12 of the biggest enterprise blockchain players of 2020

12 of the biggest enterprise blockchain players of 2020

The enterprise blockchain space in 2020 looks a lot different from previous years, demonstrating the continuation and a drive to mature and advance.

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Enterprise blockchain started gaining traction in 2017 shortly after Bitcoin had reached its all-time high of nearly $20,000. Since then, enterprise blockchain has mainly been defined by private blockchain networks used by businesses for things such as supply chain management. 

The enterprise blockchain space has changed quite a bit since 2017. For instance, 2020 has brought in a number of enterprise blockchain use cases that leverage public networks rather than private ones. The COVID-19 pandemic has also driven many companies, both large and small, to use blockchain for guaranteeing proof-of-health or to revive tourism. Finally, some blockchain companies this year have started showing an interest in decentralized finance, taking steps to drive this new sector.

Listed below are a total of 12 companies and solutions that have made strides in the enterprise blockchain space this year. 

Ernst & Young

Big Four firm Ernst & Young has played an active role in enterprise adoption. The firm was one of the first to explore the cryptocurrency space in 2016 when the company conducted a survey to better understand the potential of digital assets. Since then, EY has been leading the way for public enterprise blockchain adoption.

For example, EY continues to contribute to the development of the Baseline Protocol, which uses the Ethereum public mainnet as a tamper-resistant state machine to record business data. In May 2019, EY open-sourced its Nightfall code for conducting private transactions on the Ethereum blockchain. 

Moving forward, EY plans to make Nightfall and zero-knowledge proofs easier to use for developers. Paul Brody, blockchain lead at EY, previously told Cointelegraph that developers will eventually shift from building decentralized applications to creating zero-knowledge applications, or “ZApps,” with EY’s blockchain solutions.

IBM

Big Blue’s open-source blockchain for business platform is powered by Hyperledger Fabric, an important technology that has contributed to the growth of the IBM Blockchain platform. For example, the IBM Food Trust network is currently being leveraged by major food producers, such as Nestlé, Dole and olive oil giant CHO. 

The Food Trust network dates back to 2016 — one of the earliest examples of enterprise blockchain when IBM blockchain was being leveraged by Walmart to determine food products that needed to be recalled. Another important project powered by IBM Blockchain is Maersk’s TradeLens platform, which helps shipping giants digitize their supply chains.

In addition, the Digital Health Pass platform uses IBM Blockchain to help provide verifiable health credentials, which has become extremely important due to the COVID-19 pandemic. IBM Blockchain’s partnership with the American software company Red Hat is also notable in terms of open-source development and a cloud strategy that heavily relies on blockchain technology.

Hedera Hashgraph

The decentralized public network Hedera Hashgraph was developed in 2016 with the goal of enabling developers to build secure applications with near real-time finality. Since then, Hedera’s network has grown to be owned and governed by an impressive list of companies, including Google, IBM and Boeing. 

Hedera has recently demonstrated an important blockchain use case with the release of its “SAFE HealthCheck” app, which is being applied for remote COVID-19 testing. The app is currently being used at Arizona State University, where it provides over 70,000 students and staff members with remote testing and digital health status verification. The Hedera Consensus service, the company’s enterprise blockchain solution, is also being used for other important use cases including acting as an early-warning system for airstrikes in Syria.

IconLoop

South Korean blockchain company IconLoop was founded in 2016 to enable real-world blockchain applications within the banking, healthcare and government sectors. The company is headquartered in Seoul and has raised over $15 million in funding. IconLoop recently announced that Jeju Island, a tourism hot spot in South Korea, will use its Decentralized Identity blockchain to provide secure COVID-19 contact tracing

It’s also notable that The Financial Services Commission recently approved IconLoop’s decentralized identity authentication service into the “Innovative Financial Services and Regulations Sandbox.” In October this year, Cointelegraph reported that IconLoop secured $8 million in a Series A funding round, which will be used to help launch a blockchain-based digital identity authentication service called my-ID.

World Economic Forum

The World Economic Forum Global Blockchain Council was developed to help advance blockchain technology for the global public interest. As such, the WEF council has launched a number of initiatives that leverage blockchain for public development. In May of this year, the council developed a list of blockchain principles to protect the rights of those in the blockchain community. 

Understanding the risks and benefits of blockchain, and the right to store and manage cryptographic keys are included on the list. The blockchain council also recently launched a proof-of-concept to track greenhouse gas emissions from mining and metals companies across a blockchain network. It’s also notable that the WEF believes that blockchains can enable sustainable digital finance.

PayPal

PayPal, one of the largest online payments systems, has taken a keen interest in cryptocurrency and blockchain since 2014. It was during this time that the company announced it would enable merchants to accept Bitcoin (BTC) through Braintree via several partnerships. The company noted it was looking for a way “to understand how to leverage blockchain to better serve merchants and users.”

In 2016, PayPal’s administration became interested in developing its own blockchain to enable high-speed transactions using digital currencies. However, PayPal really shook up the crypto sector this year when the company announced plans for a new service to support cryptocurrency starting in early 2021. In November of this year, PayPal’s crypto trading and payment platform went live for U.S. users. PayPal’s recent entry into the cryptocurrency market is predicted to impact the price of Bitcoin moving forward.

Microsoft

Software giant Microsoft offers a blockchain-as-a-service through its cloud computing arm, Azure. While many companies such as GE Aviation and Starbucks leverage Microsoft’s blockchain platform for supply chain management, the company has taken a much larger role in blockchain development.

Most recently, Microsoft announced a partnership with EY to use the Ethereum blockchain for Xbox gaming royalties. In regards to the pandemic, the Albany Airport is trialing a “Wellness Trace App” to ensure cleanliness of surfaces inside the airport. The app is powered by the Microsoft Azure blockchain. In June of this year, Microsoft joined the InterWork Alliance to help create global standards for tokenized ecosystems.

Visa

Payment giant Visa has shown an interest in blockchain and cryptocurrency since 2015 when it made an investment in blockchain startup Chain. In October 2016, Visa announced a preview of “Visa B2B Connect” as a system powered by Chain to quickly and securely process business-to-business payments globally. 

Visa’s early efforts in the blockchain space eventually flourished into groundbreaking developments in fintech. For instance, Visa now powers a number of crypto debit cards, like those from Binance and BlockFi. In December of this year, Visa joined forces with blockchain services company Circle to make USD Coin (USDC) stablecoin transactions compatible with certain credit cards.

However, Visa’s growing interest in fintech has also been met with scrutiny. In January, Visa acquired fintech firm Plaid, which was criticized by the U.S. Department of Justice, provoking a lawsuit against the payment provider.

JPMorgan

JPMorgan Chase is the biggest bank in the United States and one of the largest financial holdings in the world. The organization showed an interest in blockchain in 2017 when JPMorgan joined the Enterprise Ethereum Alliance, an association comprising companies interested in advancing the Ethereum blockchain.

In 2018, the banking giant published the “Bitcoin Bible” to explain to investors the positives and negatives of investing in crypto. In February 2019, JPMorgan announced its “JPM Coin” to help banks settle transactions quickly, which was subsequently launched in 2020. JPMorgan also leads the Interbank Information Network, a blockchain consortium consisting of over 130 banking partners that use distributed ledger technology to enhance compliance and reduce processing delays. 

Related: JPM Coin debut marks start of blockchain’s value-driven adoption cycle

While JPMorgan is clearly pro-blockchain, the firm has taken a harsh stance toward Bitcoin over the year, yet this outlook seems to be changing as the price of Bitcoin continues to reach new all-time highs.

Baseline Protocol

Announced in March of this year, the Baseline Protocol initiative was launched as an Oasis open-source project to enable advanced interoperability for blockchain applications. Baseline Protocol started with 14 founding companies and has since grown to a community of over 700 members, with sponsor organizations, such as Accenture and ConsenSys supporting the project.

The Baseline Protocol is attempting to resolve the blockchain interoperability dilemma, which will ultimately bring more organizations onto the Ethereum blockchain. Currently, big companies, such as Coke One North America and SAP, are leveraging the Baseline Protocol to synchronize and share business data among multiple participants.

The Baseline Protocol, with help from enterprise blockchain company Provide offering “Baseline-as-a-Service,” will eventually pave the way for enterprise DeFi. This will allow businesses to move items of value, such as financial data included in invoices, across various networks.

Salesforce

Software giant Salesforce rolled out its first blockchain-based product in May 2019. Known as “Salesforce Blockchain,” this is a low-code blockchain platform that extends the power of Salesforce’s customer relationship management system, or CRM, which caters to over 150,000 customers.

Salesforce previously told Cointelegraph that its blockchain is meant to connect businesses with IT teams to drive ROI. The product is used by a number of companies, such a Automobili Lamborghini — the Italian automobile brand — to authenticate heritage Lamborghini cars.

In April of this year, Salesforce integrated Lition’s commercial blockchain technology to help the company leverage data decentralization in its CRM. Most recently, Salesforce partnered with IBM to bring IBM’s blockchain-based Digital Health Pass onto the Salesforce platform.

