US Congress Adds Two Blockchain Proposals to the Consumer Protection Safety Act

The U.S House of Representatives has approved two blockchain-affiliated Acts through its Committee on Energy and Commerce; this marks the furthest a blockchain bill has come in the 116th Congress. The two Acts which will now be debated on the House as part of the larger Consumer Technology Act include the Blockchain Innovation Act and a section of the Digital Taxonomy Act.

Blockchain joins the list of emerging tech that the Federal Trade Commission (FTC) and Department of Commerce (DoC) will be tasked with consumer threat identification if the bill goes through. Rep Darren Soto (D-Fla) who is one of the bill’s sponsors noted that blockchain tech is excellent and could go a long way with the right regulatory support,

“I believe our government needs to support that growth, establish light-touch regulations to ensure certainty, protect innovation, stop fraud and enable its appropriate use for government, business and consumers.”

As it stands, the unregulated nature of blockchain has provided adequate grounds for scammers to engage in fraudulent activity and get away with the same in a blink. This was one of the issues cited by the bill’s sponsors and, in particular Congressman Jerry McEnery (D-CA); he highlighted that the incorporation of parts of the Digital Taxonomy Act would play a major role in protecting consumers from the scammers.

Better Late than Never!

Although a little late to the party, the U.S is gradually catching up with pioneers like Japan which enacted regulatory frameworks for the blockchain and crypto industry as early as April 2017. Politicians in the country have also started to accept donations in Bitcoin; Rep Soto, who sponsored this bill told the Chamber PAC that his campaign would be accepting BTC donations. The Democrat Congressman is not the only one that has gone this road; former presidential candidate Andrew Yang and MN-06 Rep Tom Emmer are the other candidates that have since accepted Bitcoin.

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Author: Edwin Munyui

OCC Needs to Provide Regulation Clarity to Protect Users and Businesses

The chair of Senate’s powerful committee in charge of banking, Sen. Mike Crapo (R-Idaho), has asked the Office of the Comptroller of the Currency (OCC) to update his committee on its recent Advanced Notice of Proposed Rulemaking in regards to crypto services.

In a letter dated September 1 and addressed to Brian Brooks, acting comptroller at OCC, Sen. Crapo says that it is vital to provide an update to the committee in regards to the office’s recent announcement that national banks, as well as federal savings associations, can provide crypto custody services.

The federal banking regulator had in June last year invited the public to provide their opinion in regards to how cryptocurrencies are used or treated within the financial industry.

The invitation saw about 90 banks, crypto firms, academia, as well as other organizations in the industry respond. Some major US banks stated that they were open to offering crypto services if there are clear regulations.

Crapo is asking the OCC to give the committee an update. “Provide the committee with an update on its findings and the next steps the OCC intends to take with this technology,” Crapo’s letter reads.

Crapo also urges the OCC to come up with clear and precise rules that will help the industry to grow rather than trampling its development.

“The U.S. should develop clear rules of the road that protect businesses and consumers without stifling future innovation,” the letter states.

Crapo explains that the crypto space is providing products as well as services that are diverse in the finance industry, which are not only inevitable but also beneficial. In this regard, Crapo urges the OCC to ensure that the regulations should allow the US to lead in its development.

Previously, Crapo, as the chair of the Banking Committee, has headed various Senate hearings on blockchain and cryptocurrency-related topics. A key area of focus for the committee has been the Facebook-led Libra project, which Crapo has raised concerns on whether the global stablecoin project should observe the US regulations.

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Author: Joseph Kibe

CFTC Tech Advisory Meeting Features Possible Fed-backed CBDC Scenarios

The CFTC Technical Advisory Committee (TAC) discussed a Fed-backed digital currency in the latest remote meeting which it held last week. This comes as more jurisdictions move to consider CBDC’s following China’s progress in this space and the COVID-19 pandemic that has since raised the need for digital money.

One of the keynote speakers, Georgetown Law Professor, Chris Brummer, presented some scenarios under which the U.S Fed could issue a CBDC, comparing the solution to that being advocated by stablecoins. Brummer was keen to highlight that not all CBDC’s are created equal hence multiple scenarios for a dollar-backed CBDC.

Dollar-backed CBDC Design Suggestions

In his presentation, Brummer further detailed six CBDC approaches that the Fed could take in developing a digital dollar. Most notably was the decision of whether to create an account or token backed ecosystem. The former is pretty similar to today’s bank accounts, only that into. A token ecosystem, on the other hand, will be less strict since no identification would be required to operate in the network.

Another suggestion was whether to have the CBDC on both retail and wholesale markets or only on the latter. Wholesale markets encompass commercial banks and other large financial institutions, while a retail market refers to the general public.

