Federal Reserve Addresses CBDCs Amid Crypto Initiatives by US and Foreign Firms
By: Robert A. Musiala Jr.
Late last week, Lael Brainard, a member of the Board of Governors of the U.S. Federal Reserve System, gave a speech in which she commented on the concept of central bank digital currencies (CBDCs). Among other comments, Governor Brainard said, “it is essential that the Federal Reserve remain on the frontier of research and policy development regarding CBDCs” and that the Federal Reserve is “continuing to assess the opportunities and challenges of, as well as the use cases for, a CBDC, as a complement to cash and other payments options.” On the same day, the Federal Reserve Bank of Boston announced “a multiyear collaboration with the Digital Currency Initiative at the Massachusetts Institute of Technology to perform technical research related to a central bank digital currency.” According to the press release, the collaboration will extend over two to three years and will involve, among other things, “testing a hypothetical central bank digital currency for wide-scale, general purpose use” and assessing “technology trade-offs by coding and testing various architectures” for CBDCs.
According to reports this week, a major U.S. bank has filed a patent application that would leverage artificial intelligence to analyze cryptocurrency price speculation data from various social media outlets to assist in generating cryptocurrency trading decisions. In another recent banking development, four major South Korean banks have reportedly announced their intent to begin offering services to “hold and manage cryptocurrencies for clients.” And in the U.K., London-based Archax recently announced that it has become the first company to receive the U.K. Financial Conduct Authority (FCA) “cryptoasset registration.” The FCA registration was introduced this year to comply with guidance from the Financial Action Task Force (FATF) applicable to Virtual Asset Service Providers (VASPs).
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Blockchain Initiatives Announced in Supply Chain, Voting, Ports and Collaborations
By: Robert A. Musiala Jr.
According to reports, a major U.S.-based aerospace and defense contractor and safety and productivity solution provider recently announced that it has deployed a blockchain solution for supply chain tracing to improve anti-counterfeiting and inventory management. The solution reportedly involves secure printed labels that attach to physical products and connect to a database underpinned by blockchain.
A recently published patent application by the U.S. Postal Service (USPS) describes “a voting system that can use the security of blockchain and the mail to provide a reliable voting system.” According to the patent application, “A registered voter receives a computer readable code in the mail and confirms identity and confirms correct ballot information in an election. The system separates voter identification and votes to ensure vote anonymity, and stores votes on a distributed ledger in a blockchain.”
According to a press release, the TradeLens blockchain platform for maritime shipping and port authorities has added a new member, YILPORT Holding Inc., a port and container terminal operator in Istanbul, Turkey. In other international news, the Cyprus member of a major global accounting and consulting firm network recently announced a partnership with VeChain, a blockchain technology firm with offices in the U.S., Europe and across the Asia-Pacific region. According to the press release, the collaboration is intended to assist in delivering blockchain-related services for the accounting and consulting firm’s clients.
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Crypto Enforcement Announced by SEC, DOJ, and Texas, Alabama and Ukraine Agencies
By: Jordan R. Silversmith
Last week the U.S. Securities and Exchange Commission (SEC) announced charges against a Virginia-based cryptocurrency platform and its CEO for “fraud and registration violations in connection with a $5 million initial coin offering of digital asset securities.” According to the SEC, from November 2017 through January 2018, Boon.Tech and its CEO sold “Boon Coins” to raise approximately $5 million in funding for the development of a new platform to connect employers seeking jobs with freelancers seeking work. The SEC’s order found that the coins were offered and sold as investment contracts and were consequently securities, an offering which Boon.Tech failed to register with the SEC. In a separate action by state regulators, this week securities regulators from Texas and Alabama issued an emergency cease and desist order to three business entities and an individual for their role in a cryptocurrency-based scam. The parties stand accused of falsely advertising that investment in their cryptocurrency debit cards could help customers avoid financial stress caused by COVID-19; one entity also guaranteed investment returns of over $10,000 a month.
This week the U.S. Department of Justice (DOJ) announced the indictments of five individuals in connection with their roles in an international cryptocurrency Ponzi scheme. According to the indictment, the individuals are alleged to have participated in a coordinated scheme to defraud investors to invest cash in a purported cryptocurrency mining and trading company in exchange for guaranteed profits. In another press release, DOJ announced the arrest of a man involved in a murder-for-hire scheme on the darknet. The individual, after pleading guilty to child-pornography charges, was later discovered to have sought his victim’s killing through a darknet murder-for-hire service. According to the press release, the defendant paid the murder-for-hire service approximately $20,000 in bitcoin before learning that the service was a scam. In a third press release, DOJ announced that a California woman had pleaded guilty of conspiring to using the darknet to sell heroin, methamphetamine, and cocaine in exchange for cryptocurrency.
In Europe, this week Ukrainian law enforcement announced the arrest of a cybercrime group alleged to have been responsible for laundering money for ransomware gangs. The group, alleged to have three members, reportedly ran twenty cryptocurrency exchanges and laundered more than $42 million for various criminal gangs.
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