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China’s Biggest Cities, Beijing, Shanghai, Plan to Promote CBDC in 2021

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China's Biggest Cities, Beijing, Shanghai, Plan to Promote CBDC in 2021

According to the latest announcement, Beijing and Shanghai, which are the biggest cities in China, are planning to hold pilots to promote CBDC (Central Bank Digital Currency) this year.

According to a Global Times report, this effort would lead to a positive start and could pave the way for the digital currency’s official launch.

CBDCs are controlled by the country’s central bank directly, thus helpful in storing value and making digital payments seamlessly. CBDCs can be considered as a digital form of sovereign money that is backed by national credit and government power.

Wider Efforts to Promote the Digital Currency

As a part of this announcement, Beijing Mayor Chen Jining announced that the capital would stimulate the building of demonstration zones for fintech and professional services this year.

Shanghai Mayor Gong Zheng also expressed his views regarding the development of CBDC and stated that the Shanghai city will continue to maintain financial opening-up and encourage the digital currency. 

Also, the governor of South China’s Guangdong Province, Ma Xingrui, confirmed that authorities will assist Shenzhen’s development into a pilot zone for the country’s digital currency. 

A report also highlights the views of one of the Shenzhen-based veteran industry insiders. According to him, the pilot testing is just an initial innovative step. Once launched, the digital yuan will transform the financial sector and unleash an encouraging digital finance service sector worth billions of yuan. 

Chinese Cities Continues to Plan Large-Scale Tests of Digital Currency

CBDC can minimize dependence on banks and other financial institutions and facilitate financial inclusion for the underprivileged population. Since 2020, DCEP’s (Digital Currency Electronic Payment) trial operation has increased from small-scale closed-loop testing to large-scale open testing. 

The tests were carried out in various cities of China, including Shenzhen, Shanghai, Suzhou, Chengdu, along with others.

Recently an announcement was made stating that Shenzhen city will stage another public trial of the central bank’s in-the-works digital currency. According to the reports, this is the third time the city will hold one of the “red envelope” giveaways, distributing 20 million digital yuan through a random draw.

Suzhou city also held a similar trial in the month of December 2020, giving out 20 million digital yuan.

To get instant updates about Blockchain Technology and to learn more about online Blockchain Certifications, check out Blockchain Council.  

China’s Biggest Cities, Beijing, Shanghai, Plan to Promote CBDC in 2021

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Russian Officials Must Declare Crypto Holdings

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In a new move, Russian authorities have announced that officials have to start declaring their crypto holdings. They reversed a 2018 decision that did not require the declaration from officials.

Mandatory disclosure for public officials

Disclosure of crypto holdings will be considered mandatory for Russian public officials started January 1, 2021. The requirement was announced by Igor Krasnov, the Russian prosecutor general held a meeting with 15 fellow prosecutor generals representing the Shanghai Cooperation Organization (SCO). He announced the new requirements on October 20, saying,

“Starting next year, civil servants will be required to declare [virtual] currencies on an equal basis with other assets.”

Russian Officials Must Declare Crypto Holdings

The Russian labor ministry announced in 2018 that public officials do not need to declare virtual asset holdings in their tax reports. It said that the status of crypto was unregulated, hence it was not to be included in tax reports. However, concerns about cryptocurrencies being used as instruments of bribery and corruption started to rise.

What brings new requirements?

The office of the Prosecutor General claims that it has confiscated over $440 million worth of undisclosed, non-cryptocurrency assets from public officials in the past three years. The new requirements come after President Vladimir Putin signed new laws in July that would classify crypto assets as physical commodities started in 2021. This is the first time that virtual currencies will be recognized in the country. The laws still do not recognize cryptocurrencies as legal tender. However, it would make crypto-activities legal in the country.

SCO member states include Russia, China, India, Kazakhstan, Pakistan, Uzbekistan, and Tajikistan. Non-member partners and observer states like Armenia, Cambodia, Azerbaijan, Mongolia, Iran, Belarus, and Afghanistan were also present during the meeting. As Russia has announced mandatory crypto reporting requirements, it is likely that similar reporting requirements could be enacted in other European nations soon.

The Russian Federal Financial Monitoring Service claimed to have developed a partial de-anonymization system for Bitcoin, Ethereum, and Monero in August. It also said that it is planning to sell the system to overseas countries interested in the system.

