The California Department of Motor Vehicles has announced that it will be placing all 42 million of its car titles on the blockchain. Aiming to detect fraud and streamline the title transfer process, this new technology will allow California’s more than 39 million residents to manage their vehicle titles through the DMV’s app on their phones.

The time required to transfer vehicle titles is expected to decrease from two weeks to just a few minutes, according to the DMV. Besides enhancing convenience, this move is intended to help detect lien fraud. The blockchain will create a transparent record of ownership, making  any fraudulent transfers immediately apparent to the DMV.

A blog post on Avalanche, which is hosting the blockchain, highlights that this initiative represents a key milestone in Governor Newsom’s vision of incorporating blockchain solutions into government operations.

Moving Beyond Finance

With this move, California has become the first state in the U.S. to place car titles on the blockchain. While blockchain technology has been predominately used in the financial sector, its transparent nature makes it a promising solution for managing public databases and bureaucratic processes.

“These systems have historically been accessible by large financial institutions but have done little for regular citizens,” said Andrew Smith, President of Oxhead Alpha, in a statement. The tech company worked with the state on the initiative. “We believe that ultimately, value transfer will be embedded within the system itself proving the technology works at scale and enables other jurisdictions to implement similar approaches.”

The California project has been in development since at least January 2023 and has evolved significantly since then. At the time of the initial announcement, California DMV Chief Digital Officer Ajay Gupta said that they hoped to fully replicate the DMV’s title database onto its blockchain within the next three months. They also mentioned exploring NFT car titles as a way to modernize the process, but the latest announcement makes no reference to NFTs.

The post California Places Its Car Titles on the Blockchain appeared first on PaymentsJournal.

In the minds of many, blockchain is synonymous with cryptocurrency. However, the technology can be much more than a framework for crypto transactions. B2B blockchain could serve as a powerful solution to the longstanding challenges businesses encounter in sending, receiving, and recording payments.

This transformative shift is already underway for the one million businesses that have migrated to the Paystand platform. The company recently acquired Teampay, and the two companies collectively processed over $10 billion in B2B transactions since their inceptions. That’s roughly 2% of a market that’s expected to grow by more than 40% by 2028.

“Blockchain is going to be a game-changer,” said Albert Bodine, Director of Commercial and Enterprise Payments at Javelin Strategy & Research. “Sending payments over legacy rails and structures, also known as correspondent banking, is costly and opaque. I’m very bullish on blockchain shedding some of its tie-in with crypto and making a mark on the B2B rail space.”  

DeFi in Traditional Spaces

Consumers have long benefited from seamless and accurate payments through peer-to-peer (P2P) platforms like Venmo. Meanwhile, businesses have grappled with outdated accounts payable (AP) and accounts receivable (AR) processes that can be inefficient and expensive. Paystand aims to bring the P2P experience to business payments.

The company’s network is built on the Ethereum blockchain, which allows for reliable and quick payments with no fees. According to Paystand CEO Jeremy Almond, adding Teampay to the fold, “not only revolutionizes payments and creates a seamless, fee-free B2B network, but also ushers decentralized finance into traditional spaces.” 

Bold Moves

Paystand hopes to offer relief for B2B customers who have suffered under persistent inflation and high interest rates for some time and are looking to cut costs. To capitalize on that environment, the company has made several bold moves beyond the Teampay acquisition.

It recently bought full dynamics integration with Microsoft Dynamics 365 Business Central, and the initial application for Dynamics users will be Paystand’s ability to streamline AR.  

Bodine, who examined the role of B2B blockchain in his recent report, Movements in Global Payments and Banking: 2024 Edition, noted: “As it moves away from crypto, blockchain will be extremely influential. Particularly in cross-border payments, where the situation is ripe for a new way to send payments. Then comes cross-continent and cross-ocean.”

The post Blockchain-Based B2B Platform Aims for Venmo-esque Experience appeared first on PaymentsJournal.

There’s been a sharp decline in the reception of cryptocurrencies by illicit addresses in 2023, according to blockchain intelligence firm Chainalysis. In its newly released 2024 Crypto Crime report, roughly $24 billion worth of crypto was received by illicit addresses last year, accounting for 0.34% of all transaction volume. That’s down nearly 40% from 2022’s figure.

For the second consecutive year, stablecoins accounted for the majority of illicit transaction volume in 2023. Prior to 2022, bitcoin had consistently represented most of the transaction volume each year since 2018. But in 2022, stablecoins suddenly accounted for roughly two-thirds of the illicit traffic volume, and this trend continued in 2023.

Crypto scamming and hacking revenue both fell significantly in 2023. Total illicit revenue for these activities was down by 29.2% and 54.3%, respectively. 

