financial services

ASIC Appeals Federal Court Ruling on Finder Wallet's "Earn" Product

An appeal has been submitted by the Australian Securities and Investments Commission (ASIC) against a decision made by a federal court that rejected the action that it had brought against Finder Wallet Pty Ltd and its cryptocurrency product known as “Earn”. The court had previously determined that Finder Wallet was in accordance with the laws governing financial services in Australia. This ruling has the potential to have substantial repercussions for future cases in Australia that involve cryptocurrencies and regulatory compliance.

To provide some context, the Australian Securities and Investments Commission (ASIC) initiated legal action against Finder Wallet in December 2023, saying that the firm had violated the rules governing financial services by offering its “Earn” product without first obtaining an Australian Financial Services Licence (AFSL). The Australian Securities and Investments Commission (ASIC) said that the product functioned as a debenture, which is a kind of financial instrument that requires disclosure with the regulator as well as the issuing of a target market statement. Finder Wallet reportedly failed to satisfy both of these requirements.

The actions brought by the Australian Securities and Investments Commission (ASIC) were dismissed by the Federal Court in March 2024. The Federal Court said that the ASIC had failed to prove that the “Earn” product offered by Finder Wallet was a debenture and that it was operating within the legal confines. In light of the fact that the monies that were transmitted to Finder Wallet were not meant to be used for the purpose of raising capital for the firm, the court dismissed the argument that the funds constituted a deposit or loan. The court, on the other hand, characterised the connection between Finder Wallet and its consumers as a contractual commitment, as opposed to the usual debt payback that is connected with debentures.

The Australian Securities and Investments Commission (ASIC) has filed an appeal against the verdict made by the Federal Court. The ASIC has expressed its concern that the “Earn” product was sold without the required licence or permission, which resulted in the absence of significant consumer safeguards. The appeal is an attempt to address the need for appropriate licencing and regulatory control in the cryptocurrency field. This is done with the intention of ensuring that consumers are appropriately protected when interacting with goods of this kind.

The decision of the appeal filed by the Australian Securities and Investments Commission (ASIC) might have substantial repercussions for the regulation of bitcoin goods in Australia. The purpose of this investigation is to evaluate whether or whether businesses who sell crypto-based goods that are comparable are required to get the requisite licences and comply with regulatory responsibilities . In addition, the appeal raises awareness about the significance of consumer protection measures in the cryptocurrency business, which is undergoing fast development.

Image source: Shutterstock

Chinese Central Bank Approves the City of Chengdu for its FinTech Innovation Pilot

The Chinese central bank, People’s Bank of China has recently approved the city of Chengdu to carry out FinTech innovation supervision pilots.

Chengdu, the capital of China’s Sichuan province has been added to the list of regions that could carry out FinTech-related pilots.

The People’s Bank of China launched the FinTech regulatory sandbox in December 2019, to guide licenses financial institutions to explore with technologies while complying with laws and regulations.

According to the local report, the city of Chengdu has been exploring big data, blockchain, artificial intelligence, and cloud computing to improve local financial supervision capabilities.

The Chengdu Municipal government and the Chengdu branch of the Chinese central bank have issued a development plan, to promote Chengdu’s practice of FinTech innovation. According to industry insiders, it is believed that Chengdu’s approval of the FinTech innovation supervision pilot would accelerate the city’s FinTech innovation.

Chinese government releases blockchain application blueprint

The Chinese government has released its first-ever blockchain application blueprint regarding government services in the country.

According to Beijing’s blueprint, 140 government services applications are already on blockchain and are divided into three categories, including data sharing and exchange, business collaborative processing, and electronic certificate and certificate storage.

One sector for blockchain-based use cases includes the real estate registration system, which involves 11 units, including the Municipal Planning Self-Commissioning Committee, Housing, and Urban-Rural Development Commission, Taxation Bureau, Public Security, Market Supervision Bureau, Civil Affairs, Banking and Insurance Supervision, amongst others.

With the blockchain-based real estate registration system, relevant departments would be able to ensure that the electronic licenses would be credible and would allow for traceability during the sharing process.

The Beijing Action Plan

The Chinese government issued a “Beijing Action Plan” aiming to accelerate the inclusion of new emerging technologies in the country’s economy.

