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US Treasury to oversee a new task force investigating digital currency in depth – Industry roundup: 03 March

US Treasury to oversee a new task force investigating digital currency in depth

The US Treasury Department plans to spearhead a new senior-level working group that is expected to commence discussions on the potential introduction of a digital currency. Nellie Liang, Treasury Undersecretary for Domestic Finance, stated that the committee will comprise executives from the US Treasury, Federal Reserve, National Security Council and other agencies, and is expected to meet frequently in the upcoming months to begin dialogue about potential CBDCs and other payment technologies.

The dialogues aim to focus on whether a US CBDC would support US leadership in the global financial system, maintain national security and safeguard privacy, while also attempting to combat illicit financial operations, stated Liang. However, the Treasury and Fed have not yet embraced the need for a US CBDC, she reiterated. The US Fed is reportedly conducting technology research and experimentation to determine if a CBDC is in the country’s best interest.

As the Fed prepares to roll out a widely accessible real-time payments system for banks in the US, Liang pointed out that some of the appeal of a CBDC would vanish with an enhanced interbank payments system. She also echoed policymakers’ apprehensions that the stability of the traditional banking system could be jeopardized if CBDCs become widely available. She added that there could also be challenges with retail CBDCs, such as the possibility of the lending market in the private sector becoming unstable during times of financial uncertainties.

The new US working group aims to address the issue with other nations as well as with international organizations to ensure that CBDCs work effectively and securely with the current financial system, supporting both financial stability and the integrity of the global financial system, state Liang.

Coinbase crypto exchange terminates ties with lender Silvergate

Coinbase Global, a cryptocurrency exchange, has reportedly terminated its financial contract with Silvergate Capital, a US-based bank, while also declaring that it had little exposure to the lender.

In a filing with the SEC, the US financial markets regulator, the bank reportedly postponed publication of its annual report and warned that it was evaluating its ability to continue operations. It also revealed a new sale of assets worth $5 billion, which include bonds and notes, to pay its debts. Additionally, Silvergate claimed that the upcoming regulatory scrutiny could impact its profitability further. Reports indicate that Coinbase halted payments to or from Silvergate and stated that it would collaborate with other financial institutions to assist clients in completing their cash transactions. Following the Coinbase announcement, shares of Silvergate dropped by almost half to US $7.06, said reports. At US $60.12, Coinbase stock had fallen by almost 7%.

The decision by the exchange comes as Silvergate reportedly attempts to navigate its way through the liquidity crisis it encountered after FTX's bankruptcy last year, which led to its customers withdrawing deposits worth billions of dollars. Additionally, short sellers have reportedly started to target the bank. S3 Partners, an analytics company, revealed that short interest for Silvergate stock could reportedly reach 22.6 million shares, or 82% of the float. If this occurred, using the percentage of float, it would reportedly become the most shorted stock in the US.

Quantifind secures US $23 million in financing to aid businesses in countering financial crime

Quantifind, a US-based supplier of AI-powered financial crime risk management solutions, secured US $23 million in a fundraising round led by DNS Capital, with Citi Ventures, US Venture Partners, Valor Equity Partners and S&P Global also participating in the financing. Quantifind, which offers software-as-a-service solutions and collaborates with governmental organizations, aims to assist banks and financial institutions in preventing fraud and money laundering.

The firm intends to develop its products for customer monitoring, supply chain risk screening and financial crimes investigation with the new capital, as well as planning to expand into global markets. The new funding reportedly comes on the heels of a successful 2022, stated Quantifind, during which it teamed up with four major global banks and was awarded new contracts from the US Department of Defense. Additionally, the company has also entered into agreements with a number of US institutions and has formed alliances with the Polaris Financial Intelligence Unit and the United for Wildlife taskforce. According to Quantifind’s CEO and Co-founder Ari Tuchman, international financial institutions and governments recognize the company’s capacity to automatically identify risk threats from various unstructured data sources.

The Australian central bank to commence a trial program for digital currency

The Reserve Bank of Australia (RBA) has plans to establish fourteen pilot projects that would reportedly examine possible use cases and economic advantages of a CBDC in Australia. The nation's central bank is working with the Digital Finance Cooperative Research Centre (DFCRC), as well as partners including Australia and New Zealand Banking Corp, Commonwealth Bank of Australia and Mastercard.

