Hong Kong Regulator to Unveil New Cryptocurrency Exchange Rules

Hong Kong’s financial regulator — the Securities and Futures Commission (SFC) — will publish a new set of regulations for Bitcoin (BTC) and cryptocurrency exchanges today. The news, reported by Reuters on Nov. 6, was announced by Chief Executive Ashley Alder at a local fintech event. 

Regulatory clarity for crypto exchanges operating in Hong Kong

The new requirements will detail how exchanges much approach custody, compliance such as Know Your Customer and Anti-Money Laundering rules, among other issues.

“The framework will enable virtual asset trading platforms to be regulated by the SFC, a major development which builds on a way forward I outlined at the same time last year,” said Alder. 

As Cointelegraph reported, the SFC first established guidelines for crypto funds and exchanges in November 2018. Now, a year later, the regulator is taking that work forward, Alder told the conference on Wednesday.

Huobi could become first licensed exchange in HK

Commenting on the news, private investor Dovey Wan says that this is a big deal for the entire cryptocurrency industry. She points out that Huobi, in particular, may already be on its way to becoming the first licensed exchange in Hong Kong.

“WOW this is BIG,” wrote Wan. “Hongkong SEC will announce detail in about an hour regarding cryptocurrency exchange application criteria.” She added: 

“Considering Huobi has already backdoor listed on HKex, this will def play them a huge favor to be the first legalized Chinese crypto exchange.”

Earlier this year in March, the SFC also released regulatory guidelines for Security Token Offerings. The agency outlined that security tokens are “likely to be ‘securities’” under Hong Kong’s Securities and Futures Ordinance, and thus fall under existing securities laws.

Tradewind Digital Platform Uses Blockchain to Track Provenance of Gold

Tradewind Markets has launched a new system on its platform to track the provenance of its physical gold and other precious metals.

On Nov. 5, Coindesk reported that Tradewind Markets, a blockchain-based digital trading platform launched its latest solution Origins. The digital tool provides supply chain provenance to buyers and sellers of precious metals.

Tradewind tracks where its metal comes from

According to the Tradingwind website, Origins allows customers to buy and sell physical gold and other precious metals based on individual sourcing preferences, such as mine, artisanal, recycled sources, and the name and geography of the mine where the metal was sourced. Tradewind Chief Executive Michael Albanese told Coindesk:

“If you are a miner who produces responsible metal, once the bank buys the metal, it loses its identity […] That bank sells it to a wholesaler network down to a corporation. That miner is challenged to be able to advertise its metal. For the first time ever, the miner that produces responsibly is going to be able to tag their metal to advertise it to downstream buyers.”

Tradewind’s so-called VaultChain digital platform creates a direct and immutable connection between investors and their physical gold positions stored with the Royal Canadian Mint, a crown corporation of the Government of Canada.

Investors are able to buy fractional amounts of gold or silver through the digital platform, with transactions and ownership of the gold recorded on the blockchain.

Royal Canadian Mint uses blockchain as “source of truth” 

The Royal Canadian Mint reportedly legally recognizes the blockchain as the source of truth for title to physical gold registered on the Tradewind Platform. Buyers can instruct physical delivery via a dealer or directly with the Royal Canadian Mint in a variety of formats, subject to manufacturing and delivery fees.

Blockchain helps fight against blood diamonds

At the beginning of October, it was reported that government officials in the Societe Miniere de Bisunzu (SMB) mine in Congo were using blockchain technology to assure clients that the minerals they purchase are not part of a bloody supply chain. The Berlin-based blockchain company RCS Global was the company that delivered the mine-to-market technology solutions to help fight against conflict minerals in the Democratic Republic of Congo.

Æternity Releases Final Hard Fork Software to Compete with Ethereum

The core development team of blockchain platform Æternity announced the release of the software of its latest hard fork, namely Lima.

Æternity announced in a press release published on Nov. 5 that the introduction of Lima improves the network’s virtual machines, governance and naming system. The purpose of the update explicitly described in the announcement is to challenge Ethereum and other blockchain platforms.

A virtual machine ten times more efficient 

The press release claims that Æternity is one of the most active blockchain developer communities measured by code activity. Core developers have now released the updated software and the majority of the network’s miners will choose whether they wish to upgrade or not.

The author of the announcement claims that the new Fast Æternity Transaction Engine virtual machine outperforms other blockchains and will feature better efficiency and 10 times less gas consumption when executing smart contracts. The update also completes the transition of the network’s governance to the native blockchain of Ethereum’s network.

