Yearly Archives: 2019

/2019

China’s central bank says it’s close to releasing its own digital currency

(Article published by Ryan Browne with same title in CNBC)

China’s central bank is nearly ready to issue its own sovereign digital currency, according to Mu Changchun, deputy director of the People’s Bank of China’s payments department, who said the institution’s virtual currency was “almost ready” for release, according to Reuters. Mu’s comments were also reported by Bloomberg.

Researchers at the bank have been working on the currency for five years. The PBOC hasn’t been alone in exploring the possibility of issuing digital currency as an alternative to cash; Sweden’s Riksbank is another central bank looking into the idea.

According to reports, China’s central bank would launch its digital token through a two-tier system, under which both the PBOC and commercial banks are legitimate issuers. The PBOC said it wouldn’t rely on blockchain exclusively, and would instead maintain a more neutral stance on which technology it decides to use.

Blockchain, otherwise known as distributed ledger technology, is the framework that underpins cryptocurrencies like bitcoin.

“Personally, I’m still struggling to understand the advantage of this over the current system,” Mati Greenspan, senior market analyst at trading platform eToro, said in a note Monday. “Something tells me that this is a completely different animal from what we know as cryptocurrencies.”

The news comes as global central bankers take a skeptical view on Facebook’s plans to create a cryptocurrency alongside a consortium of major companies including Visa and Uber. Called Libra, the currency hasn’t gone unnoticed by the PBOC, which said last month that it should come under central bank oversight.

US Secretary of State says crypto should be regulated like SWIFT

(Article published by Daniel Palmer with same title in CoinDesk)

U.S. Secretary of State Michael Pompeo has said he believes that cryptocurrencies should be regulated in the same way as financial institutions.

Pompeo was asked how best to regulate Facebook’s Libra or bitcoin, and he responded: “My sense is this: We should use the same framework that we use to regulate all other electronic financial transactions today. That’s essentially what these are. These are monies moving through markets, or in some case disintermediated transactions.” The same rules that apply to transactions “flowing through SWIFT or flowing through our financial institutions ought to apply to those transactions as well,” Pompeo explained. “I concede it will be difficult to do.”

During the discussion that covered a range of issues from the Hong Kong protests to state-run propaganda farms using Twitter and Facebook, the Trump adviser also addressed the use of pseudonymous cryptocurrencies in the funding of terrorism and money laundering. He argued that if such private transactions became the norm, it would “decrease the security for the world if that’s the direction we travel.”

Being able to track the flows of money around the world “has helped keep the entire world secure and to fight terrorism and other nefarious activity … We need to preserve a financial system, a global financial system, that protects that,” Pompeo said.

However, he also appeared to agree that all money laundering until now has been conducted with fiat currency.

Deloitte ‘Blockchain In a Box’ to help enterprises showcase tech

(Article published by Daniel Palmer with same title in CoinDesk)

Deloitte, one of the “Big Four” professional services firms, has officially launched a plug-and-play product aimed to help enterprises showcase their blockchain solutions to clients. The firm’s new “Blockchain in a Box” (BIAB) is designed as a mobile unit packed with four built-in nodes and several monitors that can be linked to external services such as cloud-based systems.

Firms wanting to demo their blockchain solutions can simply plug in SD media cards and load up their products into the system. Deloitte says BIAB “facilitates rapid selection and exchange of demo solutions tailored to specific client needs.”

Linda Pawczuk, principal at Deloitte Consulting and U.S. blockchain lead, explained in an announcement on 19 August: “Deloitte custom built this solution based on client interest in understanding blockchain capabilities in live interactions. What’s often misunderstood about blockchain is that it is an entirety of a technology solution – when in reality, it’s a technology component that enables larger business applications and approaches. Our mobile demonstration is practical, tactical and most importantly, tangible to clients.”

Deloitte said the product has already been demoed to “several” clients and more widely at conferences, including CoinDesk’s Consensus 2019. Chih-Wei Yi, principal at Deloitte & Touche, commented that BIAB “helps to demystify blockchain and is a refreshing and well-grounded approach versus traditional slideware-based demonstrations.”

