̽��ֱ�� of Cambridge - alternative finance

New industry collaboration to study cryptocurrencies and other digital assets

Anonymous — Tue, 01 Mar 2022 15:07:17 +0000

̽��ֱ��Cambridge Centre for Alternative Finance (CCAF) at Cambridge Judge Business School has announced the launch of the Cambridge Digital Assets Programme (CDAP), a research initiative in collaboration with 16 leading banks, public sector agencies and private organisations to study the rapid digitisation of assets and value transfer systems.

Over an initial period of two years, the CCAF will work with public and private organisations to create the data, tools, and insights necessary to facilitate an evidence-based public dialogue about the opportunities and risks presented by the growing digital asset ecosystem.

̽��ֱ��CDAP’s institutional research collaborators are: Accenture, Bank for International Settlements (BIS) Innovation Hub, British International Investment (BII), Dubai International Financial Centre (DIFC), EY, Fidelity, UK Foreign, Commonwealth & Development Office (FCDO), Goldman Sachs, Inter-American Development Bank (IDB), International Monetary Fund (IMF), Invesco, London Stock Exchange Group (LSEG), Mastercard, MSCI, Visa, and the World Bank.

̽��ֱ��programme builds on the CCAF’s work in creating digital tools such as the Cambridge Bitcoin Electricity Consumption Index (CBECI) and the Global Cryptoasset Benchmarking Study series. It is designed to address the broader ecosystem trends and issues through research that can help guide public opinion, inform regulation and policy discussion, as well as support evidence-based decision making by individuals and institutions.

Supporters of the programme include prominent public and private stakeholders from a variety of sectors to promote diversity in views and facilitate exchange of insight. These supporters will also provide input and guidance to ensure practical and meaningful research output.

“ ̽��ֱ��growing adoption of digital assets increasingly blurs the lines between roles, responsibilities and applicable rules, stretching the boundaries of long-term institutional arrangements,” said Bryan Zhang, Executive Director, CCAF. “ ̽��ֱ��Cambridge Digital Assets Programme aims to meet the resulting need for greater clarity by providing data-driven insights through collaborative research involving public and private sector stakeholders.”

̽��ֱ��programme's research will be centred around three distinct but related areas. The first is the environmental implications and broader ESG (environmental, social and governance) considerations of digital assets and their associated services. The second area will look at the processes and configurations of Distributed Financial Market Infrastructure (dFMI), including the evolving constellation of networks, platforms, applications, and services. ̽��ֱ��third research stream will focus on emergent money systems – the “asset” side of the ecosystem – comprising crypto-assets, stable-coins, Central Bank Digital Currencies (CBDCs), as well as enterprise and consumer tokens.

“We've spent a lot of time developing a consistent framework that consolidates our efforts in the digital assets space and ensuring that we have the right collaborations in place to deliver insight and clarity,” said Michel Rauchs, Digital Assets Lead, CCAF. “We believe this programme will provide decision-makers with the objective analysis and empirical evidence that they need to navigate the digital assets maze.”

Each research stream will convene a dedicated working group of CCAF researchers, domain experts, and representatives from supporting institutions of the programme.

Originally published on the Cambridge Judge Business School website.

Multi-year Cambridge Digital Assets Programme launched with 16 institutional research collaborators to create open-access datasets and tools to inform digital public dialogue and decision-making in such areas as the environment, infrastructure and cryptocurrencies.

̽��ֱ��growing adoption of digital assets increasingly blurs the lines between roles, responsibilities and applicable rules, stretching the boundaries of long-term institutional arrangements

Bryan Zhang

Teradat Santivivut

Business fund investor planning for investment

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Cambridge launches Regulatory Genome Project

Anonymous — Mon, 21 Dec 2020 10:22:21 +0000

̽��ֱ�� ̽��ֱ�� of Cambridge has launched the Regulatory Genome Project, a transformational initiative to sequence the world’s vast amount of regulatory text to create a comprehensive open repository of machine-readable regulatory information for use by regulatory agencies and businesses around the world.

This multi-year project – which includes an expanding collaboration network of regulatory agencies, companies, and academic researchers – has been inspired by the scientific and commercial innovation that followed the collective effort to code the human genome.

̽��ֱ��project aims to provide an open-source infrastructure for all countries, particularly in developing regions, to have the same digital capabilities as advanced economies to identify regulatory obligations around the world. This is particularly important as consumers have increasingly adopted digital financial services, which has opened up new areas of risk that require regulation.