Brummer noted that this was another angle the Fed should consider before transforming the CBDC niche idea into a reality. He further summarized that the future of CBDC’s could only be dictated by the issuing authority since some central banks could decide to use commercial banks or issue the currency directly.

Greater Value Than Stablecoins

Recent months have seen stablecoins like the USDT gain popularity as stakeholders in the crypto market seek to preserve value while doing other activities such as yield farming. Brummer now says that CBDC’s set out to achieve a similar goal and could have the upper hand since trusted monetary authorities back them. Brummer said,

“Central bank currencies can be seen as trying to provide more certainty and safety, if one will, behind the utility that a traditional stablecoin aspires to achieve.”

While the underlying value compared to stablecoins is clear, Brummer, however, warned that adopting CBDC’s could destabilize the whole financial ecosystem as well. This is because central authorities might overlap the role of financial institutions in onboarding and serving clients, should they choose to roll out something like an account-based CBDC run by the Fed.

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Author: Edwin Munyui

US Congress Banking Committee Discusses The Development Of Digital Money and Payments Systems

  • The U.S Congress banking committee discusses the future of digital money and payments
  • Former U.S Commodities and Futures Trading Commission (CFTC) chairman is among the witnesses set to present to the committee.

With over 32 bills on digital currencies and payment systems introduced in the 116th U.S Congress, these new technologies got yet another day in the lawmakers’ chambers. According to a remote hearing earlier today, the U.S Senate Committee on Banking, Housing, and Urban Affairs discussed the “Digitization of Money and Payments.”

Details released on the hearing put forward three witnesses who vouched for digital payments, stablecoins and presented the advantages of developing a digital dollar. The witnesses are Former CFTC chairman and Senior Counsel at Willkie Farr & Gallagher LLP, Christopher. J. Giancarlo, Paxos co-founder and CEO, Charles Cascarilla, and Professor of Law at Duke University, Prof. Nakita Q. Cuttino.

In his pre-written statement to the committee, Giancarlo urges that the development of new financial systems to push America into the 21st century. He focuses on the long settlement and bank transfer times, land titles issuance, and recent delays in distribution of the $2 trillion stimulus checks – some taking a month to reflect in citizen’s accounts.

To bring new technological solutions, Giancarlo, who launched the Digital Dollar Project, a non-profit organization aiming to digitize the greenback, will be explaining the need to have a digital USD. He further wrote:

“The United States must take a leadership role in this next wave of digital innovation or be prepared to accept that the innovation will incorporate the values of America’s global competitors.”

Cascarilla looks to focus on stablecoins, and the possible creation of a Fed-controlled digital token, a CBDC. Given the current challenges in the banking system, Charles believes the integration of stablecoins is critical to the U.S’ financial infrastructure and maintaining its position in global economics.

He concluded his statement:

“Supporting growth and innovation with a US CBDC would facilitate the necessary upgrades to our financial infrastructure, reduce systemic risk, increase inclusion for all Americans and reinforce our values and the long-term position of the US dollar.”

According to Nikita’s statement, the development of digitized payment and money systems needs to focus on “the time and access frictions facing low-income Americans.” While digital payments streamline traditional banking, there are challenges still that obscure the countrywide adoption of these new technologies.

“Congress must critically review innovations like CBDCs and stablecoins to ensure novel forms do not belie true functions. In terms of financial inclusion, this means ensuring that promises of open access are achievable and ultimately achieved.”

[Also Read: ‌Bank of Canada: Zero-Knowledge Proof Are Insufficient for National Scale CBDC Integration]

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Author: Lujan Odera

OOC Oil & Gas Consortium Successfully Tests Blockchain Management System for Wastewater

The Offshore Operative Committee (OOC) Oil & Gas Blockchain Consortium, comprising of companies like Royal Dutch Shell, Equinor, ConocoPhillips, Exxon Mobil Corp, and Repsol has successfully completed pilot blockchain management program to automate payment, reduce costs and time for transporting wastewater, reported Reuters.

The water haulage program would streamline the process of transferring wastewater and other by-products produced during oil and natural gas extraction. The blockchain pilot automatically measured the volume of by-products and generated invoices in real-time.

The blockchain management system has been developed in partnership with blockchain software developer firm, Data Gumbo. The pilot run ended in late January and turned out to be a success as it reduced the amount of time that was required to transport the wastewater from ‘90-120’ days to ‘7 days’.

The blockchain pilot also reduced the need for human intervention significantly from 16 steps to 7 steps. The automation process also ensured that 85% of volume data on the network gets automatically validated due to the information provided by other parties involved on the network. They are confident that soon, they would be able to verify 100% of the data on-chain.

Rebecca Hofmann, the chairman of the 10-company consortium, was quite happy with the pilot run and lauded blockchain technology for bringing efficiency in their work process. She said:

“The results of this pilot prove that non-manned volume validations can trigger automated payments to vendors, and showcase the opportunities that exist for blockchain to reduce costs, increase efficiency, provide transparency and eliminate disputes in the oil and gas industry.”

