The retail giant Walmart sparked the interests of the crypto community this week after filing for a blockchain patent in the US. The company seeks to develop a multitude of crypto-related projects based off of a future stable coin. The news follows Facebook’s announcement of a similar strategy and highlights the growing interests of major corporations to enter the digital currency sector.
News of Walmart’s crypto ambitions officially dropped on August 1, via patent filing number 20190236564. According to the document, the company desires a “System and Method for Digital Currency via Blockchain.” Interestingly, the stable coin discussed could be pegged to both fiat currencies and other digital currencies such as Bitcoin. It appears that HODLers aren’t alone in their belief that crypto has the potential to one day become the world’s chosen currency.
The patent details a payment system in which Walmart employees are able to avoid high banking fees. In this system, employees receive their paychecks in a Walmart stable coin. Employees could then choose to spend their checks via the participating venders, or of course at Walmart. Additionally, they could choose to convert their earnings into fiat currency to spend elsewhere. Employees could also receive interests for keeping their holdings in the Walmart system. In essence, Walmart could become a blockchain-based corporate bank.
Banking the Un-Banked
Walmart recognizes this potential. According to the patent, the firm envisions a scenario in which the perks of holding Walmart coins far surpass fiat currency. Your bank can give you interest, but few can give you a discount on your groceries, auto parts, glasses, and everything else Walmart offers. The company could even utilize the system to provide employees with access to credit and debit services via advanced biometrics. Imagine using your retina or fingerprints to purchase your items instead of easily copied plastic cards.
A Complete Blockchain Ecosystem
Walmart executives seek to create a complete blockchain ecosystem. The patent points out that the company possesses both the services and the products to accomplish this task. This forward-looking perspective is necessary when you seek to maintain an effective business model as the digitization of the economy continues.
Walmart Loves Blockchain
For those that follow crypto developments in this sector, the news came as no surprise. Walmart already employs a host of other Blockchain-related systems for testing purposes. Currently, the company has Beta tested numerous projects including supply chain management systems, customer market places, and even smart appliance integration.
Together, these systems could create a futuristic scenario straight out of a sci-fi movie. For example, imagine that your smart fridge notifies your smartwatch that you are running low on milk. At this point, you ask your fridge to order a refill. Your fridge then contacts Walmart and places your order. The order is paid for via Walmart’s stable coin. You even get a discount. Notably, this entire transaction can occur without the use of a traditional bank.
Is Walmart Trying to Rule the World?
It appears that as more people lose faith in government-backed currencies, corporations are ready to take up the slack. When you consider that both Facebook and Walmart are ready to issue cryptocurrencies, it’s obvious that the tides of change are here. The only real question now is – which conglomerate will be the first to successfully issue a cryptocurrency to the masses?
ECB Lawmaker Jens Weidmann Wants to Let Libra Face the Free Market
This month saw the emergence of a more open tone towards Facebook’s Libra concept by some lawmakers within the European Central Bank. Specifically, a lawmaker by the name of Jens Weidmann believes that a more hands-off approach will prove the tenacity of the market. The statements put forth by Weidmann, who also serves as the President of the German Central Bank, showcase a re-centering by some important ECB members towards free-market values.
In a recent interview, Weidmann proposed a new hands-off approach towards the controversial crypto. Uniquely, he explained that the ECB needs to let the market play out before it decides that its necessary to crush innovation in the sector. Weidmann stated that if given the chance, competitors will create a more robust and secure option than Facebook’s proposed stablecoin.
Not the Place for Central Banks
Interestingly, Weidmann also doesn’t believe that central banks should start competing in the cryptocurrency sector as well. This view puts her directly at odds with a plethora of global regulators. For example, in the latter part of 2019, Chinese central banking executives announced the start of the development of its own stable coin. The project goes under the name “The Digital Currency Electric Payment system (DCEP).”
Stop Calling for Intervention Prior to the Launch of the Product
Weidmann voiced concerns about the tendency for officials to call for government intervention when dealing with emerging digital assets such as cryptocurrencies. he explained that there are some market indicators that should play out prior to “calling for the state right away.” Basically, he believes the ECB needs to provide companies a chance to develop a corresponding offer.
Free Market – Jens Weidmann
Weidmann is confident in the fact that there are numerous other firms that possess the skills and technical know-how to create a better option. He knows that on top of the creation of cheaper and faster alternatives, many people will desire a more secure and trustworthy option.
Anti -Libra Sentiment
Libra has been under fire ever since the concept was first brought forth to US lawmakers. Unfortunately, for Libra’s developers, the rest of the world appears to be just as cautious about the concept. For example, the President of Switzerland, who also functions as the country’s head of finance, went as far as to call Libra a “failure.”
European Central Bank Sentiment
Weidmann’s unique view on how to deal with the Libra project is a far cry from the other members of the ECB. Last year, the group’s President, Christine Lagarde made a statement that put the group’s viewpoint more in line with China’s strategy rather than a fair market approach.
In a public statement, Lagarde acknowledged the clear and growing demand for stablecoins. She explained that it was important for the ECB to stay “ahead of the curve” when dealing with these new financial instruments. Unfortunately, no further specifics were brought to light.
Jens Weidmann Has Faith in the Market
It’s refreshing to see a financial regulator such as Weidmann stand up for free-market values. His straightforward approach towards the development of new FinTech is what the cryptocommunity needs to continue along the path of innovation. Hopefully, more ECB members will get on board with this strategy moving forward. For now, the Libra project has the attention of the entire financial sector.
