The news of Russia waging war against Ukraine has set the world to a stand still. Traders aren’t sure whether to buy or sell. Civilians are attempting to withdraw all their money from their banks. The question on the layman’s mind is “what affect is this war going to have on me?”
As a result, I have illustrated a few of the terms you will likely be hearing in the news right now and providing brief explanations of the affects that this war could potentially have on certain spaces within FinTech.
Cyber Security
As a part of Russia’s military operations against Ukraine, they have released a number of ‘wiper attacks’ into Ukraine’s digital infrastructure. Unlike typical cyber attacks where data is used for monetary gain, a wiper attack completely destroys all the data stored within a system, making it impossible to retrieve. This attack has been directed towards Ukraine’s government websites and banking institutions in an effort to break down their integrity and promote widespread uncertainty amongst Ukraine’s civilians.
Financial Services: FCA Sanctions
The FCA (Financial Conduct Authority, regulator of financial services in the UK) recently updated it sanctions in relation to Russia as a result of orders coming from our current Prime Minister, Boris Johnson. Sanctions are financial restrictions placed on individuals or entities. In this context, sanctions have been placed on all financial movement to and from Russia, including all agents that operate out of Russia. This effects a number of trading lines all the way down to making a quick bank transfer. In the financial services world, it is expected that FinCrime (Financial Crime) teams are upholding this request on behalf of their firms as a regulatory requirement by the FCA meaning that if it is not thoroughly implemented, it is considered a criminal offence worthy of up to seven years in prison. Remain diligent folks!
Cryptocurrencies
Expectedly, across the crypto markets, there has been a consensus in the direction of the value of ‘market caps’. This is a term that refers to the total value of a crypto asset (i.e. Bitcoin, Ethereum, Cardano etc.) and measures its worth on the open market. It can also be defined as the value you get when you multiply all shares of that cryptocurrency by the single price of that cryptocurrency. Market caps in comparison to what they were at the beginning of the month have suddenly ‘crashed’/lowered across the board today as a result of the imminent war. It is understandable that people are currently panic selling their crypto assets to obtain its monetary value to extend its usage, rather than keeping their assets on the market where the value may continue to lower… However… With the sanctions in place across banking institutions, it is likely that more funds will now be pumped into the markets as crypto assets are still heavily under regulated. Food for thought!
Widespread Condemnation: Leaders Around The World
Last but not least, I felt it important to raise the subject of the influence that World Leaders have across the world and upon different nations’ dealings. A great example of a person of prominence largely affecting the FinTech space is when Elon Musk announced that Tesla purchased bitcoins worth $1.5 billion last February and we saw that the cryptocurrency rose by 20 percent in one day. This ‘Musk Effect’ also took place when Elon Musk posted a tweet last June which read “#Bitcoin” with a broken heart emoji and a meme suggesting that the Tesla CEO had broken up and fallen out of love with Bitcoin. Like clockwork, this caused a sudden drop in the value of Bitcoin. I say all this to say that as world leaders are announcing the condemnation of Russia’s acts, we will surely see the markets in array in response to announcements being made across the globe.
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Liz. #FTWL
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