Financial Literacy plus new purchasing power can drive rapid and environmentally sustainable, local-to-global, economic development. Historically, new technologies promote new forms of money and commerce that usher in new economic eras. This chapter is for leaders and innovators in financial services and sustainable economic development. It reveals an emerging era of sustainable prosperity for all. The world can now eradicate centuries-old poverty and inequality at the pace of mobile apps and social media. The funding for this paradigm shift is a next-generation financial instrument and not higher taxes, deeper debt, or redistribution of wealth schemes. The chapter introduces the first token-less ledger currency that is distributed through a public Business-Community Wealth Ledger (BCWL). Dual Currency transactions integrate fiat currencies with wealth-backed ledger currencies, monetizing and mobilizing currently underutilized business resources and increasing profits for participating businesses.
This chapter considers how DLT could be used in connection with derivatives transactions and the English law and cross-border conflict-of-laws issues that may arise from such use. The chapter addresses more simple use cases for DLT, such as acting as a record keeping function in respect of payments under a transaction or in respect of transfers of collateral, and why conflict-of-laws issues are less likely to arise from such use. The chapter then looks at more complex use cases, in particular the potential use of tokens housed on a DLT system as collateral in respect of derivatives transactions. The chapter considers a number of different types of tokens, from tokens that are backed by a real-world asset to tokens that are native to the DLT system, and addresses the conflicts-of-laws issues that may arise from taking security over such tokens. The chapter also addresses how the law could be developed so as to provide greater legal certainty on these issues.
В. С. Петренко, Алла Карнаушенко, Kateryna Melnykova
In today's world, the finance and investment sector is becoming increasingly dynamic and diverse.One of the key trends is the growing interest in alternative sources of financing, which provide businesses and individual investors with new opportunities to obtain and provide financial support.This article provides a detailed analysis of alternative sources of financing, including crowdfunding, venture capital and cryptocurrency initial public offerings (ICO).It also discusses the role and importance of alternative sources of financing in modern business and the impact of technological innovations on this sector.Alternative sources of finance encompass a wide range of financial instruments and platforms that allow businesses and individuals to raise and invest funds outside of traditional banking and financial institutions.One of the most popular categories is crowdfunding, which requires raising funds from a large number of individual investors through an online platform.Another important category is venture capital, which has evolved into investing in start-ups and innovative businesses with high risk but significant return potential.ICOs are another aspect of alternative sources of funding that is proving popular.This method allows startups and projects to raise funds by issuing cryptocurrency tokens.The article compares the categories of alternative sources of financing and identifies crowdfunding, venture capital and ICO as three key categories of alternative sources of financing with their unique features and advantages.Crowdfunding allows mass investors to invest in various projects, venture capital business is aimed at supporting innovations and start-ups, and ICO allows issuing tokens to raise funds.The impact of the development of Internet technologies and blockchain, which have changed the landscape of alternative finance, is also identified.Online platforms and distributed ledgers can create secure and accessible channels for attracting investment.This makes alternative sources of finance more attractive to investors and businesses.Technological innovations are also helping to improve risk assessment and credit scoring processes, making alternative finance more predictable and efficient.
Crypto-assets, such as cryptocurrencies and tokens, offer a diverse range of payment and investment services. Particularly, tokenisation simplifies products and processes, making negotiation and exchange easier and reducing inefficiencies and costs. However, this disintermediation does not necessarily reduce the role of banks, but rather transforms it, as the increasing complexity of products and services increases the importance of high-value consulting services. Banks can benefit from entering the distributed ledger technology (DLT) ecosystem and can serve as a reliable reference point for investors, consumers, and issuers. However, banks are also exposed to compliance and reputational risks that can only be managed with clear regulation. Regulatory uncertainty, stemming mainly from confusion regarding the legal classification of crypto-assets, hinders the provision of services by banks, and increases risks for consumers and investors. The regulatory framework should be revised in a technology-neutral manner to address these issues and allow for experimentation of innovative solutions, such as the European MiCAR.
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Despite the benefits that banks could get from implementing distributed ledger technologies (DLTs), few banks have focused on making full use of it. According to operational experience, DLTs – which are blockchain based in this case – are frequently employed at the level of cryptocurrencies but are seldom used when it comes to banking applications. This chapter aims to provide an overview of the current state of the academic literature on implementing DLT in the banking sector. By providing a comprehensive overview of DLT adoption in the banking sector, this study can contribute to the development of a better understanding of DLT and its potential to transform the banking industry.
