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Argentina’s Central Bank Set to Prove Non-Crypto Use Cases of Blockchain Technology with its New Clearing System

The Central Bank of Argentina (BCRA) is now looking to test a blockchain-based clearing system to be used by the country’s major financial institutions. The aim of the blockchain clearing system is to provide efficiencies for fiat payments and enable them to be more reliable and to provide end-to-end traceability.

A proof-of-concept for the permissioned blockchain network has been created, based on RSK Smart Contract network, along with the major commercial banks in Argentina, including Santander and BBVA, according to a blockchain developer IOV Labs. One of the major goals of the proof-of-concept was to show that there are other use cases for blockchain such as smart contracts, other than just cryptocurrencies.

The clearing system is currently in its testing phase, while Diego Zaldivar, the CEO of IOV Labs emphasized the importance of using technology to optimize processes and provide better services to Argentinian citizens during these global circumstances. Banks, clearinghouses, BCRA, and other financial institutions will be participating in the network.

Although the central bank is willing to look into blockchain as a technology to be incorporated into its clearing system, the BCRA has issued a statement in 2014 to citizens to remind them that digital assets such as Bitcoin were not a form of legal tender.

Other central banks have been propelling towards a blockchain-based currency to be used in the nation.

Bank of France launches program of experiments testing out CBDC

The Bank of France (Banque de France) has launched a program of experiments testing out a potential central bank digital currency (CBDC) aimed for interbank settlements. Potential participants are being invited to submit their applications, as the Bank of France is calling for applications to experiment with the use of a digital euro.

The French central bank is open to test out new technology, although it did not specify using blockchain. The three main objectives of the CBDC experiment includes identifying benefits, analyzing potential risks, and modeling as CBDC-based interbank settlement.

Sweden’s Sveriges Riksbank tests out CBDC

Sweden’s Sveriges Riksbank announced that it had started testing an e-krona, taking one step closer to the release of a central bank digital currency.

The e-krona aims to simulate everyday banking activities, including payments, deposits, and withdrawals from a digital wallet on a mobile phone. The pilot testing program has been scheduled to operate for one year, until February 2021 and will be running on blockchain.

Image via Shutterstock

IBM Joins Trade Finance Blockchain Platform We.Trade As New Shareholder

IBM has announced a new collaboration with blockchain-based trade finance platform, we.trade to enhance network capabilities and accelerate the global growth of the platform. We.trade was designed to connect buyers, sellers, banks, insurers, and other organizations in a network, simplifying cross-border trading.

We.trade is backed by a group of banks, including Deutsche Bank, HSBC, Rabobank, Santander, UBS, Société Générale, and a few others. As one of the largest blockchain-enabled trade networks in the world, the blockchain platform first aimed to help small and medium-sized enterprises (SMEs) in Europe to get better access to trade finance. With the new partnership with IBM, we.trade is looking to scale globally as it is expanding in Asia, Africa, and Latin America.

Built on the latest version of the IBM Blockchain Platform, IBM has been the platform’s technology partner since the beginning. We.trade was also the first enterprise blockchain consortium to go live back in early 2018.

We.trade automates trade finance processes, including providing traders with access to insurance, credit rating, and logistics services. Jason Kelly, General Manager of Blockchain Services at IBM said, “The strategic direction for we.trade and IBM is focused on driving growth and transparency across the entire trade ecosystem, collaborating to enhance the network effect of blockchain, and expanding access to trade finance and other services to the market place.”

IBM also takes a 7 percent stake in we.trade, amongst the 12 existing shareholders: CaixaBank, Deutsche Bank, Erste Group, HSBC, KBC, Nordea, Rabobank, Santander, Société Générale, UBS, and UniCredit.

During the last few months, with the emergence of the coronavirus pandemic, we.trade has observed the trend of removing paper-heavy processes in trade finance. With a digitized solution, improving access to trade finance will be essential to post-pandemic economic recovery.

“No other distributed ledger-based platform for trade has moved so rapidly to deliver value for member organizations and their customers,” said Ciaran McGowan, CEO of we.trade. “The enthusiasm for this platform underscores the need to continue to invest and expand access to a growing number of organizations.”

HSBC became the first bank to finance transaction via we.trade

The Global Trade Review reported that HSBC financed a transaction on the we.trade platform within the second round of pilots that started in June of 2019. The transaction took place between HSBC’s client Beeswift, which was a company that produces protective equipment and their sale to a company in the Netherlands banked by Rabobank.

Ripple’s Partner Santander Bank Won’t Use XRP for International Payments Due to Low Adoption

Santander Bank, a major European financial presence and one Ripple’s most prestigious partners is reportedly hesitating to add XRP to its international payments network.

One of Ripple’s most prominent partners, major Spanish bank Santander appears concerned about the low activity of Ripple’s XRP token and is hesitant to adopt the cryptocurrency on its international payment network—One Pay FX.

In a recent interview with the Financial Times, the Chief Executive Officer of One Pay FX, Cedric Menager said that Santander hopes to “operate in as many currencies and corridors as possible from the beginning.”

