FinTech in Focus—November 9, 2020



FinTech in Focus—November 9, 2020

Kate Goldman
Kate Goldman
FinTech Associate, Center for Financial Markets

In this Issue

Industry Headlines»
International Developments»

COVID-19 and FinTech

The Bank of England’s FinTech Director Tom Mutton gave a speech during the 2nd Bund Summit held virtually in Shanghai last week. Mutton highlighted the many ways technology has fueled the country’s COVID-19 recovery and what the Bank of England can do to continue supporting FinTech innovators.

While acknowledging FinTech’s demonstrated value during the pandemic, Mutton commented, “Just imagine the impact had the COVID crisis occurred in 2000, not 2020. Back then, only 25 percent of British households had access to the internet.” Mutton referenced digital payments and cloud technology as being two key drivers of success. Digital payments helped seamlessly facilitate the sudden shift from in-person transactions to e-commerce. And as we know, e-commerce has played a critical role in helping businesses staying afloat during shut-downs.

Mutton continued his speech by identifying three main areas where the Bank of England could help bolster FinTech innovations. Firstly, by improving small-businesses’ access to capital through “a trusted, permissioned platform for exchange of ‘open data.’” Secondly, through further explorations of a Central Bank Digital Currency (CBDC). And lastly, through the establishment of a digital identity framework. Lack of formal identification remains a major barrier to entry for millions across the globe.

You can read a transcript of Mutton’s speech here.

 Industry Headlines

Virtual Banking

Earlier this week, the Office of the Comptroller of the Currency (OCC) granted Social Finance Inc., (SoFi) provisional approval to establish a full-service national bank. The OCC published a news release stating that SoFi’s conditional approval was “based on a thorough evaluation of information available to the agency, including the representations and commitments made in the application and by the proposed bank’s representatives.” The OCC is requiring that SoFi apply for Federal Reserve membership as well as deposit insurance from the Federal Deposit Insurance Corporation (FDIC).

On October 28, the Wyoming State Banking Board approved Avanti Financial Group Inc. as a Special Purpose Depository Institution (SPDI). The unanimous (8-0) decision makes Avanti the second SPDI to receive approval in the US, just weeks after cryptocurrency exchange Kraken’s approval in September. Forbes reports, “Wyoming-based Avanti will now be able to take custody of bitcoin and other cryptocurrencies, similar to what Coinbase does, while also holding dollars on deposit at the Federal Reserve, streamlining the process by which cryptocurrency companies that need to cover payrolls and taxes can get traditional accounts.” Avanti’s website reports the bank plans to begin providing accounts sometime in 2021 and other high minimum accounts shortly after.


In other news from the state, the University of Wyoming has debuted its new Center for Blockchain and Digital Innovation. According to a press release from the University, “The center will focus on fostering innovation; applied research and education; technology development; economic development and job growth; and corporate engagement.” The state has been regarded as highly pro-FinTech since they were among the first to establish a regulatory sandbox for pilot technologies. Dean of the College of Business Dave Sprott indicated the University would soon be establishing a blockchain minor and incorporating other technical graduate certificates, as well as a joint master’s and law degree.

JP Morgan recently announced Onyx, a new business division dedicated specifically to the bank’s blockchain and digital-currency projects. JP Morgan is looking to expand its blockchain-based services to areas such as check cashing and cross-border payments. Responding to criticism of blockchain as not lucrative, Takis Georgakopoulos, JP Morgan’s global head of wholesale payments, told CNBC, “We are launching Onyx because we believe we are shifting to a period of commercialization of those technologies, moving from research and development to something that can become a real business.”

Digital Assets

JP Morgan has just launched their own digital currency, JPM Coin, after first announcing the project last summer. Takis Georgakopoulos, JP Morgan’s global head of wholesale payments, told CNBC, “JPM Coin is being used commercially for the first time this week by a large [unnamed] technology client to send payments around the world.”

The Association for Digital Asset Markets (ADAM) has appointed Michelle Bond as the group’s new CEO. Michelle Bond told Institutional Asset Manager, “Digital asset markets are a critical component of financial services moving forward, and their future hinges on market integrity and effective policy. ADAM’s unique Code of Conduct ensures that our members are committed to high standards for integrity, fairness, efficiency, and compliance – and it also serves as an excellent predicate for our members to participate in the regulatory policy processes.” Bond boasts impressive experience in both the private and public sector, having previously served as senior counsel at the Securities and Exchange Commission (SEC) and worked on the Dodd-Frank Act.

