[co-author: Veronica Reynolds]
Coffee Conglomerate Set to Accept Bitcoin in 2020 as Cryptocurrency Adoption Continues to Rise
By: Veronica Reynolds
This week brought big news for fans of both coffee and cryptocurrencies. According to reports, a leading financial company has said that it will begin testing a consumer app for bitcoin purchases of coffee from a well-known international coffee chain. Testing of the app is set to launch in the first half of 2020. In other news, Avalon bitcoin miner maker Canaan filed for a $400 million Initial Public Offering this week. This attempted offering comes after two failed attempts to go public overseas in mainland China and Hong Kong. Chinese media outlets peg Canaan’s valuation at between $2 billion and $3 billion. Finally, Binance has begun its rollout of a new payment service allowing international users to buy cryptocurrencies using local fiat. Last week, it added a Nigerian fiat-to-cryptocurrency gateway that allows consumers to enter the market using the Nigerian currency, Niaira.
Yet as cryptocurrency markets continue to develop, so do cyberthreats. Cryptocurrency-related crime is on the rise in South Africa, according to digital wallet provider Paxful. According to Paxful, there has also been a 64% increase in cryptocurrency trades occurring in Africa this month compared to October 2018. Meanwhile, the number of Americans who own cryptocurrencies has doubled since 2018, according to an Australia-based financial services company. According to a recent survey it conducted, an estimated 36.5 million people currently hold some form of cryptocurrency. The survey indicates the average cryptocurrency holder owns approximately $5,500 worth of digital currencies, but the median amount hovers at only $360. The survey also found that daily bitcoin transactions now amount to $9.6 billion per day, a figure that surpasses PayPal’s yearly transaction volume ($578 billion in 2018) in just two months. The survey found that since Bitcoin’s inception in 2009, $11 trillion in wealth has been transferred within the network.
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Blockchain Capital Markets Firms Achieve New Approvals in US and Abroad
By: Simone O. Otenaike
Early this week, a New York-based regulated financial institution announced plans to launch a blockchain-based settlement platform for a limited number of U.S. equities. The platform will reportedly help clients reduce fees and gain access to capital that is otherwise unavailable through the legacy settlement system. The financial institution recently received a “no-action” letter from the Securities and Exchange Commission (SEC), which means the SEC will not take any enforcement action against the institution for its platform. According to reports, two multinational financial services firms will be the first to use the financial institution’s settlement service once those firms obtain additional approvals from the SEC.
3iQ, a Canadian investment fund manager focused on digital asset technologies, announced earlier this week that the Ontario Securities Commission issued a favorable ruling regarding the Bitcoin Fund, a closed-end bitcoin fund that is expected to be listed for trading on a major Canadian stock exchange. According to reports, Gemini Trust Company LLC, a New York-based cryptocurrency exchange and trust company, will operate as the custodian of the bitcoin in the fund.
Overseas, Sygnum, a digital asset technology group based in Singapore and Switzerland, recently obtained a capital markets services license from the Monetary Authority of Singapore. The license allows the group to offer private qualified investors a curated portfolio of digital assets. Also this week, tZero announced plans to partner with a U.K.-based direct-to-developer real estate investment company to tokenize the company’s 180-unit luxury residential development and issue tokens on the Tezos Blockchain. According to reports, this offering will be the U.K.’s first real estate-backed security token offering.
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Blockchains Take Another Bite Into Food Tracking; Land Registry Pilot Takes Off in Latin America
By: Diana J. Stern
Recently, a multinational financial services corporation announced a food supply chain pilot that will be used by a major United States food cooperative to track salmon, cod and shrimp. The goal is to provide greater visibility into ethical sourcing and environmental compliance of seafood. According to reports, the pilot is built on the financial services firm’s proprietary blockchain technology, which provides industry-agnostic track-and-trace functionality.
Another enterprise pilot took off this week in the real estate sector. The largest source of development financing for Latin America and the Caribbean engaged blockchain startup ChromaWay to record land registration and lending in Bolivia, Peru and Paraguay on a blockchain over the next two years. The solution has multiple layers, including a blockchain rooted in relational databases, a smart contract programming language and the option to deploy on a public blockchain, Chromia. In addition to tech, the project will focus on governance and standards such as the W3C standard for Verifiable Claims and Decentralized Identifiers. ChromaWay’s platform was previously used for tracking land titles in Sweden.
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US Agencies Join Global Innovation Network, Crypto Enforcement Actions Continue
By: Jordan R. Silversmith
Last week, four U.S. financial regulatory agencies, including the SEC and the Federal Deposit Insurance Corp. (FDIC), joined the Global Financial Innovation Network (GFIN). Participation in GFIN will help the agencies clarify regulations and promote the early identification of emerging regulatory opportunities, challenges and risks. In related news, the U.S. Commodity Futures Trading Commission’s (CFTC) fintech initiative, LabCFTC, is set to become an independent operating office of the agency. A newly independent LabCFTC, reporting directly to Chairman Heath Tarbert, will take on a greater role in engaging with the fintech community to develop and write regulations for new products involving technologies such as blockchain, digital assets and other novel financial technologies.
A New York federal judge recently resolved the CFTC’s claims against a convicted fraudster, his co-conspirator and his British binary options company, ordering them to pay a total of more than $4.6 million in a default judgment. The CFTC claimed that the defendants had used digital assets to cheat investors, using a cryptocurrency to conceal their misconduct and make illegal off-exchange retail swaps.
Also in New York, the U.S. Attorney’s Office of the Southern District of New York last week indicted a banking solution platform’s principal on three criminal counts. Oz Yosef, the principal of Crypto Capital, was indicted on conspiracy to commit bank fraud, bank fraud and conspiracy to operate an unlicensed money transmitting business. As a result of the indictment, Yosef will forfeit listed assets that represent the number of proceeds traceable to his offenses. The president of Crypto Capital was later extradited to Poland by Polish authorities on charges of laundering approximately $390 million. In a final note, this week another instance of cryptocurrency SIM swapping hacking was reported in a lawsuit filed by a major cryptocurrency investor, who claims he lost $1.7 million in cryptocurrency in a SIM swapping attack.
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