Institutional Investors Still Interested? Bitwise Releases Bitcoin and Ethereum Funds

The creator of the world’s first cryptocurrency index fund has launched two liquid beta funds holding bitcoin and ether exclusively to address market demand. The Bitwise Bitcoin Fund and the Bitwise Ethereum Fund are available in two share classes, Institutional Shares and Investor Shares.

Bitwise Funds Open to Minimum Investment of $25,000 for Retail Investors and $1 Million for Institutionals

Bitwise Asset Management has broadened its fund family with the two new strategies which join the Bitwise 10 Private Index Fund. The Bitcoin and Ethereum funds are being promoted as a low cost alternative to current existing options which charge exit fees and other expenses.

Hunter Horsley, chief executive officer of Bitwise Asset Management, believes the 68 percent drawdown in bitcoin prices this year has given investors a unique opportunity to enter the market at very low prices.

“Though an ETF has not yet been approved, investors and advisors like the fund format because it’s professionally managed and simplifies access to best-in-class custody, trading, reporting, and tax preparation, and allows for the safe capture of events like hard forks and airdrops.”

The Bitcoin and Ethereum funds aim to capture the total returns available to bitcoin and ethereum investors, respectively, including hard forks and air drops. Bitwise holds the capital in cold storage with an institutional third-party custodian. The asset management firm offers an institutional offering, with an all-in expense ratio of 1.0% and a minimum investment of $1 million, and a retail offering, with an all-in expense ratio of 1.5% and a minimum investment of $25,000.

The cryptocurrency market has been down lately. Bitcoin trades below $4,000 and Ethereum lost the $100 handle. Matt Hougan, global head of research at Bitwise, says that institutional demand for bitcoin and ether funds is increasing, with some adding to their positions throughout the downturn and others using the opportunity to enter the market.

“With significant positive developments on the horizon, including the launch of the Bakkt bitcoin futures exchange from ICE, the launch of Fidelity Digital Assets, and the continued movement of institutional investors like Yale University and Stanford University into the crypto space, we have seen significant inbound demand for high-quality bitcoin and ether funds.”

The funds launched by Bitwise allow U.S.-accredited investors to come in and out of the fund weekly and charge no withdrawal or performance fees, or performance fees.

Bitwise is backed by a few leading names within the ecosystem, including Khosla VenturesBlockchain Capital, and Naval Ravikant. In late July 2018, chief executive Horsley told CNBC that the asset management firm was hopeful of launching its own cryptocurrency index ETF. The company filed a proposition to the SEC with that goal in mind. In that interview, Horsley added that his customers “like the index strategy” because they don’t get tied down to a single cryptocurrency.

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Ripple, NEM, Cardano, Fetch.AI, Found Blockchain Industry Lobby in Europe

Four leading global blockchain companies have announced the founding of what they call the first credible attempt to create a unified voice for the blockchain industry at European level. Blockchain for Europe intends to address the fragmented policy debate over the issue in order to lobby in favor of crypto friendly regulation in the European Union.

Blockchain for Europe to Influence European Policy on Blockchain and Cryptocurrencies

The new lobby for the blockchain industry was founded by EMURGO/Cardano, Fetch.AI, NEM, and Ripple. Prior to the public announcement, the association hosted a Blockchain for Europe Summit on 27 November alongside the four largest groups in the European Parliament.

The summit brought together blockchain industry leaders, regulators, policymakers, relevant industry players, academics, and other stakeholders to discuss use cases in government, healthcare, trade, identity, transport, financial market infrastructure, and cryptocurrencies.

If the blockchain association have their way, the European Union may become the global front-runner in blockchain technology with smart regulation that shape the global agenda on blockchain. Ripple is a San Francisco-based technology company but Europe represents a considerable market for its blockchain products. Founding the association is a strategic move to influence policy in the region, said Dan Morgan, Head of Regulatory Relations, Europe.

“Ripple is delighted to be a founding member of Blockchain for Europe. This is a critical time for policymakers in Europe as they seek to develop the right regulatory framework to capture the benefits of both digital assets and blockchain technology.”

Kristof Van de Reck, co-founder of the NEM Foundation, pointed to the lack of unbiased information especially when it comes to the open and decentralized application of the technology.

“By joining forces with different stakeholders that have blockchain at the core of their business, we aim to provide insights which are not tailored to the agenda of specific organizations or stakeholders.”

Fetch.AI is an emergent intelligence protocol based in Cambridge, UK. The team is developing Autonomous Economic Agents to autonomously exchange value. Co-founder and Chief Technology Officer Toby Simpson stressed that the technologies of tomorrow will change the lives of “so many people”.

“This is an extraordinary opportunity to guide European policy in a field that will positively change the lives of so many people. The convergence of technologies like machine learning, AI and decentralised ledgers delivers the opportunity for a world where technology works more effectively for the benefit of us all.”

EMURGO, the UK-based company which created the cryptocurrency Cardano, has co-founded the association to help expand Cardano globally, said Chief Information Officer Manmeet Singh.

“Within the scope of EMURGO’s mission to drive the adoption of Cardano globally, we are very keen to work with the European institutions in crafting the rules and regulations which will enable blockchain technology to thrive globally, thereby expanding the impact of our third generation blockchain Cardano, all under the leadership of EU governance.”

While Blockchain for Europe was founded to influence the drafting of blockchain and cryptocurrency regulation in the European Union, the region already contains some of the most crypto friendly jurisdictions in the world, having surpassed the United States and Asia in initial coin offerings.


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U.S. Air Force Promotes Learning of Blockchain for Supply Chain Management

The U.S. Air Force Institute of Technology is promoting blockchain technology for supply chain management purposes. The military entity has developed a free tool to help professionals learn about blockchain and published a live blockchain application along with tutorial videos.

U.S. Air Force Looks to Increase Trust and Transparency to Complex Logistics Network

The legacy system the military use for its extremely complex logistics network is likely to be no match against what blockchain can do for the U.S. Air Force. The technology is capable of improving transparency and trust across all tiers in a supply chain, thus addressing some of their most pressing issues.

The military struggle to track parts that are sourced and assembled into equipment in different regions and frequently deployed overseas. Current information systems are limited but are easier to understand at first sight. Distributed ledger technology requires a longer learning curve but it is likely to result in huge savings for the Defense budget and to the U.S. taxpayer over the long term.

The U.S. Air Force Institute of Technology (AFIT), which is an Ohio-based graduate school for the United States Armed Forces, intends to incorporate the tutorial videos into classroom exercises or business meetings, Modern Materials Handling reported. The free education tool should boost know-how inside the military and, in time, be a driver of blockchain disruption from the inside.

Introducing blockchain technology to its supply chain operations won’t happen in a day. It will take time, planning, and the buy-in of decision-makers throughout the organization.

AFIT has partnered with private supply chain security firm SecureMarking and the University of South Dakota Beacom School of Business in order to develop a multi-echelon supply chain scenario and the blockchain application around it. The scenario involves an Air Force program manager issuing digital tokens which are assigned to components and then transferred from one company to the next in the blockchain.

Only the Air Force program manager has full visibility to all components in the supply chain, but suppliers are able to add additional information to a token. The scenario is meant to prepare the military in charge to the distributed nature of the blockchain in which every transaction is permanently recorded.

The scenario also leads to questions about a future blockchain-powered application for the U.S. Air Force supply chain, such as the visibility into the overall chain, the incentive structure, the activities involved, and public vs private nature of the blockchain.

In 2014, it was reported that the United States Central Commands were studying bitcoin. The goal was to understand how the cryptocurrency works in order to gain an advantage over wrongdoers who could be making use of it for the purpose of terrorism financing. The general policy counsel at the Bitcoin Foundation, Jim Harper, took part in a discussion with the military on this very topic.


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South Korea Reveals Plan to Tax ICOs and Cryptocurrencies

The Finance Ministry of the South Korean government announced a plan to tax initial coin offerings and digital currencies in accordance with the creation of the taxation infrastructure and international trends.

South Korea Closer to Legalize and Tax Crypto Fundraisers as New Government Takes Over

Hong Nam-ki, Minister of Economy and Finance and Deputy Prime Minister nominee, has submitted a written answer to the National Assembly for his confirmation hearing. The tax plan includes setting up a task force to study how other countries approach the issue, Korea Times reported.

“A task force consisting of experts from relevant government agencies including the National Tax Service and the private sector will be formed to examine overseas examples and hammer out the taxation plan”.

Initial coin offerings are currently banned in South Korea, but Hong admitted to the possibility of lifting the ban after carefully analyzing international trends, investor protection issues, and market conditions.

“We will determine our policy orientations on ICOs with relevant agencies after reviewing the results of the financial regulator’s market survey and getting feedback from experts.”

