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In 2018, the value of cryptocurrencies dropped by 81% and ICO funding decreased. Government regulations and fraud impacted the market. However, there were developments like cross-border cryptocurrency, Bitcoin futures, and tax payments with BTC.
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2018 Crypto Review In 2018 the value of cryptocurrencies tumbled 81% from $573 Billion to just over $100 Billion. ICO funding has also dried up. In January and February ICOs were pulling in about $2.5 Billion per month. In November, ICO funding has nearly vanished except for about $65 Million. This was no doubt the result of several factors. Many of the ICOs turned out to be all show, and no go. Investors watched their capital dry up and blow away either because of fraud or incompetence. Government regulators stepped in and dropped the hammer on anything that remotely resembled a security. .
Saudia Arabia and UAE Financial Institutions to Implement Cross-Border Digital AssetIt has been confirmed that the Saudia Arabian and UAE governments will be working on a cross-border cryptocurrency. The launch date has not been confirmed as of yet, but it is known that the cryptocurrency will only be targeted for use by central banks. The central banks of UAE and Saudi Arabia will jointly issue a cross-border cryptocurrency that will be used by and between both countries. Talks about this have been swirling and in the past, the UAE Central Bank’s governor, Mubarak Rashid Al-Mansouri had released a statement that the bank was still looking into the technology needed to create the digital currency. He also informed that this will strictly be used by the Central Banks of both countries and would not be available to the public for retail sale. Stay tuned on a launch date!
Winter Not Slowing Down Nasdaq Launching Bitcoin Futures Market • The globe’s second biggest stock exchange will be adding a BTC futures market in the beginning of 2019. Nasdaq has been working closely with the Commodities and Futures Trading Commission also known as (CFTC), to obtain regulatory approval and be compliant as a market operator. The New York exchange dealer has been flirting with this idea since last year. • A digital asset exchange called Bakkt that was created by the ICE, whose parent company is the NYSE, will also be releasing their Bitcoin futures market towards the end of January. Bakkt has been taking their time, as they want to make sure their infrastructure has sufficient means to handle the large investor base in the United States. News stated that, “ICE will introduce the Bakkt Bitcoin futures contract on trading, for the date of January 24, 2019. Of course this will all be subject to regulatory approval.”
Crypto Update: Ohio Businesses Are Now Able to Make Tax Payments Using BTC! • The first state in the U.S. to accept tax payments in the global market’s top cryptocurrency, Bitcoin, will be Ohio. The Wall Street Journal shared that starting this week, businesses that will be making settlements with their taxes, can now pay with Bitcoin. Digital asset payment processing company, BitPay, has teamed up with Ohio’s state government to facilitate the payment conversions for the tax office. Josh Mandel who is Ohio’s state Treasurer, created this idea and he is a firm believer that this will be a concrete and successful way to rebrand the state and promote tech-forward ideas. A lot of states are nervous in accepting crypto payments because of the market’s volatility. Ohio’s decision has not really affected current prices in the cryptocurrency market, however it is still a great feat for Bitcoin as it is the first partnership with the U.S. government. This proves a point that Bitcoin can be used by anyone, whether or not people are using it for bad things or if it is being used by the U.S. government.
Bank of America Acquires Patent for Digital Asset Storage System • Would you like to know what interests large organizations? Acquiring and filing for large patents definitely tell us what interests organizations, regardless of what field it is. Recently the market’s second biggest financial institution, Bank of America, has attained its latest blockchain and crypto patent that involves storage. The patent includes functionality in remote storage of private keys and it was initially filed about 2 years ago. The current issue with storage methods for crypto keys is that the responses are not in real-time. Bank of America’s main goal is to a safe deposit box for these keys. Bank of America also wants the responses to be transparent and allow for the customers to know in real-time if their keys are being messed with. Security and storage of private keys has always been a major topic in the crypto market, and it will be interesting to see how Bank of America makes its impact on this.
After Friday’s SEC Actions, Experts Say ICO Party ‘Is Truly Over’ • The U.S. Securities and Exchange Commission (SEC) has compelled two crypto startups to register their token sales as securities offerings. It’s the first time the SEC has pursued such an action without additional charges of fraud. • In a pair of orders published Friday morning, the SEC announced it had settled charges with CarrierEQ Inc., otherwise known as Airfox, and Paragon Coin Inc., wherein both startups would register their tokens as securities, refund investors, pay penalties of $250,000 and file periodic statements with the regulator for at least the next year. And like last week’s settlement with Zachary Coburn, founder of the decentralized exchange EtherDelta, this seems to be a harbinger of things to come.Nic Carter, a partner at Castle Island Ventures, a venture capital fund focused on public blockchain startups, believes the regulator is building up a body of case law against unregistered securities offerings and bad actors.“It’s really hard to say or predict what the SEC is going to do, but from what I understand from their strategy, they’re going after the slam dunks, the low hanging fruit, the cases where it’s clear that there’s going to be a profit made with the token,” Carter told CoinDesk. • “
After Friday’s SEC Actions, Experts Say ICO Party ‘Is Truly Over’ • Friday’sorders seem to support that theory, according to Stephen Palley, a lawyer with D.C.-based law firm Anderson Kill. Based on the way they are worded, Palley says the orders “would appear to apply to 95 percent of all the token sales in the last two years.” • In fact, the language is identical in a couple of places,” he added. “The footnotes are identical. I would say it definitely looks like a template to me.”
