In this issue:
According to a press release published last Friday, “North America’s largest branded shelf-stable seafood company” announced that it is using the cloud-based Blockchain as a Service (BaaS) platform of a major international software company “to trace the journey of yellowfin tuna from the Indonesian ocean to the dinner table.” According to the press release, “consumers and customers will be able to easily access the complete origin and history of … yellowfin tuna simply by using their smartphones to scan a QR code on the product package.”
Last week in Singapore, the government announced TradeTrust, a blockchain pilot project for port authorities that will seek to “turn paper-based bills of lading into digital documents that can be shared and accessed when container ships dock and unload in Singapore and consequently cut costs and the risk of fraud…” This week, the European Union Blockchain Observatory and Forum issued a report focusing on blockchain scalability, interoperability and sustainability. Among many other findings, the report highlights that blockchains “will need to interact with the off-chain world as well as with each other.” Another report published from Europe this week focused on the danger of collusion posed by blockchain solutions, and proposed “methods of action for antitrust and competition agencies.”
This week a press release announced that government agencies in Canada are working to build a blockchain-based identity solution that will seek to streamline the process of authenticating company credentials for government and business. The solution would leverage the Hyperledger Indy blockchain. Enhancing data security through blockchain was also the subject of a patent granted this week to a subsidiary of a major U.S. telecom firm. The patent envisions a system that uses blockchain to secure communications and recordings.
This week MyEtherWallet announced EthVM, a new open source Ethereum blockchain explorer tool. Ethereum analytics tools continue to advance and provide more data from the Ethereum blockchain, with one recent analysis finding that over 80 percent of the total existing supply of ether is held by only 7,572 wallet addresses.
For more information, please refer to the following links:
- Bumble Bee Foods and SAP Create Blockchain to Track Fresh Fish from Ocean to Table
- Singapore Launches Maritime Blockchain
- Scalability Interoperability and Sustainability of Blockchains
- EU Report Calls for Blockchain Interoperability Standards
- Collusion by Blockchain and Smart Contracts
- Reducing Government Red Tape: British Columbia Creates New Business Identity Model with Hyperledger Indy
- Use case spotlight: The Government of British Columbia uses the Sovrin Network to take strides towards a fully digital economy
- Vonage Subsidiary Receives Patent to Secure Voice Communications With Blockchain
- MyEtherWallet Launches New Open Source Ethereum Blockchain Explorer
- Over 80 Percent of Total ETH Supply is Held by 7,572 Addresses: Research
According to recent reports, the Swiss-based Amun AG recently received approval to list a cryptocurrency exchange-traded fund (ETF) that tracks the price of XRP on SIX, Switzerland’s primary stock exchange. The firm currently has approval to issue cryptocurrency ETFs linked to four other cryptocurrencies, including bitcoin cash, litecoin, stellar lumens and EOS. Meanwhile, a U.S.-based investment management firm also announced plans to launch a blockchain ETF on the London Stock Exchange this week. The ETF initially will target 48 companies, selected through a proprietary scoring system, that are involved with blockchain technology. Coinciding with these ETF announcements, a Boston-based multinational financial services firm’s new digital asset platform went live last week with select clients.
Blockchain consortium and credit union service organization CULedger recently announced its partnership with a global information technology firm to pioneer permissioned blockchain network solutions for credit unions. The new partnership seeks to offer credit union members the ability to instantly authenticate financial transactions between members of any credit union on the global network through a customizable CULedger-issued digital credential, MyCUID. This same global information technology firm also announced plans to host the beta version of a New York investment firm’s custody solution for digital assets. The solution reportedly leverages the global information technology firm’s private cloud and encryption technologies and utilizes a hardware security module that functions like a lockbox to safeguard and manage digital keys. This appears to represent a shift from the current model of cold storage solutions, where private keys are held in a device not connected to a network.
The German Ministry of Finance made news this week with its recommendation that the country recognize securities issued in digital form as a legitimate form of financial instrument. The recommendation also called for legislation that creates a framework to regulate such digital instruments to avoid the possibility of manipulation. Also this week, a major market infrastructure provider for the global financial services industry published a white paper that outlines guiding principles for regulators and market participants for the post-trade processing of tokenized securities. The framework identifies key issues in trading cryptocurrencies that must be addressed to protect market stability. According to another recent report, the emergence of regulated security token offerings (STOs) has led to a decline in the number and volume of initial coin offerings (ICOs) and STOs during the second half of 2018. The report notes that ICOs and STOs still remain attractive to investors as a mechanism for venture capital financing.