Fujitsu

Japanese IT company Fujitsu began showing interest in blockchain technology as early as 2016. In 2017, the IT giant announced that it was developing blockchain software powered by Hyperledger for data handling, access and distribution. Shortly after this, the company announced plans to commercialize its enterprise blockchain solution, making Fujitsu a direct competitor with IBM’s blockchain solution.

Most recently, Fujitsu has taken an interest in digital identity, leveraging its blockchain solution to detect a user’s identity and credentials for online transactions. It’s notable that Japan’s third-largest bank, Mizuho Bank, along with local payments giant JCB, plans to pilot a digital identity interoperability system powered by Fujitsu’s blockchain solution.


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The enterprise blockchain space in 2020 looks a lot different from previous years, demonstrating the continuation and a drive to mature and advance.

‚Bitcoin never gets hacked‘ — crypto players respond to US Treasury breach

‚Bitcoin never gets hacked‘ — crypto players respond to US Treasury breach

„Bitcoin means trusting a SHA256 algorithm more than the U.S Treasury,“ quipped Blockfolio.

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Crypto players were quick to respond to the news that hackers breached the U.S. Treasury Department.

According to a report from Reuters, a “sophisticated hacking group” backed by a foreign government — reportedly Russia, according to three people familiar with the investigation — was able to breach the U.S. Treasury Department as well as the National Telecommunications and Information Administration, or NTIA, with the Department of Commerce.

The incident happened less than a month after Donald Trump fired Department of Homeland Security cybersecurity chief Chris Krebs. However, Reuters stated that the hackers had been monitoring NTIA staff emails run on Microsoft’s Office 365 “for months.” Other government agencies may also have been breached, but sources did not provide additional details.

In response to the attack on such a powerful government agency, crypto players pointed out the advantages of Bitcoin (BTC).

„Bitcoin never gets hacked,“ said Kraken’s head of business Dan Held on Twitter. Bitcoin bull Anthony “Pomp” Pompliano echoed Held’s sentiment, saying „Bitcoin has never been hacked.“

Blockfolio took aim at the NTIA’s cybersecurity, implying the agency used dated algorithms for its cryptographic security:

It’s unclear whether any funds have been compromised as a result of the breach. At the time of publication, the hack seems to be limited to information potentially stolen from government agencies’ emails.

“Jokes on them,” said MyCrypto founder and CEO Taylor Monahan. “The treasury’s already been hacked by internal actors.” The statement may reflect the United States government printing more money in 2020 than for nearly entirety of the country’s existence.


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„Bitcoin means trusting a SHA256 algorithm more than the U.S Treasury,“ quipped Blockfolio.

More Industry Players Weigh in on Bitcoin’s Path Once Businesses Reopen

More Industry Players Weigh in on Bitcoin’s Path Once Businesses Reopen

As the U.S. considers lifting coronavirus prevention measures, two more industry players weigh the event’s impact on Bitcoin’s price.

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Industry players said Bitcoin’s (BTC) price could be impacted once U.S. governing bodies lift COVID-19 prevention measures, such as stay-at-home orders and business closures.   

„When the world economies begin to recover and come back online after printing, in the case of the U.S. government trillions of dollars, Bitcoin will most likely become more bullish than we’ve ever seen it,“ Metal Pay CEO Marshall Hayner told Cointelegraph in a message, adding:

„Altcoin markets with solid foundation and utility with strong usage will potentially move beyond previous heights as we will begin to see the first large crypto banking platforms like Metal Pay, Facebook, and others emerge with the advent of the US Treasury backed digital dollars.“

Economies sidelined for weeks

In an effort to halt the spread of the coronavirus, much of the globe has remained at home over the past several weeks, with many businesses closed. As the U.S. evaluates a path forward, other nations are strategizing according to their own conditions.     

In the heat of the March pandemic, mainstream markets tumbled, with Bitcoin’s price following close behind. The U.S. printed trillions of dollars in efforts to pump life into the struggling markets. Recent weeks show traditional markets posting somewhat of a recovery. At times, Bitcoin has moved in tandem. 

Traders also see Bitcoin price movement coming

Crypto Twitter trader, NebraskanGooner, said Bitcoin could move north when the U.S. reopens. „The general assumption is that price is likely to push up,“ he said. „Things start to go back to normal and people are likely to put money back into traditional markets and crypto markets.“

NebraskanGooner questioned the sustainability of such buying though, saying he would look toward technical analysis on price charts for more information. 

„We could also see general rumors of businesses starting to reopen which could cause a ‚buy the rumors, sell the news event,'“ he said, referring to when hype before an event drives asset prices up, followed by plunging prices after the event occurs. 

Two other crypto traders on Twitter, CryptoWendyO and BigCheds, also recently detailed possibilities for Bitcoin when U.S. citizens emerge back into society. 


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As the U.S. considers lifting coronavirus prevention measures, two more industry players weigh the event’s impact on Bitcoin’s price.

Ethereum-Based SkyWeaver Game Launches Season 0

Ethereum-Based SkyWeaver Game Launches Season 0

Season 0’s top 1,000-ranked players will earn Ethereum-base ‘gold’ cards that can be used in SkyWeaver’s open-beta season

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SkyWeaver, the forthcoming free-to-play blockchain-based card game from Horizon Blockchain Games, has opened its final closed-beta season.

On March 21, Horizon announced that season 0 of SkyWeaver had commenced. The season will be live until the launch of SkyWeaver’s open-beta version.

Horizon opens season 0 of SkyWeaver

The collectible card game uses Ethereum-based non-fungible tokens (NFTs) as in-game items — which players can either use within the game or trade on secondary markets.

The in-game items earned during season 0 will not be able to be used once SkyWeaver enters open-beta. However, players who rank among the top 500 in either of the game’s modes will be gifted a ‘gold card’ that can be used in the open-beta version.

Horizon expects to launch in open-beta before 2021.

Players can earn and own Ethereum-based in-game digital assets

SkyWeaver features two distinct modes of gameplay. In ‘discovery’, players are given a random deck of cards that they do not keep, but can be used to earn gold cards by winning. Once the player owns enough cards, they can play in ‘constructed’ mode — where they can choose to build their deck using the cards that they possess.

When live, the game will feature ‘normal’, ‘silver’, and ‘gold’ cards. Normal cards are hosted within the game, while the silver and gold cards are owned by players.

Silver cards can be purchased from Horizon, while Gold cards are earned as rewards in-game — and are the only type of card to feature scarcity, owing to a controlled rate of release.

However, Horizon reserves the right to modify the stats of a card should it prove overpowered or disruptive to gameplay — which could unexpectedly impact the market value of gold cards.

Horizon receives backing from Reddit co-founder

On March 7, Horizon announced that it had secured $5 million in a fundraising round led by Initialized Capital — the investment firm co-founded by Reddit co-founder Alexis Ohanian.

In a blog post, Peter Kieltyka, the co-founder of Blockchain Games stated that the funds will be used to launch SkyWeaver.

Initialized Capital also led Horizon’s $3.75 million seed round in 2019.


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Season 0’s top 1,000-ranked players will earn Ethereum-base ‘gold’ cards that can be used in SkyWeaver’s open-beta season

Unknown Number of Major League Baseball Players Lured into Crypto Ponzi Scheme

Unknown Number of Major League Baseball Players Lured into Crypto Ponzi Scheme

Former pro baseball players and senior citizens are among the victims of a crypto ponzi scheme that defrauded people of at least $7.5 million

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Two men charged over an alleged crypto trading ponzi scheme lured investors, including professional baseball players, with social media posts boasting about their luxurious lifestyles.

On January 30, the Secret Service arrested the Arizona-based founders of Zima Digital Assets, John Michael Caruso, aged 28, and Zachary Salter, aged 27.

Caruso commonly refers to himself as „Krypto King“ in social media posts and claims he’s been a cryptocurrency investor since 2012. He has a criminal history and was last released from prison in late 2017.

Salter is an aspiring R&B singer who releases music under the name „Sweet Talker.“

Despite claiming no taxable income, the pair’s extravagant social media posts about their luxury good purchases helped draw in new investors.

They were charged with conspiracy to commit wire fraud and money laundering.

Unnamed MLB players caught up in scheme

The complaint alleges that Salter and Caruso defrauded more than 90 investors out of at least $7.5 million since June 2018. That figure includes an unknown number of former pro baseball players and senior citizens. Zima is still actively taking investments so the total amount lost is unknown.

Zima’s website claims the firm “operates various private funds focusing on investments in cutting-edge technologies, including crypto and other blockchain based assets,” and

Caruso and Salter were featured as successful crypto investors in Forbes, Entrepreneur, and Cigar Aficionado.

A press release that looks an awful lot like an ordinary Business Insider story referred to Caruso as “the Michael Jordan of algorithmic cryptocurrency trading.”