There is an important caveat attached to this. According to Chainalysis: “One year from now, these totals will almost certainly be higher, as we identify more illicit addresses and incorporate their historic activity into our estimates. For instance, when we published our Crypto Crime Report last year, we estimated $20.6 billion worth of illicit transaction volume for 2022. One year later, our updated estimate for 2022 is $39.6 billion.”

The Impact of FTX

The 2023 report had not reported transactions associated with FTX and other firms accused of fraud until the legal processes around them had reached a decision. Now that FTX CEO Sam Bankman-Fried has been convicted of fraud, Chainalysis is retroactively including the $8.7 billion in creditor claims against FTX in its 2022 figures.

Chainalysis’ totals also include funds stolen in crypto hacks, but exclude revenue from non-crypto native crime. So when crypto is used to pay for things like drug trafficking, that is not included in the data.

One area where the report says fraudulent activity is trending down is romance scams. “Our on-chain metrics suggest scamming revenues globally have been trending down since 2021,” the report says. “We believe this aligns with the long-standing trend that scamming is most successful when markets are up, exuberance is high, and people feel like they are missing out on an opportunity to get rich quickly.”

As Brittany Allen of Sift, a leader in digital trust and safety issues, has pointed out, the transparency of blockchain makes it difficult for fraudsters to get away with their crimes for any great length of time. “All it takes is one mistake to reveal their real identity, at which point that mistake is part of the public, permanent blockchain record,” Allen has written. “However, the real challenge for exchanges doesn’t lie in catching these cybercriminals post-attack, but in preventing them from happening in the first place.”

The post Crypto Fraud Is Down, but Illicit Stablecoin Activity Emerges appeared first on PaymentsJournal.

Citigroup Inc. has introduced Citi Token Services, a new blockchain-based cash management and trade finance solution for institutional clients.

According to Bloomberg, this service converts customer deposits into digital tokens, which can be instantly transferred internationally.

“The announcement by Citi is important for a couple of reasons,” said James Wester, Director of Cryptocurrency, and Co-Head of Payments at Javelin Strategy & Research. “First, the use of tokenized deposits to address cross-border payment flows validates an important use case that has been viewed as a potential application for enterprise blockchain for some time. Second, by applying the tool to trade finance, Citi is addressing another area that has long been viewed as inefficient.”

“Using tokens to settle payments instantly anywhere in the world is a big improvement to an area that has relied on processes that have been in place for generations,” he said.

A Tokenized Endeavor

Traditional methods often involve delays due to different financial systems and operating hours across regions.

The primary goal of Citi Token Services is to address cross-border money transfer challenges, and provide clients with a real-time, 24/7 transaction banking experience.

Earlier this year, Citigroup participated with the Federal Reserve Bank of NY to test a digital dollar. The effort demonstrated the potential of shared ledgers and tokenized assets to enhance wholesale payments, as reported in PaymentsJournal. With its new blockchain project, Citi is competing with JPMorgan Chase, which is also exploring blockchain-based digital deposit tokens for cross-border payments.

Citi Token Services is expected to have a significant impact on trade finance, an area burdened by paper-based processes. The shipping industry, in particular, relies heavily on letters of credit from banks. Smart contracts, a key element of blockchain technology, could streamline these processes.

According to Bloomberg, Citigroup has already conducted successful pilots with a canal authority and A.P. Moller-Maersk A/S, a major ocean-cargo company, demonstrating the instant transfer of tokenized deposits to suppliers through smart contracts.

The post Citi Token Services Provides Blockchain Trade Finance Solution appeared first on PaymentsJournal.

The collaboration between Binance Pay and Solve.Care is propelling cryptocurrency adoption as it enables 70 cryptocurrencies to be used in healthcare payments.

Solve.Care offers a decentralized healthcare platform that features interoperable Web3 digital health networks. The healthcare experience is enhanced by delivering a more customized patient care that is based on the individual’s health problem, economic considerations, and social needs.

Solve.Care’s healthcare application, Care.Wallet, can also be used to accumulate SOLVE tokens that can be used in exchange for healthcare products and services within its platform. Users also have full control over their personal information.

“Helping eliminate delays in payments frees up doctors to focus on what they do best, and if this model were to be adopted at scale, it could significantly help reduce healthcare costs,” said Joel Hugentobler, Analyst of Cryptocurrency at Javelin Strategy & Research. “Solve.Care has a two-token model: Care.coin is a stable digital currency issued by insurance companies and other payers. This token isn’t publicly traded, and it is backed by financial reserves of issuers. The SOLVE token is publicly traded and is required to participate or transact on the Solve.Care platform, and it’s an ERC-20 token (ethereum blockchain).”