Russian Officials Must Declare Crypto Holdings

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Permissionless Blockchain Project, Conflux Network to Act as a Global DeFi Bridge

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Conflux Network has formally launched its Tree Graph Research Institute with the government of Shanghai, according to the latest announcement. This launch will experiment with building a regulatory compliance platform that can bridge global Decentralized Finance (DeFi) applications and government regulations. 

Fan Long, Conflux Founder, and Tree Graph Research Institute Director, claims that DeFi is a new ecosystem that may present a risk to regulators. Therefore, it is crucial to maintain a reliable communication flow between DeFi innovators and the regulators.

With scalability, stability, and extensibility, Conflux is the next-generation Blockchain-based protocol that is dedicated to implementing Blockchain technology with strategic partners in real-world environments and creating decentralized mass acceptance applications.

Conflux Network Aims to Make Open Communication Crucial 

 

Tree Graph Research Institute aims at experimenting with permissionless DeFi applications to make open communication crucial for continued legislative acceptance. 

Fan Long, Founder of Conflux and Director of the Tree Graph Research Institute, mentioned that:

“Regulators need a reliable way to learn what the new technique is about and where it might lead us to. Innovators need a way to understand the concerns and red lines of regulators.”

Conflux is collaborating with the government of Shanghai on many sandbox projects, including the incorporation of Blockchain borrowing and lending services into the Pudong Development Bank of Shanghai, and the utilization of the unique regulatory structure of the Shanghai free trade zone to devise a unique stablecoin for the city.

Permissionless Blockchain Project to Help Developers 

A permissionless Blockchain project, endorsed by the Chinese state, aims to provide developers with a robust and affordable framework to build DApps.

In an interview, Fan Long explained that Conflux Network aims to provide a POW network with a faster order of magnitude for transaction rates. The key enabler technique is a novel DAG-based ledger system along with an optimistic concurrency regulation to achieve easier and quicker transactions between all the nodes in the network.

Fan Long believes that DeFi is a new space for regulators, and therefore the decentralized design of Blockchain would complicate the regulation of DeFi products for regulators. However, there are opportunities to implement controls at the boundary between the decentralized and centralized entities.

Conflux’s Open Defi Initiative 

In order to bring global DeFi projects and regulations together, the company has introduced the Conflux Open Defi initiative. Through global program tracks such as risk management, new liquidity strategies, and incubation and innovation, the open DeFi initiative aims to connect the DeFi markets of East and West. Few prestigious members of the open DeFi initiative include Blockpower Capital, Antelope Holdings, dForce, Sequoia Capital, DeBank, along with the Chinese state support and others.

To get instant updates about Blockchain Technology and to learn more about online Blockchain Certifications, check out Blockchain Council.

Permissionless Blockchain Project, Conflux Network to Act as a Global DeFi Bridge

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Chinese state-endorsed public chain to act as a global DeFi bridge, says Conflux CEO

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Conflux Network, a permissionless blockchain project which is endorsed by the Chinese state, told Cointelegraph on Sept. 22 that the project has officially launched its Tree Graph Research Institute with the Shanghai government. 

According to Fan Long, CEO of Conflux, the Tree-Graph Blockchain Research Institute will experiment with local states to build a regulatory compliance platform that can bridge global DeFi applications and government regulations. He added that: 

“DeFi is a new world and while it appears as though it may pose a challenge for regulators, they appear willing to listen. At this stage, the most important thing is to maintain a reliable communication channel between two sides— the DeFi innovators and the regulators.” 

When it comes to new techniques and innovations, the Chinese government has shown signs of tolerance for experimentation in the past. Fan indicated that the complexity surrounding DeFi and other relevant distributed innovations will make open communication crucial for continued legislative acceptance. He stated that: 

“Regulators need a reliable way to learn what the new technique is about and where it might lead us to. Innovators need a way to understand the concerns and red lines of regulators.” 

At the moment, Conflux is working with the Shanghai government on several sandbox projects. Fan told Cointelegraph that these projects include integrating blockchain borrowing and lending services into Shanghai’s Pudong Development Bank, and leveraging the Shanghai free trade zone’s unique regulatory framework to devise a unique stablecoin for the region, The CEO explained: 

“Shanghai Free Trade Zone is outside of capital control of China where RMB is offshore with its own set of rules, so we are trying to come up with some regulation breakthroughs with experimenting under the free zone framework.” 

Compared with the central bank’s digital currency, or CBDC,  Fan pointed out that  although a CBDC will allow the central government to maintain control of the financial activities, it would be hard for such a centralized form of digital currency to be accepted outside of China. 

