Category Archives: 2018 News

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Parker-Fitzgerald, UK Finance Report Sheds Light on Institutional Attitudes and Approaches to Blockchain

Banks have been flocking to disruptive technologies such as Artificial Intelligence (AI), cloud technologies as well as blockchain technologies. A recent joint report from UK Finance and Parker Fitzgerald warns of the “systemic risks” attributed to the three technological innovations.

New challenges

More specifically, the three-part report goes on to identify the risks attributed with distributed ledger technology (DLT) and blockchain technology. For starters, the paper makes a note of the growing scale of “experimentation and potential adoption” within the industry; it holds the belief that blockchain technologies will require “industry scrutiny,” which is because of issues regarding privacy, scalability, security, and competition.

The paper argues that while the technologies will benefit banks as they can move away from their archaic, inefficient legacy systems, they still carry new risks. For instance, the report harbors concerns with privacy as blockchain anonymizes data such as the keys or certificates of each transaction.

This causes trouble for smaller financial institutions as the transactions will be easier to identify within a smaller network and gives them right to be “understandably concerned” running a network that allows for even their competitors to see the anonymized transaction records.

New solutions

However, it also goes on to state that “technological solutions are possible”; the implementation of ‘cross-chains could address the concerns surrounding privacy by “allowing each participant to maintain a separate bilateral chain with all other participants. To increase security and address privacy others have suggested the potential of storing data ‘off-chain’”.

Though it continues to admit that this could reduce the benefits of using the technology as using cross-chains slows “the clearing of transactions” and in the instance side-chains are used, “reducing the ability to test and confirm the veracity of information on the ledger”.

Some conclusions are made and are generally rather optimistic, acknowledging that despite challenges ahead, embracing the emerging technologies carries far-reaching benefits and will catalyze the enablement of efficiencies and new economies as detailed in the report.

Timing is everything, Poland, and the GDPR

Furthermore, the paper was published a week after Poland became the first country to move banking records on a gigantic scale onto blockchain and recently, “temporarily” suspended tax collection for digital currencies.

It also comes just days before the new EU General Data Protection Law (GDPR) guidelines around data protection were released; the legislation which has been in the works for some years is to be implemented on 25 May 2018 in all EU member states.

In the build-up to the legislation, there had been some knee-jerk responses, fear, and uncertainty, though it is argued that blockchain technology can be used to authenticate user identity as opposed to storing it, which can be a helping hand in meeting the new GDPR provisions.

It appears as though the global conversation surrounding blockchain technology is reaching a pivotal moment, one in which the global community acknowledges the validity of the tech and works hard to ensure it can be safely, securely and effectively utilized.

 

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Seoul Mayor Doubles down on Blockchain Pledges Ahead of Local Elections

Ahead of the Seoul mayoral elections in June, the present mayor of the South Korean capital Park Won-Soon has made manifesto pledges to increase blockchain developments, among other high-tech industries.

A progressive power

Park has been mayor since 2011 and is now aiming to secure a third term. In the past, he has put forth encouraging proposals for urban redevelopment under his aspirational ‘smart city’ plans which have been in motion as early as 2014.

As reported by local news outlet The Korean Herald, Park had highlighted “six strategic sectors that the city hopes to expand, including the Internet of Things, AI, big data, and bio-health, while creating more jobs in less affluent neighborhoods to promote ‘balanced regional development’”.

CoinDesk Korea also reported that he is doubling down on his commitment by furthering efforts to create a center for blockchain incubation in the city district of Mapo. His words will undoubtedly chime well with the swathes of millennials in South Korea who are investing in cryptocurrencies and are soon to be part of a “cashless society” pilot project conducted by the Bank of Korea.

Park’s blockchain commitment, which was announced on 20 May, is a pledge to turn the Mapo Fintech Lab into a dedicated hub for blockchain and fintech development. It is the first proposal in history from the Seoul Metropolitan Government to back blockchain technology.

South Korea appears to be moving past its skeptical views of initial coin offerings (ICOs) and cryptocurrencies at an accelerating pace. Fresh regulatory stances, taxation laws and the push to legalize ICOs have put South Korea at center stage of blockchain advancements, and Park’s propositions are putting him at the epicenter of further industry attention.

In early April, Bitcoin News reported that the mayor had announced plans to further implement blockchain technology in the capital city, citing economic benefits, savings on utilities and providing new work opportunities for the young and unemployed populace of Seoul.

S-Coin and beyond

The mayor has also put forth even bolder plans to introduce a cryptocurrency for the city. Park is working towards creating appropriate institutional frameworks for Seoul to have its own digital currency, ‘S-Coin’, which will be used in city-funded social benefits programs.

With it, he is keen to address the scrutinous views presently held by the South Korean government. Park suggests that with evidence of success, further developments will follow soon after.

In an interview with CoinDesk Korea, Park said, “As Seoul is the world’s leading city in the field of information and communications, including the Fourth Industrial Revolution, I think we should study new technologies such as blockchains.”

