Category: Regulation

Categories
Blockchain CBDCs China Crypto News NFTs Regulation

China Plans to Create NFTs on a State-Backed Centralised Blockchain

China has created its own version of non-fungible tokens (NFTs), which are in no way linked to any cryptocurrencies or public blockchains and will be running on its state-backed Blockchain Service Network (BSN).

China’s Blockchain to Support NFTs

According to the South China Morning Post, BSN will be rolling out a new infrastructure that will support the use of NFTs called BSN-Distributed Digital Certificates (BSN-DDC).

The ban on cryptocurrencies in China doesn’t necessarily affect the use of NFTs, with one of the technical advisers to BSN stating that NFTs “have no legal issue”. Mainly it’s important that they do, however, distance themselves from cryptocurrencies.

The platform is poised to launch by the end of the month and only Yuan will be permitted for transactions. The main reason public blockchains have been outlawed is that regulators cannot intervene in events classified as illegal, as well as the fact that the state requires all internet systems to verify user identities, which usually isn’t the case with public decentralised applications.

BSN-DDC Could Disrupt the Industry

The BSN-DDC is compatible cross-chain and according to the report, issuing an NFT could cost as little as 0.05 yuan (A$0.01). At the moment the biggest NFT market is for digital art, but China is looking more at using it for certificate management.

NFTs in China will see annual output in the billions in the future.

He Yifan, chief executive officer, Red Date Technology

The expected rise of NFTs in China is in part also due to the platform that will “offer application programming interfaces for businesses or individuals so they can build their own user portals or apps to manage NFTs”.

China’s Solution to Monitoring Chains

According to the report, Red Date, a technical support provider to BSN, has come up with a solution to govern blockchains in China. By connecting them to the open permissioned chain run by China Mobile, China UnionPay and State Information Centre public chains can be “localised”.

Red Date CEO He Yifan also added that since 2018, more than 20 public chains have undergone this process and with the new BSN-DDC another 10 will be integrated including “the adapted version of Ethereum and Corda, plus domestic ones like FISCO BCOS”.

China has long been working on blockchain technology and was even one of the first countries to start research on CBDCs. The Digital Yuan will even be controlled by Smart Contracts, with China’s mobile CBDC wallet launching ahead of the Winter Olympic Games.

Categories
Crypto News Cryptocurrencies Cryptocurrency Law DeFi Regulation

Number of Countries Banning Crypto Has Doubled in 3 Years

Although 2021 was generally seen as a good year for the cryptocurrency industry in terms of market performance, the number of international jurisdictions banning crypto has more than doubled since 2018 with no sign of the trend easing in 2022.

According to an updated report by the American Library of Congress (LOC), nine countries have now applied an absolute ban on crypto and 42 an implicit ban. This is up from eight and 15, respectively, in 2018 when the report was first published.

Bans Have Two Shades of Meaning

In the context of the LOC report, an absolute ban means any “transactions with or holding cryptocurrency is a criminal act”, whereas an implicit ban prohibits cryptocurrency exchanges, banks and other financial institutions from “dealing in cryptocurrencies or offering services to individuals and/or businesses dealing in cryptocurrencies”.

The nine new jurisdictions with an absolute ban are Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia, Bangladesh and China. Other than the 51 jurisdictions with a crypto ban already in place, 103 have applied Anti-Money Laundering (AML) and combatting the funding of terrorism (CFT) laws, more than three times the 33 jurisdictions with such laws in place three years ago.

Current international legal status of cryptocurrencies. Source: LOC

Sweden, Estonia, Russia on the List; India Delays Execution

Estonia, Sweden’s EU neighbour across the Baltic Sea, is set to implement AML/CFT rules next month. As for Sweden itself, the Scandinavian nation’s Environmental Protection Agency called for a ban on proof-of-work (PoW) mining in November 2021 due to the power demands of keeping networks running.

The new rules are expected to change the definition of a virtual asset service provider and apply an implicit ban on decentralised finance (DeFi) and Bitcoin.

