New Enterprise Initiatives for Ethereum, Hyperledger, Aviation and Clothing
By: Simone O. Otenaike
Last week, one of the world’s largest technology firms, a leading multinational professional services firm and a major blockchain development firm announced their Baseline Protocol initiative. The initiative aims to employ the public Ethereum blockchain as an intermediary or integration layer as opposed to a place to record the final state of transactions. The initiative also seeks to employ privacy-preserving functions at an earlier stage in the transaction process. Also last week, Hyperledger added eight new members, including a global retailer, a leading national business service provider and a biometric secure identity platform. Earlier this week, TradeLens, the blockchain-based supply chain initiative, added its first financial institution. According to reports, the bank will be able to instantly authenticate shipments using the TradeLens platform.
In recent manufacturing industry news, a global aerospace firm reportedly added roughly $1 billion in airplane parts to GoDirect Trade, a blockchain-based platform designed to prove the origin of manufacturing parts. The platform aims to promote transparency in the industry and ensure each part complies with relevant safety standards. In related news, a major blockchain development firm recently released a report that details the potential for blockchain solutions in the aviation industry.
A global fashion brand recently partnered with Resonance to launch the brand’s children’s label. Resonance is a blockchain-based platform that offers consumers the ability to trace each garment as it moves through the supply chain to ensure that eco-friendly materials and ethical labor practices are employed. Finally, RFID Lab recently published a white paper that discusses the potential for blockchain solutions in the retail supply chain industry. According to the study, current RFID technology lacks interoperability, and blockchain technology could potentially offer a more reliable network for key industry players that share retail supply chain data.
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New Blockchain and Cryptocurrency Regulations in South Korea and France
By: Joanna F. Wasick
Last week, South Korean lawmakers voted for new legislation that would compel virtual asset service providers (VASPs) to register with regulators, partner with a single bank for deposits and withdrawals, and otherwise comply with existing anti-money laundering and counter-terrorism financing directives. The proposed legislation would also require VASPs, including cryptocurrency exchanges, to certify their systems with the Korean Internet Security Agency. According to reports, one effect may be the consolidation of Korea’s smaller cryptocurrency businesses, as they band together to raise funds for compliance purposes. South Korea’s president has 15 days from the vote to sign the legislation into law.
France’s Financial Markets Authority (AMF) recently proposed the creation of a collaborative “Digital Lab” that would enable European national authorities to waive certain regulatory requirements relating to securities settlement for blockchain-based security tokens in return for certain guarantees. According to the AMF, the exemption would be granted only on the condition that the participant complies with “the key principles of the financial regulation and that it is subject to increased supervision.”
Separately, a French court recently issued a decision that cryptocurrency is a fungible asset, just like money. The underlying decision involved a loan to a cryptocurrency investment company and raised the question of which entity was entitled to bitcoin cash, a cryptocurrency that was generated from a 2017 Bitcoin Network fork that occurred after the loan was made. The court decided that the bitcoin cash belonged to the recipient of the loan, similar to how dividends are paid out to a shareholder.
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Cryptocurrency Enforcement Actions in U.S., Japan and Australia
By: Jordan R. Silversmith
Last week a federal judge in California issued a $16 million default judgment to a digital asset startup incubator, ICOBox, that has not yet acknowledged an enforcement action from the SEC. The default judgment order requires the CEO to make his $192,768 civil penalty payment within two weeks, and imposes the same deadline for the company’s $16 million disgorgement.
This Wednesday, a man from Bothell, Washington, was charged in an eight-count complaint for operating an unlicensed money transmitting business, laundering of monetary instruments, and conspiracy to produce and distribute marijuana. The defendant met with undercover officers posing as criminals seeking to launder funds, and agreed to exchange bitcoin for cash while apparently aware that the cash was derived from criminal activity.
Two men were arrested in Japan on Wednesday for allegedly obtaining cryptocurrencies that were the suspected proceeds of a $530 million hack on Coincheck, a cryptocurrency exchange that in January 2018 lost approximately $530 million worth of NEM, a popular cryptocurrency. Tokyo police believe the arrested individuals have been exchanging the NEM for other digital assets since February. These arrests are the first relating to the Coincheck hack.
The Australian Taxation Office (ATO) is reportedly in the process of contacting up to 350,000 individuals by either letter or email to “remind” them of their taxation obligations when they trade in bitcoin. An ATO spokesman said taxpayers who sold digital assets during the 2017-2018 financial year may be contacted by the tax office and a review of their tax returns ordered to ensure they have reported the correct capital gains amounts on their returns. Investors who correct their return will not receive any penalties, the ATO said, but those who fail to fix their returns risk a federal audit.
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