Tag: Financial Institutions

Tripling of Bitcoin Millionaire Wallets in 2023: A Deep Dive into the Crypto Wealth Explosion

by Blockchain News

Unprecedented Accumulation of Wealth Caused by Bitcoin

In the year 2023, there was a significant shift that took place in the landscape of Bitcoin riches. The number of Bitcoin wallets that store more than $1 million has skyrocketed from 23,795 on January 1 to 81,925 at the end of the year, according to data provided by BitInfoCharts. This is an astounding growth of 237%. This spike is not simply a reflection of the desire of ordinary investors, but it also signals a fundamental change in the attitude that financial institutions have towards Bitcoin. These organizations, who were previously skeptical about cryptocurrencies, are now actively engaged in this industry because they see Bitcoin’s ability to serve as both a medium for the storage of wealth and an investment opportunity that offers significant returns.

The historical setting and the current state of the market

The rise in the number of Bitcoin wallets owned by millionaires is not a unique phenomena. It is a reflection of a larger trend in the market for cryptocurrencies. Comparative data from Glassnode shows that the number of addresses holding more than $1 million in Bitcoin hit its all-time high of 112,573 on November 9, 2021. This figure coincides with the last bull market’s apex, which occurred when Bitcoin achieved its all-time high of $69,000. Additionally, the number of wallets containing at least one Bitcoin, increased by a relatively modest 4% to reach 1,018,015 addresses, up from 978,197 at the beginning of the year. This number represents an increase from the previous year’s total of 978,197.

A Look at the Factors That Are Driving the Increase

The increase in the number of Bitcoin millionaire wallets in 2023 was caused by a number of different variables. One of the most important factors was the general excitement of the market for Bitcoin, which was fueled by an almost 40% gain in its trading price in the previous month. The price of bitcoin went up and down between $36,800 and $37,050, indicating that investors are feeling confident and optimistic. This confidence was further encouraged by the expected acceptance of Bitcoin spot exchange-traded funds (ETFs), with experts from Bloomberg estimating a high possibility of approval. Moreover, this optimism was further fueled by the approval of Bitcoin spot exchange-traded funds (ETFs). This possible change, together with projections of a major growth in Bitcoin demand, provided a fertile ground inside the Bitcoin ecosystem for the creation of wealth.

The Prognosis for the Future

The fact that the number of Bitcoin millionaire wallets will triple in 2023 is indicative of a developing cryptocurrency industry, one in which Bitcoin is becoming more widely seen as a legitimate investment option by both people and institutions. This development may mark the beginning of a new age in the landscape of digital currency, one that is distinguished by more involvement from institutions and an investing climate that is more stable. As the market continues to change, it will be very important to keep track of these patterns and the consequences they have for the larger financial environment.

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ECB Advances Digital Euro Project into Preparation Phase

by Blockchain News

The European Central Bank (ECB) has recently taken significant steps towards the conceptualization and eventual issuance of a digital euro, a Central Bank Digital Currency (CBDC). This development comes as a response to the increasing digitalization of the economy and financial transactions. Authored by Juan Ayuso, Director General Operations, Markets and Payment Systems, the narrative elucidates the trajectory of the digital euro project, its significance, and the benefits it proposes to offer.

On October 18, 2023, the ECB announced the transition of the digital euro project into a “preparation phase,” following the conclusion of an initial “investigation phase” that commenced in October 2021. During this new phase, set to span two years, the ECB aims to finalize regulations, select private-sector partners, and conduct requisite testing for the digital euro​​.

The digital euro, designed to function as a digital form of cash, is envisaged to facilitate all digital payments across the euro area. Unlike private bank deposits, the digital euro would be a form of public money issued and backed by the central bank, ensuring a higher level of trust and security. It’s intended to be easily accessible, free for basic usage, and available for both online and offline transactions. A notable feature is its promise of high privacy levels for users, akin to cash transactions​​.

The digital euro project is a reflection of the broader global trend of central banks exploring and adopting digital currencies. The transition to a digital currency is perceived as a milestone, heralding the potential transformation of the monetary system to align with digital economic frameworks. The digital euro is expected to bolster the European financial system, making it more resilient and less dependent on foreign digital payment platforms. Moreover, the digital euro’s offline mode is anticipated to provide a robust solution during internet outages, extending digital payment capabilities to remote areas currently underserved by digital infrastructure.

