Top emerging-market bank trialing bitcoin – but will China veto?
Africa’s largest bank, the Johannesburg-headquartered Standard Bank, is reportedly trial running an integrated bitcoin system. According to Coindesk, Singapore-based developers Switchless have created a “fully operational and integrated bitcoin portal system for a large multinational bank”.
Jon Matonis, executive director and board member of the Bitcoin Foundation lobby group, declared: “This picture threatens bitcoin exchanges more than government regulators.”
Although Standard Bank has not confirmed or denied backroom testing, if the report is true – it first surfaced at a London bitcoin conference – it would undoubtedly be a significant coup. The trials will no doubt be of considerable interest to the financial industry, but what about Standard Bank’s major backers?
Industrial Bank of China (ICBC), the world’s largest bank by total assets and market capitalisation, is Standard Bank’s biggest shareholder with a 20 per cent holding –paying US$5.5 billion in 2008 – according to the Financial Times, and has greater influence in the boardroom with two seats.
Since the relationship began, ICBC has been on a buying spree, snapping up Standard Bank’s non-core assets. In 2011, it bought the bank’s Argentina business for US$600 million, while a fortnight ago it agreed to buy a 60 per cent majority stake in Standard’s London-based global markets arm for US$765 million.
The financial watchdog and central bank, the People’s Bank of China, has previously stepped into the digital currency fray on two occasions in December last year to release some air for a bitcoin bubble. The mainland’s central bank ultimately triggered a collapse in global prices. As we reported, buyers could snap up coins for as little as 2,011 yuan (HK$2,572), a collapse of more than 70 per cent from a high of 7,588 yuan (HK$9,707) in November last year.
After December’s crackdown, experts were divided on whether the central bank would raise objections to the testing of the system.
“I think it is unlikely for the central bank to interfere with other bank’s internal business, despite the ICBC having a holding in the bank,” Hao Hong, managing director of research at Bank of Communications, told Bitcoin Buzz.
“Assuming the PBOC and ICBC were aware of it, the local trends or laws would dictate as Chinese subsidiaries often engage in financial activities and products that are allowed in the foreign market, but not necessarily in China,” said Zennon Kapron, managing director of mainland-based financial research firm Kapronasia. “That being said, I’m sure the PBOC could restrict ICBC’s activities if they wanted to.”
Bocom's Hong cast some doubt on the digital currency’s short-term attractiveness to speculators.
“Bitcoin is a viable payment system, but has been used as a speculative tool. The recent arrest of one its key figures, as well as its trading volatility, may dampen its attractiveness as a speculative object,” he said.
Bitcoin exchanges under ‘massive and concerted attack’: update
As we reported that exchanges were talking on a technical level to shore up their defences. It is worth noting that bitcoin will be stronger, as this line sums up the situation in today’s article:
“Some websites, as well as users of bitcoin wallet software, will have to update their program with fixes to prevent future attacks, according to Jeff Garzik, a bitcoin software developer told Bloomberg.”
Bitcoin flowers for Valentine’s Day – what else!
The #BitcoinBuzz team will pay a visit to Hong Kong Flower Delivery on one of their busiest days of the year. Valentine’s Day is less than 24 hours away – and a big bouquet of flowers to show your love is a tradition. Some of the florist’s orders have been snapped up and paid in bitcoin already.
We’ll have the full story, photos and video in Friday’s South China Morning Post print edition.
Latest bitcoin price: US$649.51 at 13.27 on Thursday based on prices from BTC-e and Bitstamp