US Federal Reserve releases guidelines for master accounts for crypto banks

The US Federal Reserve's governing board has released tiers of guidelines for crypto banks and other fintech institutions to follow. The new guidelines will standardize applications for master accounts from organizations with new charters. The rules apply to cryptocurrency banks as well as other cryptocurrency trade or industry groups.

Crypto-related financial institutions or similar types of financial products have grown dramatically in recent years. The Fed stated that as the number of institutions grows, many of them have requested access to the Federal Reserve Banks' accounts and payment services, referred to as "master accounts."

By opening reserve bank master accounts, institutions can expect to gain direct access to the Federal Reserve's payment systems. Reports indicate that if businesses lack access to this information, they will then be forced to form partnerships with other financial institutions that maintain master accounts.

Institutions can now expect to operate with greater independence with these new rules in place, provided that they adhere to the regulatory measures. Furthermore, these crypto companies can now forgo using traditional banks as intermediaries. The guidelines are comprised of a three-level review framework, where the level of due diligence provided to an institution may vary dependent on the applicant’s level of risk.

According to the Federal Reserve, “institutions with federal deposit insurance would be subject to a more streamlined level of review, while institutions that engage in novel activities and for which authorities are still developing appropriate supervisory and regulatory frameworks would undergo a more extensive review.” The purpose of this modification was to handle non-federally insured organizations chartered under state law and federal law equally.

The Fed asserted that numerous participants during the consultation on proposed guidelines pointed to fintech-related business models and other unique special-purpose charters as potentially heightening the risk to the payment system, according to Crypto News. Michelle Bowman, Governor, Federal Reserve System, stated that more work is required prior to establishing a methodology to apply these principles, cautioning that while the standards will improve uniformity and reliability, they are only the first step toward a transparent application process.

SAP network to aid US businesses in meeting sustainability goals

Information Services Group (ISG), a global technology research and advisory firm, published a new research report stating that US companies seeking to improve their sustainability are turning to SAP ecosystem partners for enterprise resource planning (ERP) solutions that help meet their objectives.

Companies are reportedly under increasing pressure to become more sustainable. However, many are finding it difficult to find enough specialists to fill these positions, according to the 2022 ISG Provider Lens SAP Ecosystem Study for the United States. The report indicates that they are looking to service providers, especially in high-demand industries like SAP solutions, for sustainability.

According to Bill Huber, ISG partner, Digital Platforms and Solutions, sustainability has become a major focus for both providers and enterprises in the SAP ecosystem. Some are calling it a critical requirement for business operations and service provider offerings.

According to ISG, one factor contributing to the lack of sustainability talent in the US is that it is still lagging behind Europe, where the drive toward decarbonization began earlier. Global SAP service providers are looking to aid US businesses by using case studies and experience from Europe.

The development of IoT to capture and analyse data for insights related to environmental, social and governance (ESG) objectives is becoming a major driver of the market for SAP's ERP services, according to the report. Additionally, SAP ecosystem partners are working more closely with SAP to provide sustainable solutions including route optimization, supply-chain track-and-trace capabilities, and carbon footprint analysis.

The 2022 ISG Provider Lens SAP Ecosystem report for the US assesses the performance of forty providers across five categories: Managed Application Services for SAP ERP, Managed Platform and Cloud Services for SAP, SAP Business Technology Platform, and SAP S/4HANA System Transformation — Large Accounts.

Russia proposes its alternative to SWIFT for trade partner transactions

Russia has invited members of the Shanghai Cooperation Organization (SCO) to join its financial messaging system (SPFS), the Russian equivalent of SWIFT. According to the country's Economic Development Minister, Maxim Reshetnikov, Moscow wants to increase the volume of settlements in national currencies.

Reshetnikov pointed out that the SCO countries must continue to push for complete national payment system interoperability and increase the number of cross-border payments in domestic currencies. Reshetnikov further added that a quarter of the trade transactions between Russia and China are currently settled in rubles and yuan. Reports indicate that the SCO has eight members – China, India, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Pakistan and Uzbekistan – as well as four Observer States (Afghanistan, Belarus, Iran, and Mongolia) and six Dialogue Partners (Armenia, Azerbaijan, Cambodia, Nepal, Turkey, and Sri Lanka). The organization's work is said to be primarily concerned with security issues and handling regional development issues.

