The dramatic
transformation of the World Wide Web triggered Web 3.0 in 2021, powered by blockchain
technology, artificial intelligence, and machine learning. It completely reshaped
businesses and operating models, forcing traditional banking systems and
financial service companies to step into uncharted territory.

 

We chatted with
Octavian Patrascu, founder of global broker CAPEX.com,
about the challenges and opportunities of the fintech industry in the Web 3.0
era.

 

Web 3.0 – a game-changer
for fintech companies

 

We started the
conversation with Octavian asking his opinion about the Web 3.0 impact on the
fintech industry. Here’s what he answered:

 

‘After Bitcoin was
launched in 2009, the financial technology scene started to grow quickly. In
the years that followed, we saw the rise of many new fintech companies and the
development of innovative technologies that traditional financial institutions
are now using.

 

However, the landscape
is changing again with the development of Web 3.0. Businesses can already feel
the impact of decentralized finance (DeFi), which is based on blockchain
technology. We are about to witness a new wave of fintech innovation that will
make the industry more efficient and accessible, bringing forth a new internet
infrastructure that will change the rules of the game,’ Octavian added.

 

 

How does the fintech world
benefit?

 

According to the CAPEX.com
founder, the third generation of internet services is disrupting the way
people, businesses, and regulatory organizations are collaborating and planning
to work together.

 

With the integration of
DeFi at the heart of new technology, we have a completely new financial system
outside of the central authorities’ control. The DeFi system’s protocols and platforms
that provide financial services are decentralized and cannot be shut down by
any bank.

 

DeFi is also more
efficient than the traditional financial system. People can send money directly
to someone without going through a mediator. All the transactions are recorded
on the blockchain and are visible to everyone with an Internet connection,
making it more transparent and accessible.

 

Due to the advantages
of the DeFi systems, the benefits of Web 3.0 can be quite impressive. For
example, Web 3.0 makes the onboarding process more user-friendly. Every single
evolution of the web will ensure even more trustworthiness for businesses by
eliminating security issues of storing any data.

 

With Web 3.0’s list of
contributing technologies, fintech companies can automate processes to perform
customer journey mapping and allocate resources more efficiently to meet client
demands, facilitate better engagement, and encourage enduring loyalty.

Artificial
intelligence, IoT (Internet of things), and blockchain technology – the three
crucial foundations of Web 3.0 – ensure real-time, secure, and transparent
transactions for FinTech companies worldwide.

 

Web 3.0 reduces account
suspensions and denial of distributed services, helping financial technology businesses
lower the cost of managing server failures or other similar issues.

 

What about the
challenges for the fintech industry in the new digital era?

Without challenges,
there would be no opportunity to evolve. Octavian named some of the obstacles that
fintech companies need to overcome under Web 3.0:

‘The new technologies
have many benefits, but they also pose some challenges.

·     
Firstly, DeFi is still
in the early stages of development. This means that some bugs and glitches need
to be fixed.

·     
Secondly, blockchain
technology is constantly evolving. This means the protocols and platforms that
provide financial services can change quickly, taking businesses and
entrepreneurs by surprise.

·     
Thirdly, Defi is a
global system, so the rules and regulations that apply to the traditional
financial system do not necessarily apply to the DeFi system. For example, in
the conventional financial system, there are KYC (know your customer) and AML
(anti-money laundering) regulations that banks must follow. However, in the
DeFi system, these regulations do not necessarily apply ‘, the CAPEX.com
founder said.

 

What does the future of
fintech hold under web 3.0?

 

Octavian believes the
future of fintech could be very exciting under web 3.0: ‘With the arrival of
decentralized finance (DeFi), we see a new wave of financial applications and
services built on the Ethereum blockchain, leading to many fresh possibilities
for interacting with and using financial services. Under web3.0, we see the
shift changing from traditional financial infrastructure, centralized and
controlled by a few institutions, towards a more decentralized and open system.
This will provide more opportunities for innovation and ultimately pave the way
for a more inclusive and democratic financial system to emerge.

 

We are only just
scratching what is possible now with these technologies. In the future, I
believe they will become the primary way that people interact with financial
services. Traditional infrastructure will become increasingly obsolete, and we
will see a change towards a more open, inclusive, and democratic financial
system,’ concluded Octavian Patrascu.

