US and China settle audit terms to benefit Chinese tech companies
Beijing and Washington signed a deal last Friday that will enable US regulators to inspect accounting firms in China and Hong Kong, reportedly marking a significant step towards resolving a dispute that had threatened to bar Chinese firms, including Alibaba, from US stock exchanges. US regulators have long sought access to the audit records of Chinese firms that are listed on US stock exchanges, but Beijing has been reluctant to grant such requests due to security reasons.
The agreement may signal a significant improvement in US-China relations, enabling many Chinese businesses and investors who have made investments into companies with an opportunity to continue to have access to the largest capital markets in the world. While both sides established the specifics of the agreement, US officials cautioned that their assessment of China's compliance would depend on whether they had full access to the audited records of Chinese companies. The Public Company Accounting Oversight Board (PCAOB), which is responsible for supervising the audits of US-listed companies, claimed that despite this, the agreement was reportedly the most comprehensive and detailed that the regulator has ever reached with China.
The PCAOB stated that the agreement would grant it complete discretion to choose the firms, audit engagements and possible violations it inspects and investigates without input from Chinese authorities. Additionally, the PCAOB expects to have direct access to interview and take testimony from all personnel associated with audits that it inspects or investigates.
Due to pandemic-related restrictions in China, Hong Kong has been chosen as the location for the on-site inspections, according to PCAOB. However, US regulators are said to have the option to inspect on the Chinese mainland in the long term. Chinese companies that fail to comply with requests for audit working papers will have their access to US trading suspended beginning in 2024, but this deadline could be pushed back.
Mastercard study suggests biometric payments are convenient and secure, but privacy concerns persist
Mastercard released a new research study as part of its second annual New Payments Index (NPI) that elaborates on global digital payment trends. The results suggest that privacy concerns are preventing biometrics adoption.
The study focuses on the Asia Pacific region, which includes Australia, China, India, Japan, New Zealand, Thailand and Vietnam. During the last twelve months, 88% of respondents in the Asia Pacific (APAC) region reportedly used technologies such as biometrics, digital wallets, QR codes and cryptocurrencies. Additionally, 69% of consumers in the region claimed they increased their use of at least one digital payment method during the same time period, compared to 52% of respondents from North America and 48% from Europe.
According to the survey respondents, biometrics-powered payments are the most convenient and secure option available: 70% of APAC respondents stated that using fingerprint or facial recognition to authenticate transactions was easier than remembering PINs or passwords, and 69% claimed it is more secure. However, only 53% of those polled in APAC said they were willing to share their biometric data to save time, while 72% are concerned about who will have access to their private information. Nonetheless, 58% of APAC consumers reported using biometrics more frequently during the last year, indicating an upward trend in adoption.
The report also examined data related to other digital payment technologies, such as Buy Now Pay Later (BNPL), showing that 50% of APAC respondents reported feeling at ease using the technology compared to 41% of consumers worldwide. In contrast, digital currencies and assets received a mixed response. The majority of APAC respondents (88%) had heard of cryptocurrencies, non-fungible tokens (NFTs) (68%) and other digital assets, but only 31% said they had held crypto as an investment in the previous year.
In response to the report, Sandeep Malhotra, EVP of Products and Innovation for the Asia Pacific market, Mastercard, stated that “financial stakeholders worldwide must support the sustainable development of these new payment methods, particularly in a time of uncertainty in socioeconomic, health, and political matters.” Malhotra expects widespread adoption of emerging payment technologies in the region.
MAS investigates cryptocurrency companies before new regulations
The Monetary Authority of Singapore (MAS), Singapore’s central bank, has reportedly begun plans for new cryptocurrency regulations to address the ongoing liquidity crisis and withdrawal issues. It has provided applicants and holders of the MAS' Digital Payment Token licenses with detailed questionnaires about operations and holdings, according to reports.
