Your FinTech Reading for the Week

Fed releases DLT research paper.  The Federal Reserve’s new paper [full text] examines the potential risks, rewards, and impact of distributed ledger technology (DLT) for business cases including payments, securities clearing, and settlement.  The research was spearheaded by Fed governor Lael Brainard, following a speech she delivered on DLT in April [full text].

OCC requires special-purpose charter-seekers to consider financial inclusion.  The Office of the Comptroller of the Currency (OCC) dedicated significant attention to financial inclusion in its recent paper on special-purpose charter applications [full text]. The OCC expects all applicants “engaging in lending activities,” even if not subject to the Community Reinvestment Act, to show commitment to financial inclusion and create business plans responsive to community needs.

Circle to stop transacting bitcoin.  The company will no longer offer customers the ability to buy and sell bitcoins. The company intends to grow its Circle Pay mobile app, which facilitates transfers in dollars, euros and British pounds, though it may continue using bitcoin to settle transactions behind the scenes. Circle’s payments platform will continue to rely on blockchain.

BCG on blockchain.  The Boston Consulting Group (BCG) published “Thinking Outside the Blocks,” [full text] a primer for businesses to understand the interplay of tokens and blockchain in facilitating new forms of digital identity, ownership, contracts, and trust. BCG suggests that the environment for blockchain is “favorable” but prospects for the technology remain uncertain.

Facebook acquires European e-money license.  Facebook has been authorized as an “electronic money institution” by the Central Bank of Ireland (CBI). The new license allows the social media giant to roll out new functionality to its European users, including the ability to make payments and P2P money transfers via the Messenger app.

R3 expects to raise $150 million in Q1.  The blockchain consortium’s CEO confirmed that the company is “in the process of raising a $150 million round” expected to close “in the early part of the new year.” Over 90% of R3’s original 42 bank members “have expressed an interest in investing.” Current members include JPMorgan Chase, Deutsche Bank, and Thomson Reuters.

Is blockchain still on track?  In the wake of early R3-backers Goldman Sachs and Banco Santander leaving the consortium, Bloomberg’s Elaine Ou wonders what’s next for blockchain.  Ou suggests that some blockchain ventures may be running into problems because they “neglected to ask financial institutions what they wanted.”

What is the future for fintech and regulation?  Carol Van Cleef, a partner in Baker Hostetler’s D.C. office, shares her thoughts on the outlook for fintech and regulation. Van Cleef’s comments include notes on cybersecurity and ransomware, smart contracts, and robo-advisory services.

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