In this study, the five most well-known cryptocurrencies in the blockchain-based decentralized financing structure were compared with the centralized market interest rates, and it was examined whether there is a significant relationship between the changes in market interest rates and the prices of cryptocurrencies. Key findings indicate a significant relationship between most cryptocurrencies, such as Dash, Litecoin, Ethereum, and Bitcoin, with market interest rates. However, XRP emerges as an exception. In addition to the comparative analysis between cryptocurrencies and market interest rates, this study delves into the underlying mechanisms that govern these relationships. It explores the role of blockchain technology in shaping the decentralized financing structure and highlights the intricacies of various cryptographic algorithms. The research also emphasizes the need for specialized accounting practices that cater to the unique challenges posed by cryptocurrencies. This study bridges the understanding between conventional economic mechanisms and the innovative world of cryptocurrencies, offering inferences that are important for investors, financial analysts, and accountants in the digital age.
Kristián Košťál, Muhammad Nasim Bahar, Richard Gazdík, Michal Ries
In this paper, we introduce a pool-based liquidity protocol designed to enhance the accessibility and scalability of decentralized finance (DeFi) on smart contract-enabled blockchains. This user-friendly solution addresses the limitations of traditional financial systems by streamlining lending and borrowing operations, ultimately promoting broader adoption of DeFi beyond technology enthusiasts. The core protocol components encompass lending and borrowing managers and a liquidation manager to ensure the timely initiation of liquidations under unfavorable conditions. We also discuss various interest rate models to optimize the protocol's performance. To further advance the project's decentralization and governance, we advocate for establishing a decentralized autonomous organization (DAO) and exploring the potential integration of flash loans functionality. By offering an accessible, versatile, and robust DeFi platform through our pool-based liquidity protocol, we aim to accelerate the adoption of decentralized finance and extend its benefits to the broader population.
Nipun Agarwal, Pornpit Wongthongtham, Neerajkumari Khairwal, Kevin Coutinho
Blockchain technology has emerged as a transformative force in the financial industry, offering the potential to streamline and enhance financial markets’ clearing and settlement processes. This paper explores the application of blockchain technology in these critical areas. We examine traditional clearing and settlement procedures, the challenges they pose, and how blockchain can address these issues. Through case studies and technical insights, we illustrate the benefits and limitations of implementing blockchain solutions. This paper utilizes the PRISMA method to survey papers related to blockchain-based clearing and settlement systems, while using Science Direct to identify papers that have been published in this area. These papers were reviewed to identify themes that relate to extending blockchain development for clearing and settlement system in financial markets. As a result, this paper also shows how the Layer One X (L1X) blockchain can be applied to develop financial markets clearing and settlement systems.
Purpose This study aims to analyze the effect of cryptocurrency capitalization market development on bank deposits variability in the United Arab Emirates (UAE) spanning the period 2005M1–2020M4 using the novel nonlinear autoregressive distributive lag (NARDL). Design/methodology/approach The study employs the NARDL recently developed by Shin et al . (2014) to estimate the long and short-run relationships between the variables rather than the widely known ARDL (Pesaran et al., 2001), which suffers from a complex structure in the estimation equation that usually includes lags and differences in both short and long terms. The implementation of NARDL required several proceedings after plotting the descriptive data, commencing with unit root tests, selection of lag length, estimating the long-and-short variables coefficients, heteroscedasticity test and Wald test for symmetries. Findings The long-run estimations of the positive and negative asymmetric coefficients indicate that cryptocurrencies capitalization has a negative impact on bank deposits in the UAE. Further, the short-run estimations coefficients exhibit that both significant positive and negative partial sum squares of cryptocurrencies decrease bank deposits. Research limitations/implications The study has applied to the UAE spanning the period 2005M1–2020M4 using the NARDL. Practical implications The short-run estimations coefficients exhibit that both significant positive and negative partial sum squares of cryptocurrencies decreases bank deposits, which means that the increase in the magnitude of cryptocurrencies capitalization stimulates depositors and speculators to adjust their portfolios towards contracting their deposits in banks to invest partially in cryptocurrencies, on the other hand, the decline in cryptocurrencies capitalization process spur depositors and speculators to reduce their deposits for purchasing cryptocurrencies at lower prices. Social implications The study infers that individuals and businesses are cautious when investing in cryptocurrencies, and they need more certainty and trust to include these types of assets in their portfolios. The fluctuation in cryptocurrencies capitalization prompts speculators to change their deposits according to the cryptocurrencies' prices. Originality/value This study explores the short-and long-run asymmetric impacts of cryptocurrencies capitalization development on bank deposits volatility in the UAE, based on a NARDL, for providing a manifest depiction of whether the cryptocurrencies industry might be a threat to conventional banking system performance in the potential future.