No cryptocurrency purchased

Forensic accountants believe that none of the money Zima took from its would-be investors was actually invested in cryptocurrency. The pair instead used the money to live it up, spending $350,000 on luxury car rentals and another $610,000 on private jets, a mansion rental (dubbed “the Krypto Castle”), as well as a variety of jewellery and designer clothing.

Caruso had a fleet of luxury cars including a Lamborghini, and the pair lost $830,000 within 134 hours of gambling at Las Vegas casinos.

They frequently posted about their lifestyles on Instagram and Facebook, including a video suggesting Zima had $1 billion in assets under management. They used direct messaging on the platforms to contact potential investors. 

Their victims include former Major League Baseball players and their families, along with a 76 year old man who lost $200,000 and an 86 year old who lost $60,000.

The investigation found that $1.9 million of the funds was paid back to investors in the form of „returns.“

„The pattern of investor payments against investor payouts with no investment of funds is consistent with … a Ponzi scheme,“ court filings show.

Anybody who invested money in the scheme is urged to contact the U.S. Secret Service Phoenix Field Office at (602) 640-5580.


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Former pro baseball players and senior citizens are among the victims of a crypto ponzi scheme that defrauded people of at least $7.5 million

Key Players in Crypto and Blockchain Share Their New Year’s Wish for 2020

Key Players in Crypto and Blockchain Share Their New Year’s Wish for 2020

Leaders in the blockchain and cryptocurrency space share their New Year’s wish for the industry

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The digital currency space has seen rapid growth and expansion in 2019, with heightened interest from governments and global corporations. Cryptos recovered from the 2018 bear market, when with Bitcoin (BTC) crashed to as low as $3,800, leaving numerous experts to paint a gloomy picture of a longstanding bear market and call the downturn in the first half of 2019 the longest and harshest in the crypto history. While cryptocurrency markets were struggling to recover, corporate and central bank digital currencies have quietly become a focus of attention. 

The blockchain sector has seen exponential growth in 2019, as it became recognized by governments and institutions around the world as a transformative technology. This year, blockchain adoption reached new highs as it continued to find new use cases. News broke with an array of exciting blockchain-related developments, with the United Nations-led International Organization for Migration launching a blockchain tool to prevent the exploitation of migrant workers, and Chinese President Xi Jinping giving a seminal public endorsement of blockchain technology.

As 2019 came to a close, Cointelegraph reached out to industry leaders and key influencers to ask them what their New Year’s wish was for the blockchain and cryptocurrency industries. 

Erik Voorhees, founder and CEO of ShapeShift, a Swiss-based instant crypto exchange.

“For 2020, I’d like to see perception of crypto assets return back to a balanced state. By this I mean, in 2017 every crypto in existence was worth a gazillion dollars (which was crazy), and in 2018/2019, there has been a similarly overly pessimistic view (anything other than Bitcoin is worthless). Both extremes are misguided, so I’d like to see the quality projects start to be differentiated more clearly from the garbage projects.”

Vorhees has previously stated that cycles of price bubbles are necessary for the industry to grow. In May 2019, he said that in order for Bitcoin to become a trillion-dollar asset, “there have to be bubbles in crypto because crypto is taking over the world, and it’s not just going to advance 5% per month without end.”

Valery Vavilov, co-founder and CEO of Bitfury Group, the largest non-Chinese Bitcoin blockchain software development company. 

“I hope that more people, companies and governments around the world will choose to do good, driven by inner values that focus on making the world more trusted, livable and secure for all of us.”

In 2019, Bitfury reiterated its status as one of the world’s top fintech firms, having been included on the Forbes 2019 “Fintech 50” list and procuring regulatory approval for a Bitcoin mining fund for institutional investors.

Ethan Beard, SVP of Xpring, a Ripple initiative that invests, incubates and provides grants to tech startups.

“Moving into 2020, my hope is that we’ll see more developers building on the XRP Ledger and Interledger Protocol as Xpring pushes to make integrating money into applications easy for the more than 23M developers worldwide. Xpring will continue to make strategic partnerships in the global blockchain and crypto ecosystem and push updates to the Xpring platform to help further this vision.

“I hope to see more financial institutions holding and trading digital assets in 2020, with at least half of the top 20 global banks leveraging digital assets in some form. My wish is that this trend will expand to other global markets outside the G20. 

“I wish to see a blockchain-based game launch in 2020, reaching broad adoption that allows users to buy and sell virtual goods and capitalize on tokenized assets. Blockchain provides opportunities to reinvent the business model for games.”

Last year, Xpring continued massively investing in blockchain-focused companies and projects, as well as expanding its international presence by acquiring an Iceland-based crypto trading firm.

Daniel Larimer, CTO at Block.one, an open-source software publisher and the company behind the EOSIO network.

Discussing Block.one’s vision for 2020 and beyond, Larimer said that his key focus is integrity, and that blockchain’s inherent qualities lend itself to being used to create integrity by design.

„We want to collaborate and work with everyone in the ecosystem that’s pushing forward technologies that facilitate integrity in society. Instead of ‚don’t be evil,‘ we’re going to create systems where we CAN’T be evil. There’s a lot of tribalism in the cryptocurrency space. At the end of the day, if blockchain wins, we all win.”

In 2019, Block.one opened new headquarters in Washington, D.C., launched the beta version of EOS-based social media platform Voice and inspired the Marshall Islands to develop its own national digital currency.

Alex Mashinsky, founder and CEO of Celsius Network, a decentralized lending and borrowing platform.

“I know our crypto community is not currently equally distributed and I would like to see more women join us to reach half of the community. I would also like for some of the projects to hit mass scale and deliver mass adoption.”

Speaking at Elev8con in December, Mashinsky also said that blockchain tech could help fight the centralization of social media networks, which he claims has resulted in the increase of fake news. He said that someday, “the entire Internet will become an application on the blockchain.”

Last year, Celcius began managing the Sustainable Development Goals Impact Fund within the United Nations Sustainable Development Goals initiative. 

Diogo Monica, co-founder and president of Anchorage, an institutional crypto custody provider. In 2019, Anchorage became the first qualified entity to support institutional custody for Telegram’s Gram token, and raised $12 million from a number of high-profile investors.

“2020 presents an opportunity for maturing stable digital currencies to become usable, fungible money for people worldwide. No cryptocurrency to date has become the medium of exchange people use in the way they use digital payments like Cash App and Square Pay, and we see a unique opportunity ahead.”

Andy Cheung, head of operations at OKEx, a Malta-based digital currency trading platform.

“My wishes are 1) for cryptocurrency exchanges to work together to service the massive underbanked and unbanked community across the globe. 2) For governments to understand the needs of the blockchain community and work to support more innovation in this space, and 3) to see a world where individuals are in control of their financial assets without intermediaries.”

During the last year, OKEx revealed a number of developments, including the establishment of a self-regulatory organization aiming to standardize crypto exchange compliance practices and policies, and the launch of a comprehensive data insights platform that covers trading trends for derivatives.

Richard Dennis, founder and CEO of TemTum, a scalable blockchain network and quantum-secure cryptocurrency.

“As we prepare to enter a new decade, my wish for the crypto space is that all projects work to achieve better resource efficiency, better security and an improved user experience so that everyone can reap the benefits of the economic freedom that comes with crypto.”

At the end of 2019, in an expert take for Cointelegraph, Dennis wrote that quantum supremacy is officially here, and that 2020 could be an even bigger year for the looming prospect of quantum computing. “If we start now on a security framework for quantum, we might just be able to maintain the integrity so vital to keeping the internet, cryptocurrencies and our other vital connected technologies working as they should,” he noted.

Tal Kol, co-founder of Orbs, a public blockchain for building apps and smart contracts. In 2019, Orbs partnered with South Korea’s largest online bookstore, Yes24, and collaborated with Celsius and BitGo.

“I would like to have the industry showcase use-cases in production that solve every-day problems and are relevant. Specifically, I hope to showcase how blockchain is relevant for the 2020 elections. In November we were honored to be one of the few projects presenting to the Congressional Blockchain Caucus at the Blockchain on the Hill event organized by the Global blockchain Business Council (GBBC). The event came at the request of members of Congress who wanted to hear about use-cases aside from cryptocurrencies and financials. The use-case we presented was the blockchain-based solution for digital content authentication — a solution that can help with copyright protection, but equally interesting — fighting fake users and fake content.”

Robert Beadles, president of Monarch Blockchain Corporation, a cryptocurrency company and developer of the cryptocurrency payment solution Monarch Wallet.

“I wish for the US government to make regulations clear and to embrace this new technology and the entrepreneurs developing it. I wish for a 10 percent flat tax on all cryptocurrency uses and gains. And I wish for the Monarch Wallet to be the blockchain wallet for the world, used everywhere and by everyone.”

Last year, Monarch launched a decentralized recurring cryptocurrency payments system and partnered with Celsius Network to enable crypto holders to earn interest on their assets through a “savings account” feature on Monarch’s platform.

