Bitcoin withdrawals suspended in volatile trading

Binance, the world’ largest crypto exchange “temporarily” halved bitcoin withdrawals on Monday after the cryptocurrency dropped to its lowest point in nearly 18 months during a broad-based market sell-off triggered by the latest US inflation data.

Binance blamed a transaction processing issue for the interruption and said that trading in other cryptocurrencies was unaffected by the pause. However, the hiccup came after crypto lending platform Celsius announced it was pausing all withdrawals and transfers amid “extreme market conditions”. Its CEL digital token plunged nearly 50% late Sunday and the total value of the digital asset market dipped below US$1 trillion (£820 billion), having been valued by data site CoinMarketCap at nearly US$3 trillion last November.

Celsius said in a blogpost: “Due to extreme market conditions… Celsius is pausing all withdrawals, swap, and transfers between accounts. We are taking this action today to put Celsius in a better position to honour, over time, its withdrawal obligations.” In an earlier blog on 7 June, Celsius had reassured customers that it had not experienced any issues in meeting withdrawal requests after the collapse in crypto project Terra spared market volatility.

However, Marcus Sotiriou, analyst at the UK-based digital asset broker GlobalBlock commented on the latest bout of volatility: “Many think it is mainly due to fear surrounding the insolvency risk of one of the biggest lending platforms Celsius, after it has been widely speculated that they have been irresponsible with client funds.”

And according to the CoinDesk website, rival cryptocurrency lending platform Nexo has expressed interest in buying some of Celsius’ assets. “In a letter to Celsius Monday, Nexo said it was particularly interested in Celsius’ collateralised loan portfolio,” it reported. “Nexo publicised the letter, which didn’t mention a price, in a tweet.”

Bank of Jamaica presses ahead with digital currency

Jamaica’s central bank has moved a step closer to issuing digital currency backed by the state to be used as local legal tender. The move is expected to help many on the island of nearly three million who do not have bank accounts, according to a government statement.

Jamaica is following the lead of the Bahamas, became in October 2020 was the first country to roll out a digital currency – the ‘Sand Dollar’ – nationwide and more than a year after the Eastern Caribbean Central Bank (ECCB) created its own form of blockchain-based currency, which is available in several island nations including St. Lucia, Grenada, Antigua and Barbuda and St. Kitts and Nevis.

The Bank of Jamaica (BOJ) has already completed a small-scale pilot programme last year with Ireland technology firm eCurrency Mint and named its central bank digital currency (CBDC) the Jamaican Digital Exchange, aka Jam-Dex.

Earlier this year the BOJ announced a phased launch of the token so that users could transact using the CBDC via their digital wallets and this month legislators approved a bill authorising the BOJ to formally issue and back the CBDC.

Those latest amendments authorise the central bank to be the sole authority to issue a CBDC, and for it to become legal tender, said Natalie Haynes, the BOJ’s deputy governor. However, before those amendments become law, there are still some steps to be taken, she added.

“The publication of the Act in the [Jamaica] Gazette will signal the date when the Act comes into effect. At the date of promulgation, the Bank will be so authorised to issue CBDC, and CBDC will then be regarded as legal tender.”

The BOJ has said that Jam-Dex does not utilise blockchain technology; not because the bank has any major concerns with the technology usually associated with CBDCs but because it requires seamless integration with the country's payment infrastructures, which poses a challenge. At the same time the use of a CBDC stands to raise “systemic efficiency” and lower physical cash distribution and storage costs, the central bank adds.

Trade finance bank launches in the UK

Neotrade, which says its mission is to become the “leading” digital trade financing bank operating on a global scale, has launched operations in the United Kingdom.

The Manchester-based bank offers financing for small and medium-sized enterprises (SMEs) using an artificial intelligence (AI)-based scoring system to provide a “personalised financing experience within minutes”.

“Small and medium sized businesses (SMBs) are in the backbone of the global trade,” Neotrade says, noting that nearly half of worldwide trade volumes are produced from this segment.

“At the same time many SMBs are struggling to get the financing they need, as banks are not able to process most of the requests,” it adds. “Over 40% of requests get rejected automatically. Moreover, as agile businesses, SMBs require an easy, transparent and fast way to financing”.

Neotrade plans to serve this untapped market and aims to “shape the trade finance market for SMBs in the future and cover the market gap”.

The bank employs a four-step process, which it says it can take care of supplier payments and customers can then repay based on their chosen terms of payment.

“We believe that international trade is a key driver for development around the globe. Businesses must have access to a steady cash-flow all year round,” Neotrade adds.

“In the face of the unforeseen, the conventional norm is to watch, wait and lie low. We want to help businesses stay safe while moving ahead of all disruptions.”

Standard Chartered offers Chinese yuan-denominated Asian options

Reports in the Chinese press state that Standard Chartered Bank has become the first foreign bank to sell Chinese yuan-denominated Asian options to two China mainland companies. The UK banking giant is said to be extending its product portfolio with new additions that give its clients a wider range of hedging instruments at a lower cost.