The Spanish banking giant has expressed concern about Ripple’s token, XRP, and its low usage saying the XRP token “was not actively traded in enough markets” to support the firm’s requirements for its innovative One Pay FX payments network. Menager explained this was less than ideal for the bank as Santander wants its users to have the “best experience as quickly as possible.“

While Santander is not ready to leverage XRP on One Pay FX quite yet, Ripple did clarify that Santander does use the blockchain company’s software for cross-border payment solutions. Ripple also asserted that Santander remains one of its largest and most important customers.

Blockchain Reduces Payments Friction Says Ripple CEO

While the XRP token may not yet be utilized as much as Santander would like to be able to include the cryptocurrency on its One Pay FX payments network, there have been encouraging movements and development on Ripplenet.

As reported by Blockchain.News, RippleNet’s on-demand liquidity (ODL) customers have been its core focus. Ripple stated in its second-quarter report that the liquidity of the network would deepen as more institutions leveraged RippleNet and even revealed that the company has been purchasing XRP in the secondary market to increase the health of the network.

Ripple further noted various key integrations of XRP, including Binance, which has launched an exchange-traded options contract, and Huobi XRP perpetual.

In late April, the first fully regulated crypto bank, Sygnum Bank, added XRP to its custody solution and financial platform. Uphold, a mobile payments startup also completed the integration of XRP into its wallet.

The company believes that these integrations helped contribute to the “health of XRP markets.”

CEO Brad Garlinghouse also believes that compared to just a few years ago, most governments now also considering leveraging blockchain technology for cross-border payments. Central Banks and institutions now see digital assets as a game-changer as it solves frictions like transparency and settlement.

G7 Bank Sector Higher Money Laundering Risk than Crypto Industry, Reports Mexico Financial Intelligence

According to an official report released by the Financial Intelligence Unit (FIU) of Mexico, the G7 banking sector comprising of major banks Santander, BBVA, Citibanamex, Banorte, HSBC, Scotiabank, and Inbursa—was the most prone to money laundering operations, despite being the most regulated.

Who is most at risk of money laundering?

Banks connected to exchange activity were also as highly ranked in terms of money laundering schemes. The report, which depicted the results of the second National Risk Assessment (NRA), discussed money laundering and terrorist financing. It detailed that there were four sectors within the financial industry that were most at risk of money laundering illicit activities.

The four categories were G7 banking, brokerage houses, exchange houses, and multiple banking institutions with commercial operations, as shared by El Economista. Among the four sectors outlined, the one with the highest risk of fraudulent activity was the G7 banking sector, which translated to approximately 80% of the banking sector’s assets.

The report by the FIU of Mexico also separated risk levels for money laundering and terrorist funding into four categories, depending on the magnitude of fraud – low, medium, medium-high, and high risk. The most regulated finance sector, the “G7 banking group,” ranked among the highest risk for money laundering.

Crypto scams easier to track than fiat

Though there appears to be increasing skepticism that fintech and crypto industries are always leveraged for money laundering schemes and monetary scams, the two sectors were surpassed by the traditional banking sector in terms of money laundering risk. The 2020 Financial Intelligence Unit of the Ministry of Finance and Public Credit report did not allocate a risk classification for the fintech industry.

During an ongoing panel hosted by the Association of Certified Financial Crime Specialists in August, Paxful Chief Compliance Officer Lana Schwartzmann mentioned that there are advantages to adopting cryptocurrency in a traditional fiat world. She referenced the infamous Twitter Bitcoin hack and stated that due to the digital trail left by crypto, digital assets fraud is easier to track than fiat. Had it been a traditional money heist, the investigation would not have been resolved as quickly.

Twitter Bitcoin heist

The Twitter Bitcoin (BTC) hack, which held the media spotlight in July, revolved around the narrative of three men who overtook Twitter by storm and generated over $100,000 worth of Bitcoin funds by hacking the accounts of world-known figures such as Elon Musk, Bill Gates, Kanye West, Joe Biden and more.

Santander Blocks Payments by UK Account Holders to Binance

Spanish banking giant Santander has blocked payments from its UK customers to Binance crypto exchange, citing the need to protect customers’ funds.

Santander unit in the UK sent emails to customers saying: We’ll be stopping payments from Santander accounts to Binance wherever possible.”

The email further mentioned the UK’s financial regulator (Financial Conduct Authority)’s recent warning that Binance Markets Limited is not allowed to conduct any regulated activities in the country.

Santander previously announced that it was undertaking a review of its policy towards cryptocurrency exchange after witnessing a huge rise in demand from customers seeking to purchase crypto assets in recent months.

Santander’s move to block payments to Binance from UK customers follows other UK banks to blacklist the exchange.

In June, NatWest (National Westminster) Bank imposed transaction limits on the number of funds customers could send to exchanges, including Binance. On Tuesday this week, UK Barclays blocked clients from sending payments to Binance. The following day, Nationwide Building Society, a mutual financial institution in the UK, announced that it was conducting a review of its policies on cryptocurrencies.