In 2020, will international regulators give the green light for Facebook’s Libra stablecoin? Will China come closer to launching its national digital currency? How will developers make blockchain protocols more scalable and interoperable?

The coming year seems promising for the blockchain and cryptocurrency industries, which will continue to grow with more inclusion and more use cases. Stay updated on current events in the space with the industry’s leading publication, Cointelegraph.


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Leaders in the blockchain and cryptocurrency space share their New Year’s wish for the industry

Industry Players Criticize Initial Exchange Offerings as Alternative to ICOs: Bloomberg

Industry Players Criticize Initial Exchange Offerings as Alternative to ICOs: Bloomberg

A host of crypto industry critics have weighed in on the potential drawbacks of initial exchange offerings, pointing to regulatory issues and problematic centralization

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A host of crypto industry critics have weighed in on the potential drawbacks of so-dubbed initial exchange offerings (IEOs) — a crypto exchange-hosted alternative to the original model of an initial coin offering (ICO). Their views were reported by Bloomberg on April 10.

IEOs offer an alternative model of token offering wherein a crypto exchange acts as a form of underwriter, operating the sale and ostensibly vetting both the projects themselves and prospective investors.

The IEO phenomenon has apparently gained traction amid a declining ICO market that has absorbed the adverse impact of a regulatory crackdown and bearish crypto valuations.

Bloomberg cites crypto data tracker CoinSchedule.com, whose data reportedly indicates that around $180 million has been raised in 23 IEOs, with most taking place since February.

Yet IEOs’ regulatory status is no less clear — and prospectively even less promising — than their ICO predecessors, some critics argue. Zach Fallon — a securities lawyer who reportedly formerly worked on ICO matters at the United States Securities and Exchange Commission — told Bloomberg that the new model will „take everything from an ICO and make it worse.“

Jeff Dorman, partner and portfolio manager at Los Angeles-based Arca Funds, meanwhile pointed to the paradox of introducing intermediaries to a space that prizes decentralization:

“The irony of course is that this is directly at odds with the decentralized ethos embedded in crypto, but this has been conveniently ignored as long as it’s working.”

Crypto exchanges, moreover, ostensibly use IEOs as an occasion to push sales and use of their own native tokens, either by making IEO issuers raise funds using their exchange token, or requiring IEO traders to have large balances of their native token to participate in sales.

Fallon told Bloomberg this practice could make the model even more problematic for regulators, and make them more likely to be deemed securities. He further noted the broker-dealer-like role exchanges play in the offerings.

As reported, the IEO model was spearheaded by Binance, whose token sale platform Launchpad hosted a high-profile token sale for the Tron-based BitTorrent token (BTT) this January, followed by another IEO for AI and smart contract project Fetch.AI in February.

In mid-March, United States crypto exchange Bittrex cancelled its first IEO token sale, which it had planned to host on its Malta-based counterpart, just two days after its announcement. It later conducted a different, inaugural IEO in early April.


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A host of crypto industry critics have weighed in on the potential drawbacks of initial exchange offerings, pointing to regulatory issues and problematic centralization

From Stablecoins to Blockchain Trials: Japanese Players Are Going Crypto as the Local Government Is Overseeing the Market

From Stablecoins to Blockchain Trials: Japanese Players Are Going Crypto as the Local Government Is Overseeing the Market

Japan’s authorities continue to practice in regulation, while the local industry is going full crypto — read more in our analysis

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The beginning of the year was particularly eventful for the Japanese crypto ecosystem, which is generally considered to be a major part of the industry. First of all, Japan’s Central Bank (BoJ) issued a study on the role of central bank digital currencies (CBDCs) in the current monetary system, a topic that was widely discussed by the country’s officials last year.

Secondly, major domestic trading company and investment bank, Marubeni Corporation and Daiwa Securities Group, reported blockchain-related advancements in their businesses. Finally, local banking giant Mizuho Financial Group announced the launch of its custom stablecoin.

Time to observe this news closer and see what has been happening with crypto in Japan.

It’s still unclear whether Japan will issue a CBDC

Japan’s authorities have been notably hesitant about the idea of introducing a CBDC, which might seem surprising at first, given that cryptocurrencies can be used as a legally accepted means of payment in the country (although they are not considered “legal tender”).

CBDCs — just like Bitcoin (BTC) and altcoins — are also virtual currencies. The main difference is that they are issued and controlled by a federal regulator. Hence, CBDCs are not decentralized, unlike many digital assets. Basically, they represent fiat money, albeit in digital form. Each CBDC unit acts as a secure digital equivalent to a paper bill and can be powered with distributed ledger technology (DLT).

Consequently, if central bank decides to issue a CBDC, it becomes not only its regulator, but an account holder as well, as people would have to store and access their digital money via this bank. That places CBDC-issuing central banks on a par with private banks.

CBDCs could be seen as central banks’ response to the growing popularity of cryptocurrencies, which bypass regulators’ purview due to their decentralized design. Federally-issued currencies, in turn, aim to take some of the main features from crypto — namely the convenience and security — and combine them with the proven attributes of the conventional banking system, in which money circulation is regulated and reserve-backed.

At this point, the BoJ has publicly criticized the concept of CBDCs twice. First, in April 2018, its deputy governor, Masayoshi Amamiya, declared that such currencies can have a negative impact on the existing financial system. Specifically, he expressed his concern about taking on the role of private banks:

“The issuance of central bank digital currencies for general use could be analogous to allowing households and firms to directly have accounts in the central bank. This may have a large impact on the aforementioned two-tiered currency system and private banks‘ financial intermediation.”

Then, on Oct. 20, Masayoshi Amamiya expressed his doubts regarding the effectiveness of CBDCs, adding that his agency won’t be issuing its digital currency in the near future.

Specifically, Amamiya responded to a theory suggesting that CBDCs can help governments overcome the „zero lower bound“ — a situation in which interest rates fall to zero and the central bank loses the capacity to stimulate the economy. According to this approach, a CBDC would enable central banks to charge more interest on deposits from individuals and firms, and hence motivate them to spend money and vitalize the financial system.

The deputy governor questioned that theory, claiming that charging interest on central bank-issued currencies would only work if central banks fully eliminate physical money from the local economy. Otherwise, the public would still continue converting digital currencies into cash in order to avoid paying interest.

The elimination of fiat money in Japan is “not an option for us as a central bank,” since cash is a popular method of payment in the country, Amamiya added. Indeed, Japanese society is still mostly cash-based, as about 65 percent of transactions are reportedly done in paper money (which is more than double that of other developed economies).

Japan loves its cash

The BOJ deputy governor continued that thought by stressing that his agency is not planning on creating a CBDC that can be widely used by the public for settlement and payment purposes. The shift to bank-issued crypto from the existing sovereign currencies seems to be „quite a high hurdle,” as crypto assets are often associated with speculative investments and do not represent a stable means of payment, he noted.

Further, the central bank examined the role of CBDCs in the current monetary system in a report released on Feb. 19. The paper was written by representatives of the University of Tokyo and the BoJ.

The report divided possible CBDCs into two categories, the first being those accessible to the general public for daily transactions instead of banknotes and the other as those limited for large-value settlements.

Interestingly, after explaining that CBDCs of the latter kind wouldn’t bring a lot of new features to the monetary system — as it has already been digitized — the report’s authors focused on the first category throughout most of the document. The report stressed that DLT could be applied to such token-based CBDCs.

The working paper noted that blockchain-based CBDC could lower the level of anonymity of its users, as cash money cannot be tracked and hence is used for criminal activities. Here, the authors referenced the example of the People’s Bank of China (PBoC), which announced its intent to issue a digital currency to curb tax evasion back in 2016.

Notably, the document doesn’t necessarily reflect the official views of the BoJ and was published to stimulate further discussion on the topic, which suggests that Japanese officials have not given up on the idea of issuing a CBDC.

The FSA continues to apply scrutiny toward the local crypto industry

The Financial Services Agency (FSA), the national financial regulator, is known to have a tight grip on local digital asset exchanges. It comes as no surprise, given that the country has witnessed the two largest crypto hacks in history: namely, last year’s outlandish $532 million Coincheck hack and the notorious crash of Tokyo-based Mt. Gox. In the wake of those security breaches, the watchdog has introduced numerous precautions, including on-site inspections of exchanges’ offices and mandatory risk management system reports.

As per Japan’s Payment Services Act, amended in April 2017, all digital currency exchanges in the country are required to be registered with the FSA. The agency has granted the most compliant players with licenses. Currently, the pool of exchanges cleared to serve the Japanese market currently is represented by 17 platforms: Money Partners, Liquid (previously known as Quoine), Bitflyer, BitBank, SBI Virtual Currencies, GMO Coin, Btcbox, Bitpoint, Fisco Virtual Currency, Zaif, Tokyo Bitcoin Exchange, Bit Arg Exchange Tokyo, FTT Corporation, Xtheta Corporation, Huobi and Coincheck. The latter managed to secure its license just recently, almost a year after it suffered from a major hack.