For more information, please refer to the following links:
- SIX Exchange May List XRP Exchange-Traded Product in Two Months
- Investment Firm Invesco Launches Blockchain ETF on London Stock Exchange
- Fidelity Digital Assets: An Update on Our Work
- Fidelity’s Digital Asset Platform Goes Live With Select Clients
- IBM, CUSO CULedger Partner to Develop Blockchain Solutions for Global Credit Unions
- IBM Quietly Enters Crypto Custody Market With Tech Designed for Banks
- German Finance Ministry Calls for Regulated Blockchain Securities Market
- DTCC Outlines Guiding Principles for Post-Trade Processing of Tokenized Securities
By: Brian P. Bartish
In a letter recently made public, Securities and Exchange Commission Chairman Jay Clayton endorsed analysis advanced by the SEC’s director of corporate finance, William Hinman, in a 2018 speech stating the view that ether is not a security. Citing to the Howey framework, Chairman Clayton, in response to a letter from U.S. House Representative Ted Budd, indicated that where purchasers no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts, a digital asset may not represent an investment contract. According to a recent announcement on the SEC’s FinHub website, the SEC is also looking to establish stronger working relationships with the cryptocurrency and wider fintech community through local peer-to-peer meetups and a new online portal, hosted by FinHub, where interested attendees can report general areas of interest or a specific inquiry, including “determination of instrument as a ‘security.’”
Last week, Thailand’s SEC approved the first ICO portal, with the first public ICO reported to be conducted under digital asset royal decree to follow in the near future. The Thai SEC is also working to issue criteria that will allow companies to conduct STOs in Thailand. In Malta, the Malta Financial Services Authority (MFSA) recently appointed blockchain forensics firm CipherTrace to oversee regulatory processes and conduct risk management audits of virtual asset businesses, following recommendations from the IMF that MFSA take immediate action to close gaps in AML and CFT oversight.
Cryptocurrency schemes continue to see strong action from law enforcement and regulators, with the Commodity Futures Trading Commission (CFTC) announcing a Consent Order with Marshall Islands-based 1pool Ltd. The company was required to pay $990,000 to resolve claims that 1pool illegally offered retail commodity transactions margined in bitcoin, failed to register as a futures commission merchant (FCM) and failed to meet supervisory duties. Also last week, a joint investigation involving the U.S. Attorney’s Office for the Southern District of New York, the New York District Attorney, the Internal Revenue Service-Criminal Investigation (IRS-CI) unit and the FBI resulted in the arrest of Konstantin Ignatov on wire fraud charges for his role with OneCoin, which authorities are calling a multibillion-dollar pyramid scheme involving cryptocurrency.
For more information, please check out the following links:
- SEC Chairman Clayton just confirmed Commission staff analysis that found Ethereum (and cryptos like it) are not securities
- SEC Jay Clayton Letter of March 7 2019
- US SEC’s Finhub Launches Series of Meetups to With Crypto, Fintech Communities
- Local P2P with SEC FinHub
- Thai SEC approves first ICO portal, still unnamed
- Maltese Financial Regulator Appoints CipherTrace to Monitor Compliance in Crypto Firms
- Manhattan U.S. Attorney Announces Charges Against Leaders Of “OneCoin,” A Multibillion-Dollar Pyramid Scheme Involving The Sale Of A Fraudulent Cryptocurrency
- Foreign Trading Platform and Its CEO to Pay $990,000 for Illegal Bitcoin-Related Transactions with U.S. Customers
By: Joanna F. Wasick
According to a United Nations (UN) Security Council expert panel report, North Korea has been carrying out major cryptocurrency hacks in order to bypass economic sanctions imposed due to its nuclear program. The hacks, including at least five attacks on Asian cryptocurrency exchanges between January 2017 and September 2018, reportedly created losses totaling $571 million. A number of attacks on overseas financial institutions and exchanges were also reported. The UN report urged member states to be vigilant in sharing any information they have about North Korean cyberattacks on other governments and domestic financial institutions.
Early last week, Ledger, a manufacturer of offline, cold/hardware cryptocurrency wallets, issued a report identifying five security “vulnerabilities” in devices manufactured by its direct competitor, Trezor. Ledger claimed that it told Trezor of these purported weaknesses and only went public with them after Trezor failed to take “appropriate measures.” Trezor has since responded, claiming that none of the weaknesses were critical, and any exploitation of them would require physical access to the wallet, specialized equipment, significant time and technical expertise. Trezor also stated that some of the identified vulnerabilities had already been patched.
Tether, a cryptocurrency stablecoin, recently updated the terms of its website in a manner that indicates its USDT stablecoin may not in fact be backed 100 percent by fiat reserves. Since its inception, Tether had asserted that it supported a direct coin-to-dollar ratio. The Tether website now qualifies this, stating that while its reserves include traditional currency, “from time to time” they may also include “other assets and receivables from loans made by Tether to third parties.”
For more information, please refer to the following links:
- North Korea Hacking Crypto Exchanges to Circumvent Sanctions: UN Panel
- North Korea’s military has stolen more than half a billion dollars in cryptocurrency
- Our Shared Security: Responsibly Disclosing Competitor Vulnerabilities
- Ledger Discloses Five Reported Vulnerabilities in Two Models of Trezor Hardware Wallets
- Our Response to Ledger’s #MITBitcoinExpo Findings
- Cryptocurrency Community Eyes Tether After Website Dilutes USD Backing Claims