“It will be crucial for the team at Solve.Care to implement a layer 2 solution to significantly reduce transaction fees that the ethereum blockchain is notorious for. While this platform may be a huge success, there will likely be roadblocks and challenges they will have to navigate through and improve over time. Regardless, this is a big step for a company like this to help push the industry forward, and I’m sure other companies are anxious to monitor the developments moving forward,” he added.

The Convergence of Crypto and the Healthcare Industry

One of the biggest and long-standing pain points within the health industry is their payment systems. They are often sluggish, expensive, and susceptible to error. When cryptocurrencies are integrated into the healthcare payment structure, transactions are faster, more secure, more cost-effective—and it eliminates the intermediaries.

The rise of crypto adoption worldwide is causing a tremendous shift across various industries, including healthcare. Although the healthcare industry has generally been lax in adopting new technologies, many in the industry are realizing its many benefits, especially when it comes to security. When payments are made within blockchain technology, users can rest assured that their personal health information will be safe during the payments process.

The post Binance Pay and Solve.Care Partnership Aims to Streamline Healthcare Payments appeared first on PaymentsJournal.

JPMorgan Chase is researching a digital deposit token to make settlements and cross-border payments faster.

According to Bloomberg, the banking giant has the essential infrastructure needed to accept this new form of payment, however, the token will not be created if it doesn’t get the green light from U.S. regulators.

If approved, JPMorgan Chase plans to launch the digital deposit token for corporate client use within a year’s time. It will facilitate money transfers to clients of other banks and streamline cross-border transactions. Initially, the digital deposit token may only support dollars, but could potentially support other fiat currencies down the line.

“Deposit tokens bring plenty of potential benefits, but we also appreciate that regulators would want to be thoughtful and diligent before any new product gets developed and used. Should that appetite develop, our blockchain infrastructure would be able to support the launch of deposit tokens relatively quickly,” a JPMorgan spokesperson said in a prepared statement to Bloomberg.

Banks Are Inching Closer Towards Blockchain Adoption

Banks have generally tiptoed around adopting cryptocurrencies, but they have not been hesitant to explore its related technology, especially in the field of blockchains. Chase’s CEO Jamie Dimon has certainly expressed his misgivings about Bitcoin, calling it unreliable and fraudulent back in 2017.

Still, innovations in cryptocurrency and other emerging technologies are forcing banks to explore new ways to make payments faster, cheaper, and safer. As financial institutions delve into this new landscape, they must do so under strict compliance to current regulations, ensuring they‘re keeping user security at the forefront.  

As banks turn to blockchain technology, they will create new opportunities, including extending their offerings, establishing new streams of income, and enhancing the customer service experience.

As cryptocurrency adoption continues to grow, the industry would have reached a level of maturity where financial institutions could potentially adopt as part of their offerings, in time.

The post JPMorgan Chase Eyes Blockchain Technology appeared first on PaymentsJournal.

Layer 2s are the newest solution to hit the cryptocurrency market and are poised to alleviate the mounting transaction processing load, thereby enhancing scalability.

In “The Limits of Crypto and The Rise of Layer 2s,”  Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research, delves into the obstacles that blockchain networks are contending with, what Layer 2s are, and the risks associated with adopting this solution within a traditional business model.

Barriers Facing Blockchain Networks

Hugentobler’s report acknowledges the growing demand for block space. As the number of blockchain users grows, the volume also increases, contributing to network congestion. This ultimately leads to a drop in processing speed and a surge in cost.

“Bitcoin being the first to the market, the number of base-layer blockchains has proliferated over the years, and they’re all trying to solve this scalability issue,” Hugentobler said.

“But when they’re trying to solve these issues of cost or congestion and they’re changing the core design of the blockchain, they face what’s called the blockchain trilemma—which is really finding the balance of tradeoffs between decentralization, security and, and scalability.”

Layer 2s Defined

Layer 2 refers to a solution that is “off-chain” yet is constructed on top of the original blockchain to enhance scalability as well as performance.

“A Layer 2 is a separate protocol,” Hugentobler said. “But it really refers to the level of implementation of scaling solutions.

“There are a number of ways that different companies go about it, but they can be directly implemented on top of the blockchain itself, or as a separate function of a base layer. However, they’re still dependent on that base layer to finalize transactions.”

The main role of Layer 2 is to free the base layer of bitcoin or ethereum and keep it from becoming congested with any additional tasks outside of the execution and settlement.