Notably, the agency’s tough supervision has prompted some major players to quit the Japanese market. Thus, Binance, one of the world’s largest crypto exchanges that had once opened an office in the country, turned to Malta — the famously crypto-friendly country — after the Japanese regulator had slapped it with a warning in March 2018. Similarly, local social messaging app Line has also decided to exclude the domestic market prior to the launch of its cryptocurrency exchange, citing local regulatory difficulties.

Nevertheless, the FSA’s severity hasn’t scared everyone off. As many as 190 exchanges are reportedly pending the agency’s approval to enter the local market. Perhaps the most notable example here is United States-based Coinbase, which has made positive remarks about Japan’s crypto regulatory climate in the past, saying that the FSA’s intense focus on security is “good for us.” Given that Coinbase originally planned to establish its operation in Japan within 2018, the financial agency is likely to approve or decline its application at some point in the next few months.

Moreover, the Japanese arm of the internet giant Yahoo will reportedly open their own crypto exchange “in April 2019 or later.” Other players that will potentially open a crypto exchange in Japan include Mitsubishi UFJ Financial Group, the largest domestic bank, and Money Forward, the company behind a popular financial management application.

In December 2018, the FSA published a draft report that introduced the new regulatory framework for cryptocurrencies and initial coin offerings (ICOs) in the country. In it, the agency continued to strengthen security requirements for local crypto exchanges, focusing on private keys management, among other things. Further, the FSA urged players to join the Japan Virtual Currency Exchange Association (JVCEA), a self-regulatory body comprised of domestic industry participants. Moreover, the financial watchdog suggested that ICOs might become subject to securities regulation in the future. Indeed, previously, local media reported that the agency was going to introduce new ICO regulations to protect investors from fraud.

One of the FSA’s potential next steps is to regulate unregistered firms that solicit investments in cryptocurrencies. According to Cointelegraph Japan, there is a loophole in the country’s existing regulatory framework that allows unidentified companies that collect funds in crypto rather than fiat currencies to stay in a gray zone, and the watchdog intends to close it.

Industry players have asked to reduce the current tax rate

In February 2019, the Japan Association of New Economy (JANE), a business industry association led by Hiroshi Mikitani, the CEO of Japanese e-commerce giant Rakuten, asked the FSA to reduce the current tax rate for crypto trading income.

Specifically, JANE inquired whether it was possible to tax crypto in compliance with progressive taxation instead of general taxation.

According to Cointelegraph Japan, income from trading cryptocurrencies is currently taxed at 55 percent in Japan. Imposing progressive taxation on crypto gains would reduce it to 20 percent — the same rate that is applied to stocks and forex markets in the country. The association has also asked the FSA to impose no tax on crypto-to-crypto transactions.

Previously, in October 2018, local news agency Sankei reported that the Japanese National Tax Agency was planning to adjust the tax filing system for cryptocurrencies in order to corroborate that local traders report their gains.

Currently, such profits are classified as “miscellaneous income” in the country. Basically, Japanese crypto holders have to pay between 15 and 55 percent on gains declared on their annual tax filings. The top amount applies to people who earn more than 40 million yen ($365,000) annually.

Stablecoins and bank-controlled digital currencies are on the rise in Japan

Over the past few months, at least two major digital currencies developed by Japan’s major banks and IT-industry players have received important updates, , the origins of which – as well as a detailing of related projects – was covered in a separate Cointelegraph article.

J-coin

Japanese banking giant Mizuho Financial Group, which has over $1.8 trillion in total assets, will reportedly launch its bespoke stablecoin for payments and remittance services as soon as March 1.

Dubbed “J-Coin,” the new digital currency platform aims to directly link existing bank accounts with digital wallets. According to reports, the project is being developed in a partnership with around 60 counterpart financial institutions — which host around 56 million user accounts combined.

The currency will reportedly be managed by a dedicated mobile app, J-Coin Pay, which uses QR codes at checkout to complete retail payments. As per local financial newspaper Nikkei Asian Review, the currency will resemble a stablecoin fixed at a price of 1 yen (~$0.01) per unit, while transfers between bank accounts and J-Coin wallets are set to be free of charge.

GYEN

In February, domestic IT giant GMO Internet confirmed its plans to launch a yen-backed stablecoin called GYEN this year.

There are few details about the project at the moment. The company’s representatives has so far only revealed that the firm has set up a subsidiary and appointed a person responsible for GYEN operations to issue the stablecoin in 2019.

The company had to shut down some of its other crypto-related operations, however. In late December, GMO announced it was quitting the Bitcoin mining hardware sector, citing “extraordinary loss” in Q4 last year. In Q3, GMO’s cryptocurrency projects reportedly brought the company around 2.6 billion yen ($22.8 million) despite “the harsh external environment.”

Japan’s largest firms are actively tapping blockchain for their business

Numerous Japanese private firms — including banks, brokerages, trading giants and IT players — have announced blockchain-related news within the past few months, cementing Japan’s reputation as one of the most technology-focused countries. Here are the main companies, along with their projects:

Banks and brokerage

Sumitomo Mitsui Banking Corporation (SMBC), Japan’s second-largest bank

In February, SMBC completed a proof-of-concept (PoC) using blockchain consortium R3’s Marco Polo trade finance platform. Marco Polo is a Corda-powered venture developed by R3 and Irish tech firm TradeIX, connecting banks via a trade network.

SMBC, which is currently the only Japanese bank participating in the Marco Polo scheme, said it had partnered with Mitsui & Co. — one of the largest “sogo shosha” (general trading companies) in Japan — to enhance efficiency in trade processes.

“[The] PoC was conducted between SMBC and Mitsui & Co. which aims to improve productivity in its trade operations, by testing modules such as Receivable Finance and Payment Commitment (Payment Undertaking),” the press release explained, adding:

“SMBC expects to commercialize Marco Polo in the first half of FY2019 [the financial year 2019] after verification of the PoC.”

Daiwa Securities Group, Japan’s second-largest securities brokerage

Daiwa Securities had also announced the completion of a blockchain PoC.

The pilot project, dubbed “JPX Proof-of-Concept Testing for Utilization of Blockchain / DLT in Capital Market Infrastructure,” allegedly involved 26 companies, including financial institutions, system providers and institutional investors. The reported goal of the pilot was to increase the efficiency of blockchain tech in the post-trade process.

According to the results of the trial, the blockchain system is expected to reduce operational costs and allow for the easier development of new products and services.

SBI Holdings, the first bank to own a cryptocurrency exchange in Japan

SBI Holdings has also struck an agreement with R3 to work in Japan, purportedly to develop local use of its Corda blockchain platform.

According to the official announcement, the new joint venture will “support provision and introduction of the Corda license, arrange schemes for its actual use beforehand, as well as promote collaboration with overseas offices of R3 and other Corda partners.”

Mitsubishi UFJ Financial Group (MUFG), the world’s fifth-largest bank

On Feb. 20, MUFG announced it will launch a new blockchain-based payment system in collaboration with U.S. content delivery network Akamai.

Titled the “Global Open Network,” the platform aims to utilize MUFG’s payment industry reach to strengthen its position in the increasingly competitive blockchain payments market. The project is scheduled to launch in the first half of 2020.

Previously, MUFG had revealed its initiative to establish a remittance corridor with Brazil using Ripple (XRP).

IT

Itochu, one of the five-largest companies in Japan

On Feb. 1, Itochu announced the start of a PoC aimed to develop a blockchain traceability system, in which buyers and sellers can record the date, time, location and other transaction details on blockchain through a mobile app.

The press release stresses that the start of the new trial is contributing “to the achievement of the 17 Sustainable Development Goals listed in ‘The 2030 Agenda for Sustainable Development’ adopted by the United Nations.” It also adds:

“The aim of developing a blockchain traceability system [is to ensure] stable procurement and supply of raw material for our investment companies and trading parties, improving the traceability of its distribution.”

Line, host of Japan’s major messenger app

As 2018 was drawing to a close, Line signed a memorandum of understanding with local financial player Nomura Holdings to form a blockchain alliance.

Nomura — which provides investment, financing and related services to individual, institutional and government customers — Line and LVC Corporation — which oversees messenger’s digital asset and blockchain business units — will reportedly sign a formal contract by the end of March 2019. More details will be announced closer to the date.

As Cointelegraph previously reported, Line is actively involved in developing crypto products. For instance, in January 2018, the company announced it would launch its own crypto exchange and in-app trading space for its 200 million active monthly users.

Energy and utilities

Marubeni Corporation, Japanese trading company that has expanded into the U.S. and Europe

In late February, Marubeni teamed up with U.S.-based blockchain startup LO3 Energy to use the technology to increase automation and efficiency in its renewable energy offerings.

“The Japanese energy sector is in the midst of a drastic transition, and there are increasing numbers of private power producers and suppliers interested in developing new customer offerings particularly in the renewable energy space,” LO3 Energy CEO Lawrence Orsini commented in the press release:

“Initially this project is internally focused, but it is very much driven by the desire from Marubeni to explore the opportunities that blockchain management systems can offer in the transaction of energy throughout Japan.”

