Blockchain Payment Solutions, Patents and Market Data Announced
By: Diana J. Stern
Late last week, a major U.S. financial services firm made headlines with several blockchain-related developments. The first relates to a credit card that will be offered by cryptocurrency lending startup Nexo that would provide a revolving line of credit backed by the card holder’s cryptocurrency assets. In addition, the same financial services firm announced a partnership with an iconic clothing retailer to showcase its blockchain-based provenance solution at the retailer’s flagship store in California. The solution seeks to tackle the multibillion-dollar online counter-fitting problem by allowing customers to scan a QR code and view the product journey of limited-edition fashion items.
A major U.K.-based financial services firm announced two blockchain developments this week: one for supply chain finance and another for cross-border letters of credit for the oil industry. The firm and its strategic partner Linklogis provided the supply chain solution to digital government services provider Digital Guangdong, a joint venture among several Chinese firms. The letter of credit was executed as a pilot transaction for an oil shipment from Thailand to Singapore using the Voltron blockchain platform.
Two notable blockchain patents targeted at financial services and capital markets were announced this week. A multinational retail corporation and one of the world’s largest companies filed for a patent related to a fiat-backed stablecoin. Also, a different retail giant’s subsidiary, tZERO, was awarded a patent for the Time Ordered Merkle Epoch methodology. According to a press release, the solution can link the settlement of tokenized blockchain-based securities on a public blockchain to legacy trading systems.
According to earnings reports published this week, the Cash App of a major U.S. financial services and mobile payments company brought in $125 million in bitcoin sales in the second quarter of 2019 – almost doubling its record-breaking first quarter. Another report published this week found that 318 addresses hold approximately 80% of the stablecoin Tether. The report explained that this concentration of ownership increases risk for all cryptocurrency users because many exchanges are dependent on Tether for liquidity.
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Blockchain Supply Chain Pilots Announced Across Industries, New Studies Published
By: Simone O. Otenaike
Early this week, a multinational technology firm launched Trust Your Supplier, a new blockchain network designed to improve supplier qualification, validation, onboarding and life cycle information management in the supply chain industry. Leading technology, telecommunications, pharmaceutical, beverage and manufacturing firms have already joined the network as founding participants. The same multinational technology firm also recently partnered with a California-based technology firm to pilot a blockchain project that will track hard drives through the supply chain. The multinational technology firm is both the customer of these drives and the provider of the underlying blockchain platform. According to reports, the supply chain solution will track products sold to the customer and products returned to the supplier to ensure that only genuine devices, rather than counterfeit ones, are returned.
Late last week, a global automobile manufacturer announced production of the first cars containing recycled cobalt verified through blockchain technology. The manufacturer also announced plans to join a separate project to track cobalt from the Democratic Republic of Congo. In more supply chain news, a major wine importer in China, in conjunction with VeChain, launched the second phase of the Wine Traceability Platform to combat wine counterfeiting. In the new phase, each wine bottle has an encrypted tag that allows customers to access immutable product information stored on the blockchain. According to reports, since the platform’s launch, 20-plus imported wine products have been made available on the platform and the importer has seen a 10% increase in wine sales.
The UCL Center for Blockchain, in conjunction with the Retail Blockchain Consortium, recently released a market report surveying the adoption of blockchain in the supply chain industry. The report reviewed over 100 projects and notes that 15% of projects analyzed have moved into the production stage. Another recently released report comes from a multinational professional services firm and evaluates blockchain use cases in the insurance industry.
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ICO Enforcement Actions Continue Amid Tax Bill, Senate Hearing and UN Report
By: Joanna F. Wasick
Earlier this week, cease and desist orders were issued against two online investment entities, Zoptax LLC and Unocall, as part of an ongoing effort coordinated by the North American Securities Administrators Association (NASAA), a task force comprised of North American state and country officials working together to stop fraudulent initial coin offerings (ICOs) and cryptocurrency-related investment schemes. NASAA was organized in April 2018. Since January, its members have initiated over 130 investigations into ICOs and similar products, and completed 35 enforcement actions.
Also this week, Kik Interactive Inc. (Kik), a defendant in an ICO-related enforcement action initiated by the U.S. Securities and Exchange Commission (SEC), denied conducting an unregistered securities offering. Kik stated in its filed response that the SEC “twisted the facts” in its complaint. The SEC began the action in June, asserting that Kik’s sale of Kin, Kik’s digital token, constituted the sale of unregistered securities. Kik sold $100 million worth of Kin in 2017; $55 million was purchased by U.S. investors.
In late July, a bill aimed at alleviating cryptocurrency investors’ tax burden was reintroduced by U.S. Congressman Tom Emmer. The bill would ensure that the exchange of one cryptocurrency for another would be treated the same way as like-kind exchanges of real property. The bill would also provide a safe harbor related to blockchain forking events. On July 30, the U.S. Senate Committee on Banking, Housing and Urban Affairs held a hearing on regulatory frameworks for cryptocurrencies and blockchain. The Congressional Research Service published its prepared testimony for the hearing, which stressed the need for harmonization of global cryptocurrency regulations. Also this week, the United Nations issued a report finding that North Korea has generated $2 billion through cyberattacks targeting banks and cryptocurrency exchanges. The proceeds are reportedly being used to fund the country’s weapons program.
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