A new governance system

The update also introduced a delegated voting system to improve voter participation. Æternity founder Yanislav Malahov said:

“Æternity grew from a team of core developers to an ecosystem built by its community. […] The launch of the on-chain governance system also marks a new era for æternity blockchain. […] In addition, the FATE VM and improved state channels are part of the æternity community’s ongoing goal to create a user-friendly blockchain platform for building decentralized applications that scale.”

Lima also launches the official Æternity naming system .chain. Names can be mapped to any address and will be auctioned. The names can be used inside smart contracts, given that the system does not rely on second-layer solutions.

As Cointelegraph reported in mid-October, major Proof-of-Stake blockchain Qtum went through its first-ever hard fork, updating the network to Qtum 2.0.

Ripple’s Xpring Invests in New Smart Contract Platform

Xpring, Ripple’s investment arm and tech incubator has completed a strategic investment into smart contract platform Flare Networks.

Joining the XRP ecosystem

On Nov. 5, Flare Networks reported that it secured a partnership and investment with Xpring that will enable the company to bring a “wealth of resources and partners to enhance and extend the Flare, Xpring and XRP ecosystems.”

The Flare Network, which has been over two years in the making, reportedly integrates the Ethereum Virtual Machine to enable public and private networks to leverage smart contracts. 

Flare will soon release a draft token whitepaper detailing the construction and decentralized management of its native coin, which will be an algorithmically managed, pegged stablecoin. Xpring further explained:

“Flare’s native token will be an algorithmic stablecoin created in part by burning XRP, and payments for a contract can be made and received in XRP via Interledger, which will be integrated with Flare.”

The Xpring team also added that Flare will use “the XRP address and encryption system to provide XRP users with a virtually seamless way of interacting with smart contracts on the Flare Network,” enabling more users and developers to leverage the XRP Ledger in more use cases, such as contract settlement and app development.

Cointelegraph has contacted Xpring in regards to the reported investment into Flare Network. Xpring has not yet responded as of press time.

Xpring invests in Swedish startup

In October, Xpring invested in Swedish cryptocurrency self-custody startup Towo Labs to build hardware wallet firmware. Xpring said that the Swedish startup plans to develop a new version of the XRP Toolkit and hardware wallet firmware supporting all XRP Ledger transaction types, as well as a non-custodial web interface.

Arweave Secures $5 Million in Funding Round Led By Andreessen Horowitz

Venture capital firm Andreessen Horowitz has led a $5 million funding round for Arweave, a blockchain-startup focused on permanent online data storage.

On Nov. 5, the Arweave project reported that it had attracted world-leading funds in a $5 million investment round led by Andreessen Horowitz’s a16z Crypto, with the participation of other top investors such as Union Square Ventures and Multicoin Capital.

Arweave hopes to be the Library of Alexandria

The startup was founded in mid-2017 by Sam Williams on the promise to permanently host data, web apps and pages on its so-called permaweb. Williams commented on the partnerships:

“These new long-term partners join us on a mission to build the world’s first truly permanent information storage system. Through the Arweave protocol, we envisage a future where humanity’s valuable history, knowledge, and applications can never be lost.”

Williams further explained what the permaweb entails, saying that one should: 

“[I]magine the Library of Alexandria, a vast catalogue of human knowledge and experience, which is now impervious to fire, flood, and other disasters. This is the permaweb.”

The investment will help the company to further develop its outreach and adoption efforts. The new partners will join an already impressive list of supporters, such as 1kx’s Lasse Clausen and Christopher Heymann, Arrington XRP Capital, and the Techstars global network, amongst others.

“99.9% of all money laundering crimes go unprosecuted.”

In October, Andreessen Horowitz general partner Kathryn Haun claimed that “99.9% of all money laundering crimes go unprosecuted.” Haun explained that the financial services industry spends an estimated $20 billion a year on anti-money laundering (AML) and know-your-customer checks — but questioned whether any of these measures are actually working. From the perspective of AML, she said, when it comes to “moving to a decentralized system, I think we’re kidding ourselves if we think that’s going to change too much.”

Rep. Davidson Sees Place for Blockchain in US Manufacturing Despite Congress’ Concerns

United States pro-crypto Congressman Warren Davidson (R-OH) has once again called for clear regulations of blockchain industry to maintain U.S. economic dominance.

On Nov. 4, Davidson published a letter in the Wall Street Journal in response to an Oct. 24 report on automation in manufacturing. The congressman urged the U.S. government to encourage innovators to stay in the country. The letter read:

“If we allow fear to stifle their efforts, we risk surrendering global superiority and sacrificing improvements in quality of living.” 

