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Jackson Mueller
Associate Director, Center for Financial Markets
Jackson Mueller is an associate director at the Milken Institute's Center for Financial Markets. He focuses on fintech, capital formation policy and financial markets education initiatives. Prior to joining the Institute, Mueller was an assistant vice president at the Securities Industry and Financial Markets Association (SIFMA), where he focused on...
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FinTech in Focus

By: Jackson Mueller
February 02, 2016
   
   

FinTech in Focus is available via e-mail, arriving in your inbox every Tuesday. If you would prefer to receive our weekly highlights in your inbox rather than wait for us to tweet out the post, please sign up today by selecting the “FinTech in Focus Weekly E-Newsletter”. As always, please contact Jackson Mueller with any questions.

Ethereum Cryptocurrency: Ether Leapfrogs Litecoin and Ripple to No. 2 in Market Cap
The cryptocurrency Ether surpassed Litecoin and Ripple in the past two weeks to become the second-largest virtual currency by market cap, trailing only Bitcoin. Ether has seen a tremendous increase in value following R3CEV’s recent announcement of a successful distributed ledger experiment involving 11 global banks using Ethereum technology, and a recent blog post by Mike Hearn concerning the viability of Bitcoin. And, while we’re on the topic of virtual currencies, Coin Center released a Framework for Securities Regulation of Cryptocurrencies describing when, and if, a cryptocurrency resembles a security and thus should be subject to securities regulation.

DTCC Calls for Existing Central Authorities to Introduce Blockchain Standards
The Depository Trust & Clearing Corp., “the premier post-trade market infrastructure for the global financial services industry,” recently released a report which stated that secure distributed ledger technology “could provide significant operational improvements as well as further mitigate risk and reduce post-trade costs.” That said, the report repeatedly states that the implementation of real time settlement doesn’t depend on blockchain technologies because modifications to current practices and law can enable real-time settlement. DTCC further adds that the least risky path for the development of blockchain technology “would be for the existing, regulated and trusted central authorities to introduce standards, governance and technology to support distributed ledger implementations.” Speaking of distributed ledger technology, Digital Asset Holdings (DAH) just announced that it would move its Hyperledger blockchain platform to the Linux Foundation and will launch a blockchain trial with JPMorgan Chase – an investor in DAH’s now $60 million funding round. Separately, Bank of America has now filed approximately 35 blockchain-related patents with the U.S. Patent and Trademark Office.

Amazon vs. PayPal, Starbucks Wins
In a recent interview, Amazon Payments Vice President Patrick Gauthier dismissed the idea of onboarding PayPal’s digital payments service to its e-commerce website. And for good reasons: the company’s Pay With Amazon service, a direct competitor to PayPal, has been used by more than 23 million people since 2013, with payment volume rising 150 percent within the last year alone. Amazon still has some catching up to do. PayPal has nearly 180 million active users and it is launching Pay With Venmo in a bid to turn the peer-to-peer payments service beloved by Millennials into a profit-generating application. And yet, despite all of this, America’s infatuation for a grande, iced, sugar-free, vanilla latte with soy milk, or some other ostentatious order, continues to elevate Starbucks’ mobile payments application as the premier mobile payments service, according to recent research from Pew.

Robo-Advice Developments
Morgan Stanley announced last week that Naureen Hassan, formerly the head of Charles Schwab’s robo-advisor platform, Schwab Intelligent Portfolios, was joining the firm as chief digital officer for wealth management. It was reported in October that Morgan Stanley may join the growing number of financial services firms (BBVA Compass, Bank of Montreal and Invesco are the latest), who have launched or partnered with robo-advisor platforms. Growth in the number of robo-advice platforms has not gone unnoticed, however, as Dawn Calonge, FINRA’s Surveillance Director, shared her thoughts on the robo-advice model and stated that FINRA is actively reaching out to active firms.

Digital Money: The Tipping Point
A report by Citi and Imperial College Business School considers the factors that must be undertaken in order for a country to adopt digital money. The report notes that for many countries, reaching the “tipping point” – where a country has successfully transitioned to digital money from paper currency – will take time, but the benefits (in the form of savings) are worth the wait. The report also finds a deepening rift between countries which are more digitally ready and those that lack the appropriate infrastructure and regulation. “Despite expectations of positive activity in the Incipient quartile, we’ve seen very little,” the report notes, adding that government support and involvement in developing a country’s infrastructure and establishing suitable regulatory frameworks are vital if a country ever intends to move toward (and beyond) the “tipping point.”

FinF 2.2.16

 

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