New Zealand tax office makes it legal to pay salaries in crypto

(Article published by Daniel Palmer with same title in CoinDesk)

 

New Zealand’s tax office, the Inland Revenue Department (IRD), has made it legal to receive salaries in cryptocurrency, and be taxed accordingly. In its August bulletin, the agency published a new ruling under the Income Tax Act (in relation to section RD 3) that states that an employee can be paid salaries in crypto assets as long as the payments are for services performed under an employment contract, are for a fixed amount and form a regular part of the employee’s remuneration.

The crypto asset being paid must also be able to be exchanged for fiat currency, and must have the primary purpose of acting like a currency or be pegged to the price of one or more fiat currencies, the IRD states.

Crypto assets are provided as shares for income tax purposes and are received under an employee share scheme, the ruling does not apply.

As far as tax goes, salaries paid in crypto assets will be treated as PAYE (pay as you earn) income payments. These are deducted by the employer and passed onto the tax department.

The new ruling – signed on June 27 by the agency’s director of public rulings, Susan Price – will apply for three years from Sept. 1, 2019. Previously under New Zealand law, salaries were only payable in “money”, effectively the New Zealand dollar.

MIT’s AI Lab analyzed 200,000 Bitcoin transactions. Only 2% were ‘illicit’

(Article published by Leigh Cuen with same title in CoinDesk)

Blockchain analytics firm Elliptic collaborated with researchers from the Massachusetts Institute of Technology (MIT) to publish a public dataset of bitcoin transactions associated with illicit activity. The group’s study detailed how researchers at the MIT-IBM Watson AI Lab used machine learning software to analyze 203,769 bitcoin node transactions worth roughly $6 billion in total. The research explored whether artificial intelligence could assist current anti-money laundering (AML) procedures.

Only 2 percent of the 200,000 bitcoin transactions in the data set were deemed illicit as part of Eliptic’s initial work. While 21 percent were identified as lawful, the vast majority of the transactions, roughly 77 percent, remained unclassified. (To date, there have been an estimated 440 million bitcoin transactions since the network’s launch in 2009.)

To be clear, the 2 percent comes from an Elliptic data set that was previously not public and the figure was merely affirmed by the MIT researchers’ analysis. The data point is in line with a study from competing analytics firm Chainalysis, which estimated just 1 percent of bitcoin transactions in 2019 were known to be associated with illicit activity.

Since Elliptic is frequently hired by law enforcement agencies around the world to identify illegal activities using cryptocurrency, this research aimed to identify patterns that can help distinguish illicit usage from lawful bitcoin usage, especially among unbanked individuals or other unknown entities.

“A big problem with compliance, in general, is false positives. A big part of this research is minimizing the number of false positives,” Elliptic co-founder Tom Robinson told CoinDesk. “The key finding is that machine learning techniques are very effective at finding transactions that are illicit.” Sometimes, Robinson added, software was able to find patterns that would be difficult to describe yet still matched with known entities, based on pre-existing data from darknet markets, ransomware attacks and other criminal investigations.

Following the academic study, Elliptic made the same dataset public to encourage open-source contributions.

“On the AML side, we are sharing our early experiments with domain experts to solicit feedback,” MIT researcher Mark Weber told CoinDesk, adding: “We are also hoping the release of the Elliptic Data Set inspires others to join the effort to help make our financial systems safer by developing new techniques and models for AML.”

CNBC reported in April that surging demand for U.S. $100 bills was likely driven by a rise in global criminal activity. A 2017 report by the American Institute for Economic Research, estimated that “more than a third of all US currency in circulation is used by criminals and tax cheats.”

Facebook Token Runs Into Instant Political Opposition in Europe

(Article published by Michael K. Spencer with same title in Medium)

Libra could be a Trojan horse and Europe is actually paying attention. Just when you think you’ll get Zuck-ed again, Europe actually has some sense. Facebook’s Libra pitches to be the future of money, but not everyone is raving about it.

Facebook has already abused their power and our trust (not to mention our data) and now we want to trust them to bank the unbanked? It’s a special kind of insanity when Silicon Valley tries to hack the world and crpyto.

Europe has been for a long time calling for tighter regulation of the social-media giant, while the U.S. has more or less been failing at tech regulation for more than a decade.

Mark Zuckerberg’s public image is sort of tarnished and even new top Grads don’t want to be associated with Facebook.

