Singapore has been involved in digital trade for some time and in 2019 conducted a successful pilot trade of US$20 million worth of iron ore shipped from South Africa to China. This was conducted on IMDA’s TradeTrust utility which is a blockchain platform where parties can communicate their trade instructions in real time. This pilot reduced the end-to-end trade document transit time from 45 days to 20 days.
In Australia electronic transactions have been governed by our own Electronic Transactions Act 1999 (Cth). This has allowed for electronic transmission largely for individuals but has previously presented barriers around documents such as Deeds and documents executed by companies.
COVID -19 presented some welcome temporary measures easing the paper-based compliance for these kinds of documents, however in order to align with the UNCITRAL’s Model Law it is fitting that these not only be made permanent measures but continue to be expanded to give business the ability to transact as electronically as possible.
Central Bank of Nigeria: banks should not engage with digital currencies
The Central Bank of Nigeria (CBN) has issued a notice to local banking institutions that it does not permit “dealing in cryptocurrencies or facilitating payments for cryptocurrency exchanges” in one of the strongest anti-digital currency positions of a Central Bank.
The CBN has again directed attention to it’s 2017 circular and that it still holds the same position it did four years ago: it will not recognise digital currencies as legal tender and will not approve any bank being involved due to “inherent risks”. The 2017 paper repeats the same misguided and incorrect myths around the “opportunities” that digital currencies is said to create for illegal activities, such as money laundering and terrorism, when all evidence is that there is no greater illegal activity in digital currencies, and likely less, than in the use of physical cash or in banks at present.
The CBN has taken the liberty of ordering all banks to close any accounts transacting with digital currencies. It said:
all banks should identify persons and/or entities transacting with cryptocurrency or operating crypto exchanges on their platforms and ensure that such accounts are closed immediately.
As the use of digital currencies is only accelerating, the more suitable, long term solution would be for sensible regulation and education to address the perceived concerns. Countries like Australia, Canada, and the Isle of Man for example, have already enacted laws to cover digital assets transactions and the institutions that facilitate within existing anti-money laundering and counter-terrorist financing laws.
Coinbase to trigger windfall gains for Westpac
Westpac’s Reinventure fund is rumoured to be imminently yielding significant dividends for the bank, from an early investment the venture capital fund made into Coinbase.
Reinventure invested in Coinbase, which is courting a direct listing (i.e. no initial public offering) on the NASDAQ exchange. Coinbase has a rumoured valuation of USD$65 billion which would deliver a paper profit of around USD$300 million to Reinventure.
Westpac’s commitments of AUD$150 million to Reinventure is split across three funds, the first being seeded by Westpac with AUD$50 million in 2014. The Coinbase investment was part of this first fund. The return from the Coinbase investment alone will make Reinventure:
one of the best performing funds in the history of Australian venture capital.
Reinventure and Wesptac have now decoupled and Reinventure is looking more broadly for funding for it’s fourth fund. This decoupling should allow Reinventure to invest more flexibly and potentially enter the decentralised finance space more heavily given the known reluctance of Westpac to pursue investments in technology which could challenge the existing monetary system.