In this issue:

New Blockchain Payments Solutions Announced for Banks, Merchants and the Unbanked

Cryptocurrency Investors Bullish on New Opportunities Despite Risk and Uncertainty

Blockchain Applications Advance in Food Production, Transport, Recordkeeping, Contracting and Voting

Public and Private Sector Entities Address Blockchain Regulatory Environment

Cryptocurrency Threat Actors Attack Cloud Infrastructure, Trading Software and Bitcoin ATMs

New Blockchain Payments Solutions Announced for Banks, Merchants and the Unbanked

By: Simone O. Otenaike

Early this week, a leading global technology firm launched a real-time global payments network for regulated financial institutions. The global payments network is currently in a limited production phase and available in 72 countries, with 48 currencies and 46 banking endpoints where people can send or receive cash. In conjunction with the firm’s announcement, six international banks signed letters of intent to issue stablecoins (tokens backed by fiat currency) on the firm’s global payments network. The network uses the Stellar public blockchain and is free to join; participants only pay according to the value they move through the network. Meanwhile the SEC’s Senior Advisor for Digital Assets recently made a public statement that stablecoins might constitute securities where one central party controls the price fluctuation over time through a pricing mechanism that keeps the price within a specified range. She further explained that the determination is based on the expectations that stablecoin issuers impart on buyers and not the specific label of the asset.

According to recent reports, a leading Swiss online retailer will now accept Bitcoin, Bitcoin Cash, Bitcoin SV, Ethereum, Ripple, Binance Coin, Litecoin, Tron, NEO and OmiseGO for purchases worth over CHF 200 (about $200). The new payment method is part of a pilot project with Swiss payment processor and Danish crypto payments startup Coinify. The system reportedly allows customers to make payments with a fee of 1.5 percent during 15-minute time windows during which the crypto exchange rate doesn’t change. A U.S.-based multinational distributor of electronic components and services will also now accept cryptocurrency payments through a collaboration with cryptocurrency payments processor BitPay.

Coinciding with these payments announcements, the Bitfury Group reportedly plans to partner with a business payments processor to launch lightning network-based bitcoin payment options for merchants in the U.S., Canada and the EU. The processor’s web-based Lightning Network allows businesses to improve the efficiency and lower the costs of fiat and bitcoin payments for products and services. In Australia, cryptocurrency exchange Binance recently unveiled a cash-to-bitcoin brokerage service that allows users to buy bitcoin with cash from high-street stores. The new service, Binance Lite Australia, is accessible through a network of over 1,000 news agents across the country. The platform currently only offers the option to buy bitcoin with Australian dollars, but the exchange plans to support more cryptocurrencies and fiat options in the future. Also in international news, Athena Bitcoin launched a bitcoin ATM in the city of Cúcuta, which lies on the border between Colombia and Venezuela. The new ATM reportedly offers customers the ability to exchange bitcoin, bitcoin cash and litecoin for Colombian pesos. During this time of economic, social and political instability in Venezuela, many Venezuelans have reportedly turned to bitcoin to preserve value and escape corruption.

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Cryptocurrency Investors Bullish on New Opportunities Despite Risk and Uncertainty

By: Brian P. Bartish

In recent SEC filings, a Southern California-based bank known for catering to clients focused on cryptocurrency and related assets, including several leading cryptocurrency exchanges, reported a 122 percent increase in such clients and an 11.4 percent increase in deposits from crypto-focused customers in 2018. Already operating its own proprietary exchange network, the bank is eyeing further growth opportunities in the arena of stablecoins, including working with several stablecoin developers to hold their deposit collateral. This week, cryptocurrency data provider CoinMarketCap’s cryptocurrency benchmark indices launched on several leading financial data feeds in the U.S. and Germany, with the goal of promoting greater accessibility to cryptocurrency data. Last week, the Stock Exchange of Thailand (SET) reiterated its pledge to collaborate with all stakeholders as it works to roll out a new digital asset platform by 2020 – part of a larger three-year strategic plan (2019-2021) aimed at opening new investment opportunities and improving the convenience and speed of the investment experience. Despite cryptocurrency market instability and the lack of FDIC guarantees, customers are reportedly racing to deposit bitcoin and ether into new interest-bearing accounts, offering up to a 6.2 percent annualized return, provided by BlockFi.

With the 74 percent decline in bitcoin value in 2018, the first mainstream exchange to allow people to trade in bitcoin futures announced that it will no longer list bitcoin futures contracts and is reviewing its approach to cryptocurrency derivatives. Seeming to confirm long-standing accusations, a new report released this week by trading analytics platform The Tie estimates that 87 percent of 97 exchanges surveyed reported potentially suspicious trading volume, with 75 percent of those exchanges reporting double their expected trading volume. The Tie estimated expected trading volume of the 100 largest exchanges to equal $2.1 billion, well below the $15.9 billion currently being reported. Japan continues to lead the way in cryptocurrency trading regulations with new rules aimed at the 8.42 trillion-yen ($75.6 billion) margin trading industry.  The rules would cap leverage in virtual currency margin trading at two to four times initial deposits and require new government registration for exchanges that handle margin trading.

