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The week in fintech: Calls for crypto regulation heat up

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The week in fintech: Calls for crypto regulation heat up

This recap features updates on bank technology, payments, online lending and other news in the U.S. financial technology space. Send tips, ideas and chatter to rachel.stone@spglobal.com. For other recent fintech news, click here.

Cryptocurrency regulation made headlines multiple times this week as global leaders and regulators continue to grapple with the decentralized and largely unregulated industry.

Finance ministers and central bankers gathering at the Group of 20 economic summit earlier this week made no concrete move toward setting rules for the sector, but called for the Financial Stability Board to consult with international standard-setting bodies on cryptocurrencies and report back in July. Shortly thereafter, the U.K. launched a cryptocurrency task force to explore the potential risks and benefits of cryptocurrencies.

Brett Redfearn, head of the SEC's Division of Trading and Markets, warned that individuals in the cryptocurrency markets could be easily manipulated through insider trading and pump-and-dump schemes, among others, Bloomberg News reported.

RBC Capital Markets analyst Mitch Steves said that while global leaders have the authority to issue regulation, there is "no clean answer" on what that regulation could or should look like.

"If we can't even put in clean requirements for people who are doing this legitimately, how are you going to track everybody in the world?" he said in an interview.

The analyst said the G-20 call to action is a "very good" start, but he does not expect any concrete regulation before the end of the year.

In other crypto regulatory news, U.S. President Donald Trump issued an executive order March 19 banning the purchase of cryptocurrencies sold by the Venezuelan government, preventing the first state-sponsored digital token from bypassing U.S. sanctions on the oil-producing nation. Also, Japan's Financial Services Agency issued a warning to Hong Kong-based Binance for offering virtual currency trading services to those who live in Japan, as the financial watchdog only allows companies registered with the Japanese government to offer such services.

The price of bitcoin stood at $8,678.93 as of 2:32 p.m. ET on March 23, up from a low this week of $7,345.46 on March 18.

Also this week, Square Inc. and Twitter Inc. CEO Jack Dorsey said he expects bitcoin to be the world's "single currency" in about 10 years, if not sooner, The Times reported. The executive acknowledged, however, that bitcoin does not currently have the capabilities "to become an effective currency."

ChineseInvestors.COM Inc. announced that it recently purchased machines used to mine cryptocurrencies, including bitcoin and litecoin.

In blockchain news, JPMorgan Chase & Co. may spin off its customized blockchain platform, Quorum, within the year. The company declined to comment but told the Financial Times in an email that it was "actively building multiple blockchain solutions."

Blockchain Capital's latest fund raised $150 million, bringing its total assets under management to approximately $250 million.

Northern Trust Corp., working with PricewaterhouseCoopers and other audit firms, announced this week that firms can now carry out audits of private equity lifecycle events using the blockchain. Using this node gives the firms access to a master record of the fund's data from their own offices.

Elsewhere in the financial technology world, Bank of America Corp. customers can now link their cards directly to their PayPal Holdings Inc. wallets through the bank's mobile app.

Vizo Financial Corporate CU invested $500,000 in startup company Constellation Digital Partners LLC, which is developing a cloud-based platform that will enable credit unions to provide digital financial services, the Triad Business Journal reported.

Also, a recent survey on mobile payments by S&P Global Market Intelligence showed that cryptocurrency trading is a token activity for most, with just 3% of total respondents having used a crypto payment app.

From March 16 to March 22, the SNL U.S. Financial Technology Index dropped 4.13%.

A recent report from S&P Global Market Intelligence explores how banks and insurers are embracing fintech innovation. The report looks at recent trends and provides outlooks for the insurtech, digital lending, digital investment management, digital banking, payments and distributed ledger technology sectors. Click here to read the report.