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Japan’s Regulator to Put Bitcoin Exchanges Under ‘Full Surveillance’

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Motoyuki Yufu (C), Deputy Director-General of Planning and Coordination Bureau at Financial Services Agency (FSA), and other FSA staff members hold a meeting with investors and influential bloggers at FSA in Tokyo, Japan June 29, 2017. Picture taken June 29, 2017. REUTERS/Issei Kato

Japan’s financial regulator will closely monitor and scrutinize bitcoin exchanges in the country from October.

Japanese bitcoin exchanges will reportedly be under “full surveillance” by the Financial Services Agency (FSA), Japan’s financial regulator and watchdog. According to the Japan Times, the FSA will increase its scrutiny of digital currency exchanges by looking into their internal systems including those to protect customers’ assets. The ‘surveillance’ will also authorize the watchdog to carry out ‘on-site’ inspections of bitcoin exchanges.

The increased oversight comes in the months following Japan’s legal classification of bitcoin as a recognized method of payment. As CCN reported in March 2016, the Japanese cabinet passed bills to recognize digital currencies like bitcoin as the digital equivalent of money. Those bills came to pass in April this year when bitcoin was classified as a legal method of payment. Come July, Japanese officials formally put an end to the 8% consumption tax rate on transactions of bitcoin bought through exchanges.

Bitcoin’s status as a form of legal tender coincides with the revision of the payment services law in April that mandated a number of requirements and standards for exchanges in Japan. The rise in popularity and adoption of bitcoin in the country has the country’s financial regulator enforcing regulatory guidelines while promoting the sector’s growth.

Sunday’s Japan Times report cites an FSA executive as stating:

We pursue both market fostering and regulation enforcement…We aim for sound market development.

Under the new rules, Japanese exchanges are required to register with the FSA before the September while complying with the newly revised rules payment services law, ahead of applying for licenses to operate as regulated exchanges.

The FSA has also reportedly established a 30-member team specifically to carry out surveillance of virtual currency exchanges in the country.

As CCN reported earlier in July, the oversight and scrutiny by Japanese authorities was to be expected so as to avoid any scenario of a Mt Gox-like collapse in the country.

Hitachi and Mizuho Strike Deal for Blockchain Supply Chain

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Mizuho Financial Group is partnering with tech conglomerate Hitachi to develop a blockchain platform for supply chain management.

Announced Thursday, the two companies have reportedly agreed to test a system built on technology from the open-source Hyperledger blockchain consortium to determine whether they can use an immutable ledger to record orders, invoices and otherwise collect data about company operations.

The ultimate goal, according to the firms, is to develop a record of every transaction that can be accessible by anyone in the company, thereby streamlining the process needed to order an item.

Right now, Hitachi’s process involves ordering an item, confirming the order, creating an invoice and approving the invoice. Due to technical limitations and reliability issues, however, this process does not always work as desired.

Hitachi intends to incorporate its Lumada Internet of Things platform into the test to aid its data collection efforts and continue to build commercial products.

Notably, this is not Mizuho’s first time testing a blockchain platform for the use case, as the firm recently completed a trade finance trial with several organizations. Other trials have included a rewards program and a research lab in the U.S.

Gibraltar Issues ICO Advisory Amid Drive Toward Blockchain Regulation

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The Gibraltar Financial Services Commission, the financial watchdog for the British Overseas Territory, has announced it will put in place new regulations aimed at bringing oversight to the cryptocurrency exchange sector.

In a September 22 statement, the commission said that, from January 2018, a new framework will regulate companies using blockchain to “store or transmit value belonging to others.” Further, it said initial coin offerings (ICOs) might also come under regulatory oversight in the near future, with the commission explaining it is “considering a complementary regulatory framework covering the promotion and sale of tokens, aligned with the DLT framework.”

Currently, ICO investment schemes are unregulated, the watchdog said, meaning investors have no recourse to any financial compensation scheme or ombudsman.

The statement cautioned the public to ensure they are aware of the “highly-speculative and risky” nature of the token sale funding method.

It reads:

“ICOs are an unregulated means of raising finance in a venture or project, usually at an early-stage and often one whose products and services have not yet been significantly designed, built or tested, yet alone made operational or generating revenue.”

Over the past month, several authorities from across the world have made similar statements warning of the risks of ICO schemes. Going a step further, China issued a full ban on the funding method earlier this month, and a number of local cryptocurrency exchanges have seen fit to shutter their services as a result.