That means this pet project Libra is so ambitious it makes them sound like they want to “become a sovereign currency”. A stablecoin disrupting fiat currency? You never know, in the internet the U.S. has created, just what’s in store for us years from now.

French Finance Minister Bruno Le Maire said the digital currency known as Libra shouldn’t be seen as a replacement for traditional currencies. So to say that Europe is wary of Facebook’s “Libra Association” that’s taking up a cryptocurrency challenge and its banner would be an understatement. The Libra Association companies are basically a coalition of U.S. payment and tech companies.

The Libra Network could also damage banks and their bottom lines. If sending digital money on WhatsApp has no fees and can even get me interest, Facebook might just become a convenient bank with its Calibra wallet.

European financial leaders vowed vigilance after Facebook announced it was diving into the cryptocurrency market, as analysts warned the social media giant could face major regulatory questions.

Facebook’s warped sense of what is good for the world is already well documented, I think.

The Lightning Network folk are probably best buds with the Facebook crypto overlords. They see Libra being good for Bitcoin, and that’s a win-win for all of these crypto influencers and fake news (biased) publications.

Cuba eyes cryptocurrency as solution to financial woes and sanctions

(Article published by Tomorrowland Ltd. with same title in Medium)

Cuba has announced it is considering the use of cryptocurrency in order to bolster its finances. According to a report from SBS-AAP, the country’s Communist government announced on state-run TV that it would potentially use crypto as part of a package aimed to boost incomes for as much as a quarter of Cubans and assist with market reforms.

The move is possibly influenced by the nation’s ally, Venezuela, which launched its own “petro” cryptocurrency early last year. It’s not clear from the report if Cuba might launch its own token or use existing alternatives. Like Venezuela, Cuba is suffering from tough U.S.-led sanctions and has also seen a drop-off in aid from Venezuela which is undergoing both financial and political crises of its own.

In the TV announcement, Cuba’s President Miguel Diaz-Canel indicted that the cryptocurrency plan is aimed to raise national production and demand in order to boost growth. The package would reportedly boost some pensions and wages for employees within public administration, social services and state-run media, almost doubling their average monthly wage.

If so, the state appears to be placing a lot of hope in its crypto dreams. Venezuela has not seen its petro token take off internationally, despite having touted it at OPEC as a means for the world to pay for oil. Soon after launch, U.S. President Donald Trump also added the petro to its list of sanctioned assets. Companies assisting the project in avoiding sanctions could also get in hot water. A Russian bank was itself sanctioned by the U.S. Treasury after it was considered to have assisted financing of the petro.

SmartDegrees obtiene el Sello de Excelencia de la Comisión Europea

La Comisión Europea ha otorgado a SmartDegrees el Sello de Excelencia, por su plataforma de registro y certificación de títulos y certificados académicos basada en blockchain.

Se trata de un certificado de calidad proporcionado a las propuestas de proyectos presentadas a Horizonte 2020, el programa marco de la Unión Europea para investigación e innovación en el período 2014-2010. El certificado garantiza el cumplimiento de los criterios de excelencia, de impacto y de calidad y eficiencia en la implementación, valederos para la obtención de financiación dentro del presupuesto Horizonte 2020.

Horizonte 2020 es el programa de investigación e innovación más grande de la Unión Europea, con fondos disponibles durante 7 años (2014 a 2020), una iniciativa emblemática de Europa 2020 destinada a asegurar la competitividad global de Europa. Es un medio para impulsar el crecimiento económico y crear empleos y cuenta con el respaldo político de los líderes de Europa y los miembros del Parlamento Europeo. Al unir la investigación y la innovación, Horizonte 2020 impulsa la excelencia en la ciencia, el liderazgo industrial y abordar los desafíos sociales.

Walmart wants to patent a stablecoin that looks a lot like Facebook Libra

(Article published by Daniel Palmer with same title in CoinDesk)

Retail giant Walmart has applied for a cryptocurrency patent that bears some similarities to the Libra token proposed by Facebook in mid-June.

In its application with the U.S. Patent and Trademark Office, Walmart touts the concept of a digital currency “tied to a regular currency” – that is, what’s commonly known as a stablecoin. Libra will be a token pegged to a basket of fiat currencies and government bonds, according to Facebook.