India’s government sent a shiver through the international crypto community when lawmakers there considered a total cryptocurrency ban last November. Although it did not eventuate, the Securities and Exchange Board of India – which oversees the regulation of local crypto exchanges – pushed to regulate cryptocurrencies as crypto assets. An outright ban, however, is still on the table.

Last month, Russia’s central bank moved to ban crypto investments and also also barred mutual funds from investing in digital currency.

Categories
Australia Crypto News Economics Regulation

Report Finds Australia’s Crypto Economy Could Grow to $68 Billion by 2030

An analysis by global consulting firm EY (formerly Ernst & Young), commissioned by digital asset management company Mawson, has found the economic value of Australia’s cryptocurrency ecosystem could grow to A$68.4 billion by 2030 and employ around 206,000 workers.

The Cryptocurrency and the distributed digital economy in Australia report, released on December 10, says that unlocking the value of the digital assets market – which covers crypto, stablecoins, NFTs, DeFi, Web 3.0 and DAOs – requires “attractive” policy settings to be put in place to drive innovation.

“The magnitude of the economic benefits will depend on the speed and scale of uptake and the transformational potential of technology across different industries,” the report states.

Digital Asset Ecosystem Set For 30x Expansion

The report puts the current value of Australia’s digital asset ecosystem at A$2.1 billion. It argues that enabling an increase of more than 30 times the sector’s value in the next decade rests on:

  • fit-for-purpose regulatory systems that provide greater business certainty;
  • upskilling the nation’s workforce, including skilled migration; and
  • more certainty around tax settings related to digital assets and the way they are transacted.  
EY’s report shows the potential economic gains from high-growth policies compared to current approaches.

Under the right reform and growth conditions, the report predicts the cryptocurrency and digital asset economy could:

  • grow in value by more than 50 percent each year;
  • add up to A$250 billion to the national economy over the next decade, reaching a value of A$68.4 billion in 2030;
  • eclipse the economic contribution of Australia’s tourism, agriculture and energy industries;
  • generate more than A$2.8 billion in high-value exports by 2030 and
  • create thousands of digital jobs across various industries, including more than 200,000 employed in 2030 and cumulatively more than 765,000 full-time roles over the next decade.

Report Responds to Australian Senate’s Crypto Recommendations

In a statement announcing the report’s release, CEO and founder of Mawson, James Manning, said the analysis was commissioned in response to the Senate Committee report, Australia as a Financial and Technology Centre Final Report.

“We are at a crossroads. As an industry, we desperately need a fit-for-purpose policy and regulatory framework to provide greater security and certainty to consumers and the crypto industry,” Manning said. He added:

The Bragg Report recommendations, in particular, represent a significant coming together of industry, regulators and government. [Those] recommendations, if adopted, will revolutionise the Australian crypto sector and improve consumer protection, therefore driving innovation, confidence and growth in the sector. 

James Manning, CEO and founder of Mawson 

Capitalising on the booming sector is clearly of interest to the Australian government. In November, in an address at the Australian Financial Review Super & Wealth Summit, Liberal Senator Jane Hume, the Minister for Superannuation, Financial Services and the Digital Economy, noted the importance of crypto and stressed the role of government in encouraging innovation.

Categories
Crypto News DeFi Regulation Tokens

US Congressman Mentions ‘Mongoose Coin’, Hours Later It Moons 320,000%

After US Congressman Brad Sherman mockingly mentioned “Mongoose Coin” at a crypto hearing, it prompted a few crypto degens to launch a memecoin by the same name. Since its inception on December 8, the coin has shot up 320,000 percent and Sherman’s reference to the fictional token has spurred several others to pop up.

The Hamster, the Cobra and the Mongoose

California Democrat Sherman has become an overnight inspiration for token creators after denigrating the competitive world of cryptos. During a House Financial Services Committee hearing on crypto, the Congressman referenced a story of the old woman who swallows bigger and bigger animals to catch the previously swallowed animal, adding that “the number one threat to cryptocurrency is crypto”.