The New Jersey Assembly Science, Innovation, and Technology Committee has approved the Digital Asset and Blockchain Technology Act to regulate the state’s developing cryptocurrency industry. Insider NJ reports, “The measure aims to provide transparency, consumer protections and a licensing structure for both operators and consumers engaging in virtual currency transactions in New Jersey. The bill is sponsored by Assembly Democrats Yvonne Lopez, Andrew Zwicker and Joe Danielsen.” While Congress has received criticism for moving too slowly on legislating cryptocurrency and digital assets, many states have charged forward with their own efforts.


Deutsche Kreditbank (DKB) has partnered with German-based software company FinTecSystems (FTS) to offer users an automated online consumer loan platform. The Paypers reports, “DKB can now make precise and automated credit decisions in real-time. The immediate loan at DKB will start at the beginning of November 2020 with an effective annual interest rate of 3,19% for a net loan amount between EUR 2.500 and EUR 30.000 for new customers.”


PayPal announced this week that they will be increasing the weekly cryptocurrency purchasing limit from $10,000 to $15,000. This development follows PayPal’s October announcement that customers will soon be able to buy, hold, and sell cryptocurrencies on their platform. Interestingly, Coindesk notes, “Bitcoin (BTC, +1.52%) saw a 15% increase in price in response to the news but PayPal’s stock price has trended downward by 12% since the Oct. 21 announcement.”

California-based FinTech Square, Inc. recently took to Twitter to announce they had awarded a grant to Maggie Valentine, a developer making cryptocurrency wallets less complicated. The tweet, published the day before Halloween, states, “Giving trick-or-treaters Open Dimes and Square Crypto grants this year. Speaking of which, this one goes to Maggie Valentine (@magglevalentine), a designer working to simplify wallet onboarding flows by reducing technical jargon and increasing user education.” The company followed the tweet with a link to her proposal.

 International Developments

Unites Arab Emirates 

The United Arab Emirates’ (UAE) Central Bank has rolled out new rules concerning the treatment of Stored Value Facilities (SVF) this week. The National News reported on the policy change: “Through the new regulation, it aims to facilitate easier market access to FinTech firms and other non-bank payment providers while ensuring that customers' funds are safe.” The new regulation touches on matters such as licensing, supervision, and enforcement provisions related to SVFs and the companies they are licensed through. A regulator from UAE’s Central Bank told reporters that companies already providing SVFs will have one year to comply with the new rules.

United States 

The Office of the Comptroller of the Currency (OCC) has issued a final rule establishing a metric for determining when a bank originates a loan and is therefore considered the “true-lender.” This test will include instances of bank-FinTech partnerships. JD Supra reported on the OCC’s ruling, noting, “Under the proposed rule, a bank would be deemed to make a loan if, as of the date of origination, it (1) was named as the lender in the loan agreement or (2) funded the loan. The final rule uses the same test, while also clarifying that if, as of the date of origination, one bank is named as the lender in the loan agreement and another bank funds that loan, the bank that is named as the lender in the loan agreement makes the loan and is the ‘true lender.’ The final rule is effective on December 29, 2020.”


Ant Group’s record-breaking $34.5 B IPO has been suspended in Shanghai and Hong Kong. CNBC reports on the breaking news, “Ant Group’s controller Jack Ma, executive chairman Eric Jing, and CEO Simon Hu were summoned and interviewed by regulators in China, according to a statement Monday from the China Securities Regulatory Commission. On Tuesday, the Shanghai Stock Exchange referred to that meeting in explaining why it has suspended the IPO.” Regulators in China noted the group was having difficulty meeting the information disclosure requirements in the regulatory environment.

A spokesperson from Alibaba, which owns a 33 percent stake in Ant Group, stated, “We will be proactive in supporting Ant Group to adapt to and embrace the evolving regulatory framework.” Alibaba shares have dropped almost 10 percent in the New York Stock Exchange since the IPO suspension was announced. Just days before the suspension, Jack Ma was publicly critical of regulators for being too risk-averse.

For more information on FinTech in Focus or the Milken Institute’s FinTech program, please contact Kate Goldman at

Published November 9, 2020