Bitcoin and Blockchain Financial Products Launch in Public Funds, Commodities, Debit Cards and Mining “Hash Contracts”
By: Teresa Goody Guillén
According to an April 9 press release, a Canadian asset manager has become the first firm to launch a fund tied to bitcoin, The Bitcoin Fund, on the Toronto Stock Exchange (TSX). After completing an initial public offering and a merger, The Bitcoin Fund has 1,491,800 Class A Units outstanding, which represents approximately $14 million of total assets. The fund operates in the same fashion as an exchange-traded product such that it is a closed-end fund in which investors purchase shares in the fund and are exposed to changes in the underlying assets’ price. According to reports, bitcoin in the fund will be custodied by New York-based cryptocurrency exchange Gemini Trust Company LLC.
Six global agriculture supply chain partners recently completed a trade transaction of wheat from North America to Indonesia on a blockchain platform provided by Singapore-based dltledgers. The wheat shipment was valued at $12 million and settled in five days, and the blockchain platform created a shared, immutable record of the transaction. Traditional trading processes are reported to take up to a month.
A major financial services firm has teamed with San Francisco-based startup Fold to offer a new debit card that earns rewards denominated in bitcoin, as opposed to other traditional rewards. In addition to spending their rewards with some retailers accepting bitcoin, Fold users are able to spend bitcoin within the company’s system to buy U.S. dollar-denominated gift cards at major U.S. companies.
According to reports, a New York power plant that uses proprietary facilities to mine bitcoin has sold up to 30 percent of its computing power to undisclosed buyers consisting of hedge funds and family offices. The deal was enabled through the execution of “hash contracts,” which allow institutional buyers to get exposure to bitcoin mining without purchasing and setting up equipment. Given the Bitcoin Network’s reported current mining competition level, the deal would reportedly yield the buyers approximately 1.8 bitcoin per day, in addition to the hardware pledged as collaterals.
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New Initiatives Leverage Blockchain for Records Management and Data Provenance
By: Robert A. Musiala Jr.
Late last week a major Italian news agency announced a new initiative, developed in collaboration with a major global consulting firm, that will use blockchain to allow readers to track the origin of news distributed by the news agency. In a separate development, this week a press release announced that Medici Land Governance “has signed a Memorandum of Understanding (MOU) with Carbon County, Wyoming to develop a blockchain-based land records and information platform in 2020.”
A major U.S. technology firm and provider of cloud-based software recently announced that it has integrated Lition into its customer relationship management (CRM) platform. Lition is a “layer-2” DApps infrastructure built on top of the Ethereum blockchain. According to a press release, the integration will enable users of the firm’s CRM software to “easily record, certify and protect important information in a confidential and tamper-proof manner using Lition’s App” and “will put Lition’s blockchain at the fingertips of more than 150,000 users around the world with a simple setup process.”
The World Economic Forum (WEF) has published a white paper that is the sixth paper in the WEF’s series of publications addressing the deployment of blockchain for supply chains. Among other things, the paper discusses blockchain interoperability layers related to business models, platforms and infrastructure; outlines approaches to achieving interoperability; provides a framework for selecting an interoperability approach; describes current interoperability solutions; and presents example real-world use cases.
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Reports Address Regulatory Challenges and Opportunities Involving Crypto Assets
By: Veronica Reynolds
In a recent report, a G20 body warns that the existing global regulatory framework addresses only some risks raised by the proliferation of stablecoins, an example of which is the proposed digital currency Libra. The body warns that the technology underpinning stablecoins has not been tested at scale, raising concerns of yet-unknown vulnerabilities that may be realized only during and after adoption by mainstream consumers. Additionally, the organization encourages governments worldwide to monitor the digital asset space in order to address potential issues with the application of current regulatory frameworks, which may contain yet-unknown loopholes.
A separate report released by a European policy department promotes regulation as a solution to cryptocurrency-related crime. The report focuses its analysis on “crypto-assets,” which it defines broadly to include stablecoins and private “tokens” issued by private platforms as a method for raising funds. The report notes that if mass adoption of crypto-assets materializes, it could greatly reduce criminal activities such as money laundering since the transactions are public and traceable, properties that cash transactions do not possess. However, the report notes this view may be theoretical only, given that other crypto-asset properties, such as ease of use and pseudonymity, make them particularly attractive for use in financial crimes. The report suggests numerous regulatory solutions to address these and other risks posed by the continued development of crypto-assets.
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FBI and Philippines SEC Issue Crypto Scam Warnings, New Hacking Methods Reported
By: Jordan R. Silversmith
Earlier this week, the FBI reported that it expects a rise in crypto-based scams related to the COVID-19 pandemic. Among the schemes for which it expects to see the greatest uptick, the FBI lists blackmail attempts, work-from-home scams, and payments for nonexistent treatments or equipment. This seems likely to include a scheme called “The Billion Coin” (TBC), which is the third crypto scam that the Philippines Securities and Exchange Commission has flagged this month. According to its April 14 advisory, TBC’s promoters market the asset as a so-called abundance-based cryptocurrency, which is a term used to justify an asset diverging from market-driven norms. The advisory warns investors against any investment in TBC, particularly during the pandemic, and notes that individuals could face a maximum penalty of 21 years in prison for acting as “salesmen, brokers, dealers or agents of such unauthorized entities.”
According to a recent security report, last month the operators behind the Sodinokibi Ransomware posted to a hacker and malware forum that the ransomware will stop accepting bitcoin and instead begin to accept the monero cryptocurrency in order to make tracing funds more difficult for law enforcement. Hackers who use a combination of the Tor browser and privacy coins such as monero make tracing funds exceedingly difficult, if not impossible. Another recently reported threat involves phishers that have begun to use fake browser extensions to target users of specific cryptocurrencies. While malicious browser extensions are not new, these attacks have reportedly begun to target well-known crypto brands via mainstream internet advertising and other channels.
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