Drawing on research from the Cambridge Centre for Alternative Finance (CCAF) at Cambridge Judge Business School and the Department of Computer Science and Technology, the project uses machine learning and natural language processing to ‘sequence’ huge amounts of regulatory text, starting with financial regulation. This offers regulators and firms the opportunity to acquire unprecedented capabilities in the development, processing and analysis of regulation.

“ ̽��ֱ��Regulatory Genome Project combines the ̽��ֱ��’s research with its convening influence to deliver societal and economic impact with the potential to be global, transformational and enduring,” said Professor Eilís Ferran, Pro-Vice-Chancellor for Institutional and International Relations at the ̽��ֱ�� of Cambridge.

As part of the project’s structure, a new ̽��ֱ��-affiliated company called Regulatory Genome Development Ltd has been formed to provide support to third parties building applications using the code and data in the Regulatory Genome.

̽��ֱ��Regulatory Genome originated out of a research project led by the CCAF with initial funding provided by the Omidyar Network to create a solution – named RegSimple – that simplifies the comparison of regulations across different jurisdictions. Additional funding has been provided by the UK’s Foreign, Commonwealth & Development Office to expand the scope and functionality of RegSimple to serve the needs of regulators in developing and emerging economies. Regulators from more than 20 jurisdictions are already contributing to the project.

“We are excited about the vast potential of this project to benefit both public and private sector interests,” said Dr Robert Wardrop, Director of the Cambridge Centre for Alternative Finance. “An open access repository of regulatory information will serve to level the regulatory playing field for those who develop and comply with regulation, particularly in emerging markets, and serve as a key resource for researchers in deepening their understanding how the regulatory landscape for digital financial services is evolving.”

Originally published on the Cambridge Judge Business School website.

̽��ֱ��project will use machine learning to sequence the world’s regulatory text and create an open-source repository of machine-readable regulatory information.

An open access repository of regulatory information will serve to level the regulatory playing field for those who develop and comply with regulation, particularly in emerging markets

Robert Wardrop

Tanner Boriack on Unsplash

Red bars

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Study highlights growing significance of cryptocurrencies

cjb250 — Thu, 04 May 2017 17:07:30 +0000

While many members of the general public may have heard of “bitcoin”, the first decentralised cryptocurrency launched in 2009, a new report from the Cambridge Centre for Alternative Finance (CCAF) paints a broader picture of “cryptocurrencies”.

̽��ֱ��report shows that cryptocurrencies – broadly defined as digital assets using cryptography to secure transactions between peers without the need for a central bank or other authority performing that role – are increasingly being used, stored, transacted and mined around the globe.

̽��ֱ��Global Cryptocurrency Benchmarking Study gathered data from more than 100 cryptocurrency companies in 38 countries, capturing an estimated 75 per cent of the cryptocurrency industry.

Prior to this research, little hard data existed on how many people around the world actively use cryptocurrencies. ̽��ֱ��conventional wisdom has been that the number of people using bitcoin and other cryptocurrencies was around 1 million people; however, based on newly collected data, including the percentage of the estimated 35 million cryptocurrency “wallets” (software applications that store cryptocurrencies) that are in active use, the CCAF research team estimates that there at least 3 million people actively using cryptocurrency today.

While bitcoin remains the dominant cryptocurrency both in terms of market capitalisation and usage, it has conceded market cap share to other cryptocurrencies – declining from 86 per cent to 72 per cent in the past two years.

̽��ֱ��study by the CCAF at Cambridge Judge Business School breaks down the cryptocurrency industry into four key sectors – exchanges, wallets, payments, and mining. Highlights of the findings are:

Exchanges

Cryptocurrency exchanges provide on-off ramps to cryptocurrency systems by offering services to users wishing to buy or sell cryptocurrency. This sector was the first to emerge in the cryptocurrency industry, and has the most operating entities and employs the most people. Currently, about 52 per cent of small exchanges hold a formal government license, compared to only 35 per cent of large exchanges.

Wallets

Wallets have evolved from simple software programs to sophisticated applications that offer a variety of technical features and services. As a result, the lines between wallets and exchanges are increasingly blurred, with 52 per cent of wallets providing an integrated currency exchange feature.

Payments

Cryptocurrency payment companies generally act as gateways between cryptocurrency users and the broader economy, bridging national currencies and cryptocurrencies. They can fit into two broad categories: firms that use cryptocurrency primarily as a “payment rail” for fast and efficient cross-border transactions, and firms that facilitate the use of cryptocurrency for both users and merchants. ̽��ֱ��study found that the size of the average business-to-business cryptocurrency payment ($1,878) dwarfs peer-to-peer and consumer-to-business cryptocurrency payments.