China aims to leverage new technologies including artificial intelligence (AI), 5G, industrial internet, blockchain, big data, and others to promote the steady growth of Beijing’s economy post-pandemic.

China has also encouraged the construction of blockchain service platforms, as well as data trading facilities to strengthen the support of a smart city database. By cultivating leading enterprises and building a backbone for blockchain-based enterprises, the country is anticipating to become a hub for research and development innovation as well as industrial applications.

Will Hong Kong's Status as an International Digital Financial Hub be Affected by the National Security Law?

2020 has been quite a year for Hong Kong, marked by months of political unrest, the emergence of the coronavirus pandemic, and a sweeping new national security law that China imposed on the city. The national security law, unanimously passed by China’s ruling Communist Party, sets up against secession, subversion, terrorism, and collusion with foreign forces to endanger national security.

The new law has ignited criticisms and fears over the clampdown of free speech and the tightening of control over Hong Kong’s financial system. It was stated that the law would also apply to non-permanent residents and people “from outside [Hong Kong].”

Many have speculated over the new law and how it will affect citizens and the future of Hong Kong. Alicia Garcia-Herrero, Natixis Chief Economist for Asia Pacific, told Blockchain.News:

“The national security law’s impact is uncertain. As far as it may be good for some but bad for others, one trend seems clear to me, namely that Mainland players will dominate even more than in the past.”

A threat to the US dollar peg?

The US Senate passed the Hong Kong Autonomy Act, which elaborated that the US government should restrict foreign banks and subsidiaries of US banks in Hong Kong from accessing the US dollar system if they are involved with transactions that target or contribute to weakening Hong Kong’s autonomy. This could potentially affect many companies in Hong Kong, including cryptocurrency firms, as most crypto brokerages depend on the US dollar system.

The Hong Kong dollar has been pegged to the US dollar for over 36 years. The Trump administration was reportedly deciding on proposals to undermine the peg to the US dollar; however, according to sources, the idea did not seem to gain any popularity. The idea of undermining the 36-year-old peg seemed to be only harmful to Hong Kong banks and the United States, and not China.

The Hong Kong dollar’s peg to the US was established almost a decade even before the US gave Hong Kong special trading status under the US-Hong Kong Policy Act of 1992; therefore the Hong Kong Monetary Authority (HKMA) does not need to seek approval from the US to keep the peg.

“The peg can survive US-China tensions if there are no major outflows. But even if there are, HKD can still remain pegged to the USD if there is enough support from the Mainland authorities,” said Chief Economist Garcia-Herrero. “The issue is rather more a structural one. Does it make sense for an economy that is fully integrated with the Mainland to be pegged to a different currency?”

The rise of the Greater Bay Area

The People’s Bank of China released a plan to boost cross-border financial services, transactions, and investments in the Greater Bay Area (GBA), between Hong Kong, Macau, and nine Guangdong provincial cities.

By allowing the residents of the two special administrative regions, Hong Kong and Macau, to purchase Chinese bank-sold wealth management products, the sweeping plan aims to build the Greater Bay Area into one of the world’s largest economic regions.

Garcia-Herrero said, “Hong Kong will become more integrated with the Mainland, and the Greater Bay Area will only push this process faster.”

Could the introduction of Hainan’s free-trade port replace Hong Kong?

The Chinese government is planning to make the province of Hainan into a free trade port, focusing on facilitating free trade, investment, and cross-border capital flows. The plan encourages government institutions to use blockchain and other emerging technologies to improve government functions.

Chinese President Xi Jinping has previously announced the decision to develop the island of Hainan into a pilot free trade zone in April 2018. With this decision, Xi said that it shows the country’s determination to liberalization and globalization while welcoming global investors.

In response to whether Hainan could potentially replace Hong Kong, Natixis Chief Economist said, “I don’t think Hainan is an option. The reason is always the same, namely, capital controls. While true for Shanghai, at least it already has the necessary size.”

“We have seen some interesting development in Hainan as of July 1, and I do think that there are opportunities, but Hainan is not going to replace Hong Kong,” said Anson Bailey, Partner and Head of Technology, Media and Telecoms Hong Kong at KPMG China. Bailey told Blockchain.News:

“For example, they said Shanghai is going to become the new financial hub in China. People have been talking about that for the last decade. However I don’t think that Hainan is going to overtake Hong Kong, it will complement Hong Kong.”