“Path to compliance” • Later on Friday, the SEC itself published a statement explaining its roadmap for regulating initial coin offerings (ICOs), crypto exchanges, secondary market trading platforms and other entities that facilitate token transactions. Perhaps most notably, the U.S. regulator stated that “there is a path to compliance with the federal securities laws” for startups issuing tokens, even if “issuers have conducted an illegal unregistered offering of digital asset securities” already. Palley pointed out that Friday’s orders went “through a pretty standard Howey analysis,” referring to the three-pronged test used to determine whether an object offered for sale qualifies as a security. The Howey test specifically looks for an investment of money in a common enterprise, meaning that more than one party has funds tied up in the venture and an expectation of profit, said Casey Jennings, a senior associate with financial services law firm Seward & KisselLLP.Importantly, Palley noted, while previous orders against ICO startups have included allegations of fraud or similar misdeeds, Friday’s announcement did not. For companies concerned about whether they may have violated securities law, Palley recommends checking in with a lawyer.Carter went one step further, advising ICOs to move away from their tokens immediately:
Ramping up • The SEC has been ramping up its efforts as it charges or settles charges with different startups, Palley noted. Anthony Tu-Sekine, a partner at Seward & Kissel, agreed, noting that the SEC has “ratcheted up the volume” of its actions. The DAO Report, for example, outlined the SEC’s views but did not take any actions against the organization, though this may have, in part, been because the DAO had already refunded investors, he said. Palley noted that following the DAO Report was the Munchee order from December 2017 – at the time, Munchee agreed to refund all of its investors, but was not required to pay any penalties or fees. “They’re tightening the screws a little bit,” Tu-Sekine said. The SEC statement Friday recommended that projects reach out to legal counsel, as well as the regulator itself through its FinHub project. Actually refunding investors may be an issue for some ICO projects. Carter noted that Paragon and Airfox were both able to provide full rescission to their investors, but not every ICO would be able to do that. Even startups which have kept all of the tokens they raised during their sales will have lost money in terms of the U.S. dollar due to the bear market, he noted, meaning they may have difficulty paying investors. From an investor perspective, Carter noted, “what matters is the notion of an ICO is pretty debunked as a fundraising method and we can go back to things that make sense for investors.”
UNITED STATES While the United States has certainly been a bit “behind the curve” when it comes to blockchain adoption, the U.S. Treasury Department is “currently running a pilot program to determine whether Blockchain technology can be utilized for supply chain management,” according to Cointelegraph. The article goes on to explain that the GSA’s Emerging Citizen Technology office launched the US Federal Blockchain program, allowing federal agencies and US businesses to further explore blockchain technology and its potential use cases within the US government.
Spain Spain is doing all kinds of interesting things within the blockchain space. According to Cointelegraph, “Banco Bilbao VizcayaArgentaria (BBVA), the second largest bank in Spain by assets and capitalization, became the firstglobal bank to use blockchain technology throughout the entire process of issuing a 75 million euro ($87 million) loan.” The article goes on to state, “On May 30, the Spanish Congress unanimously supported draft legislation that would favorably regulate blockchain technology and cryptocurrencies in the country.” In addition, the Government of Spain has backed startup ventures such as Navibration, a Spain-based technology company aiming to create a social network of audio-guided tours. This would mean that tourists, writers, translators, speakers, travelers, reviewers, etc., could all create content on the platform, allowing users to “purchase tours” through a patented navigation system.
China China’s response to the blockchain boom has been very hot and cold. The country’s stance on cryptocurrencies and ICOs has been firm. But according to Cointelegraph, “Another Chinese city is launching a fund worth over $1 billion in order to support the development of blockchain-focused enterprises. The district government of the Jiangbei new area in Nanjing city announced the plan to launch the 10 billion yuan (around $1.4 billion) blockchain fund… The effort follows reports that the municipal governments of the Chinese cities of Hangzhou and Shenzhen have both launched blockchain-dedicated funds of $1.6 billion and $80 million, respectively.” It’s clear that China understands the immense value blockchain technology could bring businesses and organizations—and they are investing in determining the most effective ways of leveraging these solutions.
Japan Japan has been a major advocate for the use cases and benefits of cryptocurrencies. According to Coincentral, “The country experienced enormous growth in their blockchain sector after making BTC legal tender last year. In an effort to lure even more investment capital to the market, the Tokyo Metropolitan Government Accelerator Program started hosting the “Block Chain Business Camp Tokyo. The program is scheduled to last two months and is aimed at stimulating private innovation in the sector. The goal is to promote blockchain projects that have the potential to improve Tokyo residents’ quality of life. As well as those that will further the economic standing of the city in the blockchain sector.”
Australia Australia has long been in support of blockchain technology. According to Cryptovest, “Australia’s federal government has decided to invest A$2.2 million ($1.6 million) in a blockchain initiative as a way to make its key sugar production more competitive, local media reported on Tuesday. Prime Minister Malcolm Turnbull’s coalition backed Sustainable Sugar Project, which targets Queensland, the major sugar export region of Australia.” In addition, according to Smartcompany, here are 10 blockchain companies in Australia that have raised millions of dollars in funding for their initiatives. And according to Coincentral, here are some other signs Australia is well on its way to becoming an influential force in the blockchain space.
Dubai The Prince of Dubai has decided that he would like to implement blockchain technology into the nation’s retail app, DubaiPay. This will allow customers to pay for goods, by using cryptocurrencies and it will allow for transactions to occur in real-time. The project will be developed by Dubai’s Department of Finance (DoF) and the Smart Dubai Office (SDO). Currently, the DoF is manually recording transactions, before they are settled. This process is not only long, but there is also a fee deduction for each transaction. It takes 45 days for the process to be complete. The DubaiPay app has more than 40 entities which also includes non-govt. and govt. agencies. The portal has collected a whopping $35 million from over 9.4 million transactions. Numerous government agencies in Dubai will be a part of the blockchain platform in the future. These agencies include Dubai Airports, Dubai Customs, Dubai Police, and Roads and Transport Authority.
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