Sherman illustrated the point by saying that Bitcoin may be unseated by Ether, which in turn could be displaced by Doge, only to also be replaced by Hamster Coin and the Cobra Coin. He then added, by way of capping the rhetorical joke, “what could Mongoose Coin do to crypto coin?”

May this be a warning to all who dare to joke about crypto? Shortly after Sherman’s remarks, a token called Mongoose Coin ($MONG) was created and within just a few hours its market cap had ballooned to US$2 million, now up a massive 320,000 percent since launch.

$MONG up 320,000 percent. Source: Dexscreener

Since the December 8 hearing, Sherman-inspired coins have been created on the Polygon, Avalanche and Binance Smart Chain networks, each with differing token supplies, which have performed accordingly. Mongoose Coin, for example, had a listed market cap of US$9 million, while Mongoose Coin DAO has a valuation of US$914,000. Sherman Coin is at US$148,000, according to Dextools.

After Sherman’s remarks, Hamster Coin, which existed prior to the hearing, also spun its wheel off the chart.

Hamster Coin price chart. Source: Coinmarketcap

Although Sherman’s comments made for some light entertainment, his statements were jumbled and he just didn’t stick the landing. The point he was trying to make was, however, not entirely wrong. In the case of fiat money, the US dollar may be the standard global currency but national currencies of other nations will continue to hold values based on the very fact that they exist. As opposed to the real world, in crypto we see the cycle repeated time and time again – altcoins rise, flop, become worthless, and simply disappear.

Regulators Unsure How to Handle Cryptos

Right now, the US Senate House Committee on Financial Services is a source of entertaining meme-worthy moments but it remains one of the leading information disseminators regarding cryptos. In October, US Securities and Exchange Commission (SEC) chairman Gary Gensler confirmed that the regulator had no intention of banning digital currencies, instead saying that any such ban “would be up to Congress”.

However, a month earlier the SEC announced it was investigating Uniswap Labs, parent company of Uniswap, the world’s largest decentralised exchange. Apparently, the SEC has DeFi insights and aims to bring forth some regulation.

Categories
Australia Banking CBDCs Crypto News Regulation

RBA Wholesale CBDC Trial ‘Project Atom’ Heralded a Success

While the Reserve Bank of Australia (RBA) has been investigating central bank digital currencies (CBDCs) for some time, its policy position has not always been clear. However, in a report released this week, there are signs that wholesale CBDCs may indeed be around the corner.

Project Atom Forecasts Efficiency Gains

Project Atom was a collaborative research project undertaken during the past year exploring the potential use and implications of a wholesale CBDC using distributed ledger technology (DLT). The CBDC itself is intended to be used by wholesale market participants (ie, banks and other financial institutions) for the funding, settlement and repayment of a tokenised syndicated loan on an Ethereum-based DLT platform.

According to the RBA, the results of the trial demonstrated that “the digitisation of syndicated loans on a DLT platform could provide efficiency gains and reduce operational risk by replacing highly manual and paper-based processes”.

Other aspects of the trial involved exploring the programmability of CBDCs that “could improve efficiency and reduce risk in transactions”.

Project Atom demonstrated the potential for a wholesale CBDC and asset tokenisation to improve efficiency, risk management and innovation in wholesale financial market transactions. The project also demonstrated the benefits of collaboration in advancing our knowledge in this area. The bank will continue its research on CBDCs as part of its strategic focus area on supporting the evolution of payments.

Michele Bullock, Assistant Governor (Financial System), RBA

Overall, despite noting potential improvements in efficiency, risk management and innovation, the RBA noted that more detailed policy work was required before the introduction of any CBDCs.

Retail CBDCs?