Fujitsu, Japan’s IT firm, a Global 500 company

On Jan. 29, Fujitsu reported that it successfully tested a blockchain-based solution to address inefficiencies in electricity surplus management.

Specifically, Fujitsu partnered with local power distribution company Eneres to use the technology to increase the success rates of power sharing, which is administered through a process known as Demand Response (DR).

DR is an agreement between utility companies and consumers, aimed to anticipate periods of peak demand by ensuring surplus power is available to those who need it.

Fujitsu claims that, in its current form, DR is an inefficient mechanism and blockchain has proven to improve it.

“Fujitsu has now devised a system in which electricity consumers can efficiently exchange among themselves the electricity surpluses they have produced through their own electricity generation or power savings,” the press release reads, noting:

“The result was an approximately 40% improvement to the DR success rate.”


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Japan’s authorities continue to practice in regulation, while the local industry is going full crypto — read more in our analysis

Malta’s Regulatory Framework Has Attracted Crypto Players, but International Watchdogs and Local Opposition Are Skeptical

Malta’s Regulatory Framework Has Attracted Crypto Players, but International Watchdogs and Local Opposition Are Skeptical

After introducing crypto regulation, Malta attracted foreign blockchain companies — but also drew criticism from both global watchdogs and local opposition

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Last week, the International Monetary Fund (IMF) claimed that the growth of blockchain in Malta has created major risks of money laundering and terrorism financing in the island’s economy, as per the local media.

Malta is renowned for its crypto-friendly politics, whose efforts in the field have earned it the moniker of “blockchain island.” However, its push for becoming the international crypto hub has attracted criticism from both global watchdogs and local opposition.

Country Snapshot / Malta

Crypto-friendliness is one of the main priorities for the Maltese government

On Jan. 24, the Times of Malta reported on preliminary findings that the IMF allegedly presented after visiting the island. The international organization highlighted blockchain — alongside remote gaming sectors and the government’s citizenship-by-investment scheme — as being high on their list of concerns regarding possible Anti-Money Laundering (AML) compliance violations.

Indeed, blockchain has remained one of top priorities for the Maltese government since July 2018, when it approved three blockchain- and crypto-related bills, aiming to establish a strong and transparent crypto regulatory climate: namely, the Digital Innovation Authority Act, the Innovative Technological Arrangement and Services Act, and the Virtual Financial Asset (VFA) Act.

Announcing the changes via Twitter, Silvio Schembri, the junior minister for financial services, digital economy and innovation within the Office of the Prime Minister of Malta, claimed that the country became “the first world jurisdiction to provide legal certainty to this space.”

Indeed, throughout 2018, a significant number of foreign crypto players who faced regulatory difficulties back home — including cryptocurrency exchanges OKex, Binance and BitBay — set up their operations in Malta due to the development of a friendlier crypto space. Additionally, Malta has the lowest corporate tax percent for international companies in the European Unionset at just 5 percent, comparing to the average of 22 percent — which appears to be an attractive factor for such relocation as well. Given that such legislation is scarcely present in other countries, where crypto is either not regulated or prohibited altogether, Malta indeed might seem like a logical destination.

Chief risk officer at OKex Tim Byun told Cointelegraph:

“What we really love about Malta is it provides a balanced and robust regulatory framework.”

In September 2018, the prime minister of Malta, Joseph Muscat, highlighted the country’s crypto-friendly status globally while addressing the United Nations during a summit in New York.

“We are currently in exciting technological times. This is why in Malta, we have launched as the blockchain island by being the first jurisdiction worldwide to regulate this new technology that previously existed in a legal vacuum.”

Further, in October 2018, Malta signed a declaration to promote blockchain usage along with seven other EU countries. As Julie Myers Wood, CEO at global investigations and security company Guidepost Solutions, told Cointelegraph:

“Rather than waiting for global guidance or just applying its existing rules to the crypto business, Malta moved forward aggressively to create a new regulatory framework for cryptocurrencies.”

On Nov. 1, the VFA Act entered into force. No licensed agents have been announced so far, as the process is still ongoing.

Setting up a crypto company in Malta might be more difficult that it seems — and the framework is in place

Despite Malta’s reputation as being a pro-blockchain country with fast-tracked bureaucracy, the process of setting up a crypto-related business on the island seems to be considerably complex.

On Oct. 18, the Times of Malta reported that almost two-thirds of those applying for Malta’s cryptocurrency agent certification have failed. Since the VFA Act came into force in July 2018, the exam as well as a training course have been mandatory for all those looking to work as “agents” in the crypto sector of Malta. The bill elaborates that “agents” are practitioners such as lawyers, accountants and auditors who may want to liaise between initial coin offering (ICO) operators — or other cryptocurrency vendors — and the island’s watchdog, the Malta Financial Services Authority (MFSA).

According to the Times of Malta, around 250 people took the exam, which contained a series of multiple choice questions. After recognizing the percentage of successful candidates was set to be “extremely low,” the examiners allegedly made a last-minute decision to revise the assessment scheme. Nonetheless, the pass rate eventually transpired to be 39 percent.

Jonathan Galea, president of BitMalta, a local nonprofit organization dedicated to the advocacy of blockchain and cryptocurrencies, who wrote his doctorate of law thesis titled “The Effect of Bitcoin on Money Laundering Law” in the past, told Cointelegraph that the domestic AML framework for crypto companies consists of several layers.

On top of AML and Know Your Customer (KYC) policies imposed by the domestic crypto regulatory framework, there is the Fifth AML Directive that was introduced across the EU in July 2018 as a response to the terrorist attacks and the offshore leaks investigated in the Panama Papers. According to Galea, crypto exchanges and wallet service providers specifically are subject to the Directive in Malta, as well as other crypto “agents” defined by the above mentioned VFA Act.

“All operators, agents, and services providers hoping to conduct business in Malta will need to stringently adhere to obligations under the AML framework in Malta, which has always been implemented a notch above what is normally required on an European level. We recognise certain risks related to such a new industry as this one [crypto], which are mostly associated with exchanges and ICOs, and therefore we are doing everything we can to address them from the get-go.”

Daniele Bernardi, CEO at financial advisory company Diaman Group, which has a physical presence in Malta, confirmed to Cointelegraph that the MFSA has split their regulatory purview into two sectors after enacting the blockchain-related bills: Now, the watchdog oversees blockchain and traditional businesses separately — however, strict KYC and AML procedures are mandatory for both sectors, Bernardi adds. According to his view, money laundering with cryptocurrencies is even less realistic in Malta:

“The real problem in Malta is that all the banks in Malta don’t open any kind of account for crypto companies, due to their fear of breaking the AML policy. So if you have a lot of Bitcoin, but you are not able to convert it into fiat, you are not able to complete money laundering.”

Malta’s questionable past with traditional financial sector hinders local crypto adoption

While the Maltese government arguably managed to bring more transparency into the local crypto space, its previous record with the traditional financial sector doesn’t help, Wood told Cointelegraph:

“Historically, Malta has been challenged with respect to financial crime enforcement even in traditional sectors, and it is currently working on a detailed plan to improve and enhance its financial security framework more generally, including strengthening its financial intelligence unit and improving the supervisory framework. As such, Malta’s embrace of a new area is of some concern to global oversight bodies, including the IMF.”

Indeed, as Bloomberg writes, EU officials have largely deemed Malta’s Individual Investor Programme — a government initiative that sells Maltese passports to foreigners for 650,000 euro (~$750,000), though less for additional family members — controversial, arguing that it could lead to an influx of dirty money into Europe’s financial markets.

There are more concrete problems on the island, many of which were investigated by journalist Daphne Caruana Galizia, who studied the Panama Papers and claimed that two of Muscat’s close associates had established companies in the country. According to Caruana Galizia, they used the firms to launder money and illegally sell passports to Russian nationals. Later, she reported that Muscat’s wife had also registered her own Panamanian shell company, which allegedly engaged in suspicious activities as well. Eventually, Caruana Galizia’s blog became the most-read news source in Malta, as per Bloomberg, and she faced as many as 47 lawsuits, about 70 percent of which were purportedly filed by government representatives. In October 2017, Caruana Galizia was killed by a car bomb.

Indeed, Malta’s effective implementation of controls and enforcement may be of some question, as Mike Carter, senior director at professional services firm Alvarez & Marsal’s Disputes and Investigations, told Cointelegraph, citing several concrete examples:

“Only 92 money laundering investigations were conducted from 2013 through 2017. In July 2018, the European Banking Authority criticized Maltese application and enforcement of money laundering laws, citing ‘general and systematic shortcomings.’ In 2018, the European Central Bank withdrew the banking license for Pilatus Bank, operating in Malta since 2014, and launched investigations into the Maltese Financial Intelligence Analysis Unit’s handling of money laundering activity.”