“Free-trade zone is not something new, it’s been around since the early 1980s. The free trade zones are very complementary when we look at the Greater Bay Area plan,” said Marcos Chow, Partner and Head of Technology Enablement Hong Kong at KPMG China. He added:

“They all have their designated roles that come together, all as parts of the plan, I never see it as the exclusion of one city over the other. It’s very exciting for us now to be in this period where these GBA plans are coming to fruition along with Hainan.”

Hong Kong will likely continue to be an international digital financial hub

Neil Shen, also known as Shen Nanpeng, member of the National Committee of the Chinese People’s Political Consultative Conference and managing partner of Sequoia Capital China, submitted five proposals to China’s annual “two sessions” political event this year. One of the proposals includes the innovation and technology development of the Greater Bay Area, which he has submitted consecutively in the past three years.

In Shen’s proposals, he suggested a Hong Kong-based cross border stablecoin, as a foundation for a cross-border settlement network between China, Japan, and South Korea as well as the special administrative region. Shen envisions that this move would make Hong Kong as the international digital financial hub and will empower the semi-autonomous city to achieve “stable economic and social development.”

The stablecoin plan questions the financial autonomy of Hong Kong, and Garcia-Herrero suggested, “Financial autonomy is already limited in as far as most of the inflows into, and outflow from Hong Kong come from the Mainland. It may be that Hong Kong can serve as a useful platform to reduce China’s dependence on the US dollar.”

“I think people that have been already based here in Hong Kong have a pretty good understanding in terms of what’s going on. Those start-ups that are already here, they want to be here as they also recognize that Hong Kong is an international finance center and international trading hub,” said Bailey. He concluded:

“Hong Kong is a resilient place and will continue to be a very international city for finance and for business.”

Square to Build a New Open Developer Platform Focusing on Bitcoin

Jack Dorsey, CEO of American financial services and digital payments company Square, announced on Twitter Friday that Square is actively creating a new non-custodial, permissionless, and decentralized financial services business platform, mainly focusing on bitcoin, the mainstream virtual currency.

This new business will build an open developer platform, similar to its development tool service provider Seller, payment application Cash App, and streaming media service provider Tidal.

“Its name is TBD.” Dorsey tweeted and confirmed the new name.

Before confirming the name of the current business as “TBD”, the new project’s name aroused heated discussions among netizens. Some netizens pointed out that “TBD” means To Be Decentralized.

Jack Dorsey said that the new business will be completely open, transparent to the public, including its Open roadmap, open development, and open source.

Mike Brock will be responsible for this project, and square will create a new Twitter and GitHub account and update this thread so that the public can access the latest news.

Jack Dorsey explained that this new department is different from Square Crypto. Founded in 2009, Square Crypto is a cryptocurrency payment solution developed by the Square Digital Payment Group specifically for merchants and consumers on the Lightning development kit. Square will only provide financial assistance.

As reported by Blockchain.News on July 9, Digital payment company Square is building an “assisted custodial” bitcoin hardware wallet. The founder and CEO, Jack Dorsey and head of hardware lead Jesse Dorogusker confirmed on Twitter.

This non-custodial hardware Bitcoin wallet would give users greater control over digital currencies they own.

