Crypto Markets Up as South Korea Drafts Tighter Exchange Regs, and SWIFT - Too Expensive and Too Slow
An upturn in the cryptocurrency markets overnight saw the global cryptocurrency market cap rise by $4 billion to $288 billion; Bitcoin gained $101 to $6734 and Ethereum also making gains, up $9 to $535. The positive movements go a long way to underpin faith in the marketplace generally after the recent unfortunate South Korean exchange hacks. According to a report, the South Korean government have drafted and submitted an extensive bill proposing a number of regulatory measures to enforce higher levels of security and responsibility for cryptocurrency exchanges.
Several significant indicators suggesting the writing is on the wall as it were for the banking industry are making their way into the mainstream media of late. Just last week CNBC host Jim Cramer commented on the subject of bank stocks failing to perform after the Federal Reserve announcement that it would be raising interest rates 4 times this year instead of 3 (it would be common to see bank stocks lift on such an announcement traditionally). His conclusion to the lackluster market reaction in the traditional markets boiled down to a few salient points - "There are plenty of younger portfolio managers who think the banks are like Sears and J.C. Penney: they're old-line brick-and-mortar stores that are about to lose their relevance thanks to all sorts of new technologies from bitcoin, blockchain, PayPal [and] Square".
The mention of J.C. Penny is very telling given their astonishingly failed attempt to transform themselves into an online retailer in 2012/2013 – losing almost 50% of their market cap and revenue dropping by 25% resulting in a loss of almost $1 billion in the process. The cause of the disaster was due to a “HiPPO” (highest paid persons opinion) in which the much hailed appointment of CEO Ron Johnson chose to ignore internal marketing data on his arrival at the company, instead enforcing a marketing platform based on his own opinions and gut instincts – a dangerous game that some financial institutions like VISA for example are still believing is the way forward.
Another example is the Rizal Commercial Banking Corporation (RCBC) in the Philippines announcing their development of a blockchain solution in collaboration with IBM to enable cheaper and faster remittance services for overseas workers. The most poignant statement in the announcement was the reason for developing the new system which would move the transaction processing away from the traditional SWIFT system: “Why is the RCBC looking to pivot away from the global interbanking system powered by SWIFT to a decentralized system without an overseeing middleman or other parties? It’s cheaper, faster and real-time - You will not need SWIFT anymore because it’s expensive. Remittance will happen in real time, bypassing all other parties“. News that banks are beginning to see the need to re-tool their systems is a very positive indicator that the old fashioned, slow and expensive traditional banking system needs to change.
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Created: Thursday, June 21, 2018
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