Sincere apologies for a break but last week so my first proper business travel to the motherland. After Covid had forced most of us to rely on virtual events and meetings, it just feels great to meet in person. It has been particularly interesting since everyone was talking about the upcoming elections in Germany, so my homeland will play a prominent role in this weeks roundup, but not only for political reasons as you will see. Here’s the latest edition of the FinTechnologist Weekly:
A Blessing in Disguise and Tales from the Motherland
The Last Nail in the Coffin?
China’s regulators mean business as many of its leading tech companies have experienced over the last couple of months. Now, it was time to turn on cryptocurrencies again, it seems: The country’s central bank last week announcedthat all transactions of Bitcoin and other crypto-currencies are illegal, effectively banning digital tokens. As a result, Bitcoin dropped 10% in value before recovering though three days later it has almost regained its losses, but remains volatile. That of course though is in a way the nature of most cryptocurrencies. It’s not the first regulatory action we have seen from China after warned investors in May against putting their money in cryptocurrencies and in June demanded that banks and payment platforms would cease facilitating transactions. And it effectively banned mining as well. Back then the price in BTC dropped below $29k only to recover yet not to previous heights, so who knows what will happen next.
Even more interesting still is why China decided to make this move and why now. The statement issued by the People’s Bank of China said that „Virtual currency-related business activities are illegal financial activities“ and that anyone involved in such activities will be prosecuted. That naturally applies to foreign platforms and websites providing such services to Chinese citizens online, too, and drove many providers to drop their Chinese customers like hot potatoes. The country’s ambitious plans to drop its energy consumption and become carbon neutral by 2050 are certainly one reason that contributed to taking this action. In that sense, the recent power shortages are both an urgent reminder with regard to the potential impact of using energy for crypto mining and how much road still lies ahead to achieve this target. Back in 2019, China accounted for 75% of the world’s Bitcoin energy consumption though this decreases to below 50% in Spring this year. Still, no small amount, but is this the really driving force? You could also see it simply as an extension of its previous politics and another example of how the Chinese authorities reclaim control they had given up in the (Fin-)tech frenzy of recent years. In that sense, it is also the logical consequence and supports a stance it had taken a while ago. Could this also be good news for bitcoin as I’ve read elsewhere? Sure, why not? After all it means that the elephant that had been in the room. Interestingly, the German translation of the saying behaving like bull in china shop substitutes the bull with an elephant, so from a strictly linguistic point the threat is over. But seriously, at least this sword is no longer hovering over Bitcoin’s head, so, yes, maybe this is good news, too. In the end, however, it will remain to be seen how cryptocurrencies can live without one of their biggest markets.
Start-Up Success Stories
Taking that small step from German idioms to the country’s startup scene, here are some interesting news as Alyne, the Munich-based RegTech, has been acquired by Mitratech. Founded in 2015 by four guys in the Bavarian capital and with a focus on Cyber Security, Governance, Risk Management and Compliance space, they quickly rose to become one of the most of the most prominent stars in the RegTech sky. I’ve been following the team and their services almost from the beginning, so it’s great to see what they achieved in a comparatively short time. Expansion to London, NY and Melbourne, building a team of more than 30 staff and now being acquired by a global tech company like Mitratech is no small feat, so congrats to the guys (assuming that that was their plan).
Though I don’t know the details of the transaction, it’s an example that shows the importance of the people behind an idea, the people that make the company, and that make a start-up successful. How many people have come up with great ideas or great technology but couldn’t execute it and more often than not that was also due to the individuals behind the company. So, once again, I tip my hat to you and all the best for your future endeavors.
One Small Picture
And to conclude my full immersion into anything German (at least for a week), I’d like to finish with a thought on the German election. The country’s Social Democrats narrowly won the election in the end Social Democrats narrowly won the election in the end, but it remains to be seen whether that will actually result in them claiming the chancellery. With the former senior partner of the outgoing governments grand coalition losing more than 8% compared to the results of the last election, the Christian Socialist’s candidate, Armin Laschet appears to still have a shot at becoming the country’s next leader because of the tight outcome.
It will take months to figure how who will be governing and I’ve already read several analysis how a political party that did not seem to have to worry much about its old rival, lost it (possibly) all in a matter of months. In Spring, the SPD appeared to be at an all time low, and only the candidate of the Green party, Annalena Baerbock, looked like a threat to the continued claim of the conservative CDU. But then came the floods that shook great parts of Western Germany and a candidate already considered weak by some was caught in a fateful picture when he like many other high-level politicians visited the Ahr valley that was hit the hardest. The then frontrunner was caught laughing enthusiastically in the background of a video of German President Frank-Walter Steinmeier speaking to reporters in Erfstadt, one of the worst-hit areas that was the scene of dramatic rescue efforts. Though he quickly apologized for the in his words inappropriate behaviour, the image qucikkly made the rounds online and on social media, causing a big stir and leaving many wondering whether this should be the man leading Europe’s biggest economy. A powerful image without doubt and though it isn’t certain how much exactly it contributed to yesterday’s election, Laschet will definitely regret it and it shows the power of social media. One to think about, even without the discussion on election rigging and fake news…
And that’s already it for this week but if you have an interesting story, please connect on Twitter. And if you would like to join me on the new FinTechnologist podcast, the same applies, of course. So, make sure you get in touch and in the meantime, have a good week!
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