To what extent does the collapse of a commercial bank spread contagion across cryptocurrency markets? How do markets behave around bankruptcy if digital assets remain stuck within the bank and cannot be withdrawn? We use a BEKK model to examine contagion effects across major digital assets during the Silicon Valley Bank (SVB) collapse period in early March 2023. We find evidence of contagion across major stablecoins and Bitcoin. We also examine the price action when nearly all withdrawals at SVB were prohibited. We find substantial abnormal movements in stablecoin cumulative returns and volumes, indicating a “flight to safety” from less to more authoritative and trusted stablecoins. The implications for practitioners and policymakers are discussed.
Decentralized finance (DeFi) built on public blockchain technology has introduced groundbreaking financial innovation through disintermediated peer-to-peer transactional architectures. By eliminating centralized intermediaries, DeFi expands access to an open ecosystem of decentralized financial services including lending, trading, derivatives, insurance, savings, asset management, crowdfunding and more. However, DeFi's disruptive nature also introduces significant regulatory challenges worldwide. Most DeFi platforms operate autonomously outside existing policy frameworks crafted around regulated entities in traditional finance. The pseudo-anonymous execution of transactions via non-custodial wallets and smart contracts risks enabling illicit activities like money laundering at unprecedented scale. Furthermore, the complexity of cross-border DeFi structures stresses traditional financial oversight dependent on fragmented national regimes. As innovation continues outpacing governance adaptation, regulators across jurisdictions grapple with crafting balanced oversight solutions without constraining beneficial advancement. This paper undertakes a comparative legal analysis of emerging legislative approaches to governing Decentralized finance (DeFi) across major developed and developing economies. It examines key tensions between DeFi's unique technical architecture and regulations designed around centralized intermediaries. Challenges are identified in combating illicit finance, protecting consumers, ensuring stability and promoting fair competition in the rapidly evolving DeFi ecosystem. The analysis assesses risks including money laundering, investor protection, systemic threats and blockchain immutability. It also reviews regulatory initiatives and debates involving global standard-setters and national authorities in jurisdictions like the United States, European Union, China, Singapore, Switzerland and United Arab Emirates. While most countries remain at early stages of tailored DeFi governance, recommendations are presented on crafting international regulatory strategies and oversight coalitions to harness DeFi’s opportunities while safeguarding public interests. Promising policy directions include regulating activities over entities, proactive developer engagement, leveraging regulatory technologies, incentivizing accountability, enabling pilot programs, and nurturing open-source collaboration. With prudent regulatory modernization centered on multi-stakeholder collaboration and industry consultation, DeFi has the potential to fulfill its promise of expanding financial access, efficiency and resiliency for the benefit of economies and communities worldwide.
Pham Thi Ngoc Dung, Long Luong, Le Ngoc Thuy Trang, Do Thi Thanh Nhan
This study aims to analyze the role of bitcoin and gold as safe haven assets against Asian equity markets during periods of high market uncertainty related to the global COVID-19 pandemic, high volatility, and extreme stock market conditions. Empirical analysis employ the DCC-GARCH methodology to estimate the time-varying relationship between bitcoin/ gold and the Asian stock market from 2016 to 2023. Our findings reveal that bitcoin serves as a strong hedge for Taiwan and Pakistan, whereas gold can be considered as a strong hedge for Japan, Singapore, India, Thailand and Vietnam. Interestingly, we observed that bitcoin does not exhibit safe haven properties in any of the Asian countries observed. In contrast, gold demonstrates strong safe haven abilities for Singapore, India, and Thailand. These results remain consistent across various measures of market turmoil, including the volatility index, COVID-19-related periods, and low quantiles in the stock market. Furthermore, our results suggest that the perception and adoption of gold as a safe haven asset in Japan and Vietnam is mainly influenced by global events and uncertainties, rather than localized stock market conditions. These findings offer valuable information for investors, financial institutions, as well as policy makers and regulators, on how cryptocurrency and gold evolved as hedge and safe haven assets in Asia during uncertainty periods.