Fidelity Envisions Metaverse NFT Marketplace And Financial Services

The world’s largest investment management firm, Fidelity Investments, has submitted trademark applications in the United States for a variety of Web3 goods and services. These applications cover a marketplace for nonfungible tokens (NFTs), as well as financial investment and cryptocurrency trading services in the metaverse.This is according to three trademark applications that were made to the United States Patent Trademark Office (USPTO) on December 21. These trademark filings were highlighted in a tweet that was published on December 27 by licensed trademark attorney Mike Kondoudis.One of the primary areas that the company appears to be concentrating its efforts on is the metaverse. Fidelity has indicated that it may be able to provide a variety of investment services within virtual worlds, such as mutual funds, retirement funds, investment management, and financial planning, in the future.It would seem that the development of payment services that are based in the metaverse is also underway. These services may include electronic payments for bills, transfers of funds, and the management of the financial aspects of credit card accounts in the metaverse and other virtual worlds.According to the papers, the company may start offering trading and administration services in the metaverse, in addition to providing services for virtual currency wallets, in the context of cryptocurrencies.In addition, Fidelity mentions that it might be able to provide some form of educational services in the metaverse in the future holding educational events such as classes, workshops, seminars, and conferences related to the marketing of financial services and the business of investing in financial markets.In the field of business marketing in the metaverse and other virtual worlds, the provision of business information to financial service providers by means of an internet web site; referral services in the field of investment advice and financial planning in the metaverse and other virtual worlds; providing business information to financial service providers via an internet web site in the field of business marketing in the metaverse and other virtual worlds a document is read here.The investment manager Fidelity stated that it could launch an online marketplace for buyers and sellers of digital media, specifically non-fungible tokens; however, further details on such are scant. NFTs are also in the plans of Fidelity, which states that it could launch an online marketplace for buyers and sellers of digital media.The most recent filings from Fidelity demonstrate that the company has not been frightened by the severe bear market in 2022 or the recent collapse of FTX. Instead, the company is planning to enhance its exposure and products in the Web3 market.When responding to a letter dated November 21 from crypto-hating senators Elizabeth Warren, Tina Smith, and Richard Durbin, which had asked Fidelity to reconsider its Bitcoin retirement products due to the volatile, tumultuous, and chaotic nature of crypto assets, the company essentially outlined as such and called for stronger regulation. In the letter, the senators had asked Fidelity to reconsider its Bitcoin retirement products.That back in October, Fidelity was apparently planning to strengthen up its crypto operation by adding 100 additional staff members, which stands in sharp contrast to a number of other cryptocurrency companies that have let off a substantial proportion of personnel this year.

The Federal Home Loan Banks System is lending to cryptocurrency

According to a report that was published by The Wall Street Journal on January 21, the Federal Home Loan Banks System (FHLB) of the United States is reportedly lending billions of dollars to two of the largest cryptocurrency banks in an effort to mitigate the effects of a surge in withdrawals. This move was made in response to the surge in demand for cryptocurrency withdrawals. The Federal Home Loan Bank is a group of 11 different regional banks from all around the United States that work together to lend money to other financial institutions.

The system, which was established in the midst of the Great Depression to provide assistance for home financing, now has over 6,500 members and 1.1 trillion dollars in assets.

According to reports, during the last three months of 2022, the organisation extended a loan of about $10 billion to the commercial bank Signature Bank, making it one of the biggest deals involving a bank borrowing money in recent years.

The Signature’s blockchain-based digital platform was given the go-ahead by the New York Department of Financial Services in the year 2018.

The study compiled by Silvergate indicates that the average deposits made by digital asset customers during the fourth quarter of 2022 were $7.3 billion. This figure represents a considerable decrease when compared to the amount attained during the third quarter, which was $12 billion.

Following the failure of FTX, traditional finance has been immune to crypto contagion; but, according to the paper, FHLB loans to crypto-exposed institutions might raise that risk.

Senator Elizabeth Warren made the following statement to the WSJ: “this is why I’ve been warning of the dangers of allowing crypto to become intertwined with the banking system.” She claimed that taxpayers should not “be left holding the bag for collapses in the crypto industry,” which she referred to as a market that is full of “fraud, money laundering, and illicit finance.” Senator Warren is a member of the Democratic Party.

The bankruptcy of the FTX group produced a ripple effect across the cryptocurrency business, which affected a number of other firms.

The most recent event to take place was on January 19, when cryptocurrency lender Genesis filed a petition for protection under Chapter 11 of the Bankruptcy Code. Genesis is reported to have liabilities ranging between $1 billion and $10 billion.

UK Watchdog Proposes Tougher Advertising Rules

According to the United Kingdom’s financial watchdog, newly proposed advertising rules in the United Kingdom could potentially see executives of crypto firms facing up to two years in prison for failing to meet certain requirements around promotion. These executives would be in violation of the rules if they failed to meet any of the aforementioned requirements.

