Payments

Ukraine’s central bank sees both promises and threats in Bitcoin

The central bank of Ukraine sees crypto as a threat to macro-financial stability and a promising opportunity for better payments at the same time.

The National Bank of Ukraine (NBU) has expressed a mixed stance on cryptocurrencies such as Bitcoin (BTC) after a year of war in the country.

The central bank of Ukraine sees both good and bad in digital assets, taking a more skeptical approach to crypto due to financial and economic issues caused by the invasion, according to the NBU press office.

In April 2022, the NBU prohibited citizens from buying cryptocurrencies like Bitcoin using the national currency, the hryvnia (UAH), only allowing such purchases via foreign currency accounts. The central bank also set a monthly limit on such purchases, prohibiting Ukrainians from buying more crypto than 100,000 UAH ($3,300) worth per month. The restrictions also apply to cross-border peer-to-peer transactions.

The administrative restrictions involving operations with cryptocurrencies in Ukraine are temporary, a press officer for the NBU told Cointelegraph on March 9. The limits will be “gradually weakened as the functioning of the economy and financial market of Ukraine normalizes,” the NBU said, adding:

“The National Bank is taking part in building a system of transparent and understandable regulation, which will contribute to the development of fair and efficient circulation of virtual assets.”

According to the regulator, the specified restrictions were necessary for Ukraine in order to stabilize the situation in the foreign exchange market and preserve macro-financial stability.

“Transactions with cryptocurrencies can be used to bypass currency regulation, in particular — as a channel for unproductive capital outflow from the country, which currently poses threats to macro-financial stability,” the NBU representative stated.

Ukraine’s central bank also sees risks of “substitution of the national currency and the emergence of parallel money circulation.” According to the NBU, such risks are especially high during the war and are beyond the effective control of the regulator. “This can pose a threat to the monetary sovereignty of the state,” the NBU spokesperson noted, adding:

“To minimize such risks, especially during the full-scale war, the National Bank will take a strong position on preventing the narrowing of the scope of application of the hryvnia as the only legal means of payment in Ukraine.”

Despite taking a cautious approach to crypto during the war, Ukraine’s central bank is still bullish on technological innovations related to digial assets. According to the NBU, there are many promises associated with crypto, including better access to financial services, competition in the field of payment services, the attraction of investments, crypto donations and other benefits.

As such, the central bank supports the need to create “civilized conditions for the development of the virtual assets market in Ukraine,” the NBU press office stated.

The latest remarks from the NBU came soon after Yurii Boiko, commissioner of Ukraine’s National Commission on Securities and Stock Market, declared that the war had no impact on the authority’s regulatory stance. According to the official, Ukraine has continued to follow in the footsteps of the European Union concerning digital asset laws.

Bybit introduces Mastercard-powered debit card days after halting USD transfers

Bybit is set to roll out Mastercard-powered debit cards, allowing users to pay for goods and services with cryptocurrency holdings.

Bybit will launch a new debit card allowing users to make payments and withdraw cash using cryptocurrency holdings.

The Bybit card will operate on the Mastercard network, and will allow fiat-based transactions by debiting cryptocurrency balances when used to pay for goods and services. The service begins with the launch of a free virtual card for online purchases, while physical debit cards are set to be available in April 2023.

The service will work with Bitcoin (BTC), Ether (ETH), Tether (USDT), USD Coin (USDC) and XRP (XRP) balances on user accounts. Payments will automatically convert the balances of these initial cryptocurrencies into euros or pounds, depending on a user’s country of residence.

ATM withdrawals and global payments will be limited to aggregated cryptocurrency holdings of a user’s Bybit account. The cards are issued by London-based payments solutions provider Moorwand.

The roll-out of Bybit’s virtual and physical debit card offering comes days after the Dubai-based exchange announced it would be halting U.S. dollar bank transfers. The suspension of dollar deposits and withdrawals was pinned on “service outages” by one of its processing partners.

Bybit users can continue to make USD deposits using Advcash Wallet and credit cards, while users are urged to carry out any pending U.S. dollar wire withdrawals by March 10.

United States-based crypto exchanges and businesses were affected when Silvergate Bank announced the discontinuation of its digital assets payment network on March 4.

Meanwhile, a report at the end of February 2023 suggests that Mastercard and Visa would hold off on announcing or embarking on further direct partnerships with the cryptocurrency and blockchain industry.

Mastercard has been exploring payment options in USDC through new partnerships, while Visa has hinted at plans to allow customers to convert cryptocurrencies into fiat on its platform in 2023.