The implementation of the digital euro is contingent upon the completion of relevant EU legislation. In June 2023, the European Commission introduced two legislative proposals aimed at establishing the legal framework for the digital euro. The ECB has stated that a final decision regarding the issuance of the digital euro will only be made post the completion of this legislative process​​.

In the coming weeks, euro area central banks are set to unveil plans for a wholesale CBDC, aiming to innovate financial institutions’ securities settlement procedures. This suggests a concerted effort within the EU to modernize financial systems in alignment with emerging digital technologies​​.

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Public Worry Grows Over Bank Stability

by Blockchain News

In a recent Gallup poll conducted across the United States in April, 48% of respondents expressed concern about their money in the bank, with almost 20% indicating they were “very concerned.” The poll was conducted after the collapse of Silicon Valley Bank and Signature Bank but before the failure of First Republic Bank in late April. According to Gallup, this level of worry is on par with the last bank-induced financial crisis in 2008, when financial institutions previously believed to be “too big to fail” collapsed.

Experts at the Hoover Institution think tank suggest that if half of all uninsured savers withdrew their cash, 186 American banks would be at risk of impairment. These banks have total assets of $300 billion but represent less than 5% of the estimated 4,135 FDIC (Federal Deposit Insurance Corporation) insured commercial banks in the United States.

Additionally, California-based PacWest, Arizona’s Western Alliance, and Memphis-based First Horizon reportedly hang in the balance following a share price slump last week. A more concerning report from the UK’s Telegraph earlier this month suggested that half of the banks in America could be insolvent. The report cited research published in April by Stanford University banking expert Amit Seru, who estimated that more than 2,315 U.S. banks are currently sitting on assets worth less than their liabilities.

“The U.S. banking system’s market value of assets is $2.2 trillion lower than suggested by their book value of assets accounting for loan portfolios held to maturity,” Seru said. This gap is due to the banks’ underestimation of the risk of loan defaults and represents a significant threat to the stability of the banking system.

The current public opinion of banks appears to be dwindling as the industry struggles to contain the collapse of several high-profile financial institutions in recent months. While these concerns are not yet at crisis levels, they do suggest a lack of confidence in the banking system. It remains to be seen what steps regulators will take to address these issues and restore public faith in the stability of financial institutions.

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Ackman Urges US Government to Guarantee SVB Deposits

by Blockchain News

Billionaire hedge fund manager Bill Ackman has warned the US government that failing to guarantee all deposits held by Silicon Valley Bank (SVB) within 48 hours could result in the destruction of several financial institutions. In a tweet on March 11, Ackman called for the government to step in and protect all depositors, warning that a “giant sucking sound” would be heard from the withdrawal of uninsured deposits from all banks, not just the systemically important banks.

Ackman argued that the world would realize what an uninsured deposit is – an unsecured illiquid claim on a failed bank – and that this would lead to a drain on liquidity from community, regional, and other banks. He said that this could “begin the destruction” of these crucial institutions if the government does not take action.

Ackman also suggested that major financial institutions, such as JPMorgan Chase, Citibank, or Bank of America, could acquire SVB before Monday to prevent this outcome. However, he argued that this was an unlikely event and that the government needed to step in to guarantee SVB’s deposits.

According to Ackman, the situation could have been avoided if the US government had stepped in on Friday to guarantee SVB’s deposits. He argued that the long-standing bank’s “franchise value” could have been safeguarded and transferred to a new owner in return for an equity injection.

SVB is a bank that specializes in providing financial services to the technology industry. Its clients include startups, venture capital firms, and private equity firms. The bank has been in operation for over 35 years and has over $100 billion in assets under management.

SVB’s deposits are currently uninsured, meaning that they are not protected by the Federal Deposit Insurance Corporation (FDIC). This is because the bank’s deposits are considered to be predominantly from institutional clients and high net worth individuals, who are not covered by the FDIC’s deposit insurance program.

In response to Ackman’s tweet, SVB issued a statement saying that it was “well capitalized and well positioned to support our clients.” The bank also said that it had no plans to seek an acquisition and that its focus was on continuing to serve its clients.

The US government has not yet responded to Ackman’s call for deposit guarantees for SVB. However, the situation highlights the risks that can arise from uninsured deposits and the need for investors to carefully consider the risks and benefits of depositing their funds with financial institutions.

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Visa Creates Service To Advise Financial Institutions On Cryptocurrencies

by NEWSBTC

It’s a new dawn. Credit card giant Visa is now in the cryptocurrency business. They won’t be buying and selling yet, though. Its new division will advise everyone. From retail customers to financial institutions, even central banks can get information from Visa’s crypto experts. A lot of people still value the input traditional institutions can give, even if they don’t have the track record. So this seems to be good news for the crypto industry.

Related Reading | As Amazon Takes on Visa, Does Cryptocurrency Offer the Real Alternative?

Reuters informs:

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“Visa’s services include educating institutions about cryptocurrencies, allowing clients to use the payment processor’s network for digital offerings, and helping manage backend operations.”

And Visa promises:

“Tap crypto’s potential with a pioneer in global payments. For crypto to realize its full potential, we are connecting crypto and blockchain networks to our trusted, global payment network. And we’re propelling innovation to deliver even more access and value to the crypto ecosystem.”

Visa’s CFO Still Doesn’t Understand Bitcoin

In a bizarre move, considering they’re offering expert advice in cryptocurrencies, Visa’s CFO said the darndest thing. Vasant Prabhu told Reuters:

“If the price is going to fluctuate from $60,000 to $50,000 in a few hours, it’s a very difficult thing for a merchant to accept (bitcoin) as a currency. I don’t know if cryptocurrencies like bitcoin will ever be a medium of exchange. Stablecoins will.”

Bitcoin is already a medium of exchange. It’s legal tender in an entire country. It’s a process, but merchants will quickly learn the benefits of holding a deflationary currency instead of an inflationary one. If Prabhu doesn’t understand this, how does he expect his clients to take his advice seriously? 

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BTCUSD price chart for 12/09/2021 - TradingView

BTC price chart for 12/09/2021 on Gemini | Source: BTC/USD on TradingView.com

What Did Visa’s Crypto Research Department Found Out?

As an introduction to the company’s crypto research department, the company says, “For financial institutions eager to attract or retain customers with a crypto offering, retailers looking to delve into NFTs, or central banks exploring digital currencies, understanding the crypto ecosystem is a vital first step.”

As the first show of power, they produced “The Crypto Phenomenon: Consumer Attitudes & Usage.” A report that, among other things, found out the following:

  • “Almost universal awareness of cryptocurrency at 94% globally among adults with discretion over their household finances.”

  • “Nearly one in three crypto-aware consumers already own or use cryptocurrency, with the majority saying that their use has increased in the past year (62% Owners), and two-thirds expecting that they will increase the share of their investable assets invested in crypto in the next 12 months (66% Owners).”

  • “In Emerging Markets, ownership (37%) and curiosity about (27%) cryptocurrency is even more pronounced.”

  • “The biggest drivers of owning and using cryptocurrency are to take part in the “financial way of the future” (42% Owners) and to build wealth (41% Owners)”

  • “Most crypto owners would be interested in buying cryptocurrency from their bank (85% Owners)”

  • “More than a third of current owners indicate that they plan to switch to a bank that offers crypto products within the next 12 months (39% Owners).”

  • “The significant majority of consumers who use cryptocurrency express interest in crypto-linked cards (83% Active Owners) and rewards (86% Active Owners).”

Related Reading | Visa Is Building A Payment Channel Network On Ethereum

Conclusions To Avoid Confusion

Even though Visa’s study seems to be skewed to what its clients need to hear to acquire their new service, the results are interesting. It’s useful to see what the research department of a company with that kind of resources can come up with. Let’s hope they keep it coming. And let’s hope Visa’s CTO reads “The Bitcoin Standard,” because that quote was embarrassing.

