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.
Ripple briefly saw a run-up in price earlier this week on rumors that Coinbase Inc. was planning to add its token to the exchange.
Ripple's XRP token jumped above $1 on March 5, but was back down to 81 cents as of 3:15 p.m. ET on March 9, following a tweet from the exchange that it has not decided to add any additional assets. Meanwhile, fellow crypto exchange Gemini may soon offer more coins, Bloomberg News reported.
Cameron and Tyler Winklevoss, the founders of Gemini, told Bloomberg that bitcoin cash and litecoin are likely candidates for expansion. Coinbase already lists those two tokens, in addition to bitcoin and Ethereum's ether token.
Adding a virtual currency to an exchange opens it up to a much wider audience, according to Credit Suisse analyst Paul Condra. If Coinbase were to list XRP, for example, it would make Ripple a "stronger brand" that would likely be viewed as more mainstream, he said in an interview.
For the exchanges, listing additional tokens would drive up volume, thus increasing commission fees. Adding a token is complicated from a technology perspective, Condra said, adding that Coinbase faces "a lot of pressure" from customer service, regulatory and compliance perspectives.
"Like what you saw with [the listing of] bitcoin cash, there was a lot of accusations of insider trading," he said. "I would imagine that they'll take extra care to make sure that when [XRP] is added, it's not leaked or there isn't some kind of insider event."
Although it is unclear when or in what order tokens may be added to Coinbase, Condra said the exchange will probably do so in order of market cap. That would make XRP the next token to be listed.
"I don't think it will stop with XRP," Condra said. "You'll see other coins, too."
Both crypto companies have announced notable executive hires this week. Coinbase snagged Eric Scro, who previously served as the New York Stock Exchange's head of finance, and also named Emilie Choi vice president of corporate and business development. Choi joined the virtual currency exchange after more than eight years at LinkedIn Corp., where she oversaw more than 40 acquisitions, according to the company's blog post.
Ripple hired Bloomberg TV's Cory Johnson as its chief market strategist, CNBC reported. Not only does Ripple market its XRP token, but it is also building a business that sells blockchain-based payments software to financial institutions.
In other cryptocurrency news this week, Wall Street's top regulator warned that some virtual currency exchanges may be operating illegally. The SEC's warning may spur crypto exchanges to look to stock exchanges as their business models of the future.
Japan's Financial Services Agency ordered the suspensions of two cryptocurrency exchanges for a month and told five others, including Coincheck Inc., to improve their operations. This followed a $530 million cryptocurrency theft at Tokyo-based Coincheck in January.
China's chief central banker slammed cryptocurrencies this week, even as he said the government remains interested in their development.
"We don't like the idea of creating a speculative product that prompts people to fantasize about striking it rich overnight," Zhou Xiaochuan, governor of the People's Bank of China, said in a press conference in Beijing, AFP reported. Yet China's central bank has set up a center for digital currency research, the report said. "In the future, traditional forms of paper money and coins may gradually fade away, and some day may not exist at all," Xiaochuan added.
Coinbase announced March 6 that it will launch an index fund to give accredited U.S. investors exposure to all digital assets listed on its exchange, GDAX.
Also this week, the European Commission said that the EU will create a financial technology laboratory to enable government authorities to work with tech companies as part of a plan to encourage the financial services industry to use blockchain, artificial intelligence and cloud services. The lab will promote investment in the industry as part of its goal to build a capital markets union and a digital single market.
Elsewhere in the financial technology world, a recent survey by S&P Global Market Intelligence showed that banks like JPMorgan Chase & Co. have work to do in U.S. mobile payments if they want to catch PayPal Holdings Inc.'s digital wallet.
From March 2 to March 8, the SNL U.S. Financial Technology Index rose 2.18%.
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.