Having crypto businesses added into the mix wouldn’t necessarily help the local government, Carter adds, although Maltese officials allegedly recognize the AML-related problems:

“Malta’s government published its own money laundering and terrorist financing assessment, noting the country as high risk of receiving foreign proceeds of criminal activity. This risk is especially notable with regard to cryptocurrency, as Maltese exchanges with poor customer and transaction monitoring controls would further highlight that susceptibility.”

Therefore, while the Maltese government has embraced the reputation of being the “blockchain island” and ceased the opportunity to evolve a definite regulatory framework for cryptocurrencies, which the EU has notably been struggling with, its history with the traditional financial market continues to put international officials on guard.

Meanwhile, the local opposition is also alarmed. On Jan. 26, the Nationalist Party (PN) doubted the efficiency of the government’s crypto-oriented politics. The PN highlighted the recent closure of blockchain company DQR Group, which relocated to Malta from Germany in April 2018 in a bid to find a friendlier environment for their business. Specifically, Silvio Schembri argued that the firm’s arrival would “cement Malta’s reputation as the Blockchain Island” as the firm’s arrival was announced.

According to local media outlet Lovin Malta, DQR had laid off most of its staff after one of its main investors, the German Bitcoin mining company Genesis Mining, ran into financial difficulties caused by the bear market.

Reacting to the news, PN representatives argued that the government had no sustainable strategy to “build and strengthen” the blockchain industry in the country. The party said in a statement, quoted by Malta Today:

“If the government really wants Malta to become the Blockchain Island, it should attract sound and credible investment from renowned companies and companies able to provide all the necessary expertise for Maltese workers to grow and prosper in this innovative sector. […] The government should ensure that […] proper due diligence is carried out before granting licenses to operators.”

In response, the government heavily criticized the PN for “gross hypocrisy”:

“The Opposition showed gross hypocrisy when it used a company’s internal situation for its own purposes and when it had not taken part in any of the six public consultation exercises on blockchain.”

The Maltese parliament had to turn to similar statements previously this month, when PN leader Adrian Delia expressed concern over an alleged lack of activity in the domestic crypto space in recent weeks.

Specifically, as per the Malta Independent, which did not quote Delia directly, he considered that “Malta was touted as Bitcoin Island by the government but the government has been completely silent over the Christmas holidays on practically everything.”

Following his comments, Malta’s Parliamentary secretariat for financial services, digital economy and innovation retaliated, claiming that the Maltese capital of Valletta “was going to be giving more peace of mind and protection for cryptocurrencies such as Bitcoin.”

Meanwhile, DQR CEO Kristian Haehndal assures that, despite the crash, his firm will not be leaving Malta.

“We didn’t expect [the market dip] to affect our partner so rapidly, but we won’t walk away from Malta as quitting isn’t part of the blockchain philosophy. We are in the process of bringing in new investors and we are very, very close to restarting our operations.”

According to data obtained by Gatt Tufigno Gauci Advocates for Cointelegraph, the Maltese government has received more than 1,000 applications for crypto licenses under the VFA Act.


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After introducing crypto regulation, Malta attracted foreign blockchain companies — but also drew criticism from both global watchdogs and local opposition

Huobi Secures Its FSA License in Japan, Other Large Players Are Pending

Huobi Secures Its FSA License in Japan, Other Large Players Are Pending

Huobi has entered the Japanese market, while the FSA might grant licenses for other players, including Coinbase, within next few months

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On Jan. 17, Singapore-based cryptocurrency exchange Huobi, one of the largest players on the market, relaunched as a fully licensed platform in Japan after merging with the BitTrade exchange.

Branching out to Japan, where compliance is valued and many regulatory measures are imposed for crypto players by domestic regulators, is a complex process. Here’s how Huobi entered the market, and which firms might soon follow suit.

Specifics of the Japanese market and the FSA’s role in it

Japan is one of the world’s largest markets for cryptocurrencies. Bitcoin (BTC) and altcoins can be used as a legally accepted means of payment there, although they are not considered “legal tender.” Being closely overseen by the national financial regulator, the Financial Services Agency (FSA), the Japanese crypto market is also one of the most compliant and regulation-oriented.

Since the amendment of Japan’s Payment Services Act in April 2017, all crypto exchanges in the country are required to register with the FSA. Counting Huobi’s recent merger with BitTrade, the pool of exchanges cleared to serve the Japanese market currently consists of 17 platforms: Money Partners, Liquid (previously known as Quoine), Bitflyer, BitBank, SBI Virtual Currencies, GMO Coin, Btcbox, Bitpoint, Fisco Virtual Currency, Zaif, Tokyo Bitcoin Exchange, Bit Arg Exchange Tokyo, FTT Corporation, Xtheta Corporation, Huobi and Coincheck.

The FSA is known to have a tight grip on local exchanges, firmly reacting to security breaches after a number of high-profile local crypto exchange incidents, namely last year’s bizzare $532 million Coincheck hack and the infamous collapse of Tokyo-based Mt. Gox. The FSA also conducts on-site inspections of exchanges that have their registration pending and occasionally asks exchanges to submit their risk management system reports in the wake of security breaches.

Biggest Exchanges Hacks

For instance, in March 2018, following the Coincheck hack, the watchdog sent “punishment notices” to as many as seven crypto exchanges and temporarily froze the activities of two more after a round of inspections. Business improvement orders were sent for a lack of “the proper and required internal control systems,” with Coincheck being specifically cited as missing a framework for preventing money laundering and the financing of terrorism. Shortly after the regulator’s move, two local exchanges — Mr. Exchange and Tokyo GateWay — decided to close up shop.

As a result of the FSA’s thorough supervision, some players have decided to quit the Japanese market. Binance, one of the world’s largest crypto exchanges that had opened an office in the country, turned to Malta — the famously crypto-friendly country — after the regulator had issued a warning in March 2018. Similarly, around the same time, crypto exchange Kraken also decided to end its services in Japan, although citing the rising costs of doing business there as the primary reason for relocation. Japanese social messaging app Line has also decided to exclude the domestic market prior to the launch of its cryptocurrency exchange, citing local regulatory difficulties.

In May of last year, the FSA rolled out further regulatory stipulations for domestic crypto exchanges, intensifying its efforts to prevent another major hack. Exchanges were required to monitor customer accounts multiple times per day for suspicious fluctuations and must comply with stricter Anti-Money Laundering (AML) measures, which specifically demand Know Your  Customer (KYC) checks, such as ID verification. There have also been reports regarding the FSA potentially prohibiting the trading of anonymity-oriented altcoins — such as Dash (DASH) and Monero (XMR) — in the future.

In July, the agency underwent a major redo aimed at improving its presence in fintech-related fields, including cryptocurrencies. Thus, the Strategy Development and Management Bureau replaced the Inspection Bureau to develop a financial strategy policy and handle issues addressing the digital currencies market, fintech and money laundering.

The Policy and Markets Bureau, in turn, succeeded the Planning and Coordination Bureau, and was tasked with developing a legal framework that addresses the rapid growth of the fintech sector.

In August 2018, Toshihide Endo, the commissioner of the FSA, said that his agency wants the cryptocurrency industry to “grow under appropriate regulation.” The official added:

“We have no intention to curb [the crypto industry] excessively. We would like to see it grow under appropriate regulation.”

In response to regulatory pressures, a self-regulatory body named the Japan Virtual Currency Exchange Association (JVCEA) has emerged, comprised of the local exchanges. In October 2018, Japan’s financial regulator formally granted self-regulatory status to the JVCEA to oversee the crypto sector. Therefore, the JVCEA might have a better say when it comes to the industry standards in the future. Specifically, the self-regulatory outfit is now expected to develop AML policies for crypto exchanges.

Huobi’s way of getting the FSA clearance — and similar attempts from the past

Founded in China in 2013, Huobi Group has been headquartered in Singapore since Beijing’s crackdown on domestic crypto-fiat exchanges in September 2017. As part of its ongoing overseas expansion efforts, the platform has recently rebranded its United States-based strategic partner trading platform HBUS to the better recognized the Huobi name. Now, the platform — currently the world’s sixth largest by daily traded volume — has expanded to the Japanese market. Huobi’s arrival follows the news about Coincheck receiving full permission from the FSA to continue operating in the country after the above mentioned security breach.

Huobi’s press release emphasizes its security precaution, outlining that Huobi Japan “features specialized distributed architecture, a Distributed Denial of Service (DDoS) attack countermeasures system, and A+ ranked SSL certification (the highest available).”

According to the official announcement, Huobi Japan supports the trading of Bitcoin, Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), Ripple (XRP) and Monacoin (MONA).

Importantly, Huobi didn’t receive the FSA license from scratch, going through a different route instead. Although Japan’s Payment Services Act allows foreign operators to register in the country as “virtual currency exchange service providers,” Huobi has relaunched as a fully licensed platform in Japan after acquiring a majority stake in BitTrade last September. At the time, BitTrade was one of only 16 crypto exchanges in the country to have secured a license from the FSA.