 

What is CAPEX.com’s
position on early web3.0 technology adoption?

 

‚Democratization is
a significant component in trading nowadays, and I know that investors are
frequently looking for new prospects. The 2022 economic outlook allows more
people to start investing in assets that were not considered feasible just
a few years ago. As one of the leading global fintech companies, it’s only
natural for us to look into the future to offer new types of services related
to DeFi, remarked Octavian Patrascu’.

Headlines:ECB’s Rehn: We will revise lower economic projections next monthECB’s Panetta: The natural way forward would be to start raising ratesECB’s Knot: We will have a large balance sheet for some time to comeECB’s Knot: Inflation expectations are at the upper limit of being well-anchoredUS MBA mortgage applications w.e. 20 May -1.2% vs -11.0% priorGermany June GfK consumer confidence -26.0 vs -25.5 expectedGermany Q1 final GDP +0.2% vs +0.2% q/q prelimFrance May consumer confidence 86 vs 89 expectedMarkets:NZD leads, AUD lags on the dayEuropean equities slightly lower; S&P 500 futures down 0.5%US 10-year yields down 3 bps to 2.73%Gold down 0.6% to $1,855.76WTI crude up 1.2% to $111.08The session started off with a slightly better risk mood but that didn’t last as equities retreated and risk aversion starts to take hold once again now. The mood is worsening as we get into North American trading with US futures marked lower and European indices also turning earlier gains into losses now.S&P 500 futures are down 0.5%, Nasdaq futures down 0.8%, and Dow futures down 0.5%. They were up by that same amount when we did the handover from Asia to Europe.Bonds are staying bid as well as yields continue to drop, with 10-year Treasury yields down another 3 bps to 2.73%.In FX, the dollar is finding some buyers after its recent weakness with EUR/USD falling from 1.0710 to 1.0655 while GBP/USD dropped from 1.2560 to 1.2480 on the session. The greenback also advanced against the commodity currencies with USD/CAD rising from 1.2820 to 1.2875 while AUD/USD slumped from 0.7100 to 0.7050 in European trading.The New Zealand dollar remains the lead gainer but has erased its nearly 1% advance against the dollar, falling from 0.6510 to 0.6450 currently. The kiwi is buoyed by a more hawkish RBNZ rate hike earlier in the day here.Easy come, easy go. That seems to be the tale with any risk recovery as of late and today might be yet another case in point.

There are still two more inflation readings before the July meetingA 50 bps rate hike isn’t off the tableRate hike will only be on the table in July, not JuneThe remarks are more of a push to try and tiptoe towards a 50 bps rate hike come July. Yup, he’s just gone out to explicitly say that now. It’s no surprise given that Knot is one of more hawkish members. That said, this isn’t quite a view shared by the overwhelming majority for the time being though.

We have been warning for many months now of the ‚Second Great Property
Bubble‘ of this century in the USA.

 

New Home Sales, after having never fully recovered from the GFC, are
again collapsing at a frenetic pace.

 

No one wants to talk about it on Wall Street? Similarly in the broader
economic community. Yet, it is very clear in the data, and has been for some
time.

 

We are all aware of sky-rocketing home prices and the joy that brings in
wealth creation for families.

 

Though, just the family home, is merely a peg in a moving wall. In other
words, simply maintaining the ability to move sideways at the same relative
value.

It is investors who have clearly benefited. In particular, the property
fanatics of the various industry motivation groups. However rising mortgage
rates are a real problem for this often severely over-stretched group.

 

Highly leveraged investing in any asset group, stocks or property,
inevitably leads to exactly the same outcome. Higher volatility and significant
correction. Corrections are OK, but wash-out the extreme speculators
corrections can be particularly savage.

 

The collapse in New Home Sales from a point of extreme upward price
extension, artificially created by a behind the curve Fed that fed the speculation,
can to be honest only end one way. That is a property price collapse.
This is likely to be underway within a few months, if not weeks.

 

The US property market is in an extreme bubble state and it is already
beginning to burst.