As reported by Crypto News Australia in February of this year, the position then was that there was no strong case for issuing retail CBDCs. And this, more or less, appeared to be the case until mid-November, but as of this week things have seemingly moved in the opposite direction, as noted by ABC business reporter David Taylor:

This shift in direction is not entirely unexpected, as CBDCs naturally confer more powers on those in control. They represent programmable money, a behavioural finance innovation enabling central bankers to use the tools at their disposal to target specific individuals, groups or demographics to drive whatever consumer behaviours they are looking to achieve.

Perhaps this is why Edward Snowden, a known privacy advocate, regards them as a tool for financial surveillance. It’s also a reason why many are turning to Bitcoin, a truly decentralised alternative.

Categories
Crypto News Cryptocurrencies Ransomware Regulation

CIA Head Confirms Rumours: We Are Working on Crypto Projects

Conspiracy theorists were vindicated yesterday when Central Intelligence Agency (CIA) director William Burns admitted at the Wall Street Journal‘s CEO Summit that the CIA was indeed involved in various crypto projects.

Details Are Murky, Obviously

One of the oldest conspiracies out there, at least in the crypto space, is that the CIA is responsible for creating Bitcoin. For the most part, that view is widely discredited and in the end is irrelevant, as Spencer Schiff pointed out.

While the CIA didn’t invent Bitcoin, it has however confirmed that it is involved in the crypto industry across various projects, although details of what that specifically entailed were absent from the discussion.

Burns, who was only recently appointed, responded to a question about whether the intelligence agency was equipped to handle ransomware attacks and the like, particularly those emanating from abroad (such as the Colonial Pipeline attack earlier this year).

Speaking about his predecessor, Burns noted that:

He [likely to be David Cohen, but unclear] had set in motion a number of different projects focused on cryptocurrency and trying to look at second- and third-order consequences as well, and helping with our colleagues in other parts of the US government to provide solid intelligence on what we’re seeing.

William Burns, CIA director

CIA Focused on Ransomware Attacks

Details as to what Burns and the CIA were doing remain opaque. One plausible theory is that they are establishing networks in order to understand them with a view to targeting and disrupting others. Another theory is that they are looking to undermine crypto networks’ credibility to quash a growing sentiment that the US dollar’s hegemony is drawing to a close.

One clue, however, was something Burns said, suggesting that criminal activities, specifically ransomware attacks, were one of the main focuses:

One of the ways of getting at ransomware attacks and deterring them is to be able to get at the financial networks that so many of those criminal networks use, and that gets right at the issue of digital currencies as well.

William Burns, CIA director

Of course, Twitter has been rife with speculation, ranging from genuine concern to satire. One user even joked that perhaps the CIA was behind NFT sensation the Bored Ape Yacht Club.

One thing’s for sure – when it comes to the CIA, things will never quite be what they seem.

Categories
Australia CBDCs Crypto Exchange Payments Regulation

Treasury Moves to Consider Feasibility of CBDC and Crypto Legalisation Reforms

The Australian government is making strides in reforming consumer and business payments as well as building a framework for the regulation of the crypto market as innovations in payment technology rapidly increase.

The Rise of New Payment Technology

Australia has long been working on the possible implementation of a Central Bank Digital Currency (CBDC), and a year-long study by the Reserve Bank of Australia (RBA) has determined that a CBDC could be used by the wholesale market for the funding, settlement and repayment of a tokenised syndicated loan on Ethereum-based distributed ledger technology (DLT). Research will continue accordingly.

The report comes as the Australian government is in the process of overhauling its regulatory framework for payment systems for the first time in more than 20 years. The concern with emerging payment technologies – such as those provided by Ant Group Co or even Tether – is that a digital currency pegged to the US dollar could pose a threat to monetary regimes and add a new layer to cross-border payments.

If we do not reform the current framework, it will be Silicon Valley that determines the future of our payments system […] These are significant shifts which we need to be in front of.

Josh Frydenberg, Australian Federal Treasurer

According to the Australian Taxation Office, more than 800,000 Australians have made transactions with digital assets since 2018. Since the technology is available and people are using it, the country has also opted to broaden its payment laws to cover online transaction providers such as Apple Inc and Alphabet Inc’s Google, as well as buy-now-pay-later (BNPL) providers like Afterpay Ltd. This would effectively end their run of operating without direct supervision.