However, Huobi’s market expansion through acquisition of a pre-approved FSA platform is not an entirely new move: In June 2018, BitTrade became Japan’s first FSA-licensed platform to be entirely purchased by an international investor, the Singaporean multi-millionaire and entrepreneur Eric Cheng. The investor also acquired BitTrade’s affiliate company at the time, FX Trade Financial Co., Ltd — one of Japan’s leading forex trading platforms. Following the Huobi deal, FX Trade Financial kept 25 percent of BitTrade’s shares.

BitTrade Acquisition Breakdown

More exchanges to receive the FSA’s blessing: Coinbase, Yahoo and others

Other players are only preparing to enter the market, still waiting to get clearance from the FSA. As Cointelegraph Japan reported on Jan. 12, seven applications will be either approved or rejected by the FSA within six months. The article also revealed the FSA’s complex and lengthy routine of reviewing crypto exchanges that have applied for a license.

Thus, the FSA conducts a procedure that takes almost six months from the time of application — which includes the submission of answers to over 400 questions — to final decision.

After receiving the answers, the FSA communicates with the company to verify its business plan, governance, cybersecurity and management system, along with its AML and counter-terrorist financing measures. In that phase of the review — which reportedly takes about four months — the agency’s officers personally double-check the company’s practices in person. After that, the company officially submits their application to the FSA. The agency then finally reviews the documents and decides whether or not to grant the license.

The financial regulator stated that there are 21 companies taking part in the first part of the review as of January, while seven are already in the decision phase. Therefore, up to seven companies could be granted a new license by the summer. In total, the FSA has reportedly received around 190 cryptocurrency exchange license applications.

Perhaps the most major of the pending candidates is San Francisco-based Coinbase, which revealed its plans to enter the Japanese crypto market in June 2018. Being a compliance-oriented company, Coinbase has made positive remarks about Japan’s crypto regulatory climate in the past, saying that the FSA’s intense focus on security is “good for us.” Given that the U.S. exchange originally planned to establish its operation in Japan “within the year,” the FSA is likely to approve or decline its application at some point in the next few months.

Moreover, the Japanese arm of the internet giant Yahoo will reportedly open their own crypto exchange “in April 2019 or later,” through buying 40 percent of BitARG Exchange Tokyo. Other potential players to open a crypto exchange in Japan include Mitsubishi UFJ Financial Group, the largest domestic bank. In January 2018, South Korean newspaper KBS reported the financial group’s plans — however, there has been no update since.

Also, Money Forward, the company behind a popular financial management application that has over 7 million users in Japan, recently shared details regarding the upcoming launch of its cryptocurrency exchange. Thus, Money Forward is reportedly planning to open their yet-to-be-named platform between January and March 2019, although it depends on how the registration with the FSA will go.

Licensed Exchanges in Japan


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Huobi has entered the Japanese market, while the FSA might grant licenses for other players, including Coinbase, within next few months

Pixel-by-Pixel, New Project Offers Game Where Crypto Players Can Create Blockchain Art

Pixel-by-Pixel, New Project Offers Game Where Crypto Players Can Create Blockchain Art

A new project is offering a game that gives players the chance to create art on the blockchain pixel-by-pixel — as well as resolve art provenance issues #SPONSORED

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A new project is gearing up to be the “first arts and games smart economy on the EOS blockchain” — offering games and giving artists the chance to showcase their creative works and monetize their passion.

PixEOS says that the first game on its platform offers a new twist on the pixel-drawing titles previously seen on the EOS blockchain. Offering a 1 million pixel canvas, PixEOS Paint offers a profit-sharing system where players can paint pixels over one another and create a collaborative art piece. At the conclusion of every game, a blank canvas begins — meanwhile, the previous masterpiece is “immortalized in a blockchain gallery and becomes a valuable non-fungible token that can be bought as a collectible, sold and traded.”

According to the project’s white paper, the PixEOS Paint game is scheduled to launch in the first quarter of 2019, heralding the start of the artistic platform. The team hopes to build a collective where both established artists and newcomers can collaborate and bond in their shared passion, with an array of platforms where creators can share ideas, improve their skills and be compensated for their work. PixEOS has already established strategic partnerships with EOSphere, Cypherglass, TokenPocket, MeetOne and BetDice.

Empowering artists

The canvas created by PixEOS users is converted into a non-fungible token that goes up for sale as a piece of digital art in a specially created gallery. On a weekly basis, users will be given the chance to vote for their favorite canvas, and the winner will go to the highest bidder in the PixEOS Auction House.

This will be complemented by an Art House where crypto enthusiasts can ask their favorite artists on the platform to create works on their behalf. Through this service, users can commission “artworks, artwork prints, merchandise and print-on-demand cool stuff” from PixEOS talent. The white paper adds: “You need a customized sticker set, a logo, a gif, a banner or any other Creative Media service? You can hire one of the featured artists or content creators and support the artists community on the EOS ecosystem.”

PixEOS says that it is passionate about supporting crypto artists, and has high hopes that its platform will make it easier to prove authorship of both digital and physical works — an issue that has been something of a challenge in the online world.

In recent months, the startup has been working to build up its core team and says its executives boast “more than 20 years of experience in branding, activation, marketing, software development and UI/UX.”

PixEOS says it has confirmed listing on major exchanges with the support of its community, with the adoption of its platform increasing over time. Artists will be able to convert their creations to non-fungible tokens if they wish, and PixEOS’s NFT standard will be made available to the EOS ecosystem in the future.

According to the company, it has already established partnerships with wallets, DApp stores, other EOS-based games and block producers to “implement a healthy and long-lasting platform” and blockchain-based marketplace where art rights can be bought and sold for use or collection.

Community focused

PixEOS says that it is using an organic marketing strategy to generate a positive buzz within its community — eliminating the bear market that’s all too often seen in the crypto world these days. The project plans to distribute tokens through a plethora of contests and GIF competitions — and every 100th member who joins the platform receives a prize as a thank you for their support.

The platform has also taken pride in offering creative branding through eight featured artists and says the pixelated avatars they have created have gone viral throughout the EOS community.

Now, PixEOS is preparing to launch an art contest that it believes will be the biggest collaborative effort ever seen in the EOS ecosystem. This competition will boast a renowned international panel of judges.

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.


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A new project is offering a game that gives players the chance to create art on the blockchain pixel-by-pixel — as well as resolve art provenance issues #SPONSORED

US Treasury Official Calls on Crypto Industry Players to Combat Illicit Use of Crypto

US Treasury Official Calls on Crypto Industry Players to Combat Illicit Use of Crypto

A U.S. Department of Treasury Under Secretary urged crypto industry players and international partners to fight the illicit use of cryptocurrencies by bad actors

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The U.S. Department of the Treasury Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker urged crypto industry players and regulators to prevent the illicit use of cryptocurrencies in a speech Dec. 3.

Speaking at the Financial Crimes Enforcement Conference on Dec. 3, Mandelker addressed the issue of mitigating risks related to emerging technologies, including digital currencies, which could potentially be used for nefarious purposes.

Mandelker stressed that financial institutions and cryptocurrency services providers must combat illicit activity and the risks of assisting bad actors. “The digital currency industry must harden its networks and undertake the steps necessary to prevent illicit actors from exploiting its services,” she said.

Mandelker also called on international regulators to strengthen anti-money laundering (AML) and Combating the Financing of Terrorism (CFT) frameworks in regards to digital currencies. Additionally, the Mandelker stressed the importance of supervision and enforcement of AML and sanctions obligations. Mandelker added:

“The lack of AML/CFT regulation of virtual currency exchangers, hosted wallets, and other providers — and, indeed, of the broader digital asset ecosystem — across jurisdictions exacerbates the associated money laundering and other illicit financing risks.”

The call to action followed a new approach that the agency took last week to target illicit actors, who deployed cryptocurrencies and other new technologies in order to launder and transfer ill-gotten funds. The cyber criminals allegedly used malware called “SamSam,” that affected over 200 victims, including state organizations and public institutions.

“As part of this scheme, two Iranian financial facilitators helped exchange the Bitcoin ransom payments into Iranian rial for the hackers. Last week, those two financial facilitators found themselves on OFAC’s Specially Designated Nationals and Blocked Person’s (SDN) list.  For the first time ever, OFAC attributed digital currency addresses associated with designated individuals,” Mandelker said.

Meanwhile, the Estonian Ministry of Finance announced it will shortly add amendments to a recently-passed financial bill that are meant to “tighten” crypto-related regulation. The regulation reportedly introduces “virtual currency exchange service providers” and “virtual currency payment service providers,” while before there only was “alternative means of payment service provider.”

Today, the Department of Financial Services of New York (NYDFS) authorized a blockchain-based digital platform offered by a local Signature Bank. The system purportedly allows funds “to be transferred in real-time between two commercial clients of Signature Bank, eliminating any dependence on a third party.”


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A U.S. Department of Treasury Under Secretary urged crypto industry players and international partners to fight the illicit use of cryptocurrencies by bad actors