 

Add a property price correction to extreme food and energy inflation and
rising interest rates, and the answer to this riddle is without equivocation, a
fully-fledged Recession.

 

The USA experience is exactly identical to the current formation of
forces in the Australian economy.

Like the USA, Australian policy makers appear completely unprepared for
what is coming.

This article was written by Clifford
Bennett, ACY Securities Chief Economist. The view expressed within this document
are solely that of Clifford Bennett’s and do not represent the views of ACY
Securities.

 

All commentary is on the record and may be quoted without further
permission required from ACY Securities or Clifford Bennett.

 

This content may have been written by a third party. ACY makes no
representation or warranty and assumes no liability as to the accuracy or
completeness of the information provided, nor any loss arising from any
investment based on a recommendation, forecast or other information supplied by
any third-party. This content is information only, and does not constitute
financial, investment or other advice on which you can rely.

Prior -11.0%Market index 315.5 vs 319.4 priorPurchase index 225.5 vs 225.0 priorRefinancing index 794.9 vs 826.9 prior30-year mortgage rate 5.46% vs 5.49% priorMortgage activity continues to slump, with the drag on refinancing contributing to the decline in the past week. Overall, this continues to suggest that there is a toll being exerted on the housing market even if prices are still yet to really cool down significantly.

ECB is focused on rates for now

The headline is in line with what Lane is also out saying now, that he does not expect a discussion about balance sheet reduction this year. It also ties to the narrative put out by Panetta earlier that the „natural way forward“ is for the ECB to hike rates while keeping the stock of assets purchased under the APP and PEPP constant.
For some context, the ECB balance sheet has hit a fresh all-time high (h/t @ Schuldensuehner):

A strict forward guidance no longer makes senseEnding the year with rates in positive territory is extremely importantWell, his view is certainly not what Villeroy depicted out earlier here. And from Lagarde’s demeanour earlier today, the base case remains for the ECB to move more gradually and stick with a 25 bps rate hike in July – at least for now.

Ofgem CEO, Jonathan Brearly, says he will be writing to UK finance minister, Rishi Sunak, today to inform him on the price cap change. Adding that „the price changes are genuinely a once in a generation event not seen since the 1970s“. Just a reminder that the energy price cap was £1,277 in October last year. That’s quite a staggering rise.This just adds to more woes for UK households as the cost-of-living crisis continues to deepen. There will be many that won’t be able to afford this when the change is officially implemented.

Equities are still looking subdued on the session with tech the laggard after the Snap warning earlier, as risk trades are pulling back some of their advance from yesterday. Here’s a look at some of the moves today:S&P 500 futures -1.1%Nasdaq futures -1.7%Dow futures -0.7%Eurostoxx -0.9%Germany DAX -0.9%France CAC 40 -0.9%UK FTSE -0.3%As much as there was some optimism late last week (into the closing stages at least) and early this week, it is best to be reminded about the challenging backdrop that has contributed to the drag in risk trades since April.Yes, we may be overdue a correction. I mean seven straight weeks of declines for US stocks is definitely up there in terms of the selling being rather stretched. But we certainly are getting a reminder today of all the major themes at play in markets.Inflation pressures are still running rampant as evident by European PMI readings today. Recession risks are continuing to grow by the day and that is evident by the extremely poor UK PMI readings today. And central banks are continuing to look towards tightening policy as evident by Lagarde’s commitment in her remarks earlier today as well.Looking elsewhere, bonds are also bid as risk aversion grips markets in general. 10-year Treasury yields are down 4 bps to 2.82%.In FX, the dollar is sitting more mixed with light changes against most major currencies. The euro and yen are gaining slightly with the former benefiting from Lagarde’s comments and the latter from safety flows into bonds. The pound is the laggard as markets pare back BOE rate hike bets following flattish economic activity seen in May from the PMI readings.

Prior -35UK retailers reported average sales for the time of year in May but expect them to dip below seasonal norms again in June. Of note, the survey found that sentiment in the retail sector deteriorated at its quickest pace since November 2020. Meanwhile, investment intentions for the year ahead stand at their weakest level since the early stages of the pandemic in May 2020.That certainly doesn’t fuel much confidence when put together with the poor PMI readings earlier here.