Hong pointed out that the national regulatory framework should try to follow the examples of other countries while no international guidelines exist at the moment. With about 2,000 digital currencies currently being traded globally and 160 domestically, Hong defined cryptocurrency as “electronic signs of values issued privately”.

“Cryptocurrencies are a new phenomenon and so there is no internationally agreed regulatory framework. Furthermore, there are such lingering problems as the market overheating and investor protection. Therefore, we need to be careful in building the regulatory framework.”

The South Korean government has excluded cryptocurrency exchanges from the category of venture enterprise in August 2018. Operators are now bundled together with bars and nightclubs. In his answer to the National Assembly, the finance minister nominee explained that the exclusion was out of concerns over cryptocurrency exchanges’ vulnerability to illegal acts and that operators are separate from distributed ledger technology.

“We will do our utmost to nurture blockchain technology as nine out of the 10 business types classified as blockchain-related businesses by Statistics Korea excluding the crypto exchanges can be still acknowledged as venture companies.”

In October 2018, the Financial Services Commission chairman Choi Jong-koo insisted that initial coin offerings should remain illegal in the country for its risks to investors. Lawmakers, however, have shown interest in revising South Korea’s Electronic Financial Transaction act in order to recognize such fundraisers.

There are currently five crypto-focused bills pending in the National Assembly that seek regulations for cryptos and ICO issuance. The National Assembly Special Committee chair Lee Hye-hoon said the blanket Initial Coin Offering ban will be lifted in the “near future”. A group of ten legislators is pushing for a new proposal allowing public research organizations and centers to issue tokens under the supervision of the FSC.


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Swiss FinTech License Allows Public Deposits of Up to 100m Francs for Blockchain Startups

The Swiss financial watchdog has published the guidelines for the FinTech license which allows companies to receive public deposits of up to 100 million Swiss Francs. The revised Banking Act, designed to promote innovation, has also opened doors to crowd-lending businesses within the regulatory sandbox.

Swiss Regulator Announces License With Relaxed Requirements for FinTech Startups

The Federal Council of the Swiss Financial Market Supervisory Authority, the country’s financial regulator, is going forward with the goal of promoting innovation in the financial sector and to remove barriers to market entry for fintech firms. The extension of the holding period for settlement accounts and a regulatory sandbox have already come into force on 1 August 2017.

The third measure, “a new authorization category with simplified requirements in the Banking Act”, will come into force on 1 January 2019. FINMA, which is responsible for granting the FinTech license, will supervise firms subject to the relaxed requirements, said the official statement. 

“With the new measure, companies with special authorisation can accept public funds of up to CHF 100 million from 1 January 2019, provided they neither invest nor pay interest on these funds.”

Blockchain-related startups are welcome to apply for the FinTech license. After receiving the application, the regulator will get in touch and indicate which FINMA staff member is responsible for the procedure. The complexity of the project and the quality of the application may determine the duration of the procedure.

The regulator also welcomes firms to present their project during a meeting prior to submitting the application. The FinTech license, which was introduced by the Swiss parliament, requires licensees to have their registered office and conduct its business activities in Switzerland.

In addition to the announced FinTech license, FINMA has announced that the recent amendments to the Banking Ordinance (BankO) have included crowd-lending businesses to the sandbox, which will only come into force on 1 April 2019.

“In the BankO, the sandbox will additionally be extended to include crowdlending business models, whereby public funds up to a total amount of CHF 1 million can one day be brokered not only for commercial and industrial purposes but also for private consumption.”

The Swiss authorities have started to work on drafting the rules for the FinTech license two years ago. The Swiss government intended to ease regulatory guidelines to ease the entry of new providers of financial technologies and services. The country wanted to be among the leaders of fintech innovation.

The FinTech license, which is much easier to obtain compared to its traditional counterpart, eyes startups offering deposit services provided they neither invest nor pay interest on these funds. Switzerland enjoys the status of ‘crypto haven‘ among the crypto community. Many startups within the ecosystem have set up their offices there, namely in Zug. The new FinTech license will serve as another reason to set up shop in the country.


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Report: Blockchain in Retail to Grow from $80m to $2.3B by 2023

A survey conducted by fintech specialist Monica Eaton-Cardone found that about 78 percent of retailers will have joined the blockchain revolution by 2023. The market value of blockchain in the retail sector could grow to more than $2.3 billion with a compound annual growth rate of 96.4 percent, the study suggests.

78 Percent of Retailers Will Adopt Blockchain in Next Five Years, Study Finds

Eaton-Cardone, who is COO of risk mitigation firm Chargebacks911, CIO of Global Risk Technologies, and member of Forbes Technology Council, has found that just 6 percent of companies are ready to embrace blockchain now. Another 9 percent are less than a year away and a further 43% will have joined in three years time. By 2023, 78 percent of retailers will integrated blockchain for payments.

Currently, the market value of blockchain in retail is about $80 million, but the next five years should entirely change the paradigm. With a compound annual growth rate of 96.4 percent, the distributed ledger economy will reach over $2.3 billion in retail only, said Eaton-Cardone.

“Bitcoin has suffered high-profile hacks and wildly fluctuating prices in recent years, so wariness of cryptocurrency has led some to be leery of blockchain by association. But the technology is starting to spread throughout the retail industry now that early adopters are proving its real-world potential”.

The fintech specialist noted that the retail sector will change significantly as it adopts different types of distributed ledger applications, including supply chain management (data trail that can trace a product from its source to retail shelves), inventory management (track the location of goods), authenticity verification (detect product diversion and trademark infringement), auto-renewal and subscription services, and customer data and loyalty programs.

Valuable distributed ledger technology applications in the retail industry include platforms such as Provenance, IBM Food Trust and TrustChain, which have capitalized on its capabilities and partnerships with industry giants such as Walmart, Carrefour, De Beers, Amazon and American Express leading the way.

“Today’s retail applications are proving that blockchain definitely lives up to its hype. Distributed ledger technology has moved from theoretical possibilities to practical uses, and the implementations we’re seeing now are just the tip of the iceberg in terms of what blockchain can do for retailers. I believe blockchain has the capacity to completely reshape the retail landscape within the next five years.”

There are, on the other hand, a few challenges the blockchain space needs to overcome before being implemented on a mass scale. Eaton-Cardone pointed to the debate over the privacy of data stored on peer-to-peer networks and the need for a common platform to emerging legal and regulatory developments.

Eaton-Cardone expects the distributed ledger to reduce or eliminate the need for intermediaries while delivering near real-time processing, lower fees and infrastructure costs, and greater transparency, efficiency, and security. Distributed ledger technology has the capability to revolutionize virtually every modern industry worldwide.

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BitPay Implements First Major PoS Solution in Canada

A Canadian luxury fine jewelry brand is now accepting Bitcoin as a means of payment at eight stores across the country. Birks Group partnered with BitPay to process all Bitcoin transactions made by customers.

Canadian Luxury Jewelry Brand Partners With BitPay to Accept Bitcoin

Leading the luxury jewelry retail sector in Canada since 1879, Birks Group is now at the forefront of the digital revolution by adding bitcoin as a payment option for customers of the brand. Transactions made through BitPay’s processing system are faster and easier than legacy fiat systems, said Jean-Christophe Bédos, President and Chief Executive Officer of Birks Group.

“It is of great significance to Birks Group to launch BitPay. As an internationally growing brand, we believe that BitPay will benefit our customers as we look to align ourselves with these innovative capabilities that are on the forefront of technology.”

BitPay is a market leader in bringing brick and mortar merchants ahead of the curve and closer to the future. Founded in 2011 in Atlanta, the global bitcoin payment service will provide Birks Group with a full array of options for accepting blockchain payments, from direct point-of-sale integrations to web and mobile-based apps, said Sonny Singh, Chief Commercial Officer of BitPay.

“Birks Group has a large number of international shoppers so allowing them to pay in bitcoin makes perfect sense. Accepting bitcoin helps Birks Group to cater to their high-end international clients and get new customers while providing an innovative and safe payment option.”

The jewelry retailer will accept bitcoin payments in 8 select stores, making it the first major implementation of BitPay’s point-of-sale solution in Canada. Bitcoin payments allow for large transactions, which has attracted the world of luxury brands. Amsterdam-based high-end jeweler Ace Jewelers Group partnered with BitPay back in 2016, becoming Europe’s first jeweler to accept Bitcoin.

The luxury real estate business has also adhered to bitcoin payments. An example of this is the acquisition of a Miami home for 455 BTC, worth 6 million dollars at the time, earlier in 2018. The purchase was the most expensive Bitcoin to Bitcoin real estate transaction to date.

BitPay’s Sonny Singh has recently told Bloomberg’s Emily Chang that Bitcoin may surge towards the $15,000-$20,000 area over the next year on the back of institutionals and the their blockchain-powered products to be launched in 2019. Singh singled out Fidelity, Bakkt, Square, and Blackrock, as potential drivers of the next Bitcoin bullish run.