Mining

In the absence of a central authority, cryptocurrencies are created by a process called “mining” – usually the performance of a large number of computations to solve a cryptographic “puzzle”. ̽��ֱ��study shows how cryptocurrency mining has evolved from a hobby activity into a professional, capital-intensive industry in which bitcoin miners earned more than $2 billion in mining revenues since 2009. ̽��ֱ��cryptocurrency mining map indicates that a significant proportion of publicly known mining facilities are concentrated in certain Chinese provinces.

̽��ֱ��study found that more than 1,800 people are now working full time in the cryptocurrency industry, as more companies are engaged across various cryptocurrency sectors.

“Cryptocurrencies such as bitcoin have been seen by some as merely a passing fad or insignificant, but that view is increasingly at odds with the data we are observing,” says Dr Garrick Hileman, Visiting Research Fellow at the Cambridge Centre for Alternative Finance (CCAF) at Cambridge Judge Business School, who co-authored the study with Michel Rauchs, Research Assistant at CCAF.

“Currently, the combined market value of all cryptocurrencies is nearly $40 billion, which represents a level of value creation on the order of Silicon Valley success stories like Airbnb,” Dr Hileman says in a foreword to the study. “ ̽��ֱ��advent of cryptocurrency has also sparked many new business platforms with sizable valuations of their own, along with new forms of peer-to-peer economic activity.”

More than 3 million people (three times previous estimates) are estimated to be actively using cryptocurrencies like bitcoin, finds the first global cryptocurrency benchmarking study by the Cambridge Centre for Alternative Finance.

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bitcoin

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UK online alternative finance market grows to £3.2 billion in 2015

sc604 — Wed, 17 Feb 2016 11:01:36 +0000

This is a significant increase in volume, but growth of the online alternative finance market is slowing down, with the annual growth in 2014/2015 being nearly half the 161% growth from 2013/14. Although the absolute year-on-year growth rate is slowing down, the report said, the alternative finance industry still recorded substantive expansion across almost all models.

̽��ֱ��report also highlights the rapid expansion of donations-based crowdfunding, the perceived risk of fraud and malpractice by the industry, and increasing institutionalisation – as around a quarter of P2P (peer-to-peer) loans are now funded by institutional investors, including traditional banks and government through organisations such as the British Business Bank.

Pushing Boundaries - 2015 UK Alternative Finance is jointly published by the Cambridge Centre for Alternative Finance at the ̽��ֱ�� of Cambridge and UK innovation foundation Nesta, in partnership with KPMG and with the support of CME Group Foundation. It is the latest in an annual series of reports from the ̽��ֱ�� of Cambridge Judge Business School and Nesta, which track the size and development of online alternative finance, such as P2P lending and crowdfunding, in the UK.

Key findings of the report, a survey of 94 crowdfunding and P2P lending platforms, include:

Increased share of the market for business finance: in 2015 it is estimated that online alternative finance platforms provided the equivalent of over 3% of all lending to SMEs (small and medium-sized enterprises) in the UK. For small businesses - those with a turnover of less than £1 million a year - P2P platforms provided an amount lending equivalent of 13% of all new bank loans.
Institutionalisation is taking off: 2015 saw increased involvement from institutional investors in the online alternative finance market. ̽��ֱ��report shows that 32% of loans in P2P consumer lending and 26% of P2P business lending were funded by institutional investors.
Donation-based crowdfunding is the fastest growing model: although starting from a relatively small base (£2 million), donation-based crowdfunding is the fastest growing model in the 2015 study, up by 500% to £12 million.
Real estate is the single most popular sector: in 2014/2015 the most popular sector for online alternative finance investments and loans was real estate, with the combined debt and equity-based funding for this sector reaching £700m in 2015.
̽��ֱ��equity market is growing fast: the second fastest growing area of the alternative finance market is equity-based crowdfunding, up by 295% - from £84 million raised in 2014, to £332m in 2015. Excluding real estate crowdfunding, in 2014/2015 the equity-based crowdfunding sector contributed to £245 million worth of venture financing in 2015 – equivalent to over 15% of total UK seed and venture equity investment.
̽��ֱ��industry is generally satisfied with current regulation: when asked what they thought of existing regulation, more than 90% of P2P lending and equity-based crowdfunding platforms stated that they thought the current level was appropriate.
̽��ֱ��biggest risk to market growth is fraud or malpractice: when asked what they saw as the biggest risk to the future growth of the market, 57% of P2P lending and equity-based crowdfunding platforms cited the potential collapse of one or more of the well-known industry player due to fraud or malpractice.

