Updates

E-Money and virtual currencies

2018

Two Initial Coin Offer (ICO) issuers, CarrierEQ Inc. and Paragon Coin Inc, was found in breach of the security law in the United States. The U.S. Securities and Exchange Commission ruled that companies when selling its 'utility tokens' were actually selling securities. Utility tokens are 'tokens which are intended to provide digital access to an application or service' (by FINMA classification). Companies are to return the funds to harmed investors, register its tokens as security, and pay $250.000 penalties. In a press release The U.S. Securities and Exchange Commission's Co-Director of the Enforcement Division stated: “We have made it clear that companies that issue securities through ICOs are required to comply with existing statutes and rules governing the registration of securities,”

Consortium around the biggest oil industry players such as BP and Shell, joined forces to implement blockchain based solutions for the energy industry. The platform which will be deployed next year, will deal with: contracts, logistics, and accounting. Apart from BP and Shell, the consortium includes Gunvor, ABN AMRO, Koch, ING, Mercuria, and Societe Generale. The aim is to reduce paper-based work in the industry.

Following the dispute in the consensus mechanisms, fourth largest cryptocurrency Bitcoin Cash which emerged from the Bitcoin fork in August 2017, was split into two new competing forks (versions). New version of Bitcoin Cash provides the blocks in the blockchain which are considerably bigger than the existing one. This change is reasoned by the ability of blockchain to scale for massive amounts of transaction. Bitcoin Cash is now divided on Bitcoin Cash ABC (BCHABC), and Bitcoin Cash Satoshi Vision (BCHSV). Two competing chains are struggling for the majority of hashrate power and to emerge as a winning chain which will attract more users of Bitcoin Cash cryptocurrency.

Report issued from the Securities and Markets Stakeholder Group (SMSG) is aiming to gave the European Securities and Markets Authority (ESMA) advice regarding the regulation around the Initial Coin Offerings (ICO).  Report is defining terms crypto asset, cryptocurrency, token, and ICO and also try to map existing regulation around the ICO in European countries. SMSG is giving recommendation on additional layer of regulation which will have on mind not to stifle the emergence and development of future hubs. Read the full report here.

Payment service giant Visa is preparing its solution for identification for cross-border payments in collaboration with IBM. The solution is called B2B Connect, and it will deploy the hyperledger blockchain solution. Hyperledger is a project of open source blockchains started in 2015 by the Linux Foundation. Visa plans to release the new service in the first quarter of 2019. First organisation to join B2B Connect is fintech provider Bottomline Technologies which serves 1 200 companies worldwide.

The Japanese Virtual Currency Exchange Association (JVCEA) has received permission from the Japanese Financial Services Agency (FSA) to police and sanction virtual exchanges for any misconduct or violation. In this way, the JVCEA is permitted to make rules on safeguarding assets, preventing possible money laundering, setting rules on identification and others.JVCEA is known for policies through tougher than existing financial regulatory frameworks.

The FSA granted 16 permissions for the virtual currency exchanges in Japan, but not the single permision in 2018. Read FSA’s statement here. (Japanese)

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