plaid withdrawals and deposits via ACH Silvergate

The news comes amid Binance.US’ global affiliate, Binance, facing legal action from the U.S. Commodity Futures Trading Commission (CFTC). On March 27, the CFTC filed a suit against Binance and its CEO Changpeng “CZ” Zhao for alleged trading violations, arguing that the exchange failed to meet compliance obligations by not registering with the regulator.

Launched in September 2019 and headquartered in California, Binance.US operates as a separate entity from Binance, which is unavailable to U.S. users due to local regulations.

Catherine Coley, the first CEO of Binance.US, reportedly enlisted a former federal prosecutor and top cop at the CFTC to represent her in the U.S. government’s investigations into Binance.US. After leaving Binance.US in June 2021, Coley has remained silent about her whereabouts in media, and hasn’t posted anything on her Twitter.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Hindenburg Research reports Block short position, claiming fraud facilitation and inflated metrics

“Block has wildly overstated its genuine user counts and has understated its customer acquisition costs,” says the report.

A report following a two-year investigation from Hindenburg Research claims digital payments company Block has “systematically taken advantage of the demographics it claims to be helping,” alleging the firm inflated its user metrics and facilitated fraud.

In the March 23 report, Hindenburg Research says Block’s practices allowed users to set up fraudulent accounts, catering to many criminals who used the platform to steal funds. The report suggests that Block insiders — including co-founders Jack Dorsey and James McKelvey, chief financial officer Amrita Ahuja and Cash App manager Brian Grassadonia — had sold more than $1 billion of the firm’s stock, whose price rose “on the back of its facilitation of fraud.”

“The ‘magic’ behind Block’s business has not been disruptive innovation, but rather the company’s willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics,” said Hindenburg. “Even when users were caught engaging in fraud or other prohibited activity, Block blacklisted the account without banning the user.”

The report cited a shift in Block’s business starting during the early days of the pandemic in 2020, when many people activated Cash App accounts to receive stimulus and unemployment payments from the United States government. Interviews with former employees by Hindenburg suggested that roughly 40% to 75% of reviewed accounts were fake, involved in fraud, or tied to a single individual.

“Like traditional financial services companies, [Block’s] key focus seems to be on dressing up predatory loans and fees as revolutionary products, avoiding regulation and embracing worst-of-breed compliance policies in order to profit from its facilitation of fraud against consumers and the government,” said Hindenburg. “The company seems to be betting that the consequences will either be a ‘cost of doing business’ or at the very least, come later.”

Related: Jack Dorsey’s Block sues Bitcoin​.com for trademark infringement

In a blog post responding to Hindenburg, Block called the report “factually inaccurate and misleading,” adding it planned to explore legal action.

“Hindenburg is known for these types of attacks, which are designed solely to allow short sellers to profit from a declined stock price,” said Block. “We have reviewed the full report in the context of our own data and believe it’s designed to deceive and confuse investors.”

Hindenburg announced it had taken a short position in Block. At the time of publication, the price of Block’s stock has dropped more than 13% in the last 24 hours to $63.38.

Magazine: Fake employees and social attacks: Crypto recruiting is a minefield

Update (March 23 at 6:17 PM UTC): This article has been updated to include a response from Block.

Coinbase pauses support for Signature Bank’s Signet: Report

The U.S. crypto exchange was reportedly looking for another payment network provider and waiting on the outcome of the situation with Signature.

More than a week after New York regulators closed the crypto-friendly Signature Bank, Coinbase has reportedly stopped support for the institution’s Signet payment platform.

According to a March 20 report from The Wall Street Journal, Coinbase users won’t be able to use Signet to send funds outside of banking hours until further notice. The crypto exchange was reportedly looking for another payment network provider and waiting on the outcome of the situation with Signature.

The crypto-friendly bank was the third domino to fall following the failure of Silvergate Bank on March 8 and Silicon Valley Bank on March 10. Though financial regulators claimed they stepped in to “protect the U.S. economy by strengthening public confidence in our banking system,” reports have suggested that Signature had no issues with solvency at the time of its closure on March 12.

The U.S. Federal Deposit Insurance Corporation announced that the bank’s deposits and loans — with the exception of roughly $4 billion in crypto deposits — would be sold to New York Community Bancorp’s Flagstar Bank. The government corporation said it planned to provide crypto deposits “directly to customers” with a digital banking account.

