In this issue:

Blockchain Enterprise Developments in Food Supply Chain, Patient Data, Patents, Mobile Devices and More

Regulation, Investment and a Bad Week for Bitcoin: Blockchain and Cryptocurrency Capital Markets Developments

Global Regulatory Consensus Beginning to Take Shape; Cryptocurrency Mining Malware Evolves 

Blockchain Enterprise Developments in Food Supply Chain, Patient Data, Patents, Mobile Devices and More

By: Simone O. Otenaike

An international supermarket conglomerate operating in 17 countries worldwide recently announced that it will implement TE-FOOD’s blockchain-based food traceability solution in five countries: France, Italy, Spain, Portugal and Senegal. More than 6,000 companies, including other leading global food retailers, have implemented TE-FOOD’s solution. In related news, a major online retailer’s crypto fund announced plans to purchase $2.5 million of equity stake (roughly 10 percent) in GrainChain, a startup that is developing a blockchain platform to aid farmers and purchasers in the grain industry by providing a more transparent vision of a grain supplier’s source and eliminating the need for middlemen. Roughly 500 farmers are currently piloting the network, and the company expects to go live sometime in the first quarter of next year.

SwissPost, Switzerland’s national postal service, and Swisscom, the state-owned telecom provider, have announced plans to team up and develop a private blockchain platform designed to meet the high security levels required by banks and to assist in securing applications such as maintaining temperature measurement data during the transport of pharmaceuticals. In Barcelona, Spain, last week, Sirin Labs unveiled the final design of its blockchain phone, the Finney. The Finney will start shipping in late December and seeks to make decentralized applications and cryptocurrency platforms easier to use through functions like automated conversion between various cryptocurrencies.

Earlier this week, one of the top five hospitals in the U.S. announced plans to collaborate with Korean blockchain startup MediBloc to develop a secure solution for health information exchange that supports data sharing. Ultimately, MediBloc aims to develop a tool that would convert data held by hospitals, research bodies, and insurance and pharmaceutical companies into a universal format. Eight medical institutions across Asia and 14 tech companies are presently signed up to test MediBloc’s system.

In patent technology news, a U.S.-based global tech giant recently won a patent connected to a chip that reduces by 15 percent the amount of power needed for cryptocurrency mining operations. The patented chip would be smaller than those currently used by cryptocurrency miners and would promote energy-efficient, high-performance mining. Meanwhile, a U.S.-based multinational vehicle manufacturer and distributor published a patent application this week that discusses the use of a distributed ledger to store data and facilitate information sharing between vehicles.

According to a recent report, various Ohio venture funds will invest more than $300 million over the next three years in early-stage startups that focus on using blockchain technology for business or government. And Hyperledger recently launched a cryptographic library, Ursa, as a new tool for developers in the open source space. Ursa aims to avoid duplication of development efforts among blockchain developers by serving as a single repository of cryptographic implementations.

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Regulation, Investment and a Bad Week for Bitcoin: Blockchain and Cryptocurrency Capital Markets Developments

By: Jonathan D. Blattmachr and Robert A. Musiala Jr.

In news that no Blockchain Monitor reader wants to hear, technical analysts are sounding the alarm bell on bitcoin. On Dec. 6, bitcoin slid below its 52-week low to around $3,400, which comes on the heels of November, in which it experienced its worst month in seven years. Chartists forecast that bitcoin could drop another 60 percent, to around $1,500. Fundamental analysts have blamed the drop on regulatory pressure, the recent hard fork and the choppy conditions in global markets generally. Due to the price drop, many bitcoin miners have ceased operations. This appears to have resulted in the second-largest drop in Bitcoin block hashing difficulty in history, with a drop of 15 percent reported on Dec. 3. A cryptocurrency mining pool recently reported that breakeven for mining operations, depending on various factors, is between $3,891 and $11,581, which means at current prices, many large-scale miners will spend more on mining than the price for which they can sell the bitcoin.

