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In this issue:
• <a href="#Interest">Interest in Blockchain-Based Supply-Chain Initiatives Continues to Swell</a>
• <a href="#Blockchain">Blockchain Securities Settlement Platform Goes Live, Crypto Payment Solutions Expand</a>
• <a href="#NY">NY Bank Enters Consent Order for Crypto AML Violations as Crypto Threats Continue</a>
<a id="Interest"></a>Interest in Blockchain-Based Supply-Chain Initiatives Continues to Swell

By: <a href="https://www.bakerlaw.com/VeronicaReynolds">Veronica Reynolds</a>

Interest in blockchain-based supply-chain initiatives continues to swell. The Indonesia Customs and Excise Department recently announced a partnership with TradeLens, a blockchain-focused initiative that seeks to facilitate real-time tracking of shipping container logistics among a diverse network of ecosystem members. TradeLens hopes to replace formerly paper-based processes by providing an automated and immutable blockchain-based tracking tool. In related news, CargoX recently announced that its blockchain document transfer (BDT) platform built atop Ethereum won the approval of the International Group of P&amp;I Clubs, an association comprised of independent, not-for-profit mutual insurance associations that provide liability coverage for a significant majority of the world’s oceangoing tonnage.

An international German-based chemical company recently unveiled reciChain – a blockchain pilot for recycling plastics. The pilot aims to automate recycling processes by working with plastics manufacturers to affix digital badges to plastic products to facilitate sorting of the products during their end-of-life stage and to improve trust among market participants by providing shared data. And MediLedger, a working group of pharma supply-chain companies, recently published a report on its blockchain pilot project detailing how blockchain can be used to help eliminate counterfeit pharmaceuticals. The working group was created as part of the effort to comply with the 2023 requirements of the Drug Supply Chain and Security Act, passed by Congress in early 2019 to improve the security of the pharmaceutical supply chain.

The 2020 Healthcare Blockchain Market Update was published this month by R3, an enterprise blockchain software firm, highlighting how its open-source blockchain project, Corda, is being used in the healthcare industry. It features use cases for distributed ledger technology in the healthcare and life sciences space. R3 also announced this week that U.K. pension providers plan to release blockchain solutions leveraging R3 technology to solve identity verification problems.

For more information, please refer to the following links:
<ul>
 	<li><a href="https://www.porttechnology.org/news/indonesia-joins-tradelens/?utm_source=Feeds&amp;utm_campaign=News&amp;utm_medium=rss">Indonesia joins TradeLens</a></li>
 	<li><a href="https://www.porttechnology.org/news/cargox-achieves-historic-moment-for-blockchain-trade/?utm_source=Feeds&amp;utm_campaign=News&amp;utm_medium=rss">CargoX achieves ‘historic’ moment for blockchain trade</a></li>
 	<li><a href="https://www.ledgerinsights.com/basf-blockchain-plastic-recycling-recichain/">BASF launches blockchain plastic recycling pilot</a></li>
 	<li><a href="https://www.chaindrugreview.com/leaders-from-24-companies-in-pharma-supply-chain-working-on-mediledger-dscsa-pilot-project/">Leaders from 24 companies in pharma supply chain working on MediLedger DSCSA Pilot Project</a></li>
 	<li><a href="https://www.r3.com/reports/healthcare-blockchain-market-update/">R3: Healthcare Blockchain Market Update</a></li>
 	<li><a href="https://www.coindesk.com/blockchain-can-help-uk-savers-recover-48b-in-unclaimed-pensions-says-r3">Blockchain Can Help UK Savers Recover $48B in Unclaimed Pensions, Says R3</a></li>
</ul>
<a id="Blockchain"></a>Blockchain Securities Settlement Platform Goes Live, Crypto Payment Solutions Expand

By: <a href="https://www.bakerlaw.com/JoannaFWasick">Joanna F. Wasick</a>

Late last week, a New York-regulated financial institution that digitizes and mobilizes assets announced the live launch of its new, private/permissioned blockchain solution designed to enable two parties to settle securities trades directly with one another. The service is reportedly the first live application of blockchain technology for listed U.S. equities and was launched under no-action relief from the U.S. Securities and Exchange Commission (SEC), which indicates that SEC staff will not advise the agency to take legal action against the institution. This week, a major technology company posted on its blog that tokenization and digitized assets can help investors unlock trillions of dollars from the economy. The post explains that tokenization, by representing ownership rights for physical assets, materially reduces costs associated with human error and costs that arise from using intermediaries and paperwork. Just as importantly, tokens provide a means of breaking up physical assets into fractions or shares, thereby expanding the potential pool of buyers and making trade more attractive. The post also notes that tokenization opens up new markets by facilitating innovation and building trust between buyers and sellers.

In a shareholder letter released earlier this week, a U.S. mobile payments company reported that its bitcoin revenue drove half of its fourth-quarter 2019 revenue results. Reported bitcoin revenue reached $178 million during that time, with gross profits reported at $3 million – a 50% raise over the previous two quarters. The company rolled out bitcoin services on its Cash App across the U.S. in the summer of 2018.

According to recent SEC filings, a major remittance firm received an investment of more than $11 million from the blockchain-based payments firm Ripple Labs. The filing does not state how the remittance firm will use the investment, although months ago it disclosed an agreement between the two entities to allow the firm to use XRP and Ripple’s blockchain product ODL to facilitate cross-border payments. And last week, Riksbank, the Swedish central bank, announced the rollout of its e-krona currency pilot project. Test users will store e-krona in a digital wallet, from which they will be able to make and receive payments. There will also be solutions for smartwatches and cards.