A variety of industry participants, ranging from small-sized fintechs to major financial institutions, were reportedly asked by the RBA to submit use cases, in which fourteen were chosen to take part in the trial. The use cases include offline payments, nature-based asset trading, trading in securities backed by highly liquid assets, and an interconnected CBDC for dependable Web3 commerce.

Brad Jones, Assistant Governor, RBA, commented that the pilot and research study, which are expected to be carried out concurrently, aim to address two purposes: to help the industry gain practical experience and to provide legislators with a better understanding of how a CBDC could strengthen the Australian financial system.

Wise offers two new solutions in the US to facilitate cross-border payments

Wise, a fintech for cross-border payments, has launched two products in the US and debuted new branding. The Wise Business cards, which reportedly link to Wise accounts, enable companies to initiate cross-border payments at the mid-market exchange rate, while the software also offers managers with capabilities to control spending and keep track of card usage.

The fintech reportedly launched the new capability to enable clients in the US to send funds using links without having to obtain bank account information, while recipients can enter their bank information to receive funds. Additionally, Wise unveiled new branding.

Reports indicate that global remittances are expected to reach US $794.54 billion in 2023, an increase from $775.13 billion in 2018. However, these kinds of transactions are reportedly hindered by excessive fees, poor cost transparency and payment inefficiency.

One of the major cost drivers for cross-border payments is reportedly the frequent requirement for currency conversion by intermediaries. Sharon Anne Kean, Director of Global Expansion, Wise, commented that some banks include cross-border payment costs within their exchange rates, which reportedly result in a lack of cost transparency. Additionally, standard cross-border payments reportedly take several days, causing cash flow challenges for companies. Wise states that 91% of their transfers take place in less than 24 hours, with approximately 52% occurring immediately.

The business cards and money linkages from Wise will reportedly assist with a variety of cross-border issues, offering clients with greater affordability and accessibility. Wise aims to continue to broaden its offerings to help streamline local and global spending in addition to funds transfers.

Arcmont, a major European private debt manager, finalizes acquisition by US-based asset manager, Nuveen

Nuveen, a subsidiary of TIAA and a US-based asset manager with US $1.1 trillion in assets under management and operations in 27 countries, has acquired Arcmont Asset Management, a European private debt investment firm.

Reports indicate that the acquisition will enable Nuveen to enhance its knowledge of private capital, its footprint in Europe, and Churchill Asset Management, a North American private debt and private equity investment specialist. With more than $66.5 billion in committed capital from the merger of Arcmont and Churchill to form Nuveen Private Capital, it will reportedly become one of the largest global private debt managers, increasing the firm's total alternative credit assets under management to $178 billion.

Arcmont, which has 100 staff members offering financing solutions across a variety of companies, industries and markets throughout six offices in Europe, has reportedly raised over $26 billion in capital and invested more than $24 billion in more than 270 deals across Europe. Additionally, its team of investment professionals combines pan-European origination skills with a history of working with corporates, advisers and private equity funds, said reports.

The collaboration between Churchill and Arcmont will reportedly be led by their individual leadership teams and will operate under their own brands while utilizing Nuveen's resources, knowledge and distribution capabilities. Together, Churchill and Arcmont serve about 600 institutional and family office investors with more than 240 investment and support specialists.

Modern Treasury and Silicon Valley Bank launch Global ACH, reducing cross-border payments

Modern Treasury, a US-based payments provider, and Silicon Valley Bank have launched Global ACH, a solution that will reportedly allow mutual clients to send cross-border payments efficiently and cost-effectively using local payment platforms.

Modern Treasury states that Global ACH offers a less expensive alternative to the SWIFT network and other third-party entities that charge foreign exchange fees. Additionally, customers can reportedly automate their global payments by leveraging the ACH and RTP payment networks in other nations, enabling them to enhance their global operations without the initial outlay.

The company anticipates that Global ACH will be favoured by marketplaces that pay users and suppliers in foreign markets, shipping and logistics companies that send money to vendors and suppliers abroad, financial services providers such as payroll and lenders sending money to foreign recipients, businesses with a significant number of foreign suppliers and contractors, and software providers that offer accounts payable services.

With Silicon Valley Bank, which incorporates the SWIFT network, Modern Treasury's Global ACH is expected to strengthen its current global payment capabilities. While SWIFT is reportedly suitable for rapid, one-time international payments, Global ACH aims to help businesses with ongoing global payments as well as lesser value transactions that are not time sensitive.

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