The pilot wastewater management system was undertaken in partnership with Nuverra Environmental Solutions, who managed the water disposal of oil wells. The blockchain management system was tested on 5 Equinor wells located in North Dakota, and all five wells returned high efficiency with the use of blockchain.

The OOC Blockchain Consortium now plans to implement the system with its mainstream production sites.

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Author: Silvia A

China’s PboC Financial Committee Aims For ‘Accelerated Blockchain, Fintech Development’

  • The People’s Bank of China Financial Committee, responsible for the fintech industry in the country held its first meeting this year earlier in the week.
  • The officials called for an accelerated effort in studying and implementing the “FinTech Development Plan (2019-2021)” which includes blockchain integration in various industries.

The meeting, held in Beijing, was chaired by the Vice President of the Party Committee of the PBoC, Fan Yifei, presiding over both the PBoC officials and heads of directly owned industrial companies. According to a publication by local media channel, Sian, this meeting focused on the theoretical and practical research in the financial and technology industry, planning guidance and application of these technologies, and the next steps to implementing them.

Yifei spoke on the need to accelerate blockchain technology and FinTech in preparation for the 2021 deadline for its development plan. The plan aims to develop a financial system that will contribute to and improve the current legacy systems making them more “adaptable, competitive and inclusive.”

In preparation for the digitization of the current modern financial systems, the officials are accelerating efforts in studying the fintech development index system, carefully monitoring dynamism and comprehensive evaluation, guiding financial institutions to accelerate the digital transformation, and continuing to enhance technology applications.

In conclusion, the officials called for an accelerated push to adopting these technologies to enhance better risk prevention measures and provide a level field ensuring regulation and “penetration of supervision” is upheld. The officials concluded,

“It is necessary to strengthen the application of regulatory science and technology, actively use big data, artificial intelligence, cloud computing, blockchain and other technologies to strengthen the construction of digital supervision capabilities.”

The PBoC has been on the frontline in the implementation of blockchain technologies in a bid to increase the efficiency of regulation within the bank and state. Since announcing its digital currency and electronic payment system back in 2018 the government has come on strongly supporting it led by President Xi.

Recently, the bank announced they will start testing the DC/EP this month by paying state employees using the digital currency.

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Author: Lujan Odera

South Korean PCFIR: Bitcoin Should Be Listed on KRX Exchange And Gov Should Allow BTC Derivatives

A presidential committee formed to advise the government in regards to the fourth industrial revolution is recommending that the South Korean government should let financial institutions to offer crypto-based products, CoinDesk reports.

The Fourth Industrial Revolution Committee (PCFIR) based in the office of the president has indicated that crypto products like Bitcoin derivatives should be allowed as a measure to institutionalize crypto trading in the country. According to the committee, crypto trading is on the rise and it will be difficult for the government to inhibit crypto-assets trading in the near future.

The committee suggests that the Korean government follow the path formulated by the US regulators and allow products like Bitcoin Futures. They further stated:

“As of May 2019, daily crypto-asset trade hit more than 80 trillion won (over $68 billion) in the world, so it is no longer possible to stop crypto-asset trade. […] The Korean government has to gradually allow institutional investors to deal in crypto assets and promote over the counter (OTC) desks dedicated to institutional investors’ trade.”

To deal with the uncertainties facing cryptocurrency exchanges, the committee suggests that the government introduce a licensing procedure or some form of guidance. The report released by the committee says that at the moment, the exchange industry is loosely controlled, Cointelegraph reports. The government should learn from the Swiss financial authorities in licensing and control of crypto exchanges in the country, the committee suggests.

Other notable suggestions from the committee comprise of allowing Bitcoin to directly trade in Korea’s national securities exchange (KRX) and unification of cryptocurrency as well as virtual currency terms under the term crypto assets.

The committee was set up in 2017 through a presidential decree to advise on policy initiatives and come up with recommendations on how to develop technological solutions in South Korea. They also coordinate public campaigns to encourage adoption and use of new tech in the country.

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Author: Joseph Kibe

Central Banks Consult on Tougher Crypto Asset Oversight

The Basel Committee on Banking Supervision (BCBS) is soliciting comments on “Designing a prudential treatment for crypto assets,” to improve the regulatory oversight by March 2020. The paper says,

“These types of crypto-assets are not legal tender, and are not backed by any government or public authority.”

But while being small in size in comparison to the global financial system, the crypto-assets has the potential to raise financial stability concerns and increase the risks such as money laundering faced by banks.