However, interest in DLT in other areas by elected authorities seems to be growing unswayed. For example, in August, the Gibraltar Stock Exchange announced plans to become the first regulated exchange to implement a blockchain for its trading and settlement systems.

Nigerian Central Bank Director: Cryptocurrency Wave ‘Cannot Be Stopped’

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The Central Bank of Nigeria is said to be taking a closer look at blockchains and cryptocurrencies.

According to a report in The Guardian this week, Musa Jimoh, a deputy director at the country’s central bank, recently spoke at a cryptocurrency-focused conference in Lagos, Nigeria’s largest city. There, Jimoh indicated that the Central Bank of Nigeria is preparing a white paper on the subject.

Perhaps most notable, however, was how Jimoh framed the reason for the study, noting the central bank “cannot stop the tide of waves generated by the blockchain technology and its derivatives.” Such comments carry extra weight coming from the institution that oversees domestic monetary policy as well as banking sector regulation.

In his remarks, Jimoh also noted that the nature of the technology, which gives users autonomy over the private keys that access blockchain-linked data, enables the creation of forms of money that are “beyond restriction and confiscation.”

Elsewhere, attendees surveyed at the conference painted a generally positive picture of how the technology is progressing domestically. Other topics addressed included how blockchains can help move payments across borders, and the investment risks associated with the nascent technology.

Dr. David Isiawe, president of the Information Security Society of Nigeria, also spoke to the general consensus, when he was quoted as saying the technology is a reality that must be faced by the country’s leaders “whether we like it or not.”

Such comments also coincide with a growing acknowledgment of the technology in Nigeria, and the issues with a relatively immature market. So far this year, domestic regulators, the Central Bank of Nigeria included, have issued two warnings about the technology.

Government Debt Getting Downgraded, Thankfully Bitcoin Backed Only By Math

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The biggest argument against cryptocurrencies is that unlike fiat currencies, they do not have the backing of any government. As multiple rating downgrades show, government support isn’t what it used to be.

Thumbs down to Britain

Moody’s downgraded the credit rating of the United Kingdom from Aa1 to Aa2 on September 22, citing weakening public finances and calling into question the Government’s fiscal consolidation plans. The pound sterling, which had been slowly recovering following the Brexit debacle, promptly lost ground after the rating downgrade. Other rating agencies like S&P and Fitch had downgraded the UK to AA in 2016.

The UK suffered its first ratings downgrade, from Moody’s and Fitch, in 2013. This ended a 35 year period of being rated AAA, and it’s been a downward slide ever since.

China in a soup

A day before the UK was downgraded by Moody’s, S&P cut the sovereign rating of China, downgrading it from AA- to A+. According to S&P, China’s prolonged credit growth had increased its economic and financial risk. The rating cut brought S&P’s rating in line with other rating agencies. It is ironic that China had taken action against ICOs and cryptocurrency exchanges shortly before its own rating was downgraded.

US and Japan drift downwards

Though the sovereign ratings of the United States and Japan have not been cut recently, the trend has been negative. The US was downgraded by S&P from AAA to AA+ in 2011, after being AAA rated for 70 years. Since the dollar is the primary reserve currency of the world, the rating of the United States government has great significance in the global financial markets. With the US national debt crossing $20 tln recently, the country’s creditworthiness likely isn’t  improving any time soon. Japan, which was last Aaa rated by Moody’s in 2009, has seen multiple rating cuts in the last eight years. It is currently rated A1/A+ by Moody’s / S&P.

Is government backing Important?

A fiat currency derives its value from the support of the government. While currencies were initially backed by gold, governments across the world felt that this was restricting their ability to print currency and expand their economies, and withdrew from the gold standard long ago. Today, the US dollar, like all fiat currencies, is solely backed by the “full faith and credit” of the nation’s government. Clearly, this “faith and credit” isn’t what it used to be.

Misguided government policies can result in the value of fiat currency depreciating rapidly. Thankfully, Bitcoin is backed by math and nothing else.

Shanghai Losing Cryptocurrency Trading Market

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As reported by CCTV news, 17 trading platforms will stop cryptocurrency trading in Shanghai. BTCChina, Binance, SZZC, Lhang, ETCWin, Bitekuang, 51SZZC, Hanbiwang, Bitbill, 19800Net, FreeWillex, ICOAGE, 91ICO, ICOrace, ICOfox, ICORaise and ICO17 have publicly announced that they are no longer involved in ICO operations and have proposed plans to exit from the market.