The Bitcoin payments giant has offices in North America, Europe, and South America and has raised over $70 million from leading investors. The firm, however, has recently faced a potentially alarming threat in the form of malicious code. The malware was deployed on versions 5.0.2 through 5.1.0 of its Copay and BitPay apps.

BitPay is investigating whether Copay users suffered from any attack purported the malicious code. In the meantime, the firm recommended users to move funds to new wallets immediately as private keys could be compromised.


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Swiss Brand to Become First European Country to Trace Tuna on the Blockchain

A Swiss food company is about to become the first European food importer to make the supply chain of its canned tuna fully traceable using distributed ledger technology. Gustav Gerig AG will include the Pacifical logo on the traceable can lids of the “Raimond Freres” brand.

Atato Builds Ethereum Supply Chain Platform for Tuna Industry

Pacifical is a global tuna marketing company jointly set up by the eight island nations of the central Pacific: Federated States of Micronesia, Kiribati, Marshall Islands, Nauru, Palau, Papua New Guinea, Solomon Islands, and Tuvalu.

The organization, which represents 25 percent of the world tuna stocks, promotes the trade of MSC certified sustainably caught free school skipjack and yellowfin tuna.

At the forefront of traceability since 2011, Pacifical partnered with Bangkok-based blockchain company Atato in 2018 to develop a supply chain initiative using distributed ledger technology for its MSC certified tune. The blockchain platform will cover more than 220 large fishing vessels, the entire supply chain and chain of custody of approximately 35 million tuna fish caught annually.

The goal is to provide an unprecedented level of transparency and traceability in order to ensure the sustainability of the tuna catch. MSC tuna can lids involved in this project will carry the Pacifical logo and a QR code which provides access to the blockchain viewer website where consumers can track all the relevant information regarding the fish in the can.

The Raimond Freres brand was a pioneer in Switzerland for introducing MSC certified tuna into the market. Consumers will now be able to fully trace the fish they buy from the catch to the final product processing via the Ethereum blockchain. Information includes which captain and vessel caught the fish, the time and area, as well as where and when it was processed.

Atato, the technology company responsible for the development of the distributed ledger platform, was founded in 2017 and leads the enterprise innovation on blockchain in partnership with ConsenSys, Modex, Amazon Web Services, Microsoft Azure, and IBM Hyperledger.

Related Reading: Can Blockchain Make Fraudulent Fisheries a Thing of the Past?

A number of blockchain projects for supply chain purposes are underway around the world. Fish-related initiatives include Provenance’s fight against illegal fishing and human rights violations. The technology, currently being tested by many food companies, allows fishermen to record their catch by sending a simple SMS instead of the legacy system of paper records, which are transferred over the blockchain as the catch moves up the supply chain. Similarly to Atato’s product, customers will then scan the label to verify the entire history of the catch.

A Forbes report found that as many as one in three seafood products in the United States were incorrectly labelled and some operations have even replaced what is presumed real seafood with chemically created “fish” products. Additionally, illegal, unregulated, and unreported (IUU) fishing is prevalent and such incidences may cost the industry over $10 billion each year.

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Ten U.S. Crypto Firms Set to Draft Code of Conduct for Digital Asset Market

Ten financial services and technology firms active in the cryptocurrency space have joined forces to launch the Association for Digital Asset Markets (ADAM) in order to establish a Code of Conduct for the emerging asset class in the United States.

Association for Digital Asset Markets Launched to Establish Code of Conduct in the United States

By working with current and former financial watchdogs, the association will seek to provide rules for efficient trading, custody, clearing, and settlement of digital assets, thus defining the standards for digital asset market participants. ADAM’s guidelines will focus on ethical behavior by firms within the industry, increased transparency with regulators and the public, and deterrence of market manipulation.

The code intends to complement the existing law and securities regulation in the U.S. in order to earn the trust of financial watchdogs and policymakers. Rules are fundamental in any market, said Duncan Niederauer, former Chief Executive Officer of NYSE and ADAM Advisory Board Member.

“Over 200 years ago, market leaders came together to draft rules that led to the creation of the New York Stock Exchange. The advent of digital assets requires a similar effort; one that will clarify existing rules and give both investors and regulators the confidence necessary to sustain this market.”

The Association for Digital Asset Markets (ADAM) was formed by digital asset advisory firm BitOda, institutional trading specialist BTIG, crypto liquidity provider Cumberland, cryptocurrency and blockchain merchant bank Galaxy Digital, OTC cryptocurrency dealer Genesis Global Trading, crypto liquidity solutions provider GSR, multi-asset quantitative trading firm Hudson River Trading, PAX and itBit creator Paxos, smart contracts platform Symbiont, and liquidity provider XBTO.

ADAM is set to draft a Code of Conduct on market integrity, risk management, know-your-customer, anti-money laundering, custody, record keeping, market manipulation, data protection, clearing and settlement, and research. The association will soon add new members and announce its executive team to be based in New York and Washington, D.C.

The organization is open to new members within the cryptocurrency space, including operators, investors, custodians, asset managers, liquidity providers, traders, and brokers.

ADAM includes a number of high-profile firms within the crypto space, such as Mike Novogratz’ Galaxy Digital. The venture capital fund of the digital assets merchant bank has recently led a Series B funding round of blockchain security company BitGo. In September, Novogratz said it would impossible for Bitcoin not to hit $10,000 by the end of the year.

Genesis Global Trading, also a member of ADAM, obtained a BitLicense from the state of New York in May 2018. Genesis was the fifth cryptocurrency exchange to be awarded with an authorization to operate in the New York state. In October 2018. Genesis chief executive Michael Moro also predicted that Bitcoin would reach the $10,000 level.


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BitPay Warns Users to Move Funds to New Wallets Amid Malicious Code Outbreak

Global Bitcoin payment service BitPay has warned customers of a vulnerability on a third-party NodeJS package used by the Copay and BitPay apps which could be used to capture users’ private keys. The company said the malicious code was deployed on versions 5.0.2 through 5.1.0 of its Copay and BitPay apps. BitPay recommended users to move funds to new wallets immediately as private keys are potentially compromised.

BitPay Investigates Whether Code Vulnerability Exploited Copay Users

BitPay is currently investigating the matter as to whether Copay users suffered from any attack purported the malicious code, the company said in a statement.

“Currently, we have only confirmed that the malicious code was deployed on versions 5.0.2 through 5.1.0 of our Copay and BitPay apps. However, the BitPay app was not vulnerable to the malicious code. We are still investigating whether this code vulnerability was ever exploited against Copay users.”

The Bitcoin payment service warned customers not to use any infected Copay versions before running a security update provided by BitPay in the app stores.

“Our team is continuing to investigate this issue and the extent of the vulnerability. In the meantime, if you are using any Copay version from 5.0.2 to 5.1.0, you should not run or open the app. A security update version (5.2.0) has been released and will be available for all Copay and BitPay wallet users in the app stores momentarily.”

Additionally, BitPay recommended users to move funds to new wallets (v5.2.0) immediately as private keys could be compromised. The Atlanta-based firm warned users not to import affected wallets’ backup phrases as they too may be compromised.

“Users should not attempt to move funds to new wallets by importing affected wallets’ twelve word backup phrases (which correspond to potentially compromised private keys). Users should first update their affected wallets (5.0.2-5.1.0) and then send all funds from affected wallets to a brand new wallet on version 5.2.0, using the Send Max feature to initiate transactions of all funds.”

BitPay found out about the malicious payload via a Copay GitHub issue report. According to comments on GitHub, the malware “was really sneaky, and only triggering the upload of the private keys for wallets that had genuinely over 100 BTC in there”. BitPay and its users were lucky this time but should be prepared for future attacks, according to GitHub user atomantic.

“Narrowly escaped a mass theft/liquidation event. Network egress monitoring would be good to add to automated tests if not already part of the build validation process.”

In April 2018, BitPay issued a warning of a trojan horse called Coinbitclip which has affected some purchases using Bitcoin processed by the payment service. The trojan did not infect any specific Bitcoin wallet or payment system, but individual Windows users only, similarly to most types of ransomware.


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$5 Million Lawsuit Claims Bitmain Mined at Expense of U.S. Customers

Gor Gevorkyan, a Los Angeles resident, has filed a lawsuit against Bitmain for allegedly mining cryptocurrency at his expense. The class action claims that bitcoin mining giant had redesigned its ASIC devices “to mine crypto currency for the benefit of itself rather than its customers who purchase the products”.

Bitmain Allegedly Used Customers Resources to Mine Crypto, Says Lawsuit

Defendant Bitmain Technologies is headquartered in Beijing, China, but the Northern California court has jurisdiction over this action because of the amount the plaintiff seeks in damages, which exceeds $5 million, exclusive of interests, fees, and costs.