The United Kingdom’s Financial Conduct Authority (FCA) issued a statement on February 6 in which it revealed that if the proposed “financial promotions regime” is approved by Parliament, then all crypto firms within the country as well as those located outside of it would be required to adhere to certain requirements when advertising their crypto services to customers in the United Kingdom.

According to the Financial Conduct Authority (FCA), “cryptoasset enterprises selling to UK customers, including those operating abroad, must be ready for this regime.”

“Taking immediate action will assist guarantee that they can continue to lawfully advertise their products to customers in the United Kingdom.” As a part of their preparations, we strongly advise businesses to get any and all guidance that may be required,” the statement said.

If the FCA’s proposed regulatory framework is implemented, companies dealing in cryptocurrencies would be required to get prior authorisation from the FCA before advertising their services, unless they qualified for an exemption under the Financial Promotion Order.

According to the governing body, a “cryptoasset firm” in the United Kingdom may only advertise and sell its products and services to clients via one of the following four channels:

According to the regulatory body, any marketing that is carried out outside of these channels would be in violation of the Financial Services and Markets Act of 2000 (FSMA), which has a criminal penalty of up to two years in jail for each offence.

“We will take tough action where we detect companies advertising cryptoassets to UK consumers in contravention of the rules of the financial promotions regime,” the Financial Conduct Authority (FCA) stated in a statement. “We will take action against firms that promote cryptoassets to UK consumers.”

Companies found to be in violation of the new regime risk having their websites taken down, receiving public warnings, and being subjected to further enforcement measures. In addition to the possibility of serving time in jail for its executives.

The Financial Conduct Authority (FCA) has said that they would wait until “necessary legislation” is passed before publishing “our final guidelines for crypto asset promotions.” This might perhaps indicate that the financial promotions regime will undergo upgrades or adjustments in the future.

According to the Financial Conduct Authority (FCA), “Subject to any changes in circumstances, we plan to adopt a similar approach to crypto assets to that outlined in our new regulations, which will be in force from February 1 2023 for other high-risk investments.”

Fujitsu Files Trademark for Crypto Brokerage Services

Japanese multinational tech company Fujitsu has filed a trademark application with the United States Patent and Trademark Office (USPTO) for a new branding that intends to offer a range of financial services, including cryptocurrency brokerage services. According to the official document filed on March 16, the proposed mark consists of the stylized word “FUJITSU” with a sideways s-shaped swirl over the “J” and “I.” The new branding would support various financial facilities, such as accepting deposits, financing loans, financial management, and the exchange of crypto assets.

Fujitsu has been increasingly interested in the Web3 technology space, with the launch of its Web3 acceleration platform in February 2023. The platform aims to support startups and partner companies in creating a diverse ecosystem of Web3 applications that span a range of use cases, including digital content rights management, business transactions, contracts, and processes. The move demonstrates Fujitsu’s commitment to driving innovation in the emerging Web3 industry.

The company’s decision to offer cryptocurrency brokerage services comes as financial regulators in Japan call for stricter banking rules for the crypto sector. In January 2023, the Deputy Director General of the Financial Services Agency’s Strategy Development and Management Bureau, Mamoru Yanase, urged global regulators to introduce tighter banking rules to improve the crypto industry’s governance and internal controls. He acknowledged that the issue wasn’t with crypto technology itself but with the “loose governance, lax internal controls, and the absence of regulation and supervision” that led to recent scandals in the sector.

Fujitsu’s move into the crypto brokerage services market signals its recognition of the growing importance of cryptocurrencies and blockchain technology in the financial industry. The new branding could help Fujitsu establish itself as a leading provider of crypto-related financial services, leveraging its extensive expertise and resources in the technology sector.

In conclusion, Fujitsu’s trademark application for cryptocurrency brokerage services and other financial facilities demonstrates the company’s commitment to the emerging Web3 industry and its growing interest in cryptocurrencies. The move could also help Fujitsu establish itself as a leading provider of crypto-related financial services and position itself at the forefront of innovation in the financial technology sector.

Unchained Capital Raises $60M in Bitcoin Funding

Despite the bearish trend in the crypto market, Unchained Capital, a financial services provider for Bitcoin holders, has raised $60 million in a Series B funding round led by Valor Equity Partners. The funding round also saw participation from NYDIG, Trammell Venture Partners, Ecliptic Capital, and Highland Capital Partners.