“ ̽��ֱ��substantive growth of alternative finance in the UK last year is not surprising, given that these new channels of finance are increasingly moving mainstream,” said Robert Wardrop, Executive Director of Cambridge Centre for Alternative Finance. “One of the key drivers underpinning this development is the growing institutionalisation of the sector. ̽��ֱ��Cambridge Centre for Alternative Finance is proud to shed light on this fascinating and dynamic industry, to help inform policymakers, regulators and the general public about how these areas of finance are increasingly becoming part of our everyday economic life.”

“2015 has seen another year of remarkable growth for Alternative Finance in the UK,” said Stian Westlake, Nesta’s Executive Director of Policy & Research. “Little more than a collection of plucky startups just six years ago, the sector now does £3.2 billion of business a year. As the sector grows and matures it is sure to face challenges - investors will be keen to see returns, and another financial crisis would certainly test the robustness of P2P lending.”

Warren Mead, Global co-lead of Fintech at KPMG, said: “After years of pushing boundaries, 2016 will be the year where ‘alternative’ financial options finally join the ranks of the mainstream. But while this evolution gives the industry the platform to grow, it also brings its own set of challenges. Being part of the financial establishment doesn’t sit well with its original social purpose. Incumbents are also playing catch up with their own digital investment, and are closing in on the disrupters’ lead. Meanwhile, platform failures within these growing networks are inevitable. So the question is, will the hard won enthusiasm for these platforms start to wane?”

̽��ֱ��report was led by Bryan Zhang, a Director of the Cambridge Centre for Alternative Finance, and Peter Baeck, Principal Researcher at Nesta. It has been supported in part by funding from audit, tax and advisory service KPMG and CME Group Foundation, the foundation affiliated with CME Group.

Originally published on the Cambridge Judge Business School website.

̽��ֱ��UK online alternative finance sector grew 84% in 2015, facilitating £3.2 billion in investments, loans and donations, according to a new report published today.

These areas of finance are increasingly becoming part of our everyday economic life.

Robert Wardrop

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European alternative finance market could top €7 billion in 2015

sc604 — Mon, 23 Feb 2015 11:27:21 +0000

̽��ֱ��European online alternative finance market grew by 144% last year, and could reach €7 billion in 2015, according to a new report produced by the Centre for Alternative Finance at ̽��ֱ�� of Cambridge Judge Business School and professional services organisation EY (formerly Ernst & Young).

̽��ֱ��report includes input from 14 key national or regional industry associations, as well as 255 leading platforms in Europe, covering an estimated 85%-90% of Europe’s online alternative finance market. While previous studies have charted alternative finance in the UK, this report is the first to cover other European countries in detail.

Seen until recently as a niche activity, online alternative finance, including equity-based crowdfunding and peer-to-peer business lending, has become a vital and increasingly commonplace source of essential funding for many businesses throughout Europe, says the report.

Online alternative finance grew across Europe from €1.21 billion in 2013 to €2.96 billion in 2014. ̽��ֱ��overall European alternative industry is on track to grow beyond €7 billion if the market fundamentals remain sound and growth continues at current rates.

̽��ֱ��volume of online alternative business funding has been growing steadily at around 75% year on year, and the estimated number of businesses funded in this way has been growing at an even faster average rate — 133% over the last three years to around 5,801 companies in 2014.

“These new forms of alternative finance are growing quickly, and this growth is beginning to attract institutional investors,” said Robert Wardrop, Executive Director of the Centre for Alternative Finance at Cambridge Judge, and co-author of the new report. “Alternative finance, at least in some European countries, is on the cusp of becoming mainstream.”

“To date there has been little hard data about the extent of the industry across Europe,” said Andy Baldwin, EY Managing Partner, Europe, Middle East, India and Africa Financial Services. “This report shows that, while it is still considerably smaller than the industry in the UK, alternative finance on the continent cannot be ignored. ̽��ֱ��whole financial services industry should be watching this space with growing interest and this study will provide a valuable benchmark against which to measure future developments.”

̽��ֱ��new report is written by Robert Wardrop, Bryan Zhang, Operations and Policy Director of the Centre for Alternative Finance, Raghavendra Rau, Sir Evelyn de Rothschild Professor of Finance at Cambridge Judge and Research Director of the new Centre, and Mia Gray, Senior Lecturer at the Department of Geography at the ̽��ֱ�� of Cambridge, who has focused on alternative finance and regional economies.

