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NFTs, Crypto Carry Gambling Risks Without Oversight, Regulator Says
A growing challenge for regulators is that non-fungible tokens (NFTs) and cryptocurrency trades carry many of the same risks as gambling, but are not regulated as such, the chief executive of the UK’s Gambling Commission has said.
The products are sometimes marketed for their lack of regulation and carry markers of harm different from gambling, according to CEO Andrew Rhodes.
Gambling harm often follows a pattern: increasing deposits, chasing losses and deepening financial problems, he said.
But NFTs and risky cryptocurrency trading carry different kinds of danger.
“With these evolving products, the pattern is different — more and more deposits — sometimes wildly unaffordable levels, with theoretical increases in value and ever-increasing exposure to loss,” Rhodes said.
“When the harm occurs it can be instant and catastrophic, with little or no recourse.”
With NFTs and cryptocurrency, marketers “talk of ‘investment’ and trading, yet with none of the safeguards or standards those terms should bring with them”, Rhodes said.
The new products are not necessarily gambling and should not necessarily be regulated as such, but he said “we will see this pattern continue and we are likely to see more and more tests of what is and is not gambling, in a way we have not faced before”.
Rhodes was speaking on “The Big Questions” at the World Regulatory Briefing, an International Masters of Gambling Law event that marked the start on Monday (April 11) of the ICE VOX portion of the gambling trade show in London.
Corruption Crackdown In China Leads To 'Double Expulsion' Of High-Ranking Regulator
A crackdown on corruption in China has led to the “double expulsion” of one of the highest-ranking regulators in Sichuan province.
Li Guorong, formerly deputy director of the Sichuan Banking and Insurance Regulatory Bureau, is the latest official to be fired from both the Chinese Communist Party (CCP) and his administrative post for corruption.
Following an investigation by China’s top anti-graft agency, Li was found to have accepted illegal payments related to the collapse of Baoshang Bank, among other offences.
Li, 46, had served as a senior executive at the bank since 2019, when he was selected as deputy head of a rescue team appointed by the central bank and the China Banking and Insurance Regulatory Commission (CBIRC).
It was China's first state takeover of a commercial lender in almost 20 years, and it is now back in the headlines once again following revelations about Li’s conduct.
In a CBIRC statement published on Monday (April 11), Li is said to have taken bribes from entrepreneurs and abused his power to help them with loan interest relief, loan issuance, loan extensions, debt restructuring and transfers of equity.
Li’s case has now been transferred to the procuratorate, where it will be reviewed and potentially prosecuted.
Malaysia Offers New RM150 Handouts To Students In Latest E-Wallet Push
Malaysia’s Ministry of Finance has launched a new RM150 ($35) giveaway to entice young people into using an e-wallet app.
The scheme, which is known as ePemula (e-Beginner), is available to all full-time students aged 18-20 years.
To claim the RM150, students must register from April 11 and download one of four e-wallets, namely BigPay, GrabPay, ShopeePay or Touch 'n Go.
The registration period will be open until June 1, and the RM150 can be spent until June 10.
In addition to delivering the RM150, the ministry said that the four e-wallet providers will provide additional incentives in the form of cashback, vouchers and loyalty points during the campaign period.
In total, the ministry has allocated RM300m ($71m) to the ePemula scheme in its 2022 budget.
The Ministry of Finance has run similar e-wallet promotions in both its 2020 and 2021 budgets.
In 2021, the ministry launched eBelia (eYouth), a scheme that issued RM150 giveaways to 18-20 year-olds using the same four e-wallets as ePemula.
And in 2020, the ministry launched e-Tunai Rakyat (e-People’s Cash), a scheme that issued RM30 giveaways to all Malaysians over the age of 18 using one of three e-wallets.
The launch of ePemula follows the publication of two recent reports, both covered by VIXIO, that demonstrate the rapid growth of Malaysia’s digital payments industry.
According to data from Bank Negara Malaysia, the country's central bank, the rate of growth in non-cash transactions increased by 25 percent annually from 2019 to 2021, which is double the annual rate of growth between 2016 and 2019.