Ripple survey: 97% of payment firms believe in the power of crypto

The lack of regulatory clarity is the biggest hurdle to the adoption of crypto-enabled payments, according to a new survey co-hosted by Ripple.

The global payments industry is bullish on the potential of cryptocurrencies and blockchain to enable faster and cheaper transactions, according to a new survey co-hosted by Ripple.

Blockchain-based digital payment network Ripple, and the Faster Payments Council (FPC) payment organization, issued a report on March 2 covering the opportunities of crypto-enabled payments.

The report titled, “Transforming the Way Money Moves,” provides insights on global crypto payment trends based on a survey sent to over 950 FPC subscribers, including analysts and CEOs across 45 countries. The survey included 281 respondents addressing 25 questions on blockchain payment use cases and benefits, digital asset ownership and usage barriers. Fieldwork for the survey was conducted during the first half of 2022.

According to survey results, nearly every surveyed FPC subscriber — or 97% of respondents — believed that cryptocurrency and blockchain tech would have a significant role in enabling faster payments in the next three years. More than 50% of surveyed payment executives believe that most merchants will accept crypto payments within one to three years.

27% of respondents among Middle East and African executives believe that the majority of merchants will be crypto-friendly by 2024. According to Ripple and FPC, such optimism in these markets could stem from crypto-enabled solutions like mobile payments and central bank digital currencies (CBDCs).

Despite 52% of respondents considering crypto use for payments, only 17% of those supported crypto-enabled payments at the time of the survey, according to the report.

The report notes that the biggest reasons for not adopting crypto technologies for payments were regulatory clarity and limited adoption. Nearly 90% of respondents pointed to regulatory ambiguity as the main hurdle to crypto payments, while 45% of interviewees cited limited industry acceptance.

In 2022, the financial data platform Pymnts, and the crypto payment firm BitPay, issued a survey suggesting that the majority of respondents for businesses with an annual income of $1 billion were adopting crypto payments to find and gain new customers.

The latest report by Ripple further reaffirms the significant potential of crypto-related technologies to become a crucial part of the global financial system. As one survey from Zogby Analytics and CasperLabs suggests, as many as 90% of enterprises in the United States, the United Kingdom and China have been experimenting with blockchain technology since early 2023.

The news comes amid Ripple CEO Brad Garlinghouse’s expectations that the XRP lawsuit with the United States Securities and Exchange Commission would be resolved this year.

“It’s been almost two and a half years since that litigation began. We’ve tried to move forward as quickly as we possibly could,” Garlinghouse said, adding that Ripple expects a decision “certainly in 2023.”

Coinbase no longer accepts payments via Silvergate Bank

Following the alleged troubles at Silvergate Bank, Coinbase announced that the crypto exchange would no longer accept or initiate payments with Silvergate.

Cryptocurrency exchange Coinbase announced that it had terminated its partnership with Silvergate Bank as its United States dollar banking partner, citing an ongoing investigation. In a tweet, the exchange said:

“In light of recent developments & out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate.“

The crypto exchange will facilitate institutional client cash transactions for its prime customers with its other banking partner, Signature Bank.

The stocks of Silvergate Bank, which were already under stress due to a delay in filing its annual 10-K report, dropped another 40% in pre-market trading. Silvergate Capital was also downgraded to “underweight” from “neutral” by JP Morgan in light of the insolvency scare.

A 10-K report is a document required by the U.S. Securities and Exchange Commission that provides a comprehensive overview of a company’s business and financial condition. The crypto bank had said it would need an additional two weeks to complete the report for the 2022 fiscal year.

The decision will not impact payment instructions in pounds or euros.

Troubles for the fintech bank began along with the downfall of the FTX crypto exchange. Silvergate Bank, also popularly known as the “crypto bank” for its slew of crypto partners, is currently facing an investigation from the U.S. Department of Justice over its involvement in the FTX collapse. The investigation revolves around former FTX CEO Sam Bankman-Fried’s account with the bank.

In another civil lawsuit, Silvergate Bank and its CEO Alan Lane were accused of “aiding and abetting” a “multibillion-dollar fraudulent scheme orchestrated by Sam Bankman-Fried (SBF)” and two of his entities — FTX and Alameda Research.

In light of the ongoing investigations and termination of partnerships, Silvergate became one of the most shorted stocks in the current market. Over 72% of Silvergate Capital stock was shorted by the end of January, according to the Financial Industry Regulatory Authority.

This is a developing story, and further information will be added as it becomes available.

Crypto gateway Alchemy Pay scores license in Indonesia

Alchemy Pay has partnered with a local fintech in Indonesia to offer low-cost remittances for crypto users.

