Fidelity adopts bitcoin; R3 raises $100 million in latest funding

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Blockchain update: R3, the consortium of banks looking to build a blockchain platform for the financial services industry, secured $107 million in its largest fundraising to date. About half of the money came from 43 financial institutions — including Barclays, Bank of America Merrill Lynch, Credit Suisse, UBS and HSBC — as well as Temasek, the Singaporean state investment company, and Intel Capital, the technology giant's venture capital arm.

Employees of Fidelity, the mutual fund giant, can now use bitcoin to pay for their lunch in the company cafeteria, "a mark of the determination of Abigail Johnson, the company's chief executive, to position the asset manager as a digital currency pioneer," the FT said. Speaking at Consensus, a bitcoin-themed conference in New York, Johnson said the company has made investments in several startup bitcoin businesses and partnered with various universities to explore possible uses of blockchain.

Virtual currencies are also gaining increasing popularity in Japan, where you can pay your gas bill or buy restaurant meals with bitcoin. Some 300,000 stores are expected to start accepting the virtual currency this year, reports the Nikkei Asian Review.

Ready to roll: The so-called fiduciary rule on retirement savings accounts that requires brokers to put the interests of their clients first, is now slated to go into effect next month as scheduled after Labor Secretary Alexander Acosta recommended against a further delay in the rule. But lobbyists for the industry are vowing to continue to try to roll it back. Wall Street Journal here and here, Financial Times

Wall Street Journal
Big hearing: A federal appeals court will hear arguments Wednesday whether the Consumer Financial Protection Bureau is constitutional and whether the president can fire its director at will.

Trust but verify: American International Group may depend on algorithms to figure out how much to charge its business customers for insurance, but still uses human beings to check on what the computers are doing. "As part of an approach it started rolling out last year, the global insurance conglomerate pairs its models with human underwriters," the Journal says. "The approach reflects the company's belief that human judgment is still needed in sizing up most of the midsize to large businesses that it insures."

Financial Times
Tailor-made: In a move that the FT is calling "a sign of the future direction of banking," BBVA has become one of the first international banks to offer "open banking," in which it shares customer data, with permission, with third parties such as retailers to offer personalized products and services.

Sued: A U.S.-based credit card company is suing Barclays for allegedly improperly selling payment protection insurance at a subprime lending business it bought from the British bank 10 years ago. The suit was brought by CCUK Finance, the British subsidiary of the former CompuCredit, which bought Barclays' subprime credit card business, called Monument, 10 years ago. The suit, which seeks £1 billion in compensation, including interest, and an additional £600 million in punitive damages, is one of the biggest such claims every filed in London's High Court, the FT said.

New York Times
Banned: Fannie Mae said it stopped selling homes to Vision Property Management, one of the biggest firms in the rent-to-own business. Fannie also said it will impose restrictions on sales of foreclosed homes to firms that it says engage in abusive forms of seller financing, including rent-to-own leases or contracts for deed.

"The policy change by Fannie could put a big crimp in the business model of certain investment firms that have sprouted up since the financial crisis," the Times said. "These firms buy foreclosed homes on the cheap and sell them to people unable to qualify for a conventional mortgage."

"I am in a traditional financial services business — but we at Fidelity can see that the evolution of technology is setting our industry up for disruption. What if this technology could do for the transfer of value what the internet did for the transfer of information?" — Abigail Johnson, Fidelity's CEO.

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Blockchain Bitcoin Digital currencies Fiduciary Rule Fidelity Investments CFPB