Fintech Digest

The FTX Fall Has Launched A Chain Of Bankruptcies

The FTX Fall has launched a chain of bankruptcies, as the economic turbulence in Europe continues. Klarna launches a new product: company introduces a new service that helps business owners to cooperate with influencers. ECB expert's predict the fall of bitcoin, given its low market capitalization and low daily trade volumes. Ireland strengthens cash flow in the country, as the governmental plans for digital transformation include the digitization of all payments. Barclays was punished for hidden fees: the bank will pay £10 million for hidden fees. Check out these headlines and more in this brief summary!

TOP NEWS |  28.11-04.12

  • The FTX fall has launched a chain of bankruptcies
  • Klarna launches a new product
  • ECB expert's predict the fall of bitcoin 
  • Ireland strengthens cash flow in the country
  • Barclays was punished for hidden fees
  • Online credit regulation gets tougher in EU
  • JP Morgan is pushing switzerland companies ahead
  • Banks are closing branches in the UK because more people are using online banking
  • TreeCard is paving the green way in the financial world
  • India is taking over the economic world

The FTX Fall Has Launched A Chain Of Bankruptcies

Another cryptocurrency platform filed for bankruptcy. This time it’s cryptocurrency-based lending platform BlockFi, known for requesting a $400 million line of credit from FTX earlier this year.

BlockFi and eight subsidiaries have filed for insolvency under Chapter 11 of the U.S. Bankruptcy Code.  

As part of the restructuring effort, the company plans to collect liabilities from all its counterparties, including the bankrupt FTX. According to BlockFi's filing, it has more than 100,000 creditors. The company's assets and liabilities are valued between $1 billion and $10 billion.

The petition allows the company to continue operations and includes requests to pay employees' salaries and continue benefits without disruption.

Klarna Launches a New Product

Klarna has unveiled a new platform that connects retailers and opinion leaders more closely so they can reach new markets more easily.

Already available in all markets Klarna operates in, the Creator Platform promises to match retailers with the right influencers from a pool of more than 500,000 influencers worldwide.

Retailers will also be able to track the performance metrics of their partnerships with bloggers, including traffic, sales, and conversions, in real-time.

Klarna built its platform on top of APPRL, an influencer marketing provider it acquired last year.

ECB Expert’s Predict the Fall of Bitcoin

Senior European Central Bank payments specialists have described bitcoin as a marketing ploy that should not be legitimized by regulatory involvement.

Ulrich Bindseil and Jürgen Schaaf label the present upheaval in cryptocurrency markets as Bitcoin's Last Stand in a blog article published by the European Central Bank.

The belief that bitcoin's value will surely grow to ever-higher levels began to dominate the narrative in the mid-2010s. However, bitcoin is not acceptable as an investment or even as a real-world payment method, experts claim. They’ve also described cryptocurrency stabilization as «artificially induced last gasp before the road to irrelevance».

At the same time, lawmakers' efforts to regulate the industry are called one of the driving forces behind the influx of funds into the industry. 

It has been argued that the existing regulatory framework governing cryptocurrencies is shaped in part by misconceptions about the processes «on the kitchen», particularly as they relate to DLT / blockchain. The authors of this article claim that these technologies have yet to create sufficient value for society.

Ireland Strengthens Cash Flow in the Country

Ireland will create a legislative framework to protect cash, at least as long as it circulates in the Republic.

The Department of Finance highlights the strain on cash services caused by the elimination of bank branches and the shift to digitization in its Retail Banking Review. It implies that government policy should encourage the establishment and upkeep of a sustainable and robust cash system for as long as cash is required. To achieve this goal, the legal framework will be created. Its purpose is to manage any further reduction in the cash infrastructure.

The report says that banks have abandoned the direct provision of cash services due to the high cost of providing the service and the transition to a more digital model of banking services. As a result, some cash-in-transit organizations (CITs) and ATMs owned and managed by unregulated non-bank vendors are now responsible for the effective running of the cash system.

The report also suggests that such businesses be brought into the Central Bank's regulatory framework.

Barclays Was Punished for Hidden Fees

Barclays Bank was fined £10 million for withholding complete fee information from retailers, as required by the Interchange Fee Regulation (IFR).

According to an investigation by the supervisory authority, Barclays did not fully disclose the fees charged for card services to its customers. As a result, they could not effectively compare the prices of services with competitors and assess the value for money of payment services.

According to the PSR inquiry, Barclays failed to comply with the IFR for more than three years, from December 2015 to December 2018. During this time, Barclays handled one-third of all card payment transactions in the United Kingdom.

Online Credit Regulation Gets Tougher in EU

The European Council and the European Parliament have reached a preliminary agreement on updated consumer credit rules to protect consumers better. The updated legislation will replace the current 2008 directive.

The new rules will address, in particular:

▪️ easy access to credit information;
▪️ awareness of the total cost of the loan;
▪️ improved assessment of the consumer's creditworthiness.

To keep up with the digitalization trend, the new credit rules will now also apply to certain risky loans that are excluded from the scope of the current directive. These include loans up to €200, loans offered through crowdfunding platforms, and BNPL products.

JP Morgan Is Pushing Switzerland Companies Ahead

Edge Laboratories and Evooq, two Swiss fintech startups that provide tools to assist advisers in developing portfolios for rich customers, have received funding from JPMorgan Private Bank. The exact amount of investment hasn’t been revealed.

The clients of these two companies are large banks, asset managers and pension funds. From Edge Laboratories and Evooq they receive software for risk assessment and portfolio creation.

As of this writing, the companies have about 285 employees.

It's worth noting that JP Morgan calls this investment a strategic one.

Banks Are Closing Branches In The UK Because More People Are Using Online Banking

The UK's largest bank is closing branches due to the growing popularity of online banking.

In the spring of 2023, HSBC announced the closure of another 114 branches in the UK as the number of customers using them continues to decline.

This will leave 327 branches in the bank's network, and HSBC plans to invest in their renewal. 

British banks have closed thousands of branches recently as more people bank online and lenders cut costs. Consumer group Which? has responded by launching a campaign against branch closures and cash abandonment.

TreeCard Is Paving the Green Way in the Financial World

TreeCard, a British fintech firm that provides consumers with a wooden debit card, has raised $23 million.

TreeCard is yet to launch, but it has already collected $23 million in funding. Valar Ventures led the investment, which also included World Fund and EQT, Seedcamp, Episode 1, and several angels.

Customers also have access to an app where they can manage their spending, exchange bills with friends, and see how many trees have been planted as a result of their spending.

TreeCard, which operates on the Mastercard network and uses Synapse's back-end card processing services, functions as a full-fledged debit account, capable of receiving top-ups from a user's normal bank account and supporting chip and PIN, contactless transactions, and mobile payments.

TreeCard generates revenue through interchange and pledges to contribute 80% of proceeds in sustainable initiatives such as reforestation. Since its inception, the firm claims to have planted 200,000 trees.

India Is Taking Over the Economic World

India may become the third economy in the world by 2030.

According to S&P Global and Morgan Stanley, India intends to overtake Japan and Germany to become the third-largest economy in the world. 

«India has the conditions for an economic boom driven by offshoring, investment in manufacturing, energy transition, and the country's digital infrastructure. These factors will make India the third largest economy and the stock market in the world by the end of the decade», Morgan Stanley analysts write in the report. 

To recap, India has launched the digital rupee in test mode today.