Australia Leading Crypto Regulation

Leading up to the reform, in October an Australian Senate committee released a 12-point crypto reform plan to assist in the regulation of the growing digital asset ecosystem. Now full-scale crypto regulation is coming to Australia, and it includes licences for exchanges, laws for DAOs, action on de-banking and a review of tax settings.

The move to regulate digital assets is an important one with many factors to consider, but consultation and discussion are essential first steps with the support of key individuals in government positions.

Categories
Banking Crypto News Gemini Regulation

CBA Account Holders May Soon Get Interest on their Crypto

Last month, the Commonwealth Bank of Australia (CBA) became the first in Australia to offer crypto to its customers. Now the country’s largest bank is moving to offer customers the ability to earn interest on their crypto.

CBA Leans on Gemini for Crypto

In addition to partnering with Gemini for its crypto offering, CBA also recently invested in the exchange’s first external fund raise, suggesting that the relationship went a lot deeper than initially suspected.

Now, according to a report by The Australian, CBA and the New York-based crypto services provider are planning to launch a “crypto interest account” to Australian customers whereby they would receive a fixed interest rate for lending their digital assets into the broader market.

Speaking about the Australian market, Andy Meehan, chief compliance officer for Gemini Asia Pacific, suggested that:

We think CBA broke the mould in your market, which is an attractive market – in fact is it a highly developed investment market that has a long tradition of people being very quick to take up new finance technology when it arrives on the scene.

Andy Meehan, chief compliance officer, Gemini Asia Pacific

He went on to say:

CBA has forced the regulators to move much faster than they might have naturally desired, but you’ll see every one of your banks offer crypto services very soon.

Andy Meehan, chief compliance officer, Gemini Asia Pacific

CBA, the First Domino to Fall?

With most Australian banks offering negative real interest rates on savings, investors are becoming increasingly drawn to alternative investments such as crypto.

CBA has been a trailblazer in the space and competitors are no doubt working behind the scenes to catch up. CBA chief executive Matt Comyn recently told Bloomberg that banks needed to be involved in the adoption of technology underpinning crypto and the insatiable demand from customers to trade them. He was also quoted as saying “we [CBA] see risks in participating, but we see bigger risks in not participating”.

It remains to be seen how the regulators will respond to CBA’s crypto interest product. Presumably they will draw guidance from Gemini itself, which as a New York-registered exchange is one of the most heavily regulated entities in the space. If it aligns with Gemini’s offshore product, you’d expect depositors’ crypto to be lent to institutional investors and for the customer to receive different rates for different cryptos, depending largely on the demand and use of such digital assets.

Categories
Banking Bitcoin Crypto News Regulation

SEC Chairman Admits: Bitcoin Competes With the US Banking System

At the Digital Asset Compliance and Market Integrity Summit held in New York on December 1, Securities and Exchange Commission (SEC) chairman Gary Gensler finally admitted that Bitcoin is a competitor to the US banking system and its worldwide consensus.

Regulation at the Heart of Discussion

At the event, Gensler joined former SEC chairman Jay Clayton for a broad discussion of the burgeoning crypto sector. Gensler saw his responsibility as mitigating risks of a “spill in Aisle 3”, which may be caused in his view by a financial instability event, stablecoins, the lending sector, or “by the investing public getting hurt by fraudsters or good-faith actors promoting and raising money”.

Gensler repeatedly referred to the sector as the “Wild West” and argued that “whether it’s a trading platform or token, [they] are not going to evolve well outside of the tenets of public policy”. His main concern articulated related to the asymmetry of information:

At the core of our bargain in the securities markets is: investors get to decide what risks they want to take. But the people raising the money, the issuers, should share full and fair disclosure.

Gary Gensler, SEC chairman

On Bitcoin

In his conversation, Gensler drew a distinction between Bitcoin and digital assets, recognising that in the case of the latter, many projects exhibited securities-like qualities.