As a result, non-cash payments penetration has more than doubled since 2016, from 113 transactions per capita per year to 239 in 2021.
Open Finance, Cultural Change Among Brazilian Banks' Top Priorities In 2022
A survey carried out by FEBRABAN, the Federation of Brazilian Banks, and Deloitte reveals that the top priorities of Brazilian banks in 2022 include cybersecurity, artificial intelligence, open finance and cultural transformation.
All of the banks participating in the survey (100 percent) said that their priorities for technological investments included cybersecurity and artificial intelligence (AI), while 78 percent are planning to analyse and explore data obtained via open finance.
Brazil launched its open finance framework at the tail-end of 2021, which enables data sharing for a number of financial products, such as foreign exchange, insurance or investment.
In addition, 78 percent of banks reported plans to prioritise cultural transformation within their organisations.
According to the survey, banks acknowledge that for digital transformation to take place effectively, they need to make internal changes in relation to knowledge, values, culture and way of operating and serving customers. To achieve this, they need a team with technical and business expertise and a culture focused on agility and customer experience.
The survey was carried out with the participation of 24 banks, which represent 90 percent of the banking assets in Brazil. The results of the survey will be released in three phases, with the second one focusing on bank investments made in technology in 2021 and the third part discussing banking transactions made last year.
South Africa Concludes wCBDC Experiment
The South African Reserve Bank (SARB), in collaboration with the Intergovernmental Fintech Working Group (IFWG), has released a new report on its research related to a central bank digital currency (CBDC).
Project Khokha 2 (PK2) has carried out experiments to create two forms of tokenised money and allow for settlement. It followed an exploratory phase (PK1), which concluded in 2018.
During the PK2 experiment, the central bank issued, cleared and settled SARB debentures, debt security, on distributed ledger technology (DLT) using two settlement options: a wholesale CBDC (wCBDC) as a form of central bank money; and a wholesale settlement token (wToken) as a form of private money issued by commercial banks.
“The PK2 report is the SARB’s contribution to broader discussions surrounding the regulatory treatment of crypto-assets and financial market innovation,” said governor Lesetja Kganyago at the PK2 report launch.
“We hope that it provides meaningful insight to the discussions taking place between policymakers and regulators as they continue to consider the most appropriate way to amend the existing domestic legal and regulatory frameworks,” he added.
Kganyago stressed the guiding principle during the bank's work has been: “If you want to go fast, go alone, but if you want to go far, go together.”
He also emphasised that PK2 does not signal support for any particular technology, nor does it signal any specific shift in policy direction.
“The project was not about replicating the status quo. Rather, it was about challenging our thinking around designing for a different future.“
In addition to the wCBDC and wToken experiment, the central bank is carrying out a study into the feasibility, desirability and appropriateness of a retail CBDC.
Honduras' Special Economic Zone To Legalise Bitcoin
Próspera, a private charter city and special economic zone in Honduras, has become just the second jurisdiction to allow Bitcoin to operate as legal tender, following neighbour’s El Salvador.
The city announced on April 7 that Bitcoin and other cryptocurrencies can now operate as legal tender within its jurisdiction.
This means that people and businesses can use cryptocurrencies to pay for goods and services, while a new regulatory framework is intended to help residents build crypto-focused businesses with high anti-money laundering (AML) and know your customer (KYC) standards.
The new framework enables municipalities in Honduras, “non-US companies” and political subdivisions from around the world to issue Bitcoin Bonds to attract foreign direct investment.
“[M]unicipalities, local governments, and international firms can issue Bitcoin Bonds from the Próspera ZEDE jurisdiction with world class KYC and AML standards, creating a new and accessible tool for attracting FDI and driving economic development in Honduras,” the announcement says.
The move follows in the footsteps of El Salvador, the first jurisdiction in the world to adopt Bitcoin as a legal tender.
Since last September, El Salvador has purchased more than 1,800 Bitcoins and the country is now working on grandiose plans to build the world’s first-ever Bitcoin city, on a volcano.
Honduras opened the first crypto ATM in the capital city, Tegucigalpa, last August where crypto users could buy cryptocurrencies after scanning their official identification information and adding personal data such as a phone number.