Over and above that, the filing suggests that the proposed coin could help provide finance for those with limited access to banking services – one of the major claims Facebook has made for Libra, most likely in an effort to appeal to the public (and regulators) over the token. “Using a digital currency, low-income households that find banking expensive, may have an alternative way to handle wealth at an institution that can supply the majority of their day-to-day financial and product needs,” Walmart states.

Facebook’s offering is expected to create a system whereby its social media platforms could use Libra for payments, allowing advertisers to earn Libra and pay Facebook in the token for ads. Although it could also be used more widely in time in remittances and other use cases.

Walmart’s filing, too, indicates its coin could have features that apply to a token being used within the ecosystem of a high-street retail company: “The digital currency may be pegged to the US dollar and available for use only at selected retailors or partners. In other embodiments, the digital currency is available for use anywhere. The digital currency can provide a fee-free, or fee-minimal place to store wealth that can be spent, for example, at retailers and, if needed, easily converted to cash.”

A notable difference is that users of a “Walmart Coin” could “even earn interest,” the application suggests. With Libra, interest earned on the scheme’s potentially vast reserve funds would go to Libra partners that back the company to the tune of around $10 million.

More closely applying to a commerce giant, though, Walmart says its token could store user’s purchasing histories on the blockchain, and then apply related savings to their subsequent purchases in a similar way to loyalty points.

Other novel features suggested in the very broad filing include the ability to remove the need for credit cards, and acting as a “pre-approved biometric (e.g., fingerprint or eye pattern) credit.” “A person is the ‘credit card’ to their own digital value bank,” the firm says.

The token could also be used to restrict what product categories can be bought and by whom, for example blocking minors from purchasing cigarettes, alcohol, or an R-rated DVD.

Walmart is already using blockchain for tracking products like fresh greens and pharmaceuticals. It’s also has been investigating various use cases of the technology, with projects including connecting automated delivery drones. In June, Walmart China launched a live scheme aimed to improve the nation’s poor food safety record. It also has a host of other patents applied for, including some relating to tracking packages, power supply payments and delivery fleets.

Facebook Libra backers are not official partners yet, says Visa CEO

(Article published by Daniel Palmer with same title in CoinDesk)

While Facebook’s Libra project was said to already have 28 founding partners when unveiled in June, that isn’t quite the case, according to Visa’s CEO and board chairman, Alfred F. Kelly, Jr.

In a Q3 2019 earnings call on 23 July, Kelly responded to a question on his firm’s involvement with the Libra project from Bryan C. Keane, an analyst at Deutsche Bank Securities. Keane asked, “Just wanted to ask on Facebook’s Libra, there’s some confusion in the market on how to think about that. Is it a strategic partner for Visa or potential disruptive threat? Just curious your thoughts and level of expected Visa involvement in Facebook Libra.”

Playing down the firm’s involvement with Libra, Kelly responded that “it’s important to understand the facts.” He continued: “So we have signed a nonbinding letter of intent to join Libra. We’re one of – I think it’s 27 companies that have expressed that interest. So, no one has yet officially joined.”

The Libra Association’s group of 28 launch partners includes Visa, Mastercard, PayPal, Uber, Lyft, Coinbase and others.

“Implied in this project is that wherever the Visa or Mastercard logo are accepted, Libra would follow suit,” Dante Disparte, head of policy and communications for the Libra Association, told CoinDesk at the time. “In so many ways it’s a great leap forward for cryptocurrencies and, in many respects, a mainstreaming of this asset class.”

Going forward, the decision to fully join Facebook’s cryptocurrency project would be decided by a “number of factors, including obviously the ability of the association to satisfy all the requisite regulatory requirements,” Kelly said.

As suggested, since its release of a Libra white paper in mid-June, Facebook has been defending itself from a storm of calls from regulators worldwide for more information on how the scheme would work, amid concerns over what affect it could have on financial stability and users’ privacy.

Kelly emphasized in the call that “it’s really, really early days” and much has still to be finalized regarding Libra. He finished on a positive note for Facebook, however, saying: “But obviously, given that we’ve expressed interest, we actually believe we could be additive and helpful in the association.”

The CEO’s comments come as confirmation of a New York Times piece from late June that cited unnamed sources at seven of the firms as saying that they had signed nonbinding agreements with Facebook.

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