The audits are focused on the financial stability and interconnection of firms, with questions ranging from top tokens owned to top lending and borrowing counterparties, loan amount, and top tokens staked via decentralized finance protocols. Furthermore, MAS has reportedly granted ten licenses to Singapore crypto firms, including exchanges such as Crypto.com and DBS Bank's brokerage arm DBS Vickers. Nearly 200 firms applied for the license.
The most recent regulatory action in Singapore is intended to increase oversight of cryptocurrency companies in light of impending new regulations for the sector. MAS Managing Director Ravi Menon's announcement in mid-July stated that they would be developing a regulatory framework to address consumer protection, market conduct and reserve backing for stablecoins in the coming months.
According to the reports, MAS’s concerns are about certain gaps in Singapore's current crypto regulations. For example, companies that provide services for digital payment tokens are not subject to risk-based capital or liquidity requirements. Additionally, it was reported that they are not currently required to protect client funds or digital tokens from bankruptcy risks. Rather, legislation is primarily focused on technological risks, money laundering and terrorism financing threats.
Singapore and Indonesia collaborate on a cross-border payments interoperability venture
As part of the Association of Southeast Asian Nations’ (ASEAN) payments connectivity effort, the Monetary Authority of Singapore (MAS) and the Bank of Indonesia have launched the development of a cross-border QR payment linkage between their countries. Reports indicate that this link, which is scheduled to go live in the second half of 2023, will enable users to make immediate, secure and efficient retail payments by scanning the QRIS (Quick Response Code Indonesian Standard) or NETS QR codes displayed by merchants.
The purpose of payment connectivity is to enable individuals and businesses, particularly micro, small and medium-sized enterprises (MSMEs), to conduct cross-border trade, e-commerce and financial transactions in a more efficient manner. As international travel resumes, it is hoped that payment connectivity will support tourism growth.
Bank of Indonesia (BI) and MAS also signed a Memorandum of Understanding (MOU) to encourage the use of local currencies in bilateral transactions such as trade and direct investments. This is reportedly consistent with ASEAN financial integration efforts to broaden the use of local currencies in intra-ASEAN trade and investment settlement. Furthermore, it aims to assist businesses in reducing exchange rate risk exposures as well as bilateral transaction costs.
Ravi Menon, Managing Director, MAS, stated that the QRIS-NETS QR code payments connectivity represents a significant step toward ASEAN's objective of achieving regional payments integration by 2025 and fostering the region's thriving cross-border trade corridors. This connection is said to also support the G20's initiatives to reduce cross-border payment frictions globally and aid in the post-pandemic economic recovery and growth.
Credit and cash flow management app onboards over 200,000 businesses
CredAble, a supply chain financing platform based in India, has onboarded over two hundred thousand businesses through its credit and cash flow management app UpScale since its launch in November 2021, according to a recent press release. Additionally, the app has reportedly processed over 1 million invoices worth over Rs 10,000 crore. According to UpScale, its proprietary technology analyzed credit reports submitted by 700 lenders and bank statements totaling Rs 5,000 crore in transaction value. The app has collaborations with more than ten banks and non-banking financial companies (NBFCs) to provide digital credit to businesses, including micro, small and medium enterprises (MSMEs).
Reports indicate that only 16% of MSMEs have access to formal credit in India, resulting in a US $350 billion gap. Nirav Choksi, Co-founder and CEO, CredAble, commented that UpScale aims to combine trade, credit and payments to provide small businesses with a unique growth solution, unlike other business apps that Choksi says focus more narrowly on payments or cash flow management.
UpScale launched a suite of tools for accelerated vendor verification for businesses in April, including GST number verification, PAN number verification, GST to PAN number conversion, and bank account verification.
Working capital issues have become one of the main areas of concern for growth, and digital lending is a major channel for small businesses to gain credit access. According to market and consumer data provider Statista, online lending in India increased from $9 billion in 2012 to almost $110 billion in 2019, and it is expected to reach $350 billion by 2023. Reports also indicate that CredAble has raised a total of $58.8 million in five funding rounds, including the most recent $9 million round led by Axis Bank in early August 2022.
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