Conflux is trying to either create a free zone stablecoin or build a public permissionless cross chain for the CBDC.

The project, which began its life as a research project at Tsinghua University, has been working to provide a robust and cheap framework for developers to build decentralized finance applications. Fan explained that: 

“Conflux Network seeks to provide a POW network with transaction speeds an order of magnitude faster. The key enabler technique is a novel DAG-based ledger structure together with an optimistic concurrency control to achieve a consistent order of transactions among all the nodes in the network.”

Fan believes that DeFi projects will only be able to go mainstream through willfully enacted compliance measures which evolve alongside government regulations. Blockchain and DeFi are new areas for regulators. Although he cannot speak to how regulators will go about this, his predicts that: 

“Decentralization will make it more difficult for regulators to control DeFi products, but there are still possibilities to exercise controls at the boundary between the decentralized world and the centralized world.” 

The Shanghai Municipal Government, one of the states endorsing the project, is interested in exploring how the city can leverage blockchain techniques to integrate traditional finance with decentralized financial services, says Fan.

In order to connect global DeFi projects and regulations, the company also created the Conflux Open Defi initiative. 

Members include: Sequoia Capital, Blockpower Capital, Antelope Holdings, dForce, DeBank, and MCDEX along with Chinese state support through the Shanghai Science and Technology Committee. Fan says Open DeFi aims to unite Eastern and Western DeFi markets through three globally focused program tracks: risk management, new liquidity strategies, and incubation & innovation.

Chinese state-endorsed public chain to act as a global DeFi bridge, says Conflux CEO

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2019 Africa Roundup: Jumia IPOs, China goes digital, Nigeria becomes fintech capital

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2019 brought more global attention to Africa’s tech scene than perhaps any previous year.

A high-profile IPO, visits by both Jacks (Ma and Dorsey) and big Chinese startup investment energized that.

The last 12 months served as a grande finale to 10 years that saw triple-digit increases in startup formation and VC on the continent.

Here’s an overview of the 2019 market events that captured attention and capped off a decade of rapid growth in African tech.

IPOs

The story of the year is the April IPO on the NYSE of Pan-African e-commerce company Jumia. This was the first listing of a VC-backed tech company operating in Africa on a major global exchange —  which brought its own unpredictability.

Founded in 2012, Jumia pioneered much of its infrastructure to sell goods to consumers online in Africa.

With Nigeria as its base market, the Rocket Internet-backed company created accompanying delivery and payments services and went on to expand online verticals into 14 African countries (though it recently exited a few). Jumia now sells everything from mobile phones to diapers, and offers online services such as food-delivery and classifieds.

Seven years after its operational launch, Jumia’s stock debut kicked off with fanfare in 2019, only to be followed by volatility.

The online retailer gained investor confidence out of the gate, more than doubling its $14.95 opening share price post-IPO.

That lasted until May, when Jumia’s stock came under attack from short-seller Andrew Left, whose firm Citron Research issued a report accusing the company of fraud. The American activist investor’s case was bolstered, in part, by a debate that played out across Africa’s tech ecosystem on Jumia’s legitimacy as an African startup, given its (primarily) European senior management.

The entire affair was further complicated by Jumia’s second-quarter earnings call when the company disclosed a fraud perpetrated by some of its employees and sales agents. Jumia’s CEO Sacha Poignonnec emphasized the matter was closed, financially marginal and not the same as Andrew Left’s short-sell claims.

Pan-African e-tailer Jumia grows 3Q revenue, e-payments and losses

Whatever the balance, Jumia’s 2019 ups and downs cast a cloud over its stock with investors. Since the company’s third-quarter earnings-call, Jumia’s NYSE share-price has lingered at around $6 — less than half of its original $14.95 opening, and roughly 80% lower than its high.

Even with Jumia’s post-IPO rocky road, the continent’s leading e-commerce company still has a heap of capital and is on pace to generate more than $100 million in revenues in 2019 (albeit with big losses).

The company plans to reduce costs by generating more revenue from higher-margin internet services, such as payments and classifieds.

There’s a fairly simple equation for Jumia to rebuild shareholder confidence in 2020: avoid scandals and increase revenues over losses. And now that the company is publicly traded — with financial reporting requirements — there’ll be four earnings calls a year to evaluate Jumia’s progress.