Risk Inherent to Layer 2s in Traditional Business Models

With the adoption of any new solution, there is always the potential for risk, especially when that solution is integrated into traditional business models. It is no different for Layer 2s. As the newest solution to enter the cryptocurrency ecosystem, they carry the risks of users being unable to withdraw their funds or outright lose them if the solution isn’t implemented properly.

Second, a lot is involved when it comes to integrating Layer 2s within a traditional business infrastructure, including front and back offices. Lastly are the unending calls for government regulation to further advocate consumer protection.

According to Hugentobler, all these issues should be seriously considered as potential barriers to adoption by companies and developers looking to add Layer 2s into their business.  

Looking Ahead

In his research, Hugentobler discovered that the transaction volume on the Lightning Network, a Layer 2 protocol, has seen better than a 200% compound annual growth rate since 2018. This points out the direction in which Layer 2s are headed. It is in line with the growing number of businesses and merchants accepting bitcoin payments by using the Lightning Network.

Learn more about how Level 2s can address blockchain issues and the barriers tied to implementing this solution for businesses.

The post As Blockchains Face Congestion, Level 2s Offer a Solution appeared first on PaymentsJournal.

The European Commission (EC) and the German Banking Association have come together to launch a new initiative called “Tokenise Europe 2025,” according to a recent article from Fintech Switzerland. The initiative was described in a report by the consultancy firm Roland Berger.  The objective of the initiative is to leverage the potential of asset tokenization and distributed ledger technology (DLT) to increase competitiveness and build economic resilience in Europe. Over 20 banking trade groups and paytech firms from different countries and industries throughout Europe are supporting the initiative.

Tokenization is the process of creating digital tokens (such as cryptocurrencies) on a blockchain to represent assets, including financial instruments such as equities and bonds. The technology offers several benefits, including greater simplicity in the financial system, faster settlement, and a potential reduction in fraud.

Tokenization is crucial for Europe to remain competitive in the global technological arena. Europe currently has the chance to secure a leading position in tokenization. However, the Roland Berger report also warns of several challenges holding back further development of tokenization, including the perceived lack of relevance of tokenization in daily business and the conservative and risk-averse culture in Europe.

It’ll be important to understand how digital ledger technology and tokenization have the potential to drive innovation and efficiency in various kinds of financial transactions. These technologies can reduce the risk of fraud and counterfeiting, as well as increase speed, efficiency, and cost-effectiveness in real-time payments. This is true for cross-border payments as well.

“Most of the CBDC development efforts globally have been blockchain-based, says Steve Murphy, Director of Commercial and Enterprise Payments at Javelin Strategy and Research. “One example of collaborative efforts between central banks for better cross-border execution is Project mBridge in Asia.  Another example, this one in the decentralized finance  (DeFi) space, is Project Guardian, sponsored by the Monetary Authority of Singapore (MAS). Pursuing innovation in these new spaces is a growing trend.”

European regulators have a critical role to play in establishing a uniform legal and regulatory framework that legitimizes tokenization and blockchain systems necessary for payments innovation. As this framework comes into place, central banks and will have more confidence in introducing CBDCs, and the private sector will be able to develop scalable, profitable use cases for the technology.  

The post Tokenize Europe 2025 Initiative Will Jumpstart EU Payments Sector appeared first on PaymentsJournal.

China claims to have more than 1,400 companies that are ‘developing blockchain solutions,’ according to a post in CoinGeek. The information is sourced from the state-owned China Academy for Information and Communications Technology (CAICT).

There may be some definitional nuance here since there are many companies (including banks, etc.) that are working on blockchain solutions that would not be considered a blockchain company—something we might loosely define as a fintech company that specializes in blockchain-based products. Nonetheless, the CAICT whitepaper claims that more than 50% of what they describe as blockchain companies globally are either in China or the U.S.

Other things pointed out from the referenced white paper are that blockchain education is a priority in China, with at least 48 institutions of higher education providing some form of blockchain course. CoinGeek’s Steve Kaaru points out that even though China has been hostile to bitcoin, the CCP General Secretary Xi Jinping has been a strong proponent of China taking blockchain leadership. We can point out that the e-yuan, China’s CBDC, is now in active use across many cities and has a blockchain foundation. 

China had previously banned Internet Coin Offerings as well as block mining, while also warning citizens not to invest in metaverse. There was also some reluctance to endorse NFTs, but according to the CoinGeek article, some pushback on that came from a Chinese court. We know that the People’s Bank of China (PBoC) has been active in wholesale cross-border testing of CBDCs, and given the successful DeFi test between J.P. Morgan and DBS in Singapore, it will likely refocus them in that space.

The piece finalizes some CAICT thoughts around the best uses of blockchain for the benefit of China, including telecommunications, regulations, retail commerce and cross-border payments (mentioned here previously).