Gevorkyan says he purchased ASIC devices from Bitmain in January 2018, including an AntMiner S9, with the purpose of mining cryptocurrencies for his own benefit. The lawsuit alleges that the devices were mining digital currencies for the benefit of Bitmain with Gevorkyan’s resources, while he attempted to properly configure them.

In ‘Factual Allegations’, the class action states that Bitmain has recently modified the startup procedure for its ASIC devices in order to start in full power high consumption mode even before customers are able to link it to their account. During that period, Bitmain’s devices mine cryptocurrencies for its own benefit while using customers’ electricity and computing power.

“The default account setting on the Bitmain ASIC devices is set to contribute to Bitmain’s own account on its own Antpool server. As a result of this new practice, Bitmain ASIC devices cost more to operate during the setup phase and transfer virtual currency to Defendant rather than the customers.”

The plaintiff brings the class action on behalf of all persons in the United States who have purchased Bitmain ASIC devices. Grevorkyan estimates this number to be around 100,000 people, which is 0.03 percent of the U.S. population.

“As a direct and proximate result of these acts, Bitmain’s customers have been and are being harmed. Plaintiff and members of the Class have suffered injury and actual out-of-pocket losses as a result of Defendant’s UCL “unfair prong” violation […]”

Grevorkyan seeks an order requiring Bitmain to cease the unfair competition, full restitution of all expenses, interests at the highest rate allowed by law, and the payment of his attorneys’ fees and costs to the procedure. Additionally, Bitmain is required to “disgorge all monies, profits, and gains which it has obtained and will unjustly obtain at the expense” of its customers.

Bitmain, one of the world’s largest cryptocurrency mining companies, is experiencing a rough patch as of lately, with the lawsuit being the most recent event. Its business risks facing a significant decline in sales volumes due to the tariffs on Chinese products imposed by the Trump Administration.

The company is also undergoing a restructuring of its board of directors ahead of its imminent IPO on the Hong Kong Stock Exchange (HKEX).


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Blockchain Capital, Coinbase Invest $12.75 Million in Security Token Issuance Platform

A number of high profile companies within the cryptocurrency space have invested in Securitize, a primary issuance platform for asset-backed security tokens on the blockchain.

The startup raised $12.75 million in a Series A funding round led by San Francisco-based VC firm Blockchain Capital. Coinbase Ventures, Ripple, NXTP, and Global Brain Corporation have also invested.

Securitize CEO Says 10-15 Exchanges to Trade Security Tokens Legally in 2019

Securitize uses its own Digital Securities Protocol (DS Protocol) to focus on the security token space, including partnering with crypto exchanges, broker-dealers, custodians, escrow services, and other infrastructures, to help companies create blockchain-based security tokens.

According to community-based competitive insights platform Owler, the startup founded by CEO Carlos Domingo, Tal Elyashiv, and Jamie Finn produces $1 million in revenue annually.

The investment will help accelerate the development of the company’s platform and the new partners, experts in the crypto space, will provide guidance as the startup prepares to tokenize itself, said Domingo.

“Not only will they provide support for Securitize as we continue to execute at the highest level of our industry, but they will also be instrumental as we prepare to tokenize Securitize for our Digital Securities Offering,” Domingo said.

Global Brain, a Tokyo-based venture capital firm, will help Securitize expand in Asia. Latin America fund NXTP will help with business development in the region, and Blockchain Capital has secured its co-founder and managing partner Brad Stephens in Securitize’s Board of Directors.

“I am excited to be both a client and an investor, and help them lead the emergence of the security token industry,” he added.

Brian Armstrong, CEO of Coinbase, had admitted that the exchange was looking to be a de facto marketplace for buying and trading crypto securities.

The emergence of Securitize may help realize the dream of tokenizing shares with blockchain to provide more transparency, liquidity, and efficiency. Securitize will be in charge of developing tokens and regulatory compliance in a process called “Digital Security Offering.” Cryptocurrency exchanges, namely Coinbase, will still have a role as trading platforms.

Securitize CEO’s Domingo explained in an interview that he is not obsessed with decentralizing everything, but that distributed ledger technology is a “better way to deal with securities.”

“The opportunity is not just to work with blockchain companies. These are first movers, but the big opportunity is in digitizing private and public shares […] 2019 will be the year that you see 10-15 exchanges trading securities in a legal way,” he added.

Airswap has launched Securitize’s Digital Securities Protocol earlier this month. The startup says it is close to reaching deals with other digital securities marketplaces such as Hyperion, Tzero, Sharespost, and Blocktrade. Domingo believes that crypto exchanges going public, with the issuance of digital securities, will be a pivotal moment for the ecosystem.

Related Reading: How Brian Armstrong, CEO of Coinbase, Became a Crypto Billionaire

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BitPay CEO: Fidelity and Bakkt Will Drive Next Major Bitcoin Rally

The chief operating officer of global bitcoin payment service BitPay is not worried about the latest downward moves in the price of the largest cryptocurrency by market capitalization. Sonny Singh expects Bitcoin to surge towards the $15,000-$20,000 area over the next year as institutional incumbents launch blockchain-powered products.

BitPay CEO Says Fidelity, Bakkt, Square, Blackrock, Will Drive Next Bitcoin Bullish Run

Observing the mainstream adoption of Bitcoin across the world as a sign of a great brand recognition, BitPay’s Singh told Bloomberg “we shouldn’t look at the price so much” because what really matters is what happens behind the scenes.

The chief operating officer doesn’t expect any significant price movement in BTC, whether up or down until institutional names come to the market with their own products.

As an example, he mentioned financial services company Fidelity who announced it would be launching a crypto subsidiary focused on custody and trade execution. Sonny Singh also mentioned future products by Bakkt, Square, Blackrock, as potential drivers of an upcoming bullish move in BTC trading.

When asked about J.P. Morgan’s CEO Jamie Dimon and his harsh comments in September 2017 about BTC being a fraud, Singh told Bloomberg’s Emily Chang that J.P. Morgan is likely to enter the crypto space once Fidelity proves there is demand for such products.

Bitcoin has faced significant bearish pressure in recent days, having lost the $6,000 handle in mid-November. The market hasn’t quite found stable ground for now. The price ranged around $4,500 since November 20 but has shed about $250 on Friday. Singh remains confident about the cryptocurrency, but cannot say the same about most altcoins.

“I think there’s a big night a day difference between Bitcoin and everything else. Bitcoin is the hundred pound gorilla. That’s the one that has massive network effect. […] The other ones, I don’t know what is going to happen to them […] I think it is safe to say the ICO market is pretty much dead right now. Maybe a couple of them will survive, I’m not sure, but none of them will survive unless Bitcoin survives first.”

BitPay is on its way to process over a billion dollars this year despite the tumble in the Bitcoin market, which has lost most of its value. The firm had reported similar volumes for the year ending 31 December 2017. This year’s results show that the adoption of Bitcoin as a means of payment continues to increase across the world regardless of recent fears.

As of publishing, Bitcoin failed to hold the $4,000, having eased to the area between $3,600 and $3,900 on Sunday. Market capitalization is now around $67 billion, having dropped below $100 billion in mid-November. The number one cryptocurrency in the market keeps printing new lows as the end of year approaches, drawing the opposite pattern of late 2017.

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EY to Hire 2,000 People Across Blockchain, AI in India in the Next Three Years

Ernst Young, one of the largest professional services firms in the world, will be hiring 2,000 employees in India in the next three years as part of its plan to build up its digital solution services in a number of domains including blockchain technology.

EY to Invest $1 Billion to Expand into Blockchain, AI

EY, which predicted in 2016 that large-scale implementation of blockchain technology would take at least three to five years, said in a report that companies who invest, experiment and adapt to DLT by that time will be able to reap the rewards of early adoption.

The digital services team in India will be assigned to develop blockchain projects for corporate and government customers. Other domains include analytics, automation, artificial intelligence, and tax technology, Ram Sarvepalli, EY India head of advisory services, told the Economic Times.

“There is significant capital available for new startups and big Indian companies are investing in digital,” Sarvepalli added. The government is heavily investing in digital from a citizen services perspective. Many of the traditional customer-oriented industries are trying to find models which allow access to customers to tier-two, tier-three towns from a digital perspective. There are regulatory changes like GST coming in and e-filing and automation of central and state govt departments … all of this is triggering a massive opportunity and the need for hiring digital talent.”

EY is adding about 600 employees every six months in analytics and has hired nearly 700 people in the last 18 months for digital governance jobs. Globally, the investment in new technology solutions will reach $1 billion over the next two financial years.

Related Reading: Indian Government to Draft Cryptocurrency Regulation Next Month

The company already has more than 2,200 people working on digital and technology solutions in India, with 25 percent of recruits being from a Science Technology Engineering Maths (STEM) background.