Jumia may not be the continent’s standout IPO for much longer. Events in 2019 point to Interswitch becoming the second African digital company to list on a global exchange in 2020. The Nigerian fintech firm confirmed to TechCrunch in November it had reached a billion-dollar unicorn valuation, after a (reported) $200 million investment by Visa.

Nigeria’s Interswitch confirms $1B valuation after Visa investment

Founded in 2002 by Mitchell Elegbe, Interswitch created much of the initial infrastructure to digitize Nigeria’s (then) predominantly cash-based economy. Interswitch has been teasing a public listing since 2016, but delayed it for various reasons. With the company’s billion-dollar valuation in 2019, that pause is likely to end.

“An [Interswitch] IPO is still very much in the cards; likely sometime in the first half of 2020,” a source with knowledge of the situation told TechCrunch.

China-Africa goes digital

2019 was the year when Chinese actors pivoted to African tech. China is known for its strategic relationship with Africa, based (largely) on trade and infrastructure. Over the last 10 years, the country has been less engaged in the continent’s digital scene.

chinaThat was until a torrent of investment and partnerships this past year.

July saw Chinese-owned Opera raise $50 million in venture spending to support its growing West African digital commercial network, which includes browser, payments and ride-hail services.

In August, San Francisco and Lagos-based fintech startup Flutterwave partnered with Chinese e-commerce company Alibaba’s Alipay to offer digital payments between Africa and China.

In September, China’s Transsion — the largest smartphone seller in Africa — listed in an IPO on Shanghai’s new STAR Market. The company raised ≈ $394 million, some of which it is directing toward venture funding and operational expansion in Africa.

The last quarter of 2019 brought a November surprise from China in African tech. More than 15 Chinese investors placed over $240 million in three rounds. Transsion-backed consumer payments startup PalmPay raised a $40 million seed, stating its goal to become “Africa’s largest financial services platform.”

Chinese investors also backed Opera-owned OPay’s $120 million raise and East-African trucking logistics company Lori Systems’ (reported) $30 million Series B.

In the new year, TechCrunch will continue to cover the business arc of this surge in Chinese tech investment in Africa. There’ll surely be a number of fresh macro news points to develop, given the debate (and critique) of China’s engagement with Africa.

Nigeria and fintech

On debate, the case could be made that 2019 was the year when Nigeria become Africa’s unofficial capital for fintech investment and digital finance startups.

Kenya has held this title hereto, with the local success and global acclaim of its M-Pesa mobile-money product. But more founders and VCs are opting for Nigeria as the epicenter for digital finance growth on the continent.Nigeria

A rough tally of 2019 TechCrunch coverage — including previously mentioned rounds — pegs fintech-related investment in the West African country at around $400 million over the last 12 months. That’s equivalent to roughly one-third of all startup VC raised for the entire continent in 2018, according to Partech stats.

From OPay to PalmPay to Visa — startups, big finance companies and investors are making Nigeria home-base for their digital finance operations and Africa expansion strategies.

The founder of early-stage payment startup ChipperCash, Ham Serunjogi, explained the imperative to operating there. “Nigeria is the largest economy and most populous country in Africa. Its fintech industry is one of the most advanced in Africa, up there with Kenya  and South Africa,” he told TechCrunch in May.

When all the 2019 VC numbers are counted, it will be worth matching up fintech stats for Nigeria to Kenya to see how the countries compared.

Acquisitions

Tech acquisitions continue to be somewhat rare in Africa, but there were several to note in 2019. Two of the continent’s powerhouse tech incubators joined forces in September, when Nigerian innovation center and seed-fund CcHub acquired Nairobi-based iHub, for an undisclosed amount.

CChub

The acquisition brought together Africa’s most powerful tech hubs by membership networks, volume of programs, startups incubated and global visibility. It also elevated the standing of CcHub’s Bosun Tijani across Africa’s tech ecosystem, as the CEO of the new joint entity, which also has a VC arm.

CcHub

CcHub/iHub CEO Bosun Tijani

In other acquisition activity, French television company Canal+ acquired the ROK film studio from Nigerian VOD company IROKOtv for an undisclosed amount. The deal put ROK founder and producer Mary Njoku in charge of a new organization with larger scope and resources.

Many outside Africa aren’t aware that Nigeria’s Nollywood is the Hollywood of the continent, and one of the largest film industries in the world (by production volume). Canal+ told TechCrunch it looks to bring Mary and the Nollywood production ethos to produce content in French-speaking African countries.