Alchemy Pay has obtained a license from the central bank of Indonesia to operate remittances and fund transfers in cooperation with local fintech firm Berkah Digital Pembayaran.

Announcing the news on Feb. 27, Alchemy Pay noted that Bank Indonesia issued the licenses jointly to Alchemy Pay and Berkah Digital’s platform BDPay, enabling the firms to offer better payout methods and reduce associated operating costs.

Fiat-to-crypto payment provider Alchemy Pay is expanding services in Asia by scoring new regulatory approval in Indonesia.

Exciting news! #AlchemyPay and @mybdpay have jointly received license from the Central Bank of Indonesia to operate remittances and fund transfers.
Read more at: https://t.co/FFkC5Jvv2Y $ACH

— Alchemy Pay|$ACH: Fiat-Crypto Payment Gateway (@AlchemyPay) February 27, 2023

According to data from the official website of Bank Indonesia, Berkah Digital has been listed as a payment service provider under license category three. The firm is mainly known for its BDPay platform, which offers retail and corporate clients local and cross-border remittance services. The platform also provides client payroll services and transfers via bank application programming interfaces, allowing users to transfer to 136 banks in Indonesia.

Alchemy Pay’s cryptocurrency on-ramp supports payments via Mastercard, Visa, Google Pay, Apple Pay and a number of other regional mobile wallets like BDPay. The platform so far operates in 173 countries.

Established in 2018 in Singapore, Alchemy Pay is a major global crypto-to-fiat payment platform known for partnerships with crypto giants like Binance exchange. The firm also operates its own utility token, Alchemy Pay (ACH), issued on the Ethereum blockchain. ACH is a major part of the Alchemy Pay network, providing transaction fees, network rewards and other processes.

Bitcoin Lightning Network growth is organic, coming from real-world adoption

Bitcoin Lightning Network adoption receives a boost with the launch of U.S. dollar payments and the decentralized social media platform Nostr.

The capacity of Bitcoin’s Lightning Network (LN) recently surpassed an all-time high of 5,000 Bitcoin (BTC).

The Lightning Network is a neutral protocol built on top of Bitcoin, and it currently does not have a “native” token attached to it like many decentralized finance (DeFi) platforms.

Although the Lightning Network’s total liquidity is less than 0.5% of the Ether (ETH) in DeFi contracts, the uptrend in Bitcoin’s LN capacity versus a downtrend in the amount of ETH locked in smart contracts is encouraging for LN development.

*Total ETH locked in DeFi contracts (top) and total BTC in LN channels (bottom). Source: DefiLlama*

While the liquidity on the LN has been rising consistently, the number of channels on the peer-to-peer network dropped drastically in November following the FTX collapse. It could be due to an exodus of miners operating LN nodes besides running mining clients.

However, the likely end of miner capitulation and the rise of Bitcoin-based applications like nonfungible tokens could mark an end to LN channel capitulation. Since the start of 2023, over 2,000 new channels have been added to the network.

*Lightning Network number of channels. Source: Glassnode*

A Valkyrie Investments report states that LN adoption is picking up speed in emerging markets like South America and Africa, primarily due to efforts of the LN mobile payment application Strike.

In December 2022, the firm launched an LN-based remittance service in Africa. The service offers no-cost transfers from the United States to Africans in Nigeria, Ghana and Kenya. Later, Strike announced a similar program in the Philippines.

*LN capacity and important chronological events. Source: Valkyrie*

More recently, the firm announced dollar payments using LN, where users can potentially send dollars from the Strike’s cash balance to savings and Visa-enabled accounts. The app will convert U.S. dollars to BTC in the background and convert to dollars at the destination. Since LN is fast and cheap, the risk due to Bitcoin’s price volatility is minimal.

The cost of international payments from the U.S. can reach as high as $45 per transaction, with transfers taking hours or sometimes days. Thus, users may start preferring Strike-based payments over traditional remittance channels.

A recent report from Marty Bent found that the LN payments have risen this year on one of the top Lightning Network wallets, Wallet of Satoshi. Moreover, Podcasting 2.0 — a podcasting platform that accepts LN payments — also recorded an uptick in tips sent to creators.

Nostr is boosting LN adoption

Another factor influencing the adoption of LN is the launch of Nostr. According to the protocol’s GitHub page, Nostr is a simple, open protocol that enables global, decentralized, censorship-resistant social media. The protocol allows social media applications to be built on it.

Damus, a Twitter competitor, is built on Nostr and has an iOS and Android application. The idea of an open, free social media network reverberates strongly in the crypto space, with Bitcoin pioneers like Jack Dorsey and Adam Back having strongly endorsed Nostr .