Coinbase, Celsius and Paxos all had funds tied to Signature at the time of the bank’s closure. Coinbase said it expected $240 million in corporate assets to be “fully recovered,” Paxos reported $250 million held at the bank, and Celsius announced some exposure but not the exact amount.

Related: Did FDIC ask Signature buyers to stop all crypto business?

The United State House Financial Services Committee will be conducting a hearing to explore the failures of Silicon Valley Bank and Signature Bank on March 29. FDIC chair Martin Gruenberg and Fed Vice Chair for Supervision Michael Barr are expected to testify.

Australian Banking Association’s cost of living inquiry reveals bank pressure

An analysis of the rising inflation and concurrent collapse of Silicon Valley Bank proved that more than 186 banks in the U.S. are at risk of a similar shutdown if depositors decide to withdraw all funds.

The trade association for the Australian banking industry — the Australian Banking Association (ABA) — launched a cost of living inquiry to closely study the impact of the COVID-19 pandemic, global supply chain constraints, geopolitical tensions and more on Australians.

An analysis of the rising inflation and concurrent collapse of three major traditional banks — Silicon Valley Bank (SVB), Silvergate Bank and Signature Bank — recently proved that more than 186 banks in the U.S. are at risk of a similar shutdown if depositors decide to withdraw all funds. The ABA’s inquiry aims to identify ways to ease the cost of living in Australia and the Government’s fiscal policy response.

Consumer price index, percentage change from corresponding quarter in previous year, December 2012 – December 2022. Source: ausbanking.org.au

ABA acknowledged that many Australians would struggle to adjust to a higher cost of living, while it may be easier for some, adding that:

“The ABA notes most customers will manage the higher cost of living and their mortgage commitments by changing their spending patterns, applying their accumulated savings to their higher repayments in anticipation of higher borrowing rates, or refinancing their mortgage.”

One of the most significant pressures for banks was when citizens rolled over from a fixed-rate mortgage to a variable rate. However, ABA urged customers to be proactive and ensure they are getting the best deal for their banking services.

Household savings ratio, December 2014 to December 2022. Source: ausbanking.org.au

Property rent across Australia has also witnessed a steady increase as markets normalized following the end of COVID-19 restrictions. Citizens experiencing financial difficulty can contact their banks and get help, including fees and charges waivers, emergency credit limit increases and deferral of scheduled loan repayments, to name a few.

Related: National Australia Bank makes first-ever cross-border stablecoin transaction

Alongside this attempt to cushion Australians against rising fiat inflation, the Reserve Bank of Australia and the Department of the Treasury have been holding private meetings with executives from Coinbase, with discussions revolving around the future of crypto regulation in Australia.

Cointelegraph confirmed from an RBA spokesperson that Coinbase met with the RBA’s payments policy and financial stability departments in mid-March “as part of the Bank’s ongoing liaison with industry.”

Blockchain is the answer to Russia’s settlement issues, banking exec says

There is no technical reason preventing Russia from creating its own blockchain-based system, blockchain provider Fuse Network’s CEO believes.

The adoption of blockchain is the right direction for Russia to solve its current settlement issues, according to an executive at Russia’s largest bank, Sberbank.

Blockchain technology has matured over the past few years to offer new capabilities that potentially enable Russia to create more efficient payment systems, Sberbank first deputy chairman Alexander Vedyakhin said.

On March 14, Vedyakhin took part in the meeting of Russia’s Federation Council on the budget and financial markets committee, highlighting the promising future of blockchain in Russia, the local news agency Interfax reported.

According to Vedyakhin, distributed ledger technology (DLT) is a great foundation for a new payment system due to its decentralized nature and privacy-enabling features. He stated:

“Because it’s a distributed ledger, there is no single point of decision-making, no center, no switch that can be turned off; everyone has records of everything, and there are special protocols that allow you to do this confidentially.”

Vedyakhin added that Sberbank is currently actively exploring the implementation of blockchain technology for payments. “We are confident that Sberbank and other colleagues from the central bank will find this solution,” he stated, expressing confidence that blockchain will become more relevant in 2023. The Sberbank executive said:

“Next-generation payment systems will be on blockchain.”

In his speech, Vedyakhin also noted that blockchain technology has rapidly evolved over the past few years, with developers managing to find solutions to issues, such  limited scalability and limited privacy. These blockchain issues have been solved so far, he added.

According to Mark Smargon, CEO of the permissionless public ledger project Fuse Network, there is no technical reason preventing Russia from creating its own blockchain-based system.