Ernst & Young (EY), one of the ‘Big Four’ public service firms, was an early adopter of blockchain technology. It has recently announced the launch of its EY Ops Chain Public Edition (PE), which allows businesses to benefit from private transactions over a public blockchain. The solution uses the zero-knowledge proof (ZKP) framework, which brings unparalleled protection during communication.

With blockchain labs in London and Paris, the firm is also developing DLT-powered tracking capabilities called EY Blockchain Private Transaction Monitor. The Indian booming economy will be able to adopt these technologies under development as EY plans to place thousands of new workers in the field over the next three years.

A business that is also booming for EY is auditing services of crypto firms. The Big Four accountancy firms, which include EY, are hiring blockchain specialists to address the new demand.

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French Tobacco Shops to Start Selling Bitcoin Vouchers in 2019

French cryptocurrency platform Keplerk has partnered with tobacco shops in the country to start offering Bitcoin to customers from early next year. French regulators and the Central Bank of France have warned consumers about the risks associated with investing in digital currencies.

Tobacco Shops First Brick and Mortar to Sell Bitcoin in the World, Says Keplerk

Keplerk, which has more than 27,000 operators, claims to be the number one cryptocurrency network in points of sale.

Now, the firm has reached an agreement with over 10,000 points of sale in France, including tobacco shops, to sell crypto assets through Keplerk vouchers. There are 24,000 licensed tobacconists in the country, which also sell lottery tickets, credits for cellphone operators, and music and video streaming services.

The sale of Keplerk vouchers will come as a new innovative source of revenue for these shops. The cryptocurrency platform will finance the commercial venture by charging a seven percent commission fee on every purchase. Adil Zakhar,  director for strategy and development at Keplerk, claimed these tobacconists will be the first brick and mortar stores to sell Bitcoin anywhere in the world.

“Tobacco shop owners are the best channel as they are trusted by customers and they are used to sell vouchers such as credit for mobile phones.”

The crypto operator has been planning the project for a year and a half and found a way to reach retail investors by securing a contract with a local cash register software provider, which allows tobacco shops to sell Bitcoin vouchers to customers. Clients can then use the tickets to obtain cryptocurrencies via Keplerk’s electronic wallet.

Tobacco shops in France will start selling Bitcoin from January 1, 2019. The business was validated by the prudential supervisory authority and resolution, an offshoot of the Bank of France and not the central bank itself. Keplerk vouchers will be available at 3,000 to 4,000 tobacconists in the beginning.

French authorities will not be supervising the fiat-to-crypto deals made with Keplerk and retail consumers are not protected by regulation, said the Central Bank of France in a statement.

“Those are purely speculative assets and not currencies. Those who invest in Bitcoin or other crypto-assets do it at their own risk […] No agreement is discussed or envisaged on the subject.”

The partnership between Keplerk and the tobacconists will have them intervene as intermediaries in the purchase of Bitcoin vouchers. Banque de France will have no specific arrangement with neither the Bitcoin platform nor tobacco shops.

Related Reading: France Regulates Cryptocurrencies to Build “The World of Tomorrow”

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CryptoOracle’s Kerner: Bitcoin Is the “Greatest Store of Value Ever Created”

Lou Kerner, partner at venture capital firm CryptoOracle, admitted that investing in Bitcoin is not for the faint of heart, but that there are rewards for those who maintain a longer investment horizon.

With fear taking over many cryptocurrency investors in recent days, Kerner likened the current momentum to the dot-com bubble in the late 1990s.

Crypto Evangelist Likens Bitcoin Market Crash to Dot-Com Bubble

Kerner, who believes that crypto is the biggest thing to happen in the history of mankind according to his Twitter page, said in November 2017 that Bitcoin, like every asset, is a confidence game.

One year later, he maintains his position while the cryptocurrency market takes a dive towards the $4,000 area. The angel investor told CNBC that holders of digital currency have been rewarded in any given two-year period ever since the rise of the emerging asset class, and sees the dot-com bubble analogous to the crypto market.

“If you go back to the internet bubble, which is what a lot of us in crypto look at for direction, Amazon, arguably one of the greatest companies in the history of the mankind, was down over 95 percent over two years,” he said.

Amazon went public in May 1997 at $18 per share and its stock rallied to more than $300 by December 1998 even after splitting in June 1998. The company made two other splits, in January and September of 1999, before the buble burst in March 2000. Amazon stock came down to as low as $6 per share in September 2001.

The second U.S. company to reach $1 trillion in market valuation is currently trading over $1,500 per share, but Kerner admitted that cryptocurrency investors must endure much more volatility compared to internet stocks.

“There was a day in 2013 when we were down 70 percent overnight. Nobody likes being down like this. But this is what investing in crypto is all about […] Crypto has been so weak because most of it there’s no underlying value outside of confidence. [But] Bitcoin, itself, we think is going to replace gold eventually. Gold is an $8 trillion thing […] I think it’s a store of value. I think it’s the greatest store of value ever created. It should surpass gold over time. It won’t happen overnight.”

A number of forces are pressuring the cryptocurrency market, including the debate over the recently announced Bitcoin Cash ‘hard fork‘ and lack of liquidity in many blockchain projects, who have raised millions of dollars from investors in their initial coin offerings (ICOs) of late 2017, but haven’t been able to come up with a commercially-viable product.

Related Reading: Price Predictions Roam Free as Bitcoin Stabilizes Above $4,500

From $800 billion in January 2018, the market capitalization of cryptocurrencies has plunged to $147 billion in less than a year. Bitcoin has been printing new 2018 lows almost every day. The market is currently consolidating at the $4,400 area.

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Silicon Valley Execs Targeted in ‘SIM Swap’ Hacking, $1 Million in Crypto Stolen

A twenty-one-year-old New Yorker has stolen cryptocurrency worth a million dollars from a Silicon Valley executive by exploiting a tactic known as “SIM swapping” to take over phone number accounts by duping wireless carriers. The thief, Nicholas Truglia, attempted to steal from other crypto bigwigs with no success.

Twenty-One-Year-Old Steals $1m from Crypto Angel Investor

Robert Ross, a San Francisco-based angel investor involved in initial coin offering pre-sales, had his phone stolen by New York con man Nicholas Truglia. The subsequent swap of his SIM card rendered $500,000 from two separate accounts he had at Coinbase and Gemini, totaling $1 million, deputy DA Erin West of Santa Clara Superior Court told New York Post.

“It’s a new way of doing an old crime. It’s a pervasive problem, and it involves millions of dollars […] You’re sitting in your home, your phone is in front of you, and you suddenly become aware there is no service because the bad guy has taken control of your phone number.”

Besides the crypto angel investor, the twenty-one-year-old also hacked the phones of a number of executives in the cryptocurrency space, including the CEO of blockchain storage firm oChain, Saswata Basu, hedge fund executive Myles Danielsen, and Gabrielle Katsnelson, the co-founder of the startup SMBX. His other attempts, however, were unfruitful. The thief has been charged with 21 counts, including identity theft, fraud, embezzlement,  and attempted grand theft auto.

The deputy DA told media that Truglia stole Robert Ross’ entire life savings, which were destined to his daughters’ college education. According to the authorities, the thief converted the cash to cryptocurrency and moved it into his personal account. After obtaining a warrant, officials searched Truglia’s 42nd Street high-rise in Manhattan only to recover $300,000 worth of crypto from a computer hard drive. Police do not expect to find the rest of the missing money, though.

Truglia, who is being held at the Manhattan Detention Complex, will be extradited to California in order to face the above mentioned 21 felony accounts related to a one-week hacking spree which made a total of six victims.

“The takeaway here to the hackers is, ‘We don’t care where you’re located, we are a task force based in Silicon Valley, and our reach is nationwide.”

SIM Swap fraud has affected many investors in the cryptocurrency space in recent times.  In September, a prominent eSports gamer said “someone stole $200,000” from him in an analogous cybercrime. In August, American blockchain and crypto investor Michael Terpin filed a lawsuit against AT&T over a SIM swap hack worth around $23.8 million at the time.


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SWIFT Partners With MonetaGO to Bring Blockchain to Indian Banking System

SWIFT has announced a pilot program in partnership with MonetaGo to explore distributed ledger technology in its financial messaging service. The company’s Indian subsidiary will experiment the technology with local customers banks which will use a shared distributed ledger network designed to improve the efficiency and security of their products and procedures as well as to meet industry-level governance and data privacy requirements.

Indian Financial System Moves Closer to Blockchain Despite Central Bank Pressure Towards Crypto Trading

MonetaGO, which provides private permissioned blockchain solutions for financial institutions and central banks, is a New York-based startup launched in 2014. The well-funded project has acquired blockchain technology and financial solutions provider Blockchain Technology Group Inc. (BTGI) in 2015. Privately funded by a handful of investors, the firm had launched a Bitcoin trading platform which allowed its exchange for 28 fiat currencies and a bitcoin peg. MonetaGO now offers technology for supply chain finance and corporate issuances.

