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Blockchain transport applications, public sector initiatives, protocol and market developments
Of: Diana J. Stern is Simone O. Otenaike
Players from the transport, oil and gas industries put the pedal on the metal to push blockchain pilots. According to reports, the Abu Dhabi National Oil Company (ADNOC) is working on a blockchain-based system that automates the accounting process for oil and gas production from one end to the other. In addition, Maritime Blockchain Labs has announced plans to further develop its blockchain-based platform to track the quality of marine fuels and quantity assurance, with the goal of facilitating decision-making based on data and alleviating weaknesses of the sector. National Transport Insurance, an insurer of heavy vehicles and transport, participates in a trial to improve food security, improve animal welfare and monitor exports using blockchain technology, innovative packaging and IoT systems to ensure the sourcing of the supply chain for Australian meat. Finally, State Farm is testing if the blockchain technology can simplify the manual surrogation process, the legal right to claim compensation from third parties responsible for a loss suffered by the insured.
In the public sector, the US Department of Homeland Security solicits requests for a funding program that provides blockchain startups and small businesses with opportunities to receive grants of up to $ 800,000 for the development of anti-counterfeiting solutions. At the state level, the Attorney General of Vermont established a working group to study blockchain technology by engaging with stakeholders, associations, industry experts and state agencies. On the international front, the UNICEF Innovation Fund will invest up to $ 100,000 in six companies selected from over 100 applications to fund open block blockchain prototypes aimed at solving global challenges such as transparency in the delivery of health services and access to mobile phone connectivity. Earlier this week, the European Union Blockchain Observatory & Forum published a report illustrating use cases, benefits and challenges for implementing blockchain technology in government and service applications. public – urging that the experimentation should continue and that digital identity and the central bank based on blockchain digital currencies (CBDC) are fundamental constituents.
Last Friday, the main developers of Ethereum have agreed to launch the Forcella di Costantinopoli (Constantinople) to block 7.080.000. Constantinople incorporates five distinct Ethereum enhancement proposals that soften the transition of Ethereum from consensus to the job test (PoW) to a more energy-efficient Consensus Proof-of-Interest (PoS) algorithm. This upgrade to a PoS consensus algorithm has the potential to radically change the Ethereum blockchain system. Meanwhile, at the beginning of this week, Hyperledger announced that another 16 organizations have joined its project as general members and four as associate members. According to a leading accounting firm, the price of bitcoin has fallen more than 80% from its high of December 2017, the total market value of all cryptocurrencies decreased by 87% compared to the highs of beginning of January and about 86% of the ICOs of 2017 are trading below the quotation price while 30% have lost almost all their value. According to reports, these market downturns are pushing investors to pressure cryptography and blockchain businesses to produce revenue-generating products.
The investment arm of a major online retailer may soon become its core business. Yesterday, the retailer's founder announced that the publicly traded company is looking to sell its retail site by February and retain its portfolio companies, many of which have blockchain-based business models. These include the tZERO token security platform, the Symbiont business technology provider, the Voatz voting application, the Ripio loan launch and the Factom data management platform, among others.
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Capital market initiatives continue as the US Congress publishes new research and two new invoices
Of: Jonathan D. Blattmachr
This week brought a large number of developments in the block and crypt space of capital markets, largely in Europe. In Germany, solarisBank works with the Boerse Stuttgart group to create a full spectrum infrastructure for digital resources. The two entities are trying to start an encryption site by the first half of 2019, with bitcoins and ether initially available for trading and an eye to providing a platform for ICOs and secondary market exchanges for tokens. The Blockchain R3 consortium collaborated with several major European banks to produce commercial transactions in real time, following a simulated transaction conducted last year. The program aims to reduce inefficiencies from current models. The subsidiary of the Gibraltar Stock Exchange now offers insurance coverage for cryptic assets (both online and offline) traded on the Gibraltar Stock Exchange. This makes the Gibraltar Blockchain Exchange at least the third digital exchange that offers such insurance, but the coverage remains insufficient to cover all operations performed daily around the world. To allay the concerns that its stablecoins can not be supported one-on-one with the euro, Stasis, based in Malta, has hired an external auditor to provide guarantees to investors. In October, similar concerns led to the Tether tokens of the USD that lost parity with the dollar. Outside of Europe, a major South Korean bank has announced that it will start registering blockchains to reduce human errors and increase efficiency.
While the bipartitanship may seem unfathomable these days, members of Congress from different sides of the corridor have introduced two bills focused on the manipulation of the cryptocurrency market. The legislators argue that the proposed legislation will contribute to the definition of regulations that will also promote competitiveness. The Congressional Research Service (CRS), which works for and under the direction of the Congress, has published a report on cryptocurrencies, economic and political issues. The CRS report notes that "role and value of cryptocurrencies … remain highly uncertain", largely due to questions about functionality. The report also notes concerns about cryptocurrency regarding consumer protection, adequate regulatory regimes, potential crime facilitation and the effects on monetary policy. The CRS also wrote that the central banks' digital currencies could offer some advantages, including the possibility for private individuals to have accounts with central banks, which could improve systemic stability and induce commercial banks to offer interest rates. to attract customers.