Repeating prior comments, he reiterated his position that Bitcoin’s innovation was real in that it was “about money and ledgers” and enabled 24/7 instantaneous, transparent and final settlement. He then went on to describe Bitcoin as an “off-the-grid” alternative to the traditional financial system:

We layered over our digital money system about 40 years ago with money laundering and various sanctions and regimes around the globe; we layered that over a digital currency system called our banking system. In 2008, Satoshi Nakamoto wrote this paper in part as a reaction, an off-the-grid type of approach. It’s not surprising that there’s some competition [Bitcoin] that you and I don’t support but that’s trying to undermine that worldwide consensus.

Gary Gensler, SEC chairman

When Gensler was appointed, Bitcoiners were optimistic as he seemed to appreciate the distinction between bitcoin and altcoins.

However, even if his latest pronouncement is disappointing to Bitcoiners, it’s difficult to argue that Bitcoin isn’t threatening US dollar hegemony. Gensler’s sentiment is also shared by Hillary Clinton, who recently described Bitcoin as “undermining the dollar“.

Shifting towards a “Bitcoin Standard”, like El Salvador, is what broadcaster Max Keiser has termed a “speculative attack against the US dollar”.

So far it seems to be working. And perhaps for that reason, Gensler’s concerns are well-founded.

Categories
Australia Blockchain Crypto News Industries Regulation

ASX’s Long-Awaited Blockchain CHESS Replacement Goes Into Testing

ASX Prices Climb as Bitcoin Price Plummets On Anzac Weekend
A board displaying stock prices is seen at the Australian Securities Exchange (ASX) in Sydney, Australia, February 9, 2018. REUTERS/David Gray

Yesterday, the Australian Securities Exchange (ASX) announced the opening of the first of the Industry Test Environments (ITE1) for its blockchain post-trade replacement solution, CHESS.

The upgraded CHESS system has undergone some rigorous tests to ensure it can deal with Australia’s increasingly large share market. This is a major step towards the new CHESS equities clearing and settlement system going live in 2023.

The Clearing House Electronic Subregister System (CHESS) is the core system that performs the processes of clearing, settlement, asset regulation, and other post-trade services that are critical to the orderly functioning of the market. ITE1 gives CHESS users their first exposure to ASX’s fully integrated external solution, which includes Digital Asset’s DAML smart contract development capability and VMware’s DLT platform. The solution uses Digital Asset’s DAML smart contract language and VMWare’s blockchain.

The New System Available in 2022

ITE1 will open for software providers, third-party vendors who supply software to CHESS users, and organisations developing in-house systems. The ITE2 will open in April 2022 for market participants and other CHESS users. The announcement is for developers, while end-users will be able to access another iteration (ITE2) of the test environment from the same date, while the launch date is planned for April 2023.

This is truly a step in the right direction as the project has already been delayed three times. In September 2018 ASX pushed the live date to late 2020, but it was extended to April 2022. The extension was given to allow participants and regulators to cope with the volatility of early pandemic trading, and then to allow the new system to be redesigned to accommodate a massive increase in trading volumes.

Tim Hogben, the ASX group executive for securities and payments, said in a media statement:

Today’s opening is a significant step on the journey towards the go-live for the CHESS replacement system in April 2023. Together, we’ve entered a new and exciting phase of the project.

Tim Hogben, ASX

He added that the system would generate valuable feedback for ASX on the state of the new and developing system, with software providers testing functional and non-functional workflows across all connectivity access channels.

A Keen Eye Will Be Kept on CHESS

Hogben described the CHESS replacement project as a key pillar in ASX’s strategy to “build an exchange for the future and deliver world-leading infrastructure to the Australian market”.

Given that the CHESS replacement project involves groundbreaking technology, it is sure to garner a lot of attention. As a result of the hype around CHESS, ITE1 will be closely watched by many financial markets worldwide as the world considers its own long-term technology solution upgrade.