In 2017, the firm decided to separate Bitcoin and blockchain technology. It was by that time that MonetaGo entered a pilot program with the Reserve Bank of India, known for its hostility against cryptocurrency trading. The company has been particularly active in India, signing agreements with commercial banks in order to develop blockchain infrastructure for payments, remittance, and trade-finance settlement processes. The participation of SWIFT India and its financial messaging system will add value to the blockchain network established with local banks, according to Kiran Shetty, chief executive officer of SWIFT India.

“SWIFT India is committed to provide significant value to the Indian financial community through digitisation of trade. MonetaGo’s expertise in providing fraud mitigation solutions to avoid double-financing and check authenticity of e-way Bill gave us the confidence to partner with them..”

The blockchain startup, which has deployed its Fraud Mitigation Network earlier in 2018, is committed to helping banks with critical real-time decision making in heavily regulated environments, said Jesse Chenard, chief executive officer of MonetaGo.

“Given India’s focus on a digital infrastructure which is supported by both policy and technological innovation, it makes sense that large institutional players are interested in these products and initiatives. This work is going to positively impact the information available to the banking industry at large.”

SWIFT has recently made the headlines for ousting the Central Bank of Iran (CBI) from its financial banking system. The US-led sanctions against the Islamic Republic of Iran are behind the move, which further isolates the increasingly alienated country.


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Indian Government to Draft Cryptocurrency Regulation Next Month

The Indian government is reportedly getting ready with draft regulations on cryptocurrencies next month.

The finance ministry set up a panel in November 2017 for the purpose of preparing a regulatory framework on the issue, but the central bank has created a hostile environment for digital currency trading platforms in 2018.

After a multitude of petitions filed by operators against the Reserve Bank of India’s (RBI’s) anti-crypto circular, the Supreme Court of India has ordered Narendra Modi’s government to clarify its policy in November.

India to Clarify Policy on Cryptocurrency Trading in December

A counter-affidavit produced by the Indian government and filed in the supreme court on November 19 says the finance ministry is about to draft cryptocurrency regulations next month, according to news website Quartz.

“…currently, serious efforts are going on for preparation of the draft report and the draft bill on virtual currencies, use of distributed ledger technology in (the) financial system and framework for digital currency in India. The draft report and bill will be circulated to members of IMC (inter-ministerial committee). Thereafter the next meeting of IMC will be held so that discussion can take place on the draft report and bill. It is expected that the draft report will be placed before the IMC by next month.”

The finance ministry panel is headed by Subhash Chandra Garg, a secretary in the department of economic affairs, and includes RBI deputy governor BP Kanungo and the chairman of India’s market regulator Ajay Tyagi.

The latter has said that virtual currency so far has not posed any systemic risk and is adept of distributed ledger technology. Kanungo, on the other hand, is a leading figure in the fight against cryptocurrency exchanges and is responsible for pushing many of them towards crypto-friendly countries such as Singapore.

“In view of the associated risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs [virtual currencies.] Regulated entities which already provide such services shall exit the relationship within a specified time,” Kanungo said in July.

Subhash Chandra Garg, the head of the panel, took to Twitter in December 2017 to issue a statement with a somewhat unfriendly tone towards the cryptocurrency space as he likened trading in digital currencies to classical Ponzi schemes.

“Cryptocurrencies like Bitcoins are neither currency nor coin. Not legal tender in India at all. Trade in these currencies has assumed character of classical Ponzi schemes. Limited supply and uninformed demand makes every new investor assume higher risk. No underlying real value.”

A previous task force, which was set up in March 2017, recommended that consumers should stop trading cryptocurrencies and operators should be choked instead of banned. The document was attached to the government’s counter-affidavit submitted to court, but in a sealed envelope, according to Quartz, which indicates the intention of making its content unknown to the public.

Related Reading: Major Indian Crypto Exchange CEO Openly Asks Gov’t to Regulate Crypto

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North Dakota Regulator Issues Cease and Desist Order Against Union Bank ICO Fraud

The North Dakota Securities Department, responsible for the enforcement of the securities laws in the U.S. state, has issued a cease and desist order against Union Bank Payment Coin (UBPC) for allegedly promoting a fraudulent initial coin offering (ICO).

The financial watchdog accuses the firm of being a copycat of Liechtenstein-based Union Bank AG, which is a pioneer in the cryptocurrency space.

Union Bank Payment Coin ‘Spoofs’ Legitimate Union Bank AG Crypto Project

The order, issued by Commissioner Karen Tyler, is the result of ongoing investigations being conducted by the Department’s ICO Task Force and part of Operation Cryptosweep, a multi-jurisdiction enforcement effort involving over 40 U.S. and Canadian securities regulatory agencies.

Union Bank Payment Coin and its associates have been ordered to stop promoting the unregistered and potentially fraudulent crypto fundraiser in North Dakota.

The fraudulent website attempts to appropriate the cryptocurrency project of the Liechtenstein bank under the name of Union Bank Payment Coin, which is similar to the name of the real bank, Union Bank AG.

UBPC uses the same wording of the real project, including being a “security token offering” for the investment in a tool “designed to store wealth by utilizing income-producing digital assets.” The company, which claims it seeks to become the “world’s first security token backed by a fully licensed bank,” says it is issuing a stablecoin backed by the Swiss Franc (CHF).

Unlike the real Union Bank AG, which is located in Liechtenstein, the IP address for Union Bank Payment Coin is located in Russia and registered to an individual, according to Tyler.

“Because ICOs are sold over the internet and pitched heavily through social media platforms, North Dakotans can be exposed to the offers whether the promotor is down the street or on the other side of the globe. Financial criminals continue to cash in on the hype and excitement around blockchain, crypto assets, and ICOs – investors should be exceedingly cautious when considering a related investment.”

The real Union Bank has announced it is launching its own cryptocurrency in August 2018. Its plan is to take advantage of the principality’s blockchain-friendly regulations to issue its own security tokens and a fiat-backed digital currency. The bank is looking to position itself as a full-service blockchain investment bank.

“As a fully licensed and regulated bank we are in a privileged position to combine all the advantages of traditional banking with the possibilities inherent in the blockchain technology. As such, our fiat-backed Union Bank Payment Coin has the potential to disrupt the approach to international trade and international cross-border transactions.”

Related Reading:The UK’s Financial Conduct Authority Is Investigating 24 Crypto Firms

Talk of the fraudulent ICO can be traced back to October on the forum. The North Dakota regulator warned investors of hackers “spoofing” legitimate ICOs to intercept and steal investor money.

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Crimea to Set Up Blockchain University to Help Countries Evade U.S. Sanctions

Crimea, a disputed territory between Ukraine and Russia, is heading towards the creation of an international center for blockchain technology. Authorities in the Crimean Peninsula regard blockchain technology as a solution for states under international sanctions. Crimea was annexed by the Russian Federation in 2014 following a coup d’etat in Ukraine. The majority of international governments, however, continue to regard Crimea as an integral part of Ukraine.

Russian-Annexed Crimea Finds Crypto Niche: Evasion of U.S. Sanctions

Roman Kulachenko, the President of the Crimean Republic Association of Blockchain Technologies Investment told Russian news agency TASS that the public entity has proposed the creation of a university or courses to advance knowledge of blockchain technology in the peninsula.

“[It is proposed] to create a university or courses for blockchain specialists, including for the authorities. There are a number of states that, like the Crimea, are under sanctions – for example, South Ossetia and Abkhazia. We have the same problems and center will allow us to combine efforts and solve the problem.”

A number of countries have considered or already started using cryptocurrencies as a tactic to circumvent international sanctions against them. Iran, for example, has recently been ousted from SWIFT’s financial banking system as part of the US-led sanctions. Without SWIFT’s system, its economy will face increased difficulty to settle its international deals. In response, the authorities in Iran have accelerated the development of their state-backed national digital currency.

Sanction-ridden Iran is a typical target country, according to Kulachenko description. The Islamic republic may eventually send a number of IT experts to study blockchain in Crimea once the proposed university becomes a reality. Russia, which is also under international sanctions since the annexation of Crimea in 2014, has also been in talks for the creation of crypto ruble in order to evade sanctions.  The plans of Russia and Iran are no secret. An Iranian MP has explicitly said that cryptocurrencies should be used to work around returning economic sanctions from the United States.

North Korea has also made the news for ramping up the use of cryptocurrencies to evade US economic sanctions. The pariah country plans to launch its own digital currency to facilitate the opening of online accounts under the guise of a non-adversarial nation. The method would include using anonymous communication to conceal the user’s locations and usage on the internet. Independent financial analysts believe the DPRK may create its own wallet services so they can to move funds to European-based accounts in order to make their way to European exchanges that have relationships with U.S.-based banks. 

Economic sanctions are increasingly being used to promote the full range of American foreign policy objectives. The university or courses being proposed by the Crimean blockchain association is likely to find great demand from targeted nations.