According to a report by the National Committee of Experts on the Internet Financial Security of Technology of China, in  January 2017 up to July 18, there were 65 completed ICO projects in China totalling RMB 2,616 bln worth of investment. Before 2017, there were only five completed ICO projects.

On Sept. 4, the People’s Bank of China (PBOC) issued an official announcementexplaining that ICOs are a form of public fundraising that are yet to be approved, and illegal. It called for all ICO activities to be stopped immediately. Later on, the government of Shanghai city and Shanghai municipality, as well as Shanghai PBOC headquarters called for all digital currency trading platforms to stop trading by Sept. 30. Subsequently, the Shanghai government would supervise refunding activities to ensure that investors could get their funds back.

More than 90 percent of ICO projects have been verified and refunded. In order to ensure a smooth operation, the top management of these platforms are asked to stay in Shanghai to cooperate with the refunding activities.

Some investors are refusing refunds, one of the main reasons being that the launched ICOs are being traded overseas, and the investors believe they are entitled to own the tokens. Moreover, the prices of the tokens are increasing, so investors do not want refunds at the same price as when the ICOs were first launched. Regarding this, Shanghai regulators explained that the core principle is to protect investors’ rights and benefits. They urge for the investors and platforms to communicate better.

Cryptocurrency Job Openings Double in Last 6 Months

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It is no secret that the crypto world is booming. A recent report from AngelList, the online job postings in cryptocurrency related fields have increased exponentially as companies seek new talents to help fill needs of the growing marketplace.

The report indicates that in the first half of 2017, more money was invested in cryptocurrency startups than all of 2016 combined. The increasing number of startups has also coincided with an increasing number of job postings within the AngelList platform. The report said:

“As cryptocurrency companies are growing, raising larger amounts of money at higher valuations, so are their hiring needs for finding top talent. The number of job listings on AngelList by cryptocurrency companies have nearly doubled in the last six months.”

Better jobs

The report also suggests that there are reasons to join the cryptocurrency hiring boom. First, within AngelList, nontechnical and technical cryptocurrency jobs pay, on average, 10 to 20 percent more than the industry norm. Further, they offer better benefits.

Second, cryptocurrency companies have far more flexible remote working perks. In fact, within cryptocurrency companies, employees are 22 percent more likely to have remote working freedom.

Third, cryptocurrency companies, and especially ICOs, offer far superior liquidity options. Typical equity positions require a liquidity event in order to be sold and have complex restrictions. ICOs generally offer employees coins as part equity positions. While those coins may still have some restrictions, they are far more liquid that options.

Technical and not

The site reportedly has 2,500+ technical role positions and 1,000+ non-technical positions available. Additionally, rather than looking for those with substantial technical awareness, the companies are looking for employees who are willing to learn. The report indicates:

“Usually, deep knowledge of the Blockchain is not a requirement. Companies are looking for a willingness to learn, ability to contribute right off the bat, and genuine interest in the market.”

The report, as a whole, indicates that the cryptocurrency market is growing rapidly, and will continue to grow as the market continues to embrace the revolutionary new technology.

How Blockchain Can Help Creators and Consumers Monetize Data

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Data is rapidly becoming the most valuable commodity around. Enterprise-level companies have embraced data analytics for sales, market analysis and customer retention, among other things.

But with the rush to big data, a deeper philosophical question arises. Who owns the data that companies access and use for monetizing industries? Do the consumers who create the data own the data or do the platforms used for the data own the data?

Data creators like photographers, writers and 3D image developers are seeking new and helpful ways to monetize data. At the same time, consumers want some control over what data is made public and getting a stake in what their public data is selling for.

Blockchain for creators

Blockchain technology is a distributed ledger database, meaning that information can be placed on the database and stored or distributed to all those within the database as well.

This distributed system contains a series of profound benefits for the financial security, as well as for data sharing. Some companies have felt the underlying push by creators to be able to share and sell their content to other users freely, without the control of centralized hubs.

Companies like Facebook, Twitter, Instagram and Google take the work that is uploaded to them and use it to increase membership, and therefore increase profit. Creators are left with a pittance, only able to monetize content through ad schemes on the respective sites, or through difficult data channels.

However, Blockchain technology creates a system where creators of content are able to sell that content directly to buyers without the intervention of a centralized corporation. Rather than hubs taking the bulk of the funds because of the service they provide, the creator is able to receive the full value of their content. Effectively, the managerial hub is being outsourced to Blockchain technology.