GMO Internet to Launch Stablecoin in Q2 2020
This week, the Japanese internet giant, GMO Internet stunned the crypto market with its announcement that the company will launch a stablecoin in Q2 2020. The firm plans to utilize the yen-pegged digital currency to further development on the platforms token ecosystem and online infrastructure. The news demonstrates rising interests from both traditional financial firms and technology agencies within the country.
GMO Japanese Yen
GMO Internets’ crypto strategy focuses on the issuance of a stablecoin dubbed the GMO Japanese Yen. Interestingly, the firm plans to launch the stablecoin outside of Japan primarily. Currently, GMO awaits regulatory approval on the strategy.
Discussing the use of these tokens, company officials stated that their primary use will be to facilitate borderless trading, payments, and remittance. In turn, the token will help further promotions and enhanced market liquidity. Most importantly, the token will function as a means to stabilize price volatility within the space.
As part of GMO Internet’s crypto strategy, the team developed a completely new blockchain from the ground up. The permissioned and centralized GYEN blockchain entered final development this year. Currently, the blockchain is in a Beta testing stage. Here, the firm continues to conduct extensive internal testing to verify the true capabilities of the platform.
GMO Internet will employ the use of its global marketing subsidiary Z.com to promote the tokens internationally. Z.com specializes in global brand recognition. The firm’s primary goal is to improve overseas strategies and market penetration.
The Tokyo-based internet provider GMO Internet initially entered service back in 1995. The firm currently trades under section 1 on the Tokyo Stock Exchange. The company continued to see expansion since its inception for a combination of reasons. For one, the firm provides 24-hour customer service to clients. Additionally, the company offers an impressive list of employee benefits including free meals and child care services.
GMO Internet decided to enter the Blockchain sector in 2017 during the now infamous crypto break out. The firm currently operates one of only a handful of regulatory compliant crypto exchanges within the country. In addition to its trading platform, GMO also hosts several large mining facilities across Japan as well.
Japanese Crypto Trend
GMO Internet’s latest strategy falls in line with the larger trend of major Japanese firms entering the crypto sector. Already, the country has seen some of its largest financial institutions take a step towards further blockchain integration. For example, SBI Holdings, one of the largest financial firms in the country, recently announced large investments in two crypto startups.
A combination of a transparent regulatory framework and favorable tax laws continues to drive further blockchain investment towards Japanese shores. This welcoming attitude coupled with the anti-crypto stance of neighbors such as China makes Japan the premier crypto space in Asia.
GMO Internet Moving Forward
Considering the sheer size and capabilities of the GMO Internet platform, it’s hard to imagine a scenario in which the firm doesn’t achieve success. For now, the Japanese crypto sector continues to showcase to the rest of the world how to integrate blockchain technology the right way.
The Managed Stablecoins are Securities Act of 2019 H.R. 5197
A new bill aimed at adding clarification to the budding stablecoin market could see some serious opposition from the cryptocommunity. The bill dubbed the “Managed Stablecoins are Securities Act of 2019 H.R. 5197″ was introduced to regulators last week. The goal of the new legislation is to amend the statutory definitions of the term security to include managed stablecoins.
Issues with Managed Stablecoins
Almost immediately, crypto analysts spotted issues with the wording of the new bill. For example, the new legislation states that “digital assets, known as managed stablecoins, are investment contracts and therefore are securities within the meaning given the term in section 2(a) of the Securities Act of 1933.” In this scenario, every stablecoin would fall under the new regulations.
The problem with such a blanket statement is that it has the potential to halt one of the most innovative sectors in the cryptocurrency market. The new legislation would be a death sentence for most of the stablecoins currently in existence. These negative effects would occur because this would require these tokens to trade exclusively on securities exchanges versus crypto exchanges.
Congress Drops the Ball
The new legislation was put forth in the wake of major tech firms such as Facebook seeking to launch stablecoins in the very near future. Regulators now believe that it will be easier to provide oversight to these projects if they fall under the securities laws. Unfortunately, the bill fails to accurately describe what is a “managed stablecoin.”
In essence, managed stablecoins are less about the token and more about the issuers’ actions. Only when a stablecoins issuer plays an active managerial role in adjusting the composition of assets that back the coin should the token fall under current securities regulations. This ruling would make sense as the company’s actions guarantee the token’s stability.
Hurt the Many to Regulate the Few
The problem with a broad categorization of stablecoins is the fact that most don’t have this active management as part of their strategy. In most instances, the digital asset represents a right in a trust. Basically, a company would peg the token to a real-world asset that represents a 1-to-1 exchange rate. Usually, this asset is some form of fiat currency.
Tether is the best example of a non-managed stablecoin. The firm holds dollars as a state-regulated trust company. This company adheres to trust regulations. Basically, the company can’t utilize these funds in any way which could detract from their 1-to-1 backing ratio. In this manner, Tether provides much-needed stability to the cryptospace without actively managing the value of the tokens.
You Can’t Douse the Stablecoin Fire
As regulators continue to explore ways to tackle the emergence of mega tech firm tokens, its interesting to see what concepts actually make it into regulations. The current Managed Stablecoins are Securities Act of 2019 H.R. 5197 lacks much of the clarification lawmakers sought to provide. As such, there is a good chance that this bill is only the start of a long regulatory battle to determine the future of these much-needed coins.