FinTech in Focus
Welcome to FinTech in Focus, a compilation of must-read stories about the role technology plays in the delivery of financial products and services. As part of the Center for Financial Markets FinTech program, FinTech in Focus offers a sampling of the week’s top domestic and international headlines and stories about this innovative, fast-growing sector.
As we continue to build-out the service and grow our readership, we will begin to release the weekly headlines over e-mail. Subscribe to FinTech in Focus to receive these updates in your inbox.
Venture Capital Investment Around the Globe
London’s FinTech sector has attracted more than $550 million in the first three-quarters of this year, surpassing the $487 million total in 2014. The $550 million is part of the roughly $2.2 billion invested in tech firms by VCs across the UK. In Asia, venture capital deal value jumped to $31.6 billion at the end of August—more than $9 billion ahead of the $22.4 billion total recorded in 2014. In the United States, venture capital firms raised $4.4 billion in the third quarter, a decrease of 33 percent compared to Q3 2014, even as total fundraising “remains quite strong,” according to Bobby Franklin, president and CEO of the National Venture Capital Association. In total, U.S. venture capital funds have raised $21.7 billion so far in 2014.
Cameron and Tyler Winklevoss received approval from the New York State Department of Financial Services (NYDFS) to launch the Gemini bitcoin exchange. The exchange was granted a limited liability trust charter by NYDFS, is open to both institutional and retail investors, and recognized in 27 states. Separately, Chroma launched Chroma.fund, the first blockchain-enabled IPO platform in the U.S. The new exchange is supposed to aid small businesses that can’t list on the NYSE or NASDAQ, with companies selling equity stakes or issuing a new financial instrument called the ChromaCoin bond. In the UK, Crowd2Fund launched the Exchange, the UK’s first marketplace for trading crowdfunding investments.
Developments in the Virtual Currency Space
Last week, BitPay and Ingenico unveiled a payment terminal capable of supporting transactions involving bitcoin at the point of sale. The Uniform Law Commission Committee on the Regulation of Virtual Currencies met over the weekend to consider “the need for and feasibility of drafting state legislation on the regulation of virtual currencies.” The meeting occurred less than a month after the Conference of State Bank Supervisors released its model framework for the regulation of virtual currencies. Nomura Securities will partner with the Nomura Research Institute to develop a study looking at the potential for distributed ledger technology, while Fidelity Investments and Deloitte are sponsoring the Blockchain Hackathon taking place in November in Dublin, Ireland. The announcements come as roughly 73 percent of Wall Street legal and compliance professionals believe distributed ledger technology can work without the need for bitcoin.
European Eyes on Big Data
The Joint Committee of the European Supervisory Authorities, a body made up of the European Securities and Markets Authority, the European Banking Authority and the European Insurance and Occupational Pensions Authority, will look into consumer protection issues surrounding the dissemination and use of big data. The UK’s Financial Conduct Authority has also indicated its interest in further exploring the use of big data over the next year. The announcements come less than a month after a U.S.-European Union international commercial data-sharing agreement was ruled invalid by the EU Court of Justice.
Non-Cash Payments on the Rise
A new report finds non-cash payment transactions reached 358 billion in 2013, and is likely to have grown to nearly 390 billion last year, with the U.S., the EU, Brazil, and China topping the list. The proliferation of non-cash transactions, especially innovative ways to pay, has changed transaction banking. As explained in a recent report by BNY Mellon, banks need to remain closely engaged with the FinTech community “as ‘the era of fintech’ is upon us.”
Comparison of Non-Cash Transactions (Billion) and Change in Payments Mix (%), by Region, 2009, 2012-2013
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