The power of this system should be evident. Companies like Cappasity, for example, are able to create databases of 3D images useful for VR and online retailers. Rather than having to pay Google or a corporate conglomerate who set their own prices and can refuse certain users, platform members are free to set prices and sell to whomever they like.

While the opportunity to monetize creative content has generally been out of the reach of creators, the distributed ledger system of Blockchain technology brings just such a system into the mainstream.

Blockchain for consumers

Beyond simply data for creators, Blockchain is also providing new and intriguing ways to monetize content for consumers. Data is incredibly valuable to businesses who are seeking to attract new customers or keep old ones.

The data that users produce every day, from social media to Internet of Things (IoT), and even data from wearable devices all have value. In fact, some analysts argue that the .7GB of data you potentially produce every day has value in the hundreds of dollars.

Of course, there is absolutely no way to monetize that data on traditional platforms, since the centralized corporations are already seeking to monetize the content for their own bottom line.

However, Blockchain technology allows both consumers and buyers to interact over personal data in a monetized way. The peer-to-peer network system of Blockchain technology provides a platform where data can be sold and bought privately.

Many companies are already building this style of data control mechanism, creating a system where users can funnel all personal data into a single decentralized ledger, and from there, choose which data to sell to data buyers within the platform. Roger Haenni, cofounder and CEO at Datum, a personal data marketplace, said:

“Blockchain technology allows for secure storage of data in a trustless and decentralized manner, where individuals own the keys to their own data, outside the control of any large entity…this allows, for the first time, to create a decentralized data storage network that allows anyone to monetize their data without being controlled by one single actor.”

While at first glance, this would seem to run contrary to demand among buyers, it is important to remember that buyers are already paying for data – and paying a lot. Platforms like this would allow them to continue to buy, but to do so with consumers directly, and probably for far less overall.

Just a foot in the door

While these solutions seem cutting edge, the reality is that we have only just begun to learn about ways that the genius of Blockchain technology can be put to use for data control and monetization. Unquestionably, new applications and systems will continue to arise, creating more and better ways for individuals to take control of the data they create and produce.

The “Bitcoinization” of Venezuela?

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In recent months, news about Bitcoin being widely purchased and mined in Venezuela has led to a number of rumors regarding the growth and demand of the cryptocurrency there. An interview with Daniel Osorio of Andean Capital Advisors on CNBC indicates that the country may soon ‘Bitcoinize’ completely.

Osorio, who spends about a week per month in the South American country, was interviewed regarding the hyperinflation problems that Venezuelans are facing. During the interview, he explained that a simple lunch costs upward of 200,000 Bolivars, or about $8-$10.

Bitcoin only

In order to pay for lunch, locals are beginning to accept only Bitcoin or money wires of foreign currencies. The problem, according to Osorio, is that unlike Zimbabwe and other nations where hyperinflation has taken its toll, Venezuela does not have access to enough dollars to manage the economy.

Locals have, therefore, turned completely to Bitcoin in order to function economically. Since Bitcoin is independent of the black market for Bolivars, it represents a fixed exchange platform for business. Near the end of the segment, Osorio says:

“We may well be witnessing the first ‘Bitcoinization’ of a sovereign state.”

Cryptocurrency lovers would argue that this is just the first of many, as liquidity and access increase exponentially.

Uruguay’s Central Bank Announces New Digital Currency Pilot

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Uruguay is the latest country to see its central bank start experimenting with its own digital currency, according to statements.

The Banco Central del Uruguay (BDC) announced Wednesday that a limited number of users would help testing a mobile-based app for the transfer of funds.

Speaking at an event called “The Future of Money and the Financial System,” BCD President Mario Bergara said that the digital currency would function like cash, allowing for balances to be passed between individuals.

According to a report from the Latin American Herald Tribune, he explained:

“It’s not that you use the phone to order money transfers, as is done today, but having bills in the cellular and being able to pass them on from one user to another.”

Whether the digital currency will run on a blockchain-based platform is still not clear, but central banks around the world, including those in Canada and the U.K., have looked to the technology during similar trials.

While no launch date was announced, the pilot is “fairly close” to launch, according to Bergara, with certain technological aspects of the program still to be finalized.

“It will be a process of trial and error, success and failures,” he was quoted as saying.

Central banks around the world have been researching new ways of issuing their own digital currencies, including via distributed ledgers. Earlier this month, a researcher for the Bank of England published a blog on the subject, arguing that, regardless of its underlying technology, a central bank-issued digital currency would need “extraordinary” levels of resilience to be successful.

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