“Major adoption by mainstream businesses and their consumers is right around the corner thanks to recent developments in scaling and privacy technology, notably on EVM [Ethereum Virtual Machine]-compatible systems, which have become the standard for experimentation,” Smargon said in a statement to Cointelegraph.

Related: Russian crypto advocates urge Putin to stop regulatory hostility

He noted that fully online real-time technology for cross-border payment settlement is “only a matter of time,” with technology significantly maturing over the past few years. At the same time, Smargon questioned whether blockchain could enable economies to bypass international sanctions, stating:

“It needs to be clarified when this technology will become widely adopted and whether it will enable users to bypass international sanctions. Blockchain enables better transparency, and disintermediation is not only a solution for illicit activities.”

The news comes amid Sberbank finalizing its Ethereum-based decentralized finance platform, which it plans to trial by May 2023. Russia’s largest bank has also been working on an international settlement platform that would serve as an alternative to SWIFT. According to Sberbank CEO German Gref, the company plans to finalize its configuration in 2023.

Tassat blockchain to join FedNow service with B2B onramp as pilot prepares for launch

The New York-based fintech said it will provide an API to allow clients to access the new Federal Reserve real-time payment service when it premiers.

Blockchain operator Tassat announced March 14 that it will provide access to the United States Federal Reserve’s FedNow payment system. FedNow, which will launch as a pilot project later this year, will provide real-time, round-the-clock payment service.

Tassat will serve as a business-to-business onramp for FedNow through a client-facing application programming interface (API), CEO Kevin Greene told Cointelegraph. Both the company’s interbank and intrabank services will provide FedNow access.

The FedNow pilot is expected to begin in June or July with a small number of banks. The system will offer real-time gross settlement by funneling commercial bank money from a sender through a Fed credit account to its recipient. It is often seen as a non-blockchain alternative to central bank digital currency (CBDC) and to stablecoin.

FedNow will initially be available only for domestic transfer, which suited Greene. “We have a lot of work to do here in America,” he said. He referred to the U.S. financial infrastructure as “antiquated.”

Tassat has a pipeline of six banks, which include the recently-shuttered Signature Bank. Greene said of the recent bank closures:

“Recent events have illuminated the existential crisis that small, mid-sized and regional banks face, particularly being squeezed out by the mega banks.”

Blockchain adoption is progressing rapidly in the banking system, according to Greene. “Sixteen months ago, most bank CEOs didn’t know much about blockchain at all,” he said, “and today the feeling is […] they have to have some kind of blockchain strategy.” Greene Added that Tassat had doubled its number of employees to 90 in the past 12 months.

Related: FedNow — US Federal Reserve Payment Tool a Threat to Banks, Not Crypto

Greene began as an investor and board member at the company when it was founded in 2017, then moved into the CEO and chairman positions.

Tassat blockchain to join FedNow service with B2B on-ramp as pilot prepares for launch

The New York-based fintech firm said it would provide an API to allow clients to access the new Federal Reserve real-time payment service when it premiers.

Blockchain operator Tassat announced on March 14 that it would provide access to the United States Federal Reserve’s FedNow payment system. FedNow, which will launch as a pilot project later this year, will provide real-time, round-the-clock payment service.

Tassat will serve as a business-to-business on-ramp for FedNow through a client-facing application programming interface, CEO Kevin Greene told Cointelegraph. Both the company’s interbank and intrabank services will provide FedNow access.

The FedNow pilot is expected to begin in June or July with a small number of banks. The system will offer real-time gross settlement by funneling commercial bank money from a sender through a Fed credit account to its recipient. It is often seen as a non-blockchain alternative to central bank digital currency and stablecoins.

FedNow will initially be available only for domestic transfer, which suited Greene. “We have a lot of work to do here in America,” he said. He referred to the U.S. financial infrastructure as “antiquated.”

Tassat has a pipeline of six banks, which include the recently shuttered Signature Bank. Greene said of the recent bank closures:

“Recent events have illuminated the existential crisis that small, mid-sized and regional banks face, particularly being squeezed out by the mega banks.”

Blockchain adoption is progressing rapidly in the banking system, according to Greene. “Sixteen months ago, most bank CEOs didn’t know much about blockchain at all,” he said, “and today, the feeling is […] they have to have some kind of blockchain strategy.” Greene added that Tassat had doubled its employees to 90 in the past 12 months.

Related: FedNow — US Federal Reserve Payment Tool a Threat to Banks, Not Crypto

Greene began as an investor and board member at the company when it was founded in 2017, then moved into the CEO and chairman positions.