Rust-belt woes in the face of changing manufacturing

The report to which Davidson was responding focused on concerns that robots and artificial intelligence were taking jobs from U.S. workers. Commenting on manufacturing in the Midwest, it reads: 

“[T]here is compelling evidence that factory automation swung three key Rust Belt states — Michigan, Wisconsin and Pennsylvania — in favor of Donald Trump in the 2016 election.”

Davidson’s letter expressed similar concerns that Americans were letter fears in the face of blockchain innovation prematurely shut down the market.

Davidson — who represents Ohio’s 8th district and is a member of the congressional steel caucus — is optimistic that the improvements crypto technology can bring to manufacturing will outweigh the cons. He told Cointelegraph:

“From improving capital formation, supply chain logistics, reinventing shop floor operations, product identification and traceability, U.S. manufacturers could stand to harness the power of blockchain to unleash incredible innovation and manufacturing growth.”  

Sharing skepticism about Facebook’s Libra project

In the letter, Davidson emphasized that a number of industry-related companies are already moving in countries such as Switzerland, seeking a friendly regulatory ecosystem.

While sharing some of his colleagues’ skepticism about Facebook’s proposed Libra project, Davidson claimed that he treats their fear of blockchain and crypto “shortsighted.” According to Davidson, by deterring initiatives in the industry, the U.S. government risks is “surrendering global superiority and sacrificing improvements in quality of living” just in order to preserve the status quo.

Davidson urges passage of the Token Taxonomy Act reintroduced in April

In a tweet on Nov. 5, Davidson expressed hope that his colleagues in the House Committee on Financial Services can find a way to fight their fear of blockchain so that the U.S. can “maintain technological and economic dominance.” Urging passage of the Token Taxonomy Act, reintroduced in April 2019, the congressman wrote:

“In the midst of technological change, consumers, innovators, and investors need regulatory certainty to keep America’ economy working for them. FinTech is just one example…”

Oxfam’s Blockchain-Based Agricultural Insurance Pays Farmers in Sri Lanka

The United Kingdom-based charity organization Oxfam International announced the success of its blockchain-based delivery system of microinsurance to paddy field farmers in Sri Lanka.

In a Nov. 4 press release, Etherisc announced that Oxfam’s blockchain-based insurance system had made pay-outs to Sri Lankan farmers who continue to risk losing their crops due to extreme weather events.

Blockchain reduces costs and increases pay-outs

Oxfam in Sri Lanka, together with its partners Etherisc and Aon plc, will now continue to seek solutions to some of the challenges that will present themselves as the new cropping season starts in the month of November. 

In the past, issues such as lack of affordable and reliable insurance products, a lack of understanding about how insurance would help a farmer survive, and when and how a claim would be paid, have always acted as major barriers that prevented farmers from utilizing insurance. 

However, the use of blockchain technology can transform and simplify the insurance claims process, which results in reduced administration costs and a higher percentage of premiums being used for fully trusted pay-outs. Chief inclusive officer at Etherisc Michiel Berende said:

“We are proud to have real-world, on-the-ground success from a blockchain solution for microinsurance […] We are delighted with the first phase results and we are excited to drive on and help more farmers.”

Oxfam continues to use stablecoins to distribute aid

In June, Oxfam partnered with Australian tech startup Sempo and blockchain company ConsenSys to test stablecoin Dai’s (DAI) suitability for aid in regions suffering from natural disasters. With the support of the Australian government, a philanthropic initiative was launched and dubbed UnBlocked Cash. Oxfam and Sempo reportedly chose the world’s most natural disaster-prone country, Vanuatu, to test the system.

In September, Oxfam initiated the pilot program’s second phase to further distribute disaster relief.

Joshua Hallwright, Oxfam Australia’s humanitarian lead, told Cointelegraph in June that it was “highly likely that Oxfam will use stablecoins or other distributed ledger technologies to provide cash aid in disaster responses in the future, either in Vanuatu or elsewhere.”

Coinbase Legal Chief Wants Private Sector to Create US Digital Dollar

Coinbase’s legal chief, Brian Brooks, feels that the United States government should take a step back and allow the private sector to create the U.S. digital dollar.

Private sector should build the technology

In a Fortune piece on Nov. 4, Brooks asked whether the U.S. government should create the digital dollar, or whether the private sector can do so more effectively. The answer to that question, according to Brooks, is also the best path forward, saying:

“The best path forward is one that harnesses our country’s remarkable capacity for innovation and also reflects government’s historical practice of setting broad guide rails for private innovation within the financial system. That means letting innovators invent, and letting government regulate. In short: the private sector should build the technology, and the public sector should set monetary policy.”