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SEC Orders Airfox and Paragon to Return Millions to Investors on ICO Registration Violations

The U.S. Securities and Exchange Commission (SEC) has settled charges against two cryptocurrency companies which were accused of violating ICO securities offering registration rules.

Both firms, Carrier EQ (Airfox) and Paragon Coin sold digital tokens in ICOs in 2017 after the regulator’s official stance on the ICO. Some crypto fundraisers can be considered securities offerings, according to its DAO Report of Investigation.

Airfox and Paragon Settle Charges with SEC for ICO Registration Violations, $250 in Penalties

As part of the settlement, both cryptocurrency companies will return funds to harmed investors, register the tokens as securities, file periodic reports with the Commission, and pay $250,000 in penalties.

Neither one has admitted or denied the findings made by the SEC, but they have consented to the orders.

Carrier EQ (Airfox), a firm which facilitates the transfer of mobile airtime, data and currency, as well as payments for goods and services, raised $15 million from selling over a million AirTokens on October 2017.

The company had closed its $6.5 million ICO pre-sale weeks earlier than scheduled. The Boston-based blockchain company intended to use the money to develop a micro-loans program and expand abroad to emerging markets.

Paragon Coin, which focuses its blockchain platform on the cannabis industry, raised approximately $12 million worth of digital assets to work toward legalization of cannabis and implement its business plan.

Related Reading: Crypto Week in Review: SEC Fines EtherDelta, Binance to Attract Institutions

The funds would be used to make supply chains more efficient and manageable, increase transparency regarding the origin of seeds and produces, as well as allowing payments between different parties.

These are the Commission’s first cases imposing civil penalties solely for ICO securities offering registration violations. Airfox and Paragon Coin failed to register their crypto fundraisers pursuant to the federal securities laws nor did they qualify for an exemption to the registration requirements, Stephanie Avakian, co-director of the SEC’s Enforcement Division, said in a statement.

“We have made it clear that companies that issue securities through ICOs are required to comply with existing statutes and rules governing the registration of securities. These cases tell those who are considering taking similar actions that we continue to be on the lookout for violations of the federal securities laws with respect to digital assets.”

Munchee was the Commission’s first non-fraud ICO registration case. The visual review and social networking app for food failed to register with the financial watchdog, but stopped its offering before delivering any tokens and promptly returned proceeds to investors.

The company was seeking to raise up to $15 million from thousands of investors ‎to develop an iPhone app for restaurant meal reviews. The SEC did not impose a penalty or include undertakings from Munchee.

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OkCoin Exchange Launches Operation in Argentina in Conquest of Latin America

OkCoin, a leading digital asset platform for fiat and token trading headquartered in Beijing, has expanded its operation to Argentina and is about to do the same in other Latin America countries.

Instiutional and retail customers are now able to exchange the Argentine peso for any cryptocurrency included in its offering.

OkCoin Offers Fiat-to-Crypto Exchange in Argentina as Country Faces 40.3% Inflation Rate

The digital currency exchange, which services millions of users worldwide, has announced it will be offering both spot and margin trading between the Argentine peso and several major cryptocurrencies. These include Bitcoin, Ethereum, Litecoin, Ripple, and Zcash, while complying to the local regulatory framework.

The OkCoin office located in Buenos Aires will support operations throughout Latin America.

The company may be eyeing markets such as Brazil, Chile, Colombia, and Venezuela, to open local operations that support the exchange of fiat currencies for digital assets. According to Tim Byun, CEO at OkCoin USA, Latin American populations are showing interest in crypto tokens while experimenting with blockchain technologies.

He added:

“OKCoin is committed to opening up new markets for digital currency consumers throughout the world, and we are very excited to extend our safe, secure and licensed trading platform to consumers in Argentina. This is just the beginning of our Latin American expansion, as we’re aiming to grow throughout the region by bringing institutional and retail traders there an array of trusted trading options so they can buy and sell with confidence.”

The Argentine peso has been experiencing significant volatility in recent times, having lost about half of its worth against the U.S. dollar on a year-over-year basis. Consumer prices in the country rose 6.5 percent in September, bringing the twelve-month inflation rate to 40.3 percent, the fifth highest in the world.

Venezuela leads the inflation rate ranking, with a hyperinflation of 833,997 percent as the government frequently announces new fiat currencies.

The country recently launched its government-backed cryptocurrency, El Petro. President Nicolás Maduro has ordered local banks to adopt the digital currency despite the overwhelming lack of confidence in the government and the central bank’s monetary policy.

Fiat currency weakness has buoyed growth of cryptocurrency markets in Argentina and Venezuela, which comes as a business opportunity for OkCoin. The emerging digital currency market is seen as a safe haven in times of economic distress, despite the volatility seen in daily trading.

Bitcoin is down by approximately four percent today, having lost the $6,000 handle yesterday. Most digital currencies are trading in the red with a few notable exceptions such as Nasdacoin, which is rallying by 267 percent.

Related Reading: Over 1,500 Bitcoin ATMs to Be Deployed in Argentina in Response to Rampant Inflation

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Brian Kelly: Bitcoin Cash Hard Fork Caused “Crypto Civil War”

Brian Kelly, founder and CEO of cryptocurrency investment firm BKCM, has said the market is experiencing a “crypto civil war” as the announced “hard fork” in Bitcoin Cash failed to gain consensus among peers in the community.

The disagreement is behind the plunging digital currency market, with Bitcoin losing the $6,000 handle on Wednesday, Kelly argued.

Crypto Market Sell-Off is “Probably an Opportunity,” Says Brian Kelly

The relatively low volatility found in the Bitcoin secondary market in recent months gave way to a price drop of nearly $1,000 in a day as the Bitcoin Cash community debates the upcoming “hard fork.”

“Things exploded” on Wednesday as Bitcoin dropped below $6,000 and is gradually approaching the $5,000 mark. The imminent software upgrade of Bitcoin Cash – born out of a Bitcoin hard fork by developers wanting to increase Bitcoin’s block size limit – is to blame, Kelly told CNBC.

“When you do a software upgrade, everybody usually agrees. But in this particular case, everybody is not agreeing. So, we’ve got ourselves a ‘crypto civil war’ […] People started selling. That triggered stops. Everybody got concerned. And that’s what happened today — the entire market sell-down.”

Related Reading: Bitcoin Cash War Begins: Hash Power of BCH Increasing Rapidly

The price of Bitcoin Cash also suffered from concerned market participants as it dropped approximately $100 to trade just above $400. Kelly explained traders are worried that Bitcoin and Bitcoin Cash markets would run into “chaos” after the “hard fork.”

His digital currency investment firm has already bought the dip as he expects both markets to settle in the “very short-term,” but warned inexperienced cryptocurrency traders of its risks.

“I think it’s probably an opportunity. In fact, we did some buying at my fund […] If you don’t understand what a ‘hard fork’ is, do not jump into that pool right now. It is the deep end.”

The cryptocurrency market is experiencing a downward momentum because of Bitcoin’s dominance (52.7 percent, according to and very thin trading in most digital assets. Meltem Demirors, CEO of cryptocurrency research firm CoinShares, told CNBC that some investment funds have taken “some money off the table” after a number of events piled up.

“I think all other assets that are not Bitcoin are in the midst of a liquidity crisis. What we’re seeing across the board is asset prices are down 75 percent or more, in some cases 95 percent. We’re now at a point where projects are running out of money. They’re going to need to start firing employees. They’re going to need to cut costs. You’re going to see consolidation, and some of these assets, inevitably, will get marked to zero.”

On Bitcoin’s recent downward market pressure, Demirors highlighted the stability of the digital currency which continues to trade within a range.

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Canadian Bank Announces Digital Safety Deposit Box for Crypto Exchanges and Investment Funds

VersaBank, formerly Pacific & Western Bank of Canada, announced one of its subsidiaries has completed beta testing for its digital safety deposit box and is now entering the commercialization phase, which will include the offering of digital safe keeping as well as multi signature services for cryptocurrency exchanges and crypto-based investment funds.

Canadian VersaBank Announces Digital Safety Deposit Box for Cryptocurrency Holdings

The testing phase of the company’s digital safety deposit box was conducted to ensure the product’s design would meet the specific requirements of cryptocurrency exchanges and crypto funds. Target clients tried VersaVault’s capabilities, including its technologically advanced digital, cyber-security solutions, and privacy settings. David Taylor, President and CEO of VersaBank and its subsidiary, VersaVault, claims the product cannot ‘drill’ into a client’s digital safety deposit box nor can look inside, giving full privacy to the customer.

“I am just delighted with the successful results of our strenuous beta testing. While many are considering ideas and plans for a digital safety deposit box, we have designed and built it, and are now commercializing a first of its kind service that provides our clients with the most sophisticated security and authentication technology available globally, in which our clients enjoy absolute privacy. The VersaVault will now begin rolling out services to cryptocurrency exchanges and crypto investment funds.”