Featured Image: Visa and Bitcoin, taken from their site | Charts by TradingView

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ECB Member Says Should not Treat Banks as “Endangered Species” in CBDC Plans

by Blockchain News

The proposed launch of Central Bank Digital Currencies (CBDCs) in many countries has been identified by many observers as a potential threat to banks and other financial institutions.

Despite this threat, European Central Bank Governing Council member Jens Weidmann advises that these banking firms should not be treated as “endangered species” that can’t handle the competition.

Many central banks worldwide are designing their CBDC products such that they would be storable in self-managed digital wallets, a design that can push many consumers to withdraw their funds stored in banks. If this happens, the banks will lose their source of deposits, which is essential in funding other businesses like lending. Drawing on this potential threat to the banks, Weidmann said 

“CBDC should be designed in a way that allows its users to reap its potential benefits as fully as possible while keeping its risks and potential side effects at bay.”

One of the ways to do this is by placing a withdrawal or usage limit so consumers do not withdraw their funds indiscriminately. This, he admonished, should be done by not being too protective of the institutions.

Weidmann believes the advent of CBDCs can stir competition amongst the financial institutions, a scenario that can spell positivity in the long run. “On the upside, CBDC could spur on competition among banks and promote new services,” he said. “Some banks might also become more cautious and reduce the potential for banking stress.”

The European Central Bank (ECB) is amongst the major monetary watchdogs with a vested interest in the Digital Euro pursuit. The ECB President, Christine Lagarde, has often reiterated the bank’s plans to launch the CBDC to serve as a complementary digital payment alternative to relieve the existing fiat Euro alternative.

Other economies, including Japan, China, and Sweden, are also exploring the Digital Currency initiative across the board.

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Egypt’s Largest Bank Connects With Lulu International Exchange Via RippleNet to Facilitate Cross-Border Payments

by Btcmanager

The National Bank of Egypt (NBE), Egypt’s largest and oldest bank, has inked a partnership deal with blockchain-based company Ripple, to utilize the latter’s digital payment solution, RippleNet, in order to facilitate cross-border transactions. 

NBE Uses RippleNet for Cross-Border Payment Settlements 

Ripple announced the partnership deal via a press release on Tuesday (May 18, 2021). According to the announcement, the NBE and Lulu International Exchange, a financial services provider headquartered in the United Arab Emirates (UAE), will use RippleNet to improve cross-border payments from the UAE to Egypt. 

With cross-border remittances being costly and slow as a result of the friction on the global payments infrastructure, NBE and Lulu are seeking a better alternative that would make remittance into Egypt faster and cheaper. Egypt is the world’s fifth largest remittance recipient after India, China, Mexico, and the Philippines, with $24 billion remittance payments received in 2020 alone.

Commenting on the recent partnership,  NBE’s Head for Financial Institutions and International Financial Services, Hesham Elsafty, said:

“NBE’s partnership with Ripple will help to improve overall efficiency by enabling NBE to establish new alliances across wider markets with reduced cost and quicker integration time. We are very excited to announce our new partnership with Ripple and Lulu which we believe will contribute to a further acceleration of the Egypt-UAE remittances corridor.”

The Managing Director of Lulu Financial Group, Adeeb Ahamed, also made a statement, saying:

“Our partnership with Ripple and NBE reaffirms our commitment to enhance the payments ecosystem of the MENA (Middle East and North Africa) region through meaningful collaboration and suitable adoption of technology.”

More Financial Institutions Continue to Adopt RippleNet

The NBE joins the list of financial institutions utilizing RippleNet for seamless cross-border payments. Others like the UnionBank of the Philippines, UAE-based commercial bank RAKBank, and Thailand’s Siam Commercial Bank are among the banks using Ripple’s digital payment solution. 

Earlier in May, Cambodian bank SBI LY HOUR launched a blockchain solution powered by RippleNet, that would improve cross-border transactions between the country and Vietnam. 

Meanwhile, the blockchain company is still facing a lawsuit with the U.S. Securities and Exchange Commission (SEC). Back in December, the SEC alleged that Ripple conducted an unregistered securities offering worth $1.3 billion, an allegation the company denies. Just before the SEC lawsuit, Ripple announced that it was setting up a regional office in Dubai. 


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