However, crypto assets are still an “immature” asset class because of the lack of standardization and constant evolution. The committee further raised a warning that certain crypto assets have a high degree of volatility and present risks of liquidity, operational, credit, market, terrorist financing, money laundering, legal and reputational risks for banks.

As such, if banks decided to acquire digital currencies or provide related services, they should apply “a conservative prudential treatment to such exposures.”

Prohibiting from Exposure to crypto-assets & Info on Holdings

For the supervisory review process, the BCBS proposes that banks should have a rigorous process to conduct comprehensive due diligence and risk assessment for crypto-asset exposures.

Banks should also inform their supervisory authorities of actual and any planned crypto-asset exposure, the paper says. They need to assure that they have fully assessed the associated risks and how they mitigated them. If not satisfied, supervisors can take appropriate action.

The committee also proposes that banks should disclose “granular” information on crypto-asset holdings on a quarterly basis. The said,

“Any specified treatment would constitute a minimum standard for internationally-active banks. Jurisdictions would be free to apply additional and/or more conservative measures if warranted. As such, jurisdictions that currently prohibit their banks from having any exposures to crypto assets would be deemed compliant with any potential global prudential standard.”

The closing date for comments is March 13, 2020. The Committee will then decide whether to specify a prudent treatment for crypto-assets, issue a consultation paper detailing the proposals and seek further input from stakeholders.

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Author: AnTy

Political ICO: BITPAC Set To Conduct An ICO To Support US Congress Candidates

BitPAC, a member of the United States Political Action Committee, is set to hold an ICO to support candidates for the House of Representatives, the lower house of the US Congress.

According to CoinDesk, founder and head of BitPAC Dan Backer said the group is going to conduct cryptocurrency crowdfunding to support candidates for the election. Initial Coin Offerings method of funding was popular during the 2017 crypto boom. However, with many exit scams coming up, many regulators and governments came up with measures to discourage investors from floating ICOs.

According to Backer anyone who has donated to the Political Action Committee can take part in it and in return, citizens will receive the Politicoin cryptocurrency.

The founder emphasized that the impending Politicoin is designed to operate as a utility token. As such, the coin has no value and cannot be used for value storage. Instead, the aim of the venture is to offer the token owners with some form of voting privileges.

Backer said that his committee does not prohibit anyone from trading the coin and exchanges are also free to list the coin but insisted that it has no value.

Furthermore, Backer also insisted that BitPAC has stored own money but was determined to conduct an ICO to ensure that everyone has an option to donate one Politicoin to his organization.

For now, donations will support North Carolina candidate Dan Bishop who is garnering for the US Congress in the upcoming special elections. In the future, BitPAC plans to significantly expand the functionality of its ICO, and provide citizens with the right to support all registered candidates from the two major parties in the US.

The report states that voters can donate using cash in the upcoming ICO. Nevertheless, it is mandatory for the voters to get in touch with Backer or any other member of his management team if they want to give away cryptocurrency. Contacting the team is essential because of the stringent measures stipulated by the Federal Election Commission (FEC).

In that respect, BitPAC was closed down last year because of ambiguity in recording of cryptocurrency donations. Backer says he decided to awaken PAC after noticing there were loopholes on reporting of crypto donations.

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Author: Joseph Kibe

US Customs and Border Protection Advisory Group To Launch Blockchain Shipping Proof-of-Concept

An advisory committee for the US Customs and Border Protection (CBP) has revealed that they are intending to launch a live test of its blockchain-based intellectual property rights proof of concept.

The panel is called Commercial Customs Operations Advisory Committee (COAC) and has been monitoring the agency’s blockchain tests and had been expected to submit related recommendations at its quarterly meeting in December. The POC strives to facilitate shipments based on known licensing relationships through the use of blockchain.

Their most recent report says:

“The working group has been active with the current POC on IPR. Since the last in person meeting in March, the working group has progressed through the overall project design, implementation of the initial engineering plan, and integration of Trade and CBP systems. Live testing of the system will start at the end of August and conclude late September.”

The COAC advises the Secretaries of the Department of the Treasury (Treasury) and the Department of Homeland Security (DHS) on the commercial operations of U.S. Customs and Border Protection (CBP) and related Treasury and DHS functions. They are involved in three ongoing proof-of-concept projects involving blockchain technology.

This is particularly a remarkable movement towards blockchain adoption because CBP is the largest federal law enforcement agency of the United States Department of Homeland Security, and is the country’s primary border control organization.

Just last year, the agency launched a live test of a blockchain-based shipment tracking system. While testing, the agency intended to establish standards of interaction between different blockchains to ensure that all firms and software will be easily connected to customs without the need for additional customization.

In similar news, the Department of Homeland Security is seeking from the private sector solutions that use blockchain to digitally issue and verify licenses, certifications, and other documents related to supply chain security and other issues.

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Author: Sritanshu Sinha