All such changes have come after the UK’s FCA announced that Binance should not operate its business in the country.

A bank representative from Santander’s UK unit said they had observed increased cases of UK customers becoming victims of crypto fraud in recent months. He said the commitment to keep customers’ funds is a key priority of the bank. Therefore, they have decided to prevent payments to Binance following the regulator’s recent warnings to consumers.

Efforts to Strength Compliance Standards

Recently, Binance has struggled to maintain its payment channels. A few days ago, the exchange suspended Euro bank deposits from the Single Euro Payment Area (SEPA), one of Europe’s key payment networks.

On July 6, Binance sent emails to its customers informing them that they would no longer be able to deposit money through the SEPA schemes. The exchange stated in the email that it made such a move because of events beyond its control.

Amid the rising crackdown from regulatory authorities, Changpeng Zhao, Binance CEO, called for clear regulations while saying that compliance is a journey.

Meanwhile, on Tuesday, June 6, Binance announced hiring a new director of compliance, Jonathan Farnell, the former director of compliance with eToro. The appointment of Farnell will assist in developing Binance’s regulatory product landscape.

Late last month, the UK’s Financial Conduct Authority banned Binance Markets Limited from providing its regulated activities in the country. Although the regulator does not regulate crypto assets, it requires exchanges to register with them. Binance has not registered with the regulator and thus is not allowed to operate its exchange business in the country.

Last month, Japan’s financial regulator – Financial Services Agency (FSA) – warned Binance about conducting its business in the nation without proper authorisation.

Also, last month, Binance halted its operations in Ontario, Canada, amid increased regulatory scrutiny of crypto assets in the region.

Yesterday, the Polish Financial Supervision Authority warned consumers to be cautious when using Binance’s services because the agency does not regulate the exchange.

Santander Bank to Offer Loans Backed by Tokenised Crop Products

The Argentinian offshoot of Spanish multinational financial services company Banco Santander is on track to start offering a loan product to farmers, which will be based on tokenised agricultural products.

The proposed product offering will be floated in conjunction with Agrotoken, a blockchain startup specialising in tokenising agricultural products.

The partnership will remove the hassles from the current system in which access to loans is engrossed with time delays and the inability of farmers or potential beneficiaries to prove the validity of their operations. Drawing on the advances in innovation, farmers and the broader agroecosystem will now be able to gain access to a ready financing model.

Accessing the loan will be based on a consensus model dubbed Proof of Grain Reserve (PoGR), and it implies that for every token involved in a loan transaction, there is a ton of grains stored that backs it.

“This is the first world experience that supports loans with tokens based on agricultural commodities, such as soybeans, corn, and wheat. Together with Santander, we are co-creating various financial products to provide agricultural producers with a service with which they can easily and smoothly access a new credit system backed by their grains”, says Eduardo Novillo Astrada, CEO & Co-Founder of Agrotoken.

With the digital ecosystem growing and blockchain innovations taking center stage in this growth, several banking institutions have explored avenues to back this new tech. Santander Bank is not a novice to innovations bordering on the blockchain ecosystem and is one of the partners embattled payments startup, Ripple Labs Inc, which has an active partnership.

The dive into the South American agricultural communities is a testament that the bank’s mission hovers around using technology to reach those who needed financing the most. Beyond the partnership with Agrotoken, the financial institution has promised more investments worth over $225 million in the region.

Santander Imposes Limit on Crypto Transactions for UK Customers

The British branch of the Spanish multinational commercial bank and financial services company, Santander, has now imposed a £1,000 ($1,120) limit on crypto transactions for customers in the UK.

Emphasizing protection from crypto fraud, Santander says this restriction is intended to protect customers from crypto investment risks. The firm noted,

“We want to do everything we can to protect our customers, and we feel that limiting payments to cryptocurrency exchanges is the best way to make sure your money stays safe.”

Additionally, the bank also stated from the 15th of November 2022, a limit to making crypto transactions worth $3,360 during 30 days would be implemented. The restriction only applies to customers who use their Santander bank account to deposit funds into crypto exchanges.

Though customers can still withdraw from exchanges to their bank account, the bank added that it would eventually be making more changes to these limits and completely ban the depositing of funds into crypto exchanges in the future.

Notably, this is not Santander’s first move disapproving crypto transactions. Last year, the bank blocked payments from its UK customers to the Binance crypto exchange, stating it was to protect customers’ funds.

The blocking was related to the UK’s financial regulator (Financial Conduct Authority)’s recent warning that Binance Markets Limited is not allowed to conduct any regulated activities in the country. At the end of the note, the bank mentioned the payments of funds into the Binance exchange still remain banned.

Not only Santander was in the mood to block crypto transactions last year, but Former Member of the British Parliament Nick Boles was also in the zone of disapproving the largest cryptocurrency by market cap, Bitcoin. Nick suggested to the Central Banks that anyone wanting to use Bitcoin for any payments should be forced to exchange it for another currency.