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Blockchain payment networks evolve, the new cryptocurrency exchange lands in the United States
Of: Joanna F. Wasick
Financial services companies in the Middle East, Europe and Asia continue to exploit the ability of cryptocurrencies to facilitate domestic and cross-border payment transactions. According to reports, the central bank of the United Arab Emirates (UAE) and the Saudi monetary authority are working together to issue a cryptocurrency that will be used exclusively by banks for transactions between the two countries. In Germany, the initiation of cryptocurrency payments Bitwala and the German startup of fintech solarisBank are launching a banking system that allows users to manage the bitcoin and euro deposits in one place, with the same services, security and convenience of a traditional German bank account. In Asia, Coinone Transfer, a Coinone subsidiary, recently introduced Cross, the first remittance app and the South Korea blockchain-based web service, which can be used regardless of whether the user has a bank account . Cross is enabled by RippleNet, the US Ripple blockchain technology, and is launched with support from Siam Commercial Bank in Thailand and Cebuana Lhuillier in the Philippines. The United Arab Emirates and Ripple announced plans to launch another cross-border remittance service in Asia by the first quarter of 2019.
On the domestic front, Amplify Exchange has announced plans to open operations in the United States in Knoxville, Tennessee. Amplify Exchange reportedly operates on a decentralized Internet system enabled by its subsidiary company, Substratum, and allows users to access the Internet in private and regardless of certain government usage restrictions. In addition, reflecting a privacy award, Mastercard has recently applied for a patent on a system that obscures the point of origin and the amount of certain cryptocurrency transactions. In other news on payments, the US cryptocurrency exchange, Kraken, after a recent valuation of $ 4 billion, is preparing to prepare a private initial offering to high-net-worth investors.
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SEC obtains the regulations, the FATF assesses the United Kingdom, the regulatory actions in Denmark and New Zealand
By: Marc D. Powers
The SEC was successful this week in two control settlements. He got an order from a federal court in Texas that requires the former CEO and COO of AriseBank to pay $ 2.7 million to settle registration and fraud violations. The case arose from the ICO of AriseCoin, where AriseBank executives falsely claimed that their company was a one-of-a-kind decentralized bank offering a variety of cryptocurrency-related services. As part of the agreement, executives have agreed with an official and director bar. The former CEO was indicted for the same behavior shortly before the agreement was concluded. In another agreement, CoinAlpha Advisors LLC (CoinAlpha) settled charges for violating registration when it agreed to return $ 600,000 collected from 22 investors from different US states. The SEC claimed that CoinAlpha committed to a general solicitation of unregistered securities and did not take reasonable steps to ensure that only accredited investors would buy interest in their fund.
Also this week, in a class action relating to the sales of unregistered securities related to an ICO, a district court dismissed the motion of the dismissed defendants, considering the defendants were unable to prove that the tokens subject to the case were not subject "investment contracts" to the registration requirements SEC. In a voluntary action, a well-funded startup, Basis, announced that it would return its financing to investors and cancel its project to build a stablecoin that would maintain a stable price based on algorithmic functions. As reported by ForbesBasis decided to cancel the project after a meeting with the SEC left the company and its lawyers believing that the proposed stablecoins would be considered as unrecorded. In another note this week, the CFTC published a request for information to obtain public comments and feedback on the technology, opportunities, mechanics, use cases and markets related to Eether and the Ethereum network. advantage of the LabCFTC, created in May 2018.
In international news, a new report was published last week by the Financial Action Task Force (FATF) which assessed the anti-money laundering and anti-terrorism measures (AML / CFT) in force in the United Kingdom. The report stressed that "virtual currency exchange providers are not yet covered by the AML / CFT requirements" and cited this as an "emerging risk". The report also stated that "there is still no evidence to suggest that a large scale ML / TF is in the UK through this relatively small sector." According to another recent report, Denmark has identified 2,700 individuals who claim to having substantial taxes on bitcoin profits from 2015 to 2017. Meanwhile, New Zealand has added three other cryptocurrency platforms as scams. Harking back to the days of Mt. Gox, prosecutors in Japan, are seeking a 10-year prison term for Mark Karpeles, who claimed to have stolen $ 3 million from client accounts at the end of 2013, months before the exchange collapsed in the wake of a hack. In a recent cyber security incident, hackers set a massive campaign to search for ethereal portfolios exposed on the Internet and mining equipment, stealing ether. Finally, a 12 December blog post from the University of Oxford noted that an interesting precedent may have been set in a recent Canadian court case, in which the court ordered a substantial amount of ether to be returned to the applicant after the plaintiff demonstrated, using blockchain analysis, that the ether had been mistakenly transferred.
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Tax analysis: securitized tokens supported by real estate or other activities
Of: Roger M. Brown is Heather K. P. Fincher
In October 2018, an asset management company, Elevated Returns, would raise $ 18 million through securitized tokens backed by commercial real estate. Other asset managers think of similar token emissions.
Many investors in these issues of tokens may consider that the asset they hold is a new token. However, the US Tax Law will probably treat investors in these types of token emissions as owners of an interest in the underlying real estate. This can be important for a number of reasons, including the case where a token holder is not a US tax resident.
In this case, the investor may not only be subject to US taxes on the sale of a token, but may also be required to comply with the special tax rules applicable to transfers by a non-US citizen residing in a US real estate interest. . Furthermore, based on these rules, the token buyer could be responsible for the withholding and deposit with the IRS of 15% of the proceeds they transfer to the seller. Special tax filing obligations may also apply to non-US residents and some pre-certifications may be necessary prior to any sale, regardless of whether the token vendor is a US or non-US citizen.
These results are generally different from the normal rules applicable to the sale of a token, such as bitcoin or ether. In other words, the federal and state tax consequences on the sale of a token may vary depending on whether the resources return a given token. Similar rules can also be applied in other countries, where real estate or other business in support of the token is outside the United States.