Brooks agrees that the U.S. has continued to take a leadership role in the world’s technology innovation initiatives, but also that this leadership is “provided by the private sector, not by the government.” He is therefore concerned that the government will stifle the cryptocurrency universe and development of its underlying blockchain technologies. Brooks said:

“The U.S. can take the lead without exerting unnecessary control over technology decisions that are providing increased access to our financial system. This can all be done while still empowering central banking authorities and building trust between individuals and institutions.”

U.S. should allow crypto firms to innovate to compete with China

Mike Wasyl, managing partner at DeerCreek, a fintech-focused corporate strategy firm that works across Asia-Pacific and the U.S., recently echoed similar sentiments when he said that the U.S. is stuck trying to regulate its way to innovation, and that it needs to wake up to China’s proactive pursuit of a central bank digital currency:

“China is making these very large macro plays. They want to maintain control and be seen as leaders and so adopting blockchain and being public about it, as we saw recently, is going to stir a lot of interest.”

Official: Binance Chain and BNB Will Be Traceable via CipherTrace

American blockchain security firm CipherTrace will provide Anti-Money Laundering (AML) controls for Binance Chain and its native asset Binance Coin (BNB).

CipherTrace to increase AML checks on Binance Chain

Binance Chain, a public blockchain of major crypto exchange Binance and the underlying blockchain for Binance DEX, is expected to improve its AML procedures through CipherTrace, Binance announced on Nov. 5.

Specifically, CipherTrace will be providing Binance Chain with institutional-grade AML controls to increase adoption of the Binance Chain blockchain.

Within the initiative, CipherTrace will enable global developers, investors and regulators to access the Binance Chain blockchain for discovering data such as high-risk addresses. Moreover, CipherTrace will be helping those entities to set various controls to protect decentralized applications, exchanges or other crypto-based applications, Binance wrote in its blog post.

Customer data will not be shared with third parties, Binance COO says

Samuel Lim, chief compliance officer at Binance, claimed that the initiative will not affect Binance users’ security and data protection. Speaking to Cointelegraph, the executive noted that customer information will not be shared with third parties as a result of the new AML practice, adding:

“Users can rest assured that Binance will uphold its usual high standards of user security and data protection.”

Lim also denied to specify to Cointelegraph whether this move would affect listing of privacy coins such as Monero (XMR) in the future, saying that Binance does not comment on specific tokens and maintains the highest integrity in its listing due diligence process.

In the announcement, Lim considered the move as a “major win for the community-driven Binance Chain,” noting that Binance users can soon expect more digital token support across its ecosystem.

Meanwhile, online critics have outlined the third party disclosure risks associated with AML practices by companies such as CipherTrace and Chainalysis. Twitter account theonevortex wrote:

“Looking forward to chain analysis companies like @ciphertrace and @chainalysis getting hacked. These people sell your data to 3 letter agencies and governments WITHOUT your permission.”

CipherTrace recently expanded its platform to support 700 tokens

CipherTrace’s support for BNB and Binance Chain follows the recent expansion of CipherTrace services to up to 700 cryptocurrencies including Ether (ETH), Tether (USDT), Bitcoin Cash (BCH) and Litecoin (LTC) on Oct. 15. Claiming that CipherTrace has expanded to support 87% of the transactional volume of the top 100 cryptos, the firm denied to specify which cryptos will not be supported on the platform at the time.

On Oct. 21, CipherTrace CEO David Jevans argued that crypto regulations by global regulators such as those by the Financial Action Task Force’s would trigger a shift of criminal activity from Bitcoin (BTC) to privacy coins.

European Union Drafts Law Suggesting Consideration of Eurocoin

A draft document issued by the European Union suggests that the union should consider issuing its own digital currency.

Will the EU wage war on crypto?

Reuters reported on Nov. 5 that the draft in question — which is still subject to amendments — urges member states to develop a common approach to cryptocurrencies, possibly banning high-risk projects.

If the draft in its current form is approved, which could happen as early as next month, it could have far-reaching consequences. More precisely, Reuters suggests that such a law could escalate into an EU regulatory campaign against cryptocurrencies.

European Central Bank to consider Eurocoin

The draft prepared by the Finnish EU presidency also suggests that the European Central Bank should consider issuing its own digital currency:

“The ECB and other EU central banks could usefully explore the opportunities as well as challenges of issuing central bank digital currencies including by considering concrete steps to this effect.”

The draft will be discussed this Friday, and perspective on its adoption will be presented on Dec. 5.

As Cointelegraph reported in a dedicated analysis in late September, Europe’s digital currency is being increasingly seen as an answer to Facebook’s Libra stablecoin.