Besides their similarities in ideology, Nostr can boost LN adoption, as Damus has integrated various LN wallets like Wallet of Satoshi, Strike, BlueWallet and others. According to a report from LN analyst Kevin Rooke, over 600,000 users have signed up for Nostr. This could help onboard users to LN, as Nostr supports the Bitcoin payment network through Nostr Zap.

While the LN does not have a native token, there is a potential for LN nodes to earn fees for facilitating transactions and providing liquidity. However, in its current state, the earnings are negligible. Hence, the Lightning Network’s growth appears to be organic, and it’s well-positioned to become the leading global payment network — as prominent personalities in the space have predicted.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Here’s why crypto companies need to focus on embedded finance

Personalized offers, financing loans, insurance, seamless payment and preferred payment mode were key features that came out as top priorities for customers.

A new study by Decta highlighted the importance of embedded finance features in today’s fintech world. With online shopping and digital payments becoming a norm, the study pointed toward some key drivers for a seamless customer experience.

Embedded finance is a new type of software distribution that works with financial infrastructure providers to include financial services in the ecosystems of already-existing products. The most common embedded finance offerings include banking, lending, insurance, payments and branded credit cards.

According to the study, quick payments and the availability of a selected payment option are the most crucial elements for a satisfying online buying experience. The lack of a preferred payment option or friction during the checkout process is the main reason for a bad shopping experience, with nearly 49% of respondents stating they would probably stop shopping if they ran into these issues.

Personalized offers became one of the key features in embedded finance, which is valued and can be enhanced by focusing on different demographics. For example, 54% of Americans preferred integrated add-ons like financing and insurance. Generation X participants were most satisfied with personal offers, while Gen-Z and Baby Boomer participants gave the offers they got a lower rating.

Loyalty rewards, frictionless payments and same-page checkouts were some other preferred embedded features that got the respondents’ approval.

While crypto companies are slowly trying to integrate embedded finance features, be it crypto-based credit cards or loans, the study offers insights into customer targeting and acquisition. Crypto companies have been exploring loyalty rewards and helping mainstream firms incorporate these embedded finance services using blockchain.

The cryptocurrency ecosystem saw an influx of institutional investment during the last bull market. Some of the biggest fortune 500 companies and traditional hedge funds jumped on the crypto bandwagon, giving a glimpse of mainstream crypto adoption.

However, there is still a long way to go with the main focus on making crypto a daily driver for retail users. The study around embedded finance could help crypto companies take a cue from the mainstream and implement it with crypto-linked products to offer a better customer experience.

Paying the way for Bitcoin adoption in El Salvador: Video

What is Bitcoin adoption like on the ground as peer-to-peer cash in the home of Bitcoin worldwide? Cointelegraph visits El Salvador to find out!

The Bitcoin (BTC) white paper title describes Bitcoin as a “peer-to-peer electronic cash system.” So how is Bitcoin being used as a means of exchange, or electronic cash, in the first country to adopt Bitcoin?

Reporter Joe Hall spent a few weeks in El Salvador attempting to live off Bitcoin and Bitcoin only. He documented his trials, tribulations, successes and satoshis (the smallest amount of a Bitcoin) in a video for Cointelegraph’s YouTube channel:

Headlines from El Salvador within the crypto community have been largely positive. Moreover, statistics emanating from the country have been abundantly positive; tourism is up 30%, crime and the murder rate in El Salvador have decreased dramatically, and the Bitcoin bonds project is underway in 2023.

Nonetheless, while Bitcoin is undoubtedly one of the best-known brands worldwide; and a marketing tool that appeals to a pool of ardent Bitcoin believers around the world, its use as a means of exchange is often questioned. In El Salvador, it’s no different, as Hall explains.

Some Salvadoran vendors are laser-eyed hodlers; others made their first Bitcoin payment with Hall and were keen to ask questions and learn more.

*Tipping Henry the delivery guy in Bitcoin to his Chivo wallet at 2 am. Source: Cointelegraph*

Hall was surprised, dismayed, entertained and ultimately enthused by his findings in the country. Adopting a new technology as novel and misunderstood as Bitcoin is a mammoth task, but Salvadorans are getting stuck into the new technology where possible.

Retailers like Walmart had the option to pay in Bitcoin — but the process was slow and inconvenient — while the likes of Texaco were staunchly anti-Bitcoin. At McDonald’s, the experience is smooth and fast; it’s even quicker than the McDonald’s branches that accept Bitcoin in Switzerland.

From the Adopting Bitcoin conference — a Lightning conference in San Salvador that gathered Bitcoiners from around the world — down to Bitcoin Beach and Surf City, across to the volcanoes of Santa Ana and on the streets of San Salvador, Hall mingled with locals to get a better sense of Bitcoin as a means of exchange.