We also recently released some member research on the B2B uses for cryptocurrencies, along with a general status on developments across the globe. These include wholesale CBDCs, cross-border trade, capital markets (NFT) and so forth, all of which typically involve distributed ledger technology. 

Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.

The post New Developments in Blockchain in China appeared first on PaymentsJournal.

You can’t say crypto without mentioning Decentralised Finance (DeFi). Institutions are pouring billions of dollars into new and exciting ventures almost every week. What makes DeFi very exciting is that it is peer-to-peer – there is no governing central institution telling you what you can and can not do with your own assets. Where does MetaFi come in?

But there’s a lot to sort out before we reach the global DeFi adoption we all dream of. You have to be a crypto ninja to know where to start and even then DeFi can’t do everything that CeFi can do. For example, how do you buy the crypto needed to interact with DeFi protocols without passing through a centralised institution? And once you have made your returns on DeFi, how do you cash out?

Today we’ll be exploring the benefits and drawbacks of both CeFi and DeFi, and how combining them (MetaFi) may just be the right way forward.

CeFi – The Good and Bad

Centralised Finance (CeFi) is what we are all used to. It is what you get from your high street bank or insurance company. When using CeFi you expect a smooth and reliable experience, just step into a store and buy an item with their debit card, it only takes a single swipe. The money will be automatically deducted from the user’s bank account without the person themselves having to do any more than wave a card at a reader.

The customer also knows that his funds are safe, and if there is a problem, there is always somebody that can help fix the issue. When using a CeFi service you can also count on the fact that these companies are themselves highly regulated with strict monitoring.

However as your common sense tells you and the 2009 depression proves, putting all your blind trust in the financial institutions on Wall Street has some downsides. Firstly, there is the centralization risk. With CeFi your funds are effectively in the hands of the institutions. And, unfortunately, it is not uncommon for users to face power abuses by centralised crypto exchanges or banks. Freezing of funds, stopping withdrawals, and not allowing certain actions are common sights when the market is in turmoil and it means you can wave bye-bye to your hard earned savings.

On top of that, by relying on a middleman CeFi services generally come with higher costs and fees and take a lot more time.

DeFi – Ups and Downs

DeFi, on the other hand, excels at allowing users to earn without having to pass through a middleman. Thanks to the peer-to-peer nature of the blockchain, crypto holders can make use of DeFi protocols with no third parties involved. Or in other words, DeFi cuts out the stereotypical Wall Street Fat Cat and gives users back the control of their funds.

In addition to this, DeFi offers a rich ecosystem of products and services, from DEX’s to yield deposits and staking pools, providing endless possibilities. Users of DeFi services tend to earn a lot more than their CeFi counterparts.

However, as with everything else, DeFi also has drawbacks. DeFi protocols are always very complicated. It’s unrealistic to expect even experienced crypto users to understand and properly use products such as a yield vault. Imagine having to read Facebook’s terms of use every time you wanted to use Facebook, to know what you are letting yourself in for. It’s just not going to happen for most people.

And if you don’t know what you are doing, and there is nobody to back you up if you make a mistake, then DeFi clearly represents a much higher risk than the CeFi governance approach. A phrase you hear often in crypto is ‘be your own bank’. But if we are honest with ourselves, do we really want to be our own bank, with everything that entails? Imagine if you forget the key to the bank (in crypto this is usually a key phrase) and you are locked out forever. In DeFi everything is in your own hands, including the responsibility of storing your funds.

Not that many people, or businesses for that matter, are prepared to take that risk. Which means that the huge benefits of DeFi, especially the opportunity to earn on dormant funds, is being wasted.

MetaFi – The Best of Both Worlds

DeFi and CeFi both have their pluses and minuses which appear to be almost the polar opposites of each other. What if we just combine the two inside one solution so that the pluses and minuses can balance out? A so-called “MetaFi” ecosystem, which would allow them to cover each other’s weak spots and reach their full potential.

CeFi excels at its accessibility and can help create a single access point for all of the DeFi ecosystems, allowing for full blockchain interconnectivity. A CeFi infrastructure would also better protect users’ funds from scams, hacks, and loss of seed phrases, making the whole experience less daunting. On the other hand, DeFi could bring to the table a certain degree of decentralisation and a rich ecosystem of services, as well as lower fees and faster services.

Bridging the two systems brings the best out of each other. MetaFi is the best bet for crypto adoption, making digital assets more accessible, efficient, and easier to use for businesses and individuals alike.

The post MetaFi – The Secret Way To Earn With Crypto appeared first on PaymentsJournal.