Other notable 2019 African tech takeovers included Kenyan internet company BRCK’s acquisition of ISP Surf, Nigerian digital-lending startup OneFi’s Amplify buy and Merck KGaa’s purchase of Kenya-based online healthtech company ConnectMed.

Moto ride-hail mania

In 2019, Africa’s motorcycle ride-hail market — worth an estimated $4 billion — saw a flurry of investment and expansion by startups looking to scale on-demand taxi services. Uber and Bolt got into the motorcycle taxi business in Africa in 2018.

Ampersand

Ampersand in Rwanda

A number of local and foreign startups have continued to grow in key countries, such as Nigeria, Uganda and Kenya.

A battle for funding and market share emerged in Nigeria in 2019, between key moto ride-hail startups MAX.ng, Gokada and Opera-owned ORide.

The on-demand motorcycle market in Africa has attracted foreign investment and moved toward EV development. In May, MAX.ng raised a $7 million Series A round with participation from Yamaha and is using a portion to pilot renewable energy powered e-motorcycles in Africa.

In August, the government of Rwanda announced a national policy to phase out gas-motorcycle taxis altogether in favor of e-motos, in partnership with early-stage EV startup Ampersand.

New funds

The past year saw several new funding initiatives for Africa’s startups. Senegalese VC investor Marieme Diop spearheaded Dakar Network Angels, a seed-fund for startups in French-speaking Africa — or 24 of the continent’s 54 countries.

Africinvest teamed up with Cathay Innovation to announce the Cathay Africinvest Innovation Fund, a $100+ million capital pool aimed at Series A to C-stage startup investments in fintech, logistics, AI, ag tech and education tech.

Accion Venture Lab launched a $24 million fintech fund open to African startups.

And Naspers offered more details on who can pitch to its 1.4 billion rand (≈$100 million) Naspers Foundry fund, which made its first investment in online cleaning services company SweepSouth.

Closed up shop

Like any tech ecosystem, not every startup in Africa killed it or even continued to tread water in 2019. Two e-commerce companies — DealDey in Nigeria and Afrimarket in Ivory Coast — closed up digital shop.

Southern Africa’s Econet Media shut down its Kwese TV digital entertainment business in August.

And South Africa-based, Pan African-focused cryptocurrency payment startup Wala ceased operations in June. Founder Tricia Martinez named the continent’s poor infrastructure as one of the culprits to shutting down. A possible signal to the startup’s demise could have been its 2017 ICO, where Wala netted only 4% of its $30 million token offering.

Africa’s startups go global

2019 saw more startups expand to new markets abroad products and business models developed in Africa. In March, FlexClub — a South African venture that matches investors and drivers to cars for ride-hailing services — announced its expansion to Mexico in a partnership with Uber.

In May, Extra Crunch profiled three African-founded fintech startups — Flutterwave, Migo and ChipperCash — developing their business models strategically in Africa toward plans to expand globally.

These startups are locating in SF and Africa to win in global fintech

By December, Migo (formerly branded Mines) had announced its expansion to Brazil on a $20 million Series B raise.

2020 and beyond

As we look to what could come in the new year and decade for African tech, it’s telling to look back. Ten years ago, there were a lot of “if” questions on whether the continent’s ecosystem could produce certain events: billion-dollar startup valuations, IPOs on major exchanges, global expansion, investment from the world’s top VCs.

All those questionable events of the past have become reality in African tech, even if some of them are still in low abundance.

There’s no crystal ball for any innovation ecosystem — not the least Africa’s — but there are several things I’ll be on the lookout for in 2020 and beyond.

In the near term I’ll start with what Twitter/Square CEO Jack Dorsey may do around Bitcoin and cryptocurrency on his return to Africa (lookout for an upcoming TechCrunch feature on this).

I’ll also follow the next-phase of e-commerce in Africa, which could pit Jumia more competitively against DHL’s Africa eShop, Opera and China’s Alibaba (which hasn’t yet entered Africa in full).

On a longer-term basis, a development to follow is how the continent’s first wave of millionaire and billionaire tech-founders could disrupt 21st century dynamics in Africa around politics, power and philanthropy —  hopefully for the better.

More notable 2019 Africa-related coverage @TechCrunch

Read more: https://techcrunch.com/2019/12/30/2019-africa-roundup-jumia-ipos-china-goes-digital-nigeria-becomes-fintech-capital/