This week our experts brought you the following insights based on their experience as investors, entrepreneurs & executives.
Monday Ilias Hatzis our Greece-based crypto entrepreneur (Founder & CEO at Kryptonio a “keyless” non-custodial bitcoin and cryptocurrency wallet, that lets users manage bitcoin and crypto, without private keys or passwords and Weekly Columnist at Daily Fintech) @iliashatzis wrote Will crypto help Russia get around sanctions and Swift ban? No!
Russia launched an all-out attack on Ukraine this Thursday, changing the face of Europe forever. Since every day is marked with new sanctions against Russia, the latest was on Saturday when key Russian banks were banned from the Swift financial system. The ban from Swift is sometimes called “the nuclear option,” and would curtail Russian banks’ access to foreign liquidity in the form of the world’s major currencies such as dollars, euros, or yen. While it did not happen in the past, Russia was threatened with a Swift expulsion in 2014 when it annexed Crimea. It would be naive to think that the threat didn’t prompt Russia to examine all the possible what-ifs in preparation for such a scenario and develop its own alternatives to counter a future expulsion from Swift. Russia has one of the largest foreign currency and gold reserves in the world. They were the fourth largest behind China, Japan, and Switzerland at the end of 2020, with $600+ billion in foreign currencies and gold. The Central Bank of Russia developed its own Swift equivalent, SPFS, which is used by around 400 institutions, mostly banks, and it only works within Russia. SPFS is extremely limited, it’s only operational during weekday working hours and its messages are limited to 20 kilobytes in size. But there have been reports to integrate the network with payment systems in China and India and expand it to countries like Turkey and Iran. Russia has also been working on its own central bank digital currency (CBDC) in an effort to give its domestic banks international liquidity should expulsion from Swift ever materialized. Now there’s talk of Russia using crypto as an escape route to circumvent sanctions. Is this realistic and how would that even work?
Editor note: Crypto is not a short term solution (which is what Russia needs in order to evade sanctions)
Tuesday Bernard Lunn, CEO of Daily Fintech and author of The Blockchain Economy wrote: Fintech Macro Part 1 Rising rates is good for banks & bad for early stage Fintech
Fintech is not immune from the macro environment and unless you live in blissful ignorance of the markets, you will have noticed some macro turbulence. High inflation leads to higher rates which is bad news for anybody with a variable rate mortgage but good news for banks who make their money from lending. It is also bad news for startups for four reasons.
Editor note: Could the market suffer a long slow puncture? ; a long slow puncture will kill the buy the dip mentality.
In its fourth-quarter and full-year 2021 shareholder letter, Lemonade’s CEO wrote that 2022 was expected to be the year of peak losses. This followed unfavorable development and product mix changes that propelled 2021 loss ratios into the 90s. This was higher by 20 points over comparable 2020 periods. They project that 2022 will be a year of peak losses with EBITDA improving in each subsequent year.
Editor note: Rintu analyses Lemonade (LMND) one of the Fintech 50 Index of publicly traded Fintech stocks and, to date, the only Insurtech in that Index.
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