Unchained Capital’s approach to Bitcoin custody is different from traditional centralized exchanges or single key solutions. The company uses multi-signature technology to enable clients to share control of their Bitcoin holdings between private keys they hold themselves and private keys held by Unchained or other financial services companies. This approach eliminates single points of failure and counterparty risk by sharing the control of funds between multiple parties. The multi-signature process can be compared to a safe deposit box with two keys, one held by the customer and the other by the bank.

During the 2022 crypto market crashes, centralized solutions such as BlockFi, Celsius, and Three Arrows Capital collapsed, resulting in the loss of users’ funds. This has highlighted the importance of mitigating counterparty risk and eliminating single points of failure, which can be achieved through the use of multi-signature solutions. Unchained Capital has secured over $2 billion in Bitcoin across thousands of keys globally, highlighting the growing demand for more secure custody solutions in the crypto market.

Joe Kelly, CEO of Unchained Capital, noted that multi-signature technology is one of the most important technologies in the Bitcoin ecosystem that can be taken mainstream. He explained that it helps protect individuals from loss and theft, which are two of the biggest issues in the industry. The funding from the Series B round will be used to expand Unchained’s reach and suite of services, allowing the company to enable new entrants to Bitcoin to leapfrog centralized custodians into their safer collaborative custody model.

Unchained Capital’s success in raising $60 million in Bitcoin funding highlights the growing interest in more secure and collaborative custody solutions in the crypto market. Casa, a competitor crypto security company, recently added Ethereum to its suite of products. As greater numbers of Bitcoin and crypto enthusiasts learn to take custody of their assets, multi-signature technology will undoubtedly play a greater role in ensuring their security. Ultimately, Unchained Capital hopes to further the mantra “not your keys, not your coins,” highlighting the importance of taking control of one’s assets in the crypto market.

US House Committee to Discuss Stablecoin Regulation

The US House of Representatives Committee on Financial Services will hold a hearing on stablecoin regulation on April 19th, according to an announcement made by the committee. The hearing comes in response to a new draft bill introduced in the House to provide a regulatory framework for stablecoins. The bill aims to protect consumers and maintain the integrity of the US financial system while promoting innovation in the use of stablecoins.

The hearing will include testimonies from experts in the field of cryptocurrency and stablecoins, including Austin Campbell, a managing partner at Zero Knowledge Consulting and adjunct professor at Columbia Business School. In a transcript of his planned testimony, Campbell notes that stablecoins are “mundane” and “look a lot like pretty basic cash instruments”. He believes that stablecoins will increase the reach of the US dollar and enhance financial inclusion, as they provide access to the global financial system to those who are currently excluded from traditional banking.

Campbell’s testimony suggests that the regulatory framework for stablecoins should not be overly burdensome, as stablecoins are similar to traditional cash instruments. He notes that regulations should focus on ensuring that stablecoins are fully backed by reserves and are not used for illicit purposes, such as money laundering or terrorist financing.

The hearing will provide an opportunity for members of the committee to learn more about the benefits and risks associated with stablecoins, as well as to gather feedback on the draft bill. The regulatory framework proposed in the draft bill is expected to be a starting point for discussion and may be amended following the hearing.

Stablecoins are digital currencies that are designed to maintain a stable value relative to a fiat currency, such as the US dollar. They are used in a variety of applications, including remittances, peer-to-peer payments, and international trade. Stablecoins have gained popularity in recent years as a way to access the benefits of cryptocurrency, such as fast and low-cost transactions, without the volatility associated with other cryptocurrencies like Bitcoin.

However, stablecoins have also raised concerns among regulators and policymakers, particularly regarding their potential impact on financial stability and the risks associated with their use. The regulatory framework proposed in the draft bill aims to address these concerns by providing a clear and consistent framework for the regulation of stablecoins.

In conclusion, the upcoming hearing on stablecoin regulation in the US House of Representatives will provide an opportunity for experts to provide testimony on the benefits and risks associated with stablecoins. It will also allow members of the committee to gather feedback on the draft bill proposed to regulate stablecoins. As stablecoins continue to gain popularity, it is important for regulators to establish a clear and consistent framework for their use to ensure that they are used safely and effectively.