For more information, please refer to the following links:
<ul>
 	<li><a href="https://www.prnewswire.com/news-releases/paxos-settlement-service-begins-settling-us-securities-trades-for-credit-suisse-and-instinet-301007785.html">Paxos Settlement Service Begins Settling U.S. Securities Trades For Credit Suisse and Instinet</a></li>
 	<li><a href="https://www.ibm.com/blogs/blockchain/2020/02/how-tokenization-and-digitized-assets-can-help-investors-unlock-trillions-from-the-economy/">How tokenization and digitized assets can help investors unlock trillions from the economy</a></li>
 	<li><a href="https://www.coindesk.com/bitcoin-drove-half-of-squares-cash-app-revenue-in-the-4th-quarter">Bitcoin Drove Half of Square’s Cash App Revenue in the 4th Quarter</a></li>
 	<li><a href="https://www.coindesk.com/moneygram-got-another-11m-from-ripple-to-use-its-cross-border-payments-tech">MoneyGram Got Another $11M From Ripple to Use Its Cross-Border Payments Tech</a></li>
 	<li><a href="https://www.ledgerinsights.com/sweden-e-krona-central-bank-digital-currency-cbdc-corda-blockchain/">Sweden to test e-krona central bank digital currency on Corda blockchain</a></li>
</ul>
<a id="NY"></a>NY Bank Enters Consent Order for Crypto AML Violations as Crypto Threats Continue

By: <a href="https://www.bakerlaw.com/JordanRSilversmith">Jordan R. Silversmith</a>

Last week, the Office of the Comptroller of the Currency (OCC), a national bank regulator, found that a New York private bank had failed to fully vet its cryptocurrency customers and transactions in high-risk jurisdictions for more than two years. According to a settlement and consent order issued last Thursday, the OCC is requiring the bank to implement measures to bring its anti-money laundering (AML) and Bank Secrecy Act compliance up to date. The bank also agreed to go through unreported suspicious transactions dating from 2019 onward. The bank was assessed no monetary penalties.

Earlier this week, the G20 urged more countries to adopt stringent anti-money laundering measures for cryptocurrency exchanges. The G20 referred to guidelines adopted last June by the Financial Action Task Force, which asked countries to adopt new AML regulations targeted at the cryptocurrency industry. A recent article discussing the European Union’s recently adopted 5th Anti-Money Laundering Directive, or AMLD5, noted that AMLD5 recognizes virtual asset service providers as “obliged entities,” which is the same designation given to banks, payment processors, and gaming and gambling businesses. The significance of the designation is that, provided that crypto businesses can show evidence of compliance with relevant regulations, financial institutions must treat them in the same way as other businesses and cannot refuse services only because an entity belongs to a particular sector like crypto.

A former software engineer for a premiere software company was convicted this week in the U.S. District Court in Seattle of 18 federal felonies related to his efforts to defraud the company of more than $10 million. Volodymyr Kvashuk, a Ukrainian citizen, worked for the company first as a contractor and then as an employee until he was fired in June 2018. According to trial testimony, Kvashuk was involved in testing the company’s online retail sales platform and used that access to steal items such as digital gift cards, which he then resold on the internet. According to the press release, Kvashuk then “used a bitcoin ‘mixing’ service in an attempt to hide the source of the funds ultimately passing into his bank account. In all … approximately $2.8 million in bitcoin was transferred to his bank accounts.”

A high-ranking Iranian general has reportedly called for using cryptocurrency to evade international sanctions on Iran. According to reports, Saeed Muhammad, commander of the Islamic Revolutionary Guard Corps’ “Army of Guardians for the Islamic Revolution,” a branch of the Iranian Armed Forces, said in a speech this week that Iran should look to crypto to bolster international investment despite heavy international sanctions on the country.

For more information, please refer to the following links:
<ul>
 	<li><a href="https://news.bloomberglaw.com/banking-law/safra-bank-failed-crypto-compliance-for-years-regulator-finds">Y. Safra Bank Failed Crypto Compliance, OCC Says</a></li>
 	<li><a href="https://aboutblaw.com/O0a">Y. Safra Bank Consent Order</a></li>
 	<li><a href="https://www.law360.com/fintech/articles/1246727/g20-wants-countries-to-implement-strict-crypto-rules?nl_pk=d839899d-0537-414a-b7cc-d6d00bb8e8ff&amp;utm_source=newsletter&amp;utm_medium=email&amp;utm_campaign=fintech">G20 Wants Countries To Implement Strict Crypto Rules</a></li>
 	<li><a href="https://www-forbes-com.cdn.ampproject.org/c/s/www.forbes.com/sites/pawelkuskowski/2020/02/20/europes-new-aml-directive-means-banks-can-no-longer-shut-crypto-out/amp/">Europe's New AML Directive Means Banks Can No Longer Shut Crypto Out</a></li>
 	<li><a href="https://www.coindesk.com/iranian-general-advocates-crypto-use-for-skirting-sanctions-report">Iranian General Advocates Crypto Use for Skirting Sanctions: Report</a></li>
 	<li><a href="https://www.justice.gov/usao-wdwa/pr/former-microsoft-software-engineer-convicted-18-federal-felonies-stealing-more-10">Former Microsoft software engineer convicted of 18 federal felonies for stealing more than $10 million in digital value such as gift cards</a></li>
</ul>

Blockchain Supply Chain Pilots Expand, Securities Settlement Platform Goes Live, OCC Enters Into Consent Order With NY Bank for Crypto Violations