The news has received international attention and should the mayor attain his third term, Seoul could become the blockchain capital of the world, challenging highly favorable crypto-friendly nations like Switzerland.

 

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Japan’s Largest Bank Partners with US Tech Giant for Blockchain Payment Service

The biggest bank in Japan has partnered with a US tech company to design a blockchain capable of handling 1 million transactions per second, boosting speed and reducing transaction feeds through distributed ledger technology.

MUFG and Akamai partnership

The Mitsubishi UFJ Financial Group (MUFG) partnered with US-based Akamai to deliver a new global payment network service, which is intended to be available from 2019 and will be compatible with Internet of Things (IoT) style payments and other emerging technologies.

“MUFG and Akamai, using Akamai’s globally deployed high-speed and high-security platform, will utilize this new blockchain’s high-speed processing and secure value transfer abilities to promote pay-per-use, micropayments, and other new IoT generation payment methods, and to support the diverse payment options of the sharing economy by offering an open platform,” reads the 21 May press release.

The new blockchain developed contrasts with the original cryptocurrency Bitcoin, which was built on the first blockchain in the world and can only process seven transactions per second; the distributed ledger developed by MUFG and Akamai is “permissioned”, which means that verified computers are the only ones able to join the network.

Risk and reward

MUFG and Akamai detailed the growing interest in blockchain technologies and highlighted its capacity to “strengthen protection against falsification of transactions and drastically lower costs”, as well as the fact that financial institutions across the globe are partnering with tech companies to also test proof of concept designs.

While the technology is reported to “create new risks for banks”, the Japanese financial giant has embraced it with Akamai, which according to the press release is “the world’s largest and most trusted cloud delivery platform”.

Blockchain has been receiving surging amounts of interest from governments and institutions since ICOs and cryptocurrency markets exploded in 2017. Industry heavyweights such as IBM, Amazon, Microsoft, and JPMorgan are making bold steps toward adopting the disruptive technology, which will only contribute to the future successes of the blockchain industry.

Blockchain, banking, and a cryptocurrency

Earlier in May, the Japanese financial giant reported that it had intentions of trialing its own cryptocurrency in 2019, which lines up perfectly with the intended release date for the new blockchain service.

As reported by Japanese local news outlet NHK, the fifth largest bank in the world by assets will be rolling out a trial app to approximately 100,000 MUFG account holders who can install the app on their smartphones and convert their deposits into the MUFG coin; one MUFG coin will be worth one Japanese yen. Users will also be able to use the currency wherever they so please and transfer the currency to accounts of other participants.

It is a clear indication that the global stance on blockchain and cryptocurrency technologies is shifting toward the mainstream. Should the partnership and digital currency trial be successful, it will prove a transformative moment for the industry, financial institutions and society.

 

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Thai Focus Group Hearing Clarifies ICO, Crypto Stance

The Security and Exchange Commission (SEC) of Thailand made several clarifications on cryptocurrency and blockchain when hosting a focus group meeting on cryptocurrency. Broadcast on 21 May on Facebook Live, the SEC discussed its present and future approaches to crypto-related enterprises and initial coin offerings (ICOs).

Clarity in conversation

As reported by local news outlet Siam Blockchain, the SEC clarified its role as being an overseer to ICO operations as well as cryptocurrency-related business such as exchanges, brokers and traders.

The focus group hearing also shed light on how ICOs should be allowed to raise funds, concluding that ICOs can only accept the national currency, Thai baht, and other digital currencies that are permitted by the SEC, those that “have enough liquidity and are not associated with money laundering”.

Furthermore, the SEC ICO Portal of Thailand will not be able to list international ICOs and nor will it involve itself with the ICOs of stable coins, which the national bank is to regulate. Projects that are operating an ICO must complete applications in 60 days and will be held to stringent Know-your-Customer (KYC) and Anti-Money Laundering (AML) standards.

The idea of an “approved ICO portal” came about in mid-May after the SEC held a public hearing for “drafted notifications and criteria” under an emergency decree on digital asset businesses which came into effect on 14 May.

SEC secretary-general Rapee Sucharitakul stated: “The legislation also aims to protect investors from risks of fraud and deception by dishonest persons, money laundering and exploitation of digital assets to facilitate illegal financial transactions, while ensuring regulatory clarity to facilitate legitimate uses of digital assets.”

Regardless of the feedback received from the blockchain community, the SEC set the legal conditions for digital tokens to only be offered by a company after a tight application process. While the new frameworks have the consumers best interests at heart, the community fears the move may be restrictive and cause Thailand to become an unattractive space for the industry.

Thai crypto classifications, taxation and regulation

Bitcoin News reported earlier in May that Thailand’s ministry of finance had proposed taxation and regulatory frameworks for cryptocurrencies; a 15% capital gains tax for digital asset operators and 7% VAT charge for all crypto-trades made