Reports indicate that Russia has been aggressively promoting its domestic financial messaging system since being removed from SWIFT as part of Western sanctions imposed on the country due to the Ukraine conflict. Both systems facilitate financial transactions between banks, but Russia's SPFS was only used in Russia up until this year, whereas SWIFT is an internationally adopted system.

BankiFi secures funding to provide embedded banking in North America

BankiFi, a UK-based embedded banking services provider with concentration on small and medium-sized businesses (SMBs), has raised US $4.8 million in the latest round of funding led by Praetur Ventures to expand into North America. BankiFi reportedly plans to use the funding to help reach its goal of providing its embedded banking platform to over two million SMBs across four continents by 2024.

Reports indicate that BankiFi offers an open cash management platform and architecture that can be integrated into financial institutions' existing infrastructure, providing customizations needed by SMBs. Keith Riddle, CEO, BankiFi Americas, commented that this technological step is expected to make cash management and the payments process seamless and simpler for SMBs worldwide.

PairSoft collaborates with Finexio to launch B2B digital payments solution

PairSoft, a provider of integrated AP and procurement automation, has partnered with financial behemoth Finexio to handle payments processing. The partnership aims to help AP and procurement teams maintain their high performance by leveraging PairSoft's comprehensive solutions.

A key component of PairSoft's goal for a unified, non-siloed spend management cycle is the new payment option, which is expected to help customers save time and money by eliminating paper checks that are prone to fraud and allowing for seamless automation. One-click payments, enhanced security and control, high-touch supplier enablement, and different payment alternatives for vendors are some of the features that will also improve the PairSoft user experience, according to reports.

PairSoft's foray into payments is said to complement the company's current robust automation solutions, into which the Finexio-powered payment platform will be integrated. The company currently offers a wide range of payment types and channels, including virtual cards, ACH, wire transfers and paper checks. For both large and small organizations, the ability to make electronic payments more quickly will increase cash flows and optimize operations, while the elimination of manual errors and the end-to-end encryption solution will strengthen fraud prevention.

Crypto.com receives OSC approval to provide services in Canada

Crypto.com, a global crypto platform, has signed a pre-registration undertaking with the Ontario Securities Commission (OSC) in Canada, which expects to follow the regulations established by the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) and the Autorité des marchés financiers (AMF) of Quebec.

This will reportedly make Crypto.com the first platform to provide cryptocurrency services in Canada. According to management, the exchange is expected to collaborate with the securities regulator, Canadian Securities Administration (CSA), to provide a variety of products and services in full compliance with Canadian regulations.

This announcement furthers the significant regulatory victories that Crypto.com has achieved internationally, notably in Singapore, the United Arab Emirates, South Korea, Greece, Italy and the Cayman Islands.

Europe’s bankruptcies increase while business registrations decrease

New business registrations in the EU reportedly fell by 1.2% in the second quarter of 2022 compared to the previous quarter. According to recent reports, new registrations have been declining since the start of 2022, with the first quarter showing a 2.3% decline compared to the fourth quarter of 2021.

Alternatively, bankruptcy declarations increased for the fourth quarter in a row as shown in table 1 below by Eurostat. The rise began in the third quarter of 2021, after an 11% decline in the second quarter of 2021 compared to the first quarter of 2021. Additionally, bankruptcies increased by 2.2% in the second quarter of 2022. The number of business registrations in the first two quarters of 2022 was still greater in comparison to the pre-pandemic period in 2019.

Table 1: Source Eurostat

Bankruptcy declarations reportedly rose the most in transportation activities in Q2 2022. According to tables 2 and 3 below from Eurostat, only the construction and information/communication sectors saw a decrease in the number of bankruptcies in the second quarter of 2022 (-12% and -4%, respectively) compared to the previous quarter. However, other activities realized an increase in bankruptcies. The activities with the highest increases in the number of bankruptcies in the second quarter of 2022 in contrast to the previous quarter were transportation and storage (+16%) and education, health, and social activities (+12%).

Table 2: Source Eurostat

Table 3: Source Eurostat