Hall attended the “My First Bitcoin” educational graduation ceremony at a school in El Pacheco. The founder, John Dennehy, was recently interviewed by Cointelegraph. Dennehy explained the group’s plan to remedy Bitcoin education in El Salvador by teaching teenagers how to Bitcoin.

Indeed, the recent graduates Hall interviewed at the school grasped the fundamental tenets of Bitcoin and expressed their belief that Bitcoin represents hope for the future. Watch the video to find out more.

Binance CEO: Crypto industry will probably move to non-dollar stablecoins

Changpeng Zhao, also known as “CZ,” says that the industry may start to use stablecoins pegged to the euro, yen, or Singapore dollar, following recent actions against the U.S. dollar-pegged stablecoin BUSD.

The crypto industry will “probably” start using euro, yen, or Singapore dollar-based stablecoins in the future, reducing its reliance on United States dollar-based stablecoins, according to Binance CEO Changpeng Zhao, also known as “CZ.”

CZ gave the statement in a Feb. 14 Twitter Spaces event in answer to a question about the crypto industry using gold as a standard of value instead of the U.S. dollar. CZ agreed that it “makes sense” to use gold. However, “most people’s costs are still in fiat currencies.” For this reason, most people calculate their investment returns in dollars, which is why U.S. dollar-backed stablecoins are “still important.”

However, CZ argued that the U.S. government’s recent actions against U.S. dollar stablecoins will probably lead the global crypto industry to rely on other currencies such as the euro, yen and Singapore dollar to back stablecoins, as he explained:

“I think given the current pressure and current stances taken by the regulators on the U.S. dollar-based stablecoins, I think that as you said the industry will probably move away to non-U.S.-dollar- based stablecoins […] as a result of this we probably will see more euro based or other Japanese yen, Singapore dollar based stablecoins, so it’s actually prompted us to look for more options in different places.”

CZ said that algorithmic stablecoins may also play a larger role in the crypto ecosystem going forward. However, he cautioned that algorithmic stablecoins are “inherently gonna have risks” that fiat-backed stablecoins don’t have. In CZ’s view, these risks need to be disclosed transparently to users, and reserves for fiat-backed stablecoins also need to be disclosed. This way, “users can very clearly decide what is going on” and make up their own minds about which stablecoins they want to hold or use.

CZ’s statements came just a day after the SEC accused U.S. dollar-based stablecoin Binance USD (BUSD) of being an unregistered “security” under U.S. laws. The algorithmic stablecoin TerraUSD (UST) lost its peg to the U.S. dollar in May, causing over $20 billion in losses to investors.

PayPal held $604M in Bitcoin and other crypto at the end of 2022

BTC and ETH have the largest share in PayPal’s crypto assets, accounting for $291 million and $250 million in the asset breakdown, respectively.

Global payment giant PayPal holds a significant part of its financial liabilities in cryptocurrencies such as Bitcoin (BTC) offered to its customers.

As of Dec. 31, PayPal held a total of $604 million in various cryptocurrencies, including Bitcoin, Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH), according to the annual report filed with the United States Securities and Exchange Commission on Feb. 10.

Bitcoin has the largest share in PayPal’s crypto assets, accounting for $291 million in the firm’s asset breakdown, while $250 million is held in ETH. The remaining $63 million includes Litecoin and Bitcoin Cash combined.

The amount of PayPal’s crypto holdings accounts for 67% of the company’s total financial liabilities, amounting to $902 million as of Dec. 31. PayPal’s total financial assets stood at more than $25 billion, according to the filing.

Despite introducing cryptocurrencies onto its platform more than two years ago, PayPal did not include a similar breakdown of crypto holdings in its previous annual financial report.

“Due to the unique risks associated with cryptocurrencies, including technological, legal, and regulatory risks, we recognize a crypto asset safeguarding liability to reflect our obligation to safeguard the crypto assets held for the benefit of our customers,” PayPal wrote in the recent filing.

PayPal stores customers’ cryptocurrencies through a third-party custodian, the company noted in the filing. PayPal stressed that it contractually requires the custodian to segregate customer assets and not mix them with proprietary or other assets, adding:

“We cannot be certain that these contractual obligations, even if duly observed by the custodian, will be effective in preventing such assets from being treated as part of the custodian’s estate under bankruptcy or other insolvency law.”

As previously reported, PayPal debuted its hold-and-sell service for Bitcoin in the United States in November 2020. The company has been doing its best to bring all possible blockchain and crypto integrations to its services, including central bank digital currencies, according to vice president Richard Nash.