The plunge isn’t stopping the capital markets industry from moving forward with new ideas, however. Institutional investors will now be able to trade on the cryptocurrency exchange Poloniex. These investors will have access to different cryptocurrency trading pairs and API interfaces as well as no-fee transactions on all bitcoin/U.S. dollar (USD) coin trades made this month. In Hong Kong, a Chinese investor will be heading up a stablecoin project within a blockchain fund. This “stable digital currency system” will focus on major currencies, beginning with instruments pegged to the yen, Aussie dollar and USD.

In regulatory developments, the New York Department of Financial Services (DFS) announced approval of a new virtual currency with commercial banking applications. Launched by a regional, New York state-chartered bank, the blockchain platform allows no-fee transfers of virtual currency between client accounts at the bank. DFS announced that to gain approval, the bank had to, among other things, implement, monitor and update effective risk-based controls and other measures to prevent money laundering or terrorist financing. In national news, Rep. Warren Davidson (R-Ohio) announced a forthcoming plan to regulate initial coin offerings and cryptocurrency offerings. The proposed legislation would create a new asset class that would regulate tokens in a way that allows them to avoid being classified as securities.

Overseas, the Swiss market regulatory body, FINMA, published new rules allowing licensed fintech companies to accept public deposits of about $100 million. An applicant seeking licensure must provide details about its business plan, asset storage methods and anti-money laundering policies, and the applicant cannot invest or pay interest on the funds received. In France, 26 companies and five banks have completed a block-based know-your-customer (KYC) test where participants were able to implement KYC checks on a shared network. And a Singapore-based cryptocurrency exchange, Huobi, recently acquired a license to operate in Gibraltar.

Caveat emptor: An MIT study reported that pump-and-dump schemes account for about $7 million in cryptocurrency trading each month. Fraudsters buy a coin at a low price, work to boost its value, then sell holdings before new buyers are able to get out. Investors should be heartened that according to the report, this represents only 0.049 percent of traded volume and new tools are emerging that it is hoped will drop this to zero. Researchers investigating these frauds believe they have developed an algorithmic tool that will be able to spot the coins targeted for pumping and dumping before the scheme begins.

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Global Regulatory Consensus Beginning to Take Shape; Cryptocurrency Mining Malware Evolves

By: Brian P. Bartish

Last weekend’s G20 Summit in Buenos Aires, Argentina, saw cryptocurrency regulation take a pivotal place on the global economic agenda, with leaders calling for the integration of crypto-asset regulation into existing Financial Action Task Force standards for anti-money laundering (AML) and countering terrorist financing. In addition, G20 leaders jointly delivered a document outlining a plan for a taxation system for cross-border electronic payment services, with a final version of regulations expected to be put in place by 2020.

In the U.S., the Department of Homeland Security Small Business Innovation Research program published a report looking into the feasibility of conducting forensic analysis on privacy-focused coins, such as zcash and monero, if they are used for illegal activity. In Estonia this past week, a new version of Estonia’s Anti-Money Laundering and Terrorist Financing Prevention Act came into effect, with new amendments specifically targeting the AML risks from cryptocurrencies and companies offering crypto-related services. According to reports, Canada appears to be eyeing similar legislation. Japan is reportedly working on separate initiatives to combat initial coin offering (ICO) fraud and to curb tax evasion on significant profits from cryptocurrency transactions. These new initiatives follow 2017 legislation that brought cryptocurrency exchanges under Japan’s AML and know-your-customer rules, which has already resulted in 5,944 reported suspicious transactions for the first 10 months of 2018 – a 788 percent increase over the period of April to December 2017.

Cybercrime continues to rise, with coin mining malware increasing in both usage and sophistication. The total number of cryptocurrency mining malware infections reportedly increased 500 percent this year after hackers allegedly stole certain code from the NSA. According to reports, infections of MikroTik routers alone have doubled, reaching 415,000, since the summer of 2018. Further, new malware continues to emerge and evolve, as researchers reportedly have identified changes to KingMiner, a monero-mining application that first appeared six months ago, that improve the malware’s ability to avoid detection.

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