This chapter will provide a discussion regarding the most popular form of cryptocurrency, Bitcoin. Information will be provided regarding what contributes to the primary status of Bitcoin as evidenced in part by its value in U.S. dollars and dominant marketization levels in comparison to other forms of cryptocurrency. This chapter will also provide a discussion as to the motivational forces behind its development and operational dynamics that contribute to Bitcoin’s potential usage in the economy. Additionally, pros and cons associated with the usage of this type of cryptocurrency will be expanded upon in detail. This chapter will also discuss the previously introduced characteristics traditionally associated with defining money to determine whether cryptocurrency such as Bitcoin is able to meet these standards and, if so, to what degree. Ultimately, Bitcoin’s success will in part be derived from the levels of trust in this cryptocurrency held by system actors in the ability to transact safely, conveniently, and abundantly. Relatedly, the incumbent money problem may increase the degree of difficulty associated with accepting cryptocurrency such as Bitcoin. Ultimately, the proliferation of cryptocurrency such as Bitcoin in the economy will depend on many variables, including societal acceptance and which government regulatory path is eventually established.
Abstract This chapter highlights the potential impact of the distributed ledger technology (DLT) on over-the-counter (OTC) derivatives markets. The chapter first explains in detail how DLT and/or blockchains work. DLT refers to the novel approach to record and share transactions and/or data across multiple participants in a decentralized way. A blockchain, where data is stored in blocks chained together in a chronological sequence, can then be considered as a particular kind of DLT, albeit the terms ‘blockchain’ and ‘DLT’ are often utilized interchangeably. DLT has received extensive consideration over the past decade from market participants, financial market infrastructures, and regulators. The chapter then documents the current trading life cycle before discussing how DLT could make the existing life cycle more efficient. It will focus not only on the potential advantages of DLT but also on new risks to which this technology might give rise. The chapter ends with regulatory evolutions.
In recent years, the conceptualization of the banking business has radically changed. Deregulation and digitalization were developing their impacts in the market, some of their effects resulted in the growing evolution and diffusion of digital platforms business models, where networks are bringing in the industry more participants and business opportunities. The digital vortex is the inevitable movement of industries toward a digital center in which business models, offerings and value chains are digitized to the maximum extent possible, also creating new disruptions, and blurring the lines between industries and this has paved the way to reduce bank’s centrality into every day’s consumer life. Under these circumstances, traditional banking has lost significance vis-à-vis other forms of financial intermediation and counterparts (namely FinTechs, BigTechs). The aim of this chapter is twofold. On the one hand, it gives some highlights on the future organization of the banking industry among the many hype storm words emerging in the market (digitalization, FinTechs, open banking, embedded finance, banking-as-a-service, decentralized finance, etc.) that are getting a twisted picture of the digital banking industry. On the other hand, by linking the dots, this chapter is going to outline the most interesting implications for both the industry and those banks that have decided to undertake a deep changing strategic transformation.
Decentralized exchanges (DEXs) are a cornerstone of decentralized finance (DeFi), allowing users to trade cryptocurrencies without the need for third-party authorization. Investors are incentivized to deposit assets into liquidity pools, against which users can trade directly, while paying fees to liquidity providers (LPs). However, a number of unresolved issues related to capital efficiency and market risk hinder DeFi's further development. Uniswap V3, a leading and groundbreaking DEX project, addresses capital efficiency by enabling LPs to concentrate their liquidity within specific price ranges for deposited assets. Nevertheless, this approach exacerbates market risk, as LPs earn trading fees only when asset prices are within these predetermined brackets. To mitigate this issue, this paper introduces a deep reinforcement learning (DRL) solution designed to adaptively adjust these price ranges, maximizing profits and mitigating market risks. Our approach also neutralizes price-change risks by hedging the liquidity position through a rebalancing portfolio in a centralized futures exchange. The DRL policy aims to optimize trading fees earned by LPs against associated costs, such as gas fees and hedging expenses, which is referred to as loss-versus-rebalancing (LVR). Using simulations with a profit-and-loss (PnL) benchmark, our method demonstrates superior performance in ETH/USDC and ETH/USDT pools compared to existing baselines. We believe that this strategy not only offers investors a valuable asset management tool but also introduces a new incentive mechanism for DEX designers.