VersaBank, which is Canada’s smallest bank by assets, planned to have the digital vault operational by June in order to offer the service to customers across the globe. The bank first reached out to cybersecurity expert Gurpreet Sahota from BlackBerry. Sahota led software engineers in designing the vault, which is stores cryptocurrencies on computer servers around the world.

Calling physical safety boxes obsolete, chief executive David Taylor says VersaVault fulfills the same goal, which is safety and security, but for today’s needs. “Most people’s really valuable assets are contained in some sort of digital format, whether it be a deed or a contract or a cryptocurrency.” The bank has no back door to open up the vault, Taylor claimed.

The bank first went digital when it adopted an electronic branchless model in 1993 and became the world’s first branchless financial institution in 1993. The safety deposit box announcement puts the Canadian bank again in the lead, but other players will be competing for customers. Goldmoney Group, a Canadian-based precious metal custodian, has expanded its business to include secure storage of Bitcoin in early 2014. Its new firm, Netagio, will be responsible to hold custody of clients’ digital assets.


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Australian Taxpayers Have Paid $1 Million to Scammers Through Bitcoin ATMs Since July

The Australian Taxation Office (ATO) has used official channels to warn taxpayers of scammers who are fooling people into paying their taxes through Bitcoin ATMs to their accounts.

As the deadline approaches on 21 November, the authority told the one million taxpayers, who will need to make a payment to the ATO, to be wary.

Australian Taxpayers on High Alert

Kath Anderson, assistant commissioner at the ATO, stated that increasingly sophisticated scammers look to exploit vulnerable people often using aggressive tactics to take their money or personal information.

The top five scammer signs include the threat of immediate arrest, unusual payment methods such as prepaid cards, the request of personal security information including tax file number, bank details or social media sites. The authority added that scammers often ask for money in order to process a refund or other payment.

“November is a prime time for scammers as they know lots of people have tax bills to pay. Be wary if someone contacts you demanding payment of a tax debt you didn’t know you owed […] Our advice is simple – the ATO will never ask you to make a payment into an ATM or via gift or pre-paid cards such as iTunes and Visa cards, or direct credit to be paid to a personal bank account,” Anderson said on the ATO website.

Since July 2018, Australians have reported over 28,000 scam attempts, totaling nearly $1 million paid to scammers, with payments through Bitcoin ATMs becoming their favorite means of payment, followed by iTunes vouchers. Anderson is also concerned about vulnerable personal information that is given away to scammers.

“Since 1 July, we’ve seen almost 6,000 taxpayers give away their personal or financial information to scammers through things like phishing scams. Your identifying information like tax file numbers, bank account numbers or your date of birth are the keys to your identity, and can be used by scammers to break into your life if they are compromised. Scammers have been known to impersonate tax agents too it’s recommended that you hang up and call your agent direct on a number you have sourced independently.”

A recent police investigation found that a number of scammers have been targeting newly-arrived migrants, who tend to be vulnerable to such a scheme as they are more likely to do things by the book as they navigate an entirely foreign system of taxation for the first time.

Cryptocurrency-related fraud totaled AUS$2.1 million in 2017, representing 0.617% of the overall AUS$340 million scam economy.

Related Reading: Australian Tax Office Warns Public About Bitcoin Scammers

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Ripple’s CEO Says Blockchain Will Change the World of Global Payments

Ripple CEO’s has sat down with Ross Leckow, IMF’s Deputy General Counsel, to talk about blockchain technology at the Singapore Fintech Festival.

Both agreed that the distributed ledger will change the world of global payments as the International Monetary Fund engages with the private sector and industry to help its members unlock the potential of blockchain with minimum risk.

IMF Engaging Private Sector to Help Countries Move Towards Blockchain-Friendly Environments

During the conversation about distributed ledger and the ASEAN market, current Brad Garlinghouse, CEO of Ripple, told Leckow that the regulatory clarity in the region, namely in Singapore, Thailand, and the Philippines, is attractive for the establishment of blockchain businesses.

“In particular, Thailand has introduced a framework that balances consumer protection with innovation. It legalizes several digital assets, including XRP, and provides clear and explicit guidelines for outside blockchain companies to operate. This clear regulatory environment makes it easier to apply blockchain and digital asset technology to solve real-world business use cases, such as improving cross-border payments across the ASEAN region.”

Blockchain also comes as an opportunity for the East Asian region as the market is ripe for adoption of blockchain to lower the costs of cross-border payments, which totaled $130 billion in inbound payments alone in 2017. Ripple is particularly invested in the region, with nearly 50 percent of global customers based there. The broad acceptance of blockchain in ASEAN markets aims to solve issues such as opaque, expensive, and slow cross-border payments, Leckow explained.

“Cross-border remittance is a good example of a use case that is very important here. Regulators here have demonstrated a willingness to engage with each other and others around the world — a type of cross-border cooperation has emerged that involves the right stakeholders and helps develop solutions to solve for problems like this.”

IMF’s fintech-related advisory group, which was founded last year, includes Chris Larsen, executive chairman of Ripple’s board of directors and former CEO and co-founder of Ripple. The IMF official added that the international community is now working together to develop regulation that is proportionate to the risks so that it does not stiffle innovation, but each jurisdiction makes its own decisions.

“Each country has to decide for themselves what type of regulatory framework is best. But generally speaking, they should be cognizant of risk but also the potential to make the global system more efficient, more inclusive with this new technology.”

Ripple’s Garlinghouse ended the talk by explaining that blockchain addresses the issues of value interoperability, including bringing three billion people – almost half of the world population – to the global economy.

Related Reading: Ripple Moves XRP Security Lawsuit to Federal Court, Attorneys Call It Brilliant

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Islamic Scholars Approve Swiss-Based Value Preservation Payment Token X8X

X8 AG, a Switzerland-based blockchain technology company and creator of value preservation payment token X8X, has obtained the approval from Islamic scholars in order to be marketed as a Sharia-compliant digital currency. The certification will allow the business to expand in the Middle East as regulators and financial exchange in the region increasingly attempt to encourage innovation in the field of finance.

X8 Currency to Expand In Middle East Amid Halal Certification, Talks of Cryptocurrency Exchange

X8 Currency is a blockchain based digital currency with an artificial intelligence wealth value preservation solution. The startup uses AI to manage funds combining AAA grade fiat currencies and gold. Dedicated to preserve value and create price stability in order to prevent from the risk of currency devaluation, its automatic reserve management and AI-driven portfolios were able to obtain a certification for Sharia compliance by Shariyah Review Bureau.

The basket of fiat currencies is composed of US Dollar, Swiss Franc, Euro, Pound Sterling, Japanese Yen, Australian, New Zealand and Canadian Dollar. The eight fiat currencies and gold compose the portfolio of the X8Currency, an Ethereum Token which is represented with assets deposited on bank accounts. X8C can only be issued or exchanged for fiat with X8X Utility Tokens.

X8 AG has assigned Shariyah Review Bureau, an Islamic advisory firm licensed by Bahrain’s central bank, as an independent Sharia Advisor. The bureau helped the investment company comply with the critical procedures of Sharia compliance in order to start its strategic expansion in the Middle East, according to Francesca Greco, Director and Co-Founder of X8 AG.

“With the changing environment of banking and asset management primarily due to fintech-driven shifts, the market for wealth preservation in Islamic finance is poised to see disruption and it is for this reason that we are seeing an increasing demand for our Product in the Islamic markets.”

Greco told Reuters that the firm will open a regional office in the Middle East later this month. X8 has been in talks with stock exchanges in Abu Dhabi, Dubai and Bahrain, to fulfill its plan on launching a Sharia-compliant cryptocurrency exchange. Regulators in the region have been cautious about digital currencies for a number of reasons, including price volatility.

The debate among Islamic scholars about cryptocurrencies remains. When considered a transfer of rights, the exchange of cryptocurrencies tends to be deemed permissible in Islam. Price volatility and monetary speculation associated with digital currencies, however, have caused some hesitance among many.


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BitPesa Partners with Japanese Insurance Company to Digitize Remittance Service

Tokyo-based insurance company Sompo Holdings has partnered with BitPesa to promote digitization of its international remittance service.

The news comes weeks after another Japanese player, money transfer firm SBI Remit, teamed up with the blockchain company to bring distributed ledger to transactions between Japan and African countries.

Japanese Sompo Holdings Follows SBI Remit in Partnership with Blockchain Firm BitPesa

The cross borders payments industry has gained a new life ever since blockchain technology emerged to disrupt the financial sector.

BTC Africa AC, also known as BitPesa, has made a name for itself as the firm focuses on bringing increased transparency and liquidity to the African continent with Bitcoin. The firm has rapidly grown its business of helping small and medium-sized businesses through international partnerships.

The company, