Category Archives: California

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Advocacy Groups Separate Fact from Fiction as California Passes Crypto Bills

Two pending blockchain and cryptocurrency bills have passed through the Californian Legislature into law, with support from a community advocacy group.

It appears that the two bills, created to clarify cryptocurrency and allow blockchain-based business to have a legal standing in the state, had considerable non-governmental support leading up to their adoption.

The Advocacy Blockchain Coalition is becoming one of a number of community groups now fulfilling an essential role in bringing facts about the industry to the attention of lawmakers. Sensationalist media reports have done little to help the advancement of emerging technologies such as blockchain and cryptocurrency in the US and advocacy groups are beginning to plug the educational gap between fact and fiction.

Lobbyists and advocacy groups manage to cut through the media hype and provide lawmakers with essential information about what blockchain and cryptocurrencies can achieve and how they can be utilized in the financial sector and elsewhere.

The new Californian bills passed, SB 838 and AB 2658, have provided a legal framework for companies to record and transfer stocks using DLT and include legislative support for contracts signed electronically, negating the need for written authorization.

They also define blockchain as “a mathematically secured, chronological, and decentralized ledger or database”, representing a huge step in accepting blockchain in the state and elsewhere in the US. This bill should receive widespread support from the public domain, comprising those from within the industry as well as members of the legal profession, private companies, and consumer groups.

One requirement of bill AB 2658 is the creation of a working group within the State Government of California including members of the cryptocurrency community, as well as legislators, to examine blockchain technology more thoroughly. The group will report back to the Legislature before July 2020 with recommendations on how it could be used at state governmental level and among the Californian business community.

A statement made Senator Roberts Hertzberg, representing the 18th District of California and the author of the first bill, commended the part that advocacy groups were playing in educating lawmakers on the use cases of blockchain technology, particularly given the flow of negative media coverage surrounding emerging technologies.

 

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California in Trend with Blockchain Introduction into State Legislation

A bill has passed both houses of the Californian state legislature which, if brought into law, will define blockchain and require the forming of a government blockchain group within a year.

The bill AB 2658 is now awaiting Californian governor Jerry Brown’s approval. If implemented, it would define blockchain as “a mathematically secured, chronological, and decentralized ledger or database“, representing a huge step in accepting blockchain in the state and elsewhere in the US.

This is a growing trend in the US as Bitcoin News has reported over the course of 2018, with US states signing up to blockchain. Arizona has officially signed into law a bill that allows for corporations to hold and share data on a blockchain. First introduced in February by state representative Jeff Weninger, the bill is intended “to open the door for emerging technologies in Arizona”.

In May, the New York state legislature also presented a bill to create a blockchain task force. If created, the New York task force would prepare a report for the governor, the temporary president of the state senate, and the speaker of the assembly by December 2019. Also, Colorado has passed its own bill which will use blockchain for government record keeping and cybersecurity.

Tennessee signed a bill recently that legally recognizes blockchain technology and smart contracts for electronic transactions. The bill also makes a provision that “protects ownership rights of certain information secured by blockchain technology”.

California’s bill requires that the blockchain group should represent a widespread from the public domain, comprising those from within the industry as well as members of the legal profession, private companies and consumer groups.

Moves at integrating blockchain into legislation has become a race in the US with  Nebraska, Florida, Arizona, Nevada, and Vermont, along with Maine, Hawaii, Illinois, and North Dakota, some of the many US states notably either in the process of presenting bills, enacting legislation or actively utilizing blockchain in state legislation.

 

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Blockfi Takes Crypto-Backed Lending to 44 US States with California Coup

Crypto-backed lending platform Blockfi has received a license to operate in California, which takes its spread of business into 44 US states.

The Californian license, on top of the those already held by the company, is an indication of a growing interest in crypto backed lending across the US. Another service, SALT, is currently providing its service in 35 states across the country, with Nexo as another major crypto loan facilitator.

Crypto-backed loans are arranged by the borrower transferring a set amount of cryptocurrency to a participating crypto platform where the assets are stored in a cold wallet as collateral for a cash loan. The loan period can vary but is often between 10% and 20%, with loan terms varying from one month up to as long as five years.

In order to protect lenders, the cryptocurrency deposited always exceeds the loan required with standard loan-to-value ratios coming in at between 40% to 60%, although this ratio can vary. To use this example if a borrower wants a loan of USD 50,000, then crypto asset collateral worth USD 125,000 would need to be deposited.

In a case where the borrower ceases payments for any reason, the platform is at liberty to sell on the collateral thereby covering the loan, or if there is a decrease in the value of collateral – a risk in falling markets – the borrower has 48-72 hours to correct the ratio to its original level. This type of lending can be risky as with market fluctuation, particularly a falling market, both lender and borrower can be taking a gamble.

Blockfi CEO Zac Prince suggests that its platform is aimed at institutional investors:

“We’ve found that a lot of crypto-asset investors are hesitant to use their crypto because of concerns with security and trust in the space… We’ve built our platform with an institutional-quality approach from top to bottom.”

Prince sees as this type of loan facility as appealing to those who want liquidity without selling their crypto assets. Just a few of the plethora of companies now operating in this growing market are Abic Corporation, Coinloan, Othera, Ethlend and Everex.

 

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Crypto Investor Sues AT&T for $224M After Phone Hack Losses

A cryptocurrency investor in the US has filed a lawsuit against his cell phone service provider AT&T on the grounds of gross security negligence that lead to his personal loss of USD 24 million in crypto.

The plaintiff, California resident Michael Terpin, filed a 69-page complaint with the US District Court in Los Angeles on Wednesday alleging that AT&T not only violated its statutory duties and Privacy Policy commitments but went so far as to willingly cooperate with the phone hacker. Terpin claimed that he was victim to digital identity theft two times in seven months when his digital assets were taken via his cell phone number.

Suspicious circumstances were cited by Terpin regarding the actions of at least one AT&T employee. He alleged that ”insider cooperation with the hacker” took place after a store employee offered out his phone number without verifying the person’s identity or requesting any of his private information. Terpin’s complaint details that his number was then used to break into his cryptocurrency accounts and compares the incident to a hotel providing a thief with a fake ID the key to a room and the safe to steal from the rightful owner.

The legal complaint seeks from AT&T USD 200 million in punitive damage and USD 24 million in compensatory damages.

AT&T responded to the accusations, providing CNBC with a statement reading: “We dispute these allegations and look forward to presenting our case in court.”

Terpin may well have been considered a profitable target by potential thieves due to his work in the cryptocurrency industry. In 2013, he co-founded Bitcoin angel investor group BitAngels, as well as the BitAngels/Dapps Fund.

The cryptocurrency community has recently placed a significant focus on increased security as imperative for increasing adoption levels and seeing market prices recover from a relatively poor performance this year, although in this instance it appears to be only AT&T at fault.

 

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South Carolina Startups Get Green Light After Operation “Cryptosweep”

The Office of the Attorney General of South Carolina has given the go-ahead for two startups to resume business in the southern US state.

The Securities Division has removed cease-and-desist orders previously served against ShipChain and Genesis Mining for being accused of being in violation of state law as part of “Operation Cryptosweep” launched by the North American Securities Administrators Association earlier this year, as reported by Bitcoin News. The Statement by the Attorney General’s Office stated at the time:

“It is in the public interest, for the protection of investors, and consistent with the purposes of the Act that Respondent be ordered to cease and desist from engaging in the above-enumerated practices, which constitute violations of the Act, and pay an appropriate civil penalty for its wrongdoing.”

Shipping platform ShipChain refuted the accusation that its token sale wasn’t conducted in compliance with securities laws and that it was “not aware” that SHIP tokens were even offered to South Carolina residents as the sale was conducted out of state before being registered there.

The company launched in 2017 in California, reportedly raised USD 30 million in a private token sale in January. It was set up to deal with logistic issues which currently blight the industry to the tune of USD 50 billion annually on lost or stolen cargo.

The other company, Genesis Mining had been accused by the South Carolina Attorney General’s Office Securities Division of selling unlicensed securities and although the order to cease and desist has been dropped, no further details were given. The Icelandic company, founded in 2013, is the largest crypto mining consumer of power in Iceland and one of the largest companies offering Bitcoin mining services.

US States continue to legislate for cryptocurrency and blockchain activity in order to regulate for a rapidly growing fintech impact as more companies choose to do business in the country.

Nebraska, Florida, Arizona, Nevada, and Vermont, along with Maine, Hawaii, Illinois, and North Dakota are some of the many US states notably either in the process of presenting bills, enacting legislation or actively utilizing blockchain in state legislation.

 

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