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Blockchain Applications Advance in Food Production, Transport, Recordkeeping, Contracting and Voting

By: Diana J. Stern

In enterprise blockchain news this week, the National Pork Board and Ripe Technology announced they are partnering to create a platform for pork producers to monitor and evaluate sustainability, then use that data to improve their practices. Some of the data recorded on chain is expected to be visible to ecosystem partners so they can validate certifications. Ripe Technology is a startup that aims to increase transparency and integrity of information across the food supply chain.

The Blockchain in Transport Alliance (BiTA) announced that it approved its first official data format specification. This year, the alliance plans to continue creating open blockchain standards for and by the transportation industry, so they can move toward tracking shipments in real time. By laying down the standards groundwork, BiTA intends to eventually phase out legacy EDI systems and replace them with blockchain-based solutions.

According to reports, one of the world’s largest technology firms teamed up with the French National Council of Clerks of Commercial Courts and successfully developed a blockchain-based solution that will be used by clerks in commercial courts across France. The technology, built on Hyperledger Fabric, manages legal transactions related to the company life cycle – including regulatory information and corporate name changes – in order to increase transparency and efficiency.

Denver, Colorado, is the latest city to plan a trialing a blockchain-based application for voting. In its May municipal election, voters who may not be able to get to the polls, such as active-duty military and overseas voters, will be able to submit their ballot through a blockchain-based mobile app designed by Voatz.

Clause, the smart contract platform built for blockchain, announced that it has extended its integration with a popular legal tech provider, DocuSign. When users sign an agreement in DocuSign, Clause allows for other events to be triggered by the fact that the document has been executed. In the coming months, Clause intends to move toward paid plans for its clients.

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Public and Private Sector Entities Address Blockchain Regulatory Environment

By: Robert A. Musiala Jr.

Last Friday, the SEC announced that it will host “a public forum focusing on distributed ledger technology (DLT) and digital assets” at the SEC’s Washington, D.C., headquarters on May 31, 2019. According to the press release, the forum is being organized by the SEC’s Strategic Hub for Innovation and Financial Technology (FinHub), and is “designed to foster greater communication and understanding around issues involving DLT and digital assets.” The event will be open to the public and will be webcast live on the SEC’s website. In another notice published last week, the SEC addressed the challenges associated with “whether and how characteristics particular to digital assets affect compliance with the Custody Rule.” The notice included a list of questions on which the SEC is seeking industry input.

In Canada, the Canadian Securities Administrators recently issued a report addressing regulatory frameworks for platforms that “facilitate the buying and selling of crypto assets and perform functions similar to one or more of exchanges, alternative trading systems (ATSs), clearing agencies, custodians and dealers.” Also this week, the Swiss legislature approved a motion that would allow certain existing legal frameworks to be applied to cryptocurrencies in order to help protect against risks such as money laundering and unsupervised market activity.

Last week, the American Bar Association published a white paper that seeks to provide “a comprehensive explanation of federal and state laws that may apply to the creation, offer, use and trading of digital assets in the United States, along with summaries of key initiatives outside the United States.” Another recent white paper published by the Brookings Economic Studies program addresses perceived gaps in the regulation of “crypto-assets” and makes recommendations for U.S. congressional action.

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Cryptocurrency Threat Actors Attack Cloud Infrastructure, Trading Software and Bitcoin ATMs

By: Robert A. Musiala Jr.

According to a recent report from the cybersecurity team at a major U.S. telecom provider, “[o]ne of the most widely observed objectives of attacking an organization’s cloud infrastructure has been for cryptocurrency mining.” The report outlines some of the most common methods of attack that hackers have used in recent attempts to hack into cloud infrastructure for the purpose of operating cryptocurrency mining malware, and provides tips for detecting such attacks. Another recently published report provides details on more than 40 bugs in blockchain and cryptocurrency platforms that were detected in the 30-day period from Feb. 13 to  March 13, 2019. A third report issued this week describes details of a malware campaign that is “attempting to compromise financial technology and cryptocurrency trading companies in an effort to harvest credentials, passwords and other confidential information.” The attackers are reportedly using an updated version of the Cardinal RAT malware, and evidence suggests they have been targeting companies in Israel that write software for forex and cryptocurrency trading.

An “in person” attack was reported late last week in Canada, where Calgary police published a press release seeking the public’s assistance to identify four individuals alleged to have stolen $195,000 in cash by exploiting a security flaw in bitcoin ATM machines. According to the press release, the suspects succeeded in initiating bitcoin conversion transactions, withdrawing cash from the bitcoin ATMs, and then cancelling the bitcoin transactions before any bitcoin was actually transferred to the ATM provider.

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