The two clients are logistics equipment provider China International Marine Containers and supply chain service provider Zheshang Development Group, the London-based lender said.

The news comes after People’s Bank of China (PBoC) started to allow yuan Asian options to be issued on 20 May. With Asian options, also known as average options, the payout is determined by the average price of an underlying asset over a period of time, while for European and US options the payout depends on the price at maturity.

Asian options reduce the possibility of extreme profit or loss on the expiration date, which is more conducive to neutral hedging and safeguarding value, said Yang Jing, Vice President of Standard Chartered Bank China. In addition, the Asian options have lower premiums than European and US options.

Asian options are more suitable for companies with stable forex cash flow to achieve substantial hedging, Yang Liu, general manager of the financial market department at Zheshang Development, told local media.

Influenced by the US Federal Reserve’s tightening monetary policy, the Yuan’s exchange rate against the US dollar has fluctuated considerably since the start of the year. It moved lower for much of April but has since seen a partial recovery.

The rate is likely to fluctuate between 6.6 to 6.9 as many institutions believe that the Fed will raise interest rates again in June and July and that the greenback will continue to appreciate, according to local reports.

Demand booms for short-term sukuk

The International Islamic Liquidity Management Corporation (IILM) said that it has issued short-term sukuk worth $7.23 billion to the market over the past six months amid greater demand for Sharia-compliant finance instruments.

The IILM’s short-term sukuk issuance regularly averaged more than US$1 billion a month, with its regular offerings including 19 series of Islamic bonds with tenors varying from one to six months.

The organisation’s 28th governing board meeting was held in Abu Dhabi on 9 June and was chaired by UAE Central Bank Governor Khaled Balama.

“As Islamic finance attracts greater demand, the IILM aims to solidify its position as a leading support hub for international Islamic finance,” he said.

“The IILM will continue supplying its short-term Sharia-compliant liquidity instruments monthly in furtherance of its mandate, objectives and future plans.”

The Corporation is an international organisation established in 2010 by central banks, monetary authorities and multilateral organisations. It issued the regular short-term sukuk across varying tenors and amounts to cater to the liquidity needs of institutions offering Islamic financial services.

In March, Moody's Investors Service reported that the Islamic financial sector was set for continued growth in 2022 as the accelerating economic recovery, particularly in the GCC region, brightens the outlook for credit growth, despite challenges from a rise in interest rates and an overall decline in sukuk issuance amid higher oil prices.

Islamic banks around the world will also continue to outperform their conventional peers in terms of asset growth this year, said the rating agency.

Strong fundamentals are also expected to drive the expansion of assets under management in the Islamic funds industry.

Modulr and Ripple partnership boosts Brazil’s Remessa Online

Brazilian fintech Remessa Online is joining forces with Modulr and Ripple to extend its cross-border payments service from Brazil into the UK and Europe.

Payments platform Modulr and enterprise blockchain and crypto solutions provider Ripple announced in February they were partnering to enable seamless payments into Europe and the UK. The partnership will now aim to make it easier for Remessa Payments to run real-time payments internationally.

Remessa Online can now provide customers with access to Single Euro Payments Area (SEPA) Instant payments and the UK’s Faster Payments; enabling them to make payments 24/7, 365 days a year to the UK and Europe. It is the first Brazilian business to establish a partnership with Modulr.

Modulr’s access to UK and European payment rails and RippleNet’s international infrastructure provides Remessa Online with an alternative to legacy correspondent banking, enabling it to make European and UK payments quickly, reliably and cost-effectively.

“We’re delighted Remessa Online is our first Brazilian fintech customer to take advantage of our partnership with Ripple,” said Myles Stephenson, founder and CEO of Modulr.

Kenyan and Nigerian central bankers “pro-CBDCs, anti-crypto”

Executives at Nigeria’s and Kenya’s central banks have endorsed central bank digital currencies (CBDCs) but say that cryptocurrencies are too volatile to become an acceptable payment method. and pose a risk to financial stability, according to a Reuters report.

The report states that Kingsley Obiora, the deputy governor of the Central Bank of Nigeria (CBN) and the Central Bank of Kenya’s (CBK) governor Patrick Njoroge, believe that a CBDC has a better chance of narrowing the financial exclusion gap and is the one viable means of reducing the cost of transactions.

In the report, Obiora, who spoke at an International Monetary Fund (IMF) moderated virtual summit, explained that his institution is opposed to cryptocurrency because “the volatility it creates can become a source of instability in the system.” Njoroge is quoted in the report as questioning what he sees as the hype associated with cryptocurrencies, but also hinted that the Bank may eventually regulate crypto assets as a “wealth product.” Besides regulating the privately issued digital currencies as a wealth product, Njoroge suggested that the CBK could eventually follow in the lead of Nigeria and issue its own CBDC.

However, unlike the CBN, which aims to widen financial inclusion via its recently launched CBDC, the CBK will not be prioritising this goal as it has been achieved with mobile money, Njoroge explained.

Kenya's central bank has already sought peoples' views and perceptions on CBDCs. According to the Reuters report, the CBK is now in the process of examining the public’s feedback.