̽��ֱ��new Centre provides a disciplined research framework to support the fast-growing structures and activities of alternative finance, in order to address the growing needs of academics, policymakers, regulators and industry. ̽��ֱ��Centre plans to launch a research programme, host a Global Alternative Finance Data Depository, and organise conferences, networking events and a fellowship programme.

Moving Mainstream: ̽��ֱ��European Alternative Finance Benchmarking Report is available to download for free at www.jbs.cam.ac.uk/ccaf/movingmainstream.

Originally published on the Cambridge Judge Business School website.

̽��ֱ��European alternative finance market - which includes crowdfunding, peer-to-peer lending and invoice trading - reached €3 billion last year and could top €7 billion in 2015, as businesses increasingly seek more efficient ways to raise funding.

Alternative finance, at least in some European countries, is on the cusp of becoming mainstream

Robert Wardrop

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Financiación colectiva (cropped)

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Alternative finance market set to double in 2015

sc604 — Fri, 07 Nov 2014 09:10:33 +0000

A total of £1.74 billion will have been raised through alternative finance intermediaries – including crowdfunding, peer-to-peer lending and invoice trading – by the end of 2014, according to new research published today by the ̽��ֱ�� of Cambridge and Nesta, the UK’s innovation foundation.

Alternative finance covers a variety of new financing models which connect people seeking funds directly with funders, often through online platforms. ̽��ֱ��majority of these providers have been founded in the last five years. Regulation of parts of the industry was introduced by the Financial Conduct Authority (FCA) in April this year, and in October the Treasury launched a consultation on a proposal for an ISA for peer-to-peer lending.

In the first three quarters of 2014, alternative finance platforms facilitated loans, investments and donations worth £1.2 billion, with the amount predicted to reach £1.74 billion by the end of the year. ̽��ֱ��researchers predict the amount will reach £4.4 billion in 2015.

̽��ֱ��report shows:

Peer-to-peer business and consumer lending continued to dominate the market with £749 million and £547 million being lent through the models respectively in 2014.
Equity-based crowdfunding reached £84 million, up 201 per cent year on year.
̽��ֱ��alternative finance market has more than doubled in size year on year from £267 million in 2012 and £666 million in 2013, to £1.74 billion in 2014.

By the end of the year it is expected that the UK alternative finance market will have provided more than £1 billion in business finance to over 7,000 small and medium enterprises in the UK, the equivalent to 2.4 per cent of all bank lending to SMEs. In the last quarter, bank lending to small and medium-sized enterprises was down by £400 million, according to the Bank of England’s latest Trends in Lending report.

44 per cent of SMEs surveyed were familiar with at least one type of alternative finance, but just nine per cent had approached an alternative platform for finance.

Over half (58 per cent) of UK consumers surveyed were aware of a type of alternative finance, with more than one in seven (14 per cent) saying they had used an alternative finance platform to seek, lend or donate funds.

“2014 has been a phenomenal year for the industry and this record-breaking growth is set to continue into the next year and beyond,” said Bryan Zhang of the Department of Geography, one of the report’s co-authors. “By connecting people directly and offering more efficient, diverse and transparent ways to invest or raise funds, alternative finance is increasingly becoming a viable source of capital for individuals and businesses alike. Although there are challenges ahead, the future looks very promising for alternative finance.”

Liam Collins, another co-author on the report, said: “These findings shed light on a growing movement that is revolutionising banking, investing and giving by using technology to simplify the links between those who want to invest money and those who need it. With bank lending to SMEs down again this quarter, it’s no wonder that alternative finance is fast becoming an important source of funding for individuals, businesses and organisations who struggle to access finance elsewhere.

“ ̽��ֱ��UK is leading the way globally, and with significant potential for the market to expand it won’t be long before we see alternative finance moving into the mainstream.”

“ ̽��ֱ��UK alternative finance market is burgeoning and we need to develop a more nuanced understanding of its structural drivers, intrinsic characteristics, dynamics and diversity, challenges and opportunities,” said Dr Mia Gray of the Department of Geography. “This report is an important first step to promote empirical research in this increasingly significant area of our economy.”

̽��ֱ��report is the result of a collaboration between Nesta and the ̽��ֱ�� of Cambridge, with support from PwC and ACCA.

̽��ֱ��UK’s alternative finance market – which includes crowdfunding, peer-to-peer lending and invoice trading – is set to reach nearly £2 billion by the end of the year, and is expected to double in 2015, as businesses increasingly seek more efficient ways to raise funding.

By connecting people directly and offering more efficient, diverse and transparent ways to invest or raise funds, alternative finance is increasingly becoming a viable source of capital for individuals and businesses alike

Bryan Zhang

Rocío Lara via flickr

Crowdfunding

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