In this paper, we explore the aftermath of the Silicon Valley Bank (SVB) collapse, with a particular focus on its impact on crypto markets. We conduct a multi-dimensional investigation, which includes a factual summary, analysis of user sentiment, and examination of market performance. Based on such efforts, we uncover a somewhat counterintuitive finding: \textit{the SVB collapse did not lead to the destruction of cryptocurrencies; instead, they displayed resilience.}
Babajide Oluwaseun Olaogun, Adaobu Amini-Philips, Ahmed K. Ibrahim
Efficient and accurate settlement processes are central to the operational integrity of financial institutions, particularly in the context of cross-border transactions and high-volume trading environments. Traditional reconciliation methods often involve time-consuming manual processes, delayed settlements, and operational inefficiencies, exposing institutions to settlement risk, liquidity risk, and compliance challenges. This proposes a Blockchain Settlement Impact Model designed to enhance institutional reconciliation processes while reducing operational and financial risks through distributed ledger technology (DLT). The model leverages the transparency, immutability, and real-time validation capabilities of blockchain to provide a secure and auditable framework for transaction settlement and reconciliation. The conceptual framework of the model integrates blockchain-enabled settlement layers with institutional accounting and treasury systems, enabling automated matching of debits and credits, immediate confirmation of transaction status, and streamlined exception management. Smart contracts are employed to enforce predefined settlement rules and automate conditional fund transfers, reducing manual intervention and minimizing the potential for human error. By providing a single source of truth for all settlement activity, the model improves operational efficiency, accelerates transaction finality, and enhances regulatory compliance. Quantitative and qualitative analyses within the model assess the impact of blockchain adoption on reconciliation speed, error rates, liquidity utilization, and risk exposure. Key performance indicators include settlement latency reduction, operational cost savings, and enhanced transparency in multi-party financial processes. The model also addresses risk mitigation by providing real-time visibility into settlement gaps, anomalous transactions, and counterparty exposures, enabling institutions to proactively manage liquidity and credit risk. Overall, the Blockchain Settlement Impact Model demonstrates the potential of distributed ledger technologies to transform institutional reconciliation practices. By combining automated settlement, real-time monitoring, and risk reduction mechanisms, the model enhances operational resilience, reduces systemic vulnerabilities, and provides a scalable solution for financial institutions navigating increasingly complex, high-volume transaction environments. Its adoption promises significant improvements in efficiency, transparency, and financial stability across global settlement networks.
The emergence of cryptocurrencies represents a significant innovation in the financial domain, where subsequently, the market has experienced exponential growth. The proliferation of digital assets has captured the attention of investors, financial institutions, and regulatory bodies, necessitating the development of research to further investigate the market–s growing action with the global financial system, specifically monetary policy and those actions executed by central banks to modulate economic activity, whether through conventional mechanisms or otherwise. The continued growth of cryptocurrency markets has prompted questions regarding the efficacy of these instruments and the evolving nature of money, necessitating the adaptation of central bank and regulatory policy frameworks. Given the considerable variation in regulatory environments across jurisdictions, international collaboration and harmonisation are essential to address potential regulatory arbitrage and establish a consistent approach to cryptocurrency oversight.
Abstract The purpose of the article is to analyse the use of cryptocurrencies in general and Bitcoin specifically. The majority of academics are aware of the benefits of using cryptocurrencies for trade facilitation, cost reduction, and similar purposes. Peer-to-peer and remittance transactions without compliance requirements have the potential to be transformed and revolutionised by cryptocurrencies; nevertheless, end users must overcome several obstacles relating to security, privacy, and control in order to take use of Bitcoin. The study elaborates on several facets of cryptocurrencies, beginning with their early development, difficulties and dangers, chances, benefits and drawbacks, and prospects. Secondary data has been used for this study like as from government sources, Scopus indexed journal, famous print media. The study find the addressed challenges pertaining to the operational and technological aspects of cryptocurrencies. And how to resolve the modern problem faced while using cryptocurrency. So we conclude that it is difficult to predict the future of cryptocurrencies, as there is still a lot of work to be done, especially in the area of formal rules. Implications: In this digital era there is a need for cryptocurrency while the whole world is turning into a cashless economy, this will be useful for our common society and have the best use for implication in the business sector, this will stop the paperwork and sustainability, and, even there is threat cybercrime while the use of cryptocurrency will be increased so by data protection and strong security and protection bill or regulation will give the usual and systematic direction for uses and one line development.
This chapter relates how federal regulators struggled with the issue of determining whether cryptocurrencies are “real” money or are they just another tradable asset. FinCen and state financial services regulators concluded that, while cryptocurrencies are not “real” money, they would be regulated as a “currency” anyway. This meant that crypto dealers are subject to state and FinCen regulation as “money transmitters,” which imposes anti-money laundering and other regulatory requirements on those entities. Federal bank regulators were slow to react to the development of cryptocurrencies but eventually launched a policy initiative to determine whether, and to what extent, banks should be allowed to engage in such activities. In the meantime, federally regulated banks were allowed to engage in some cryptocurrency related business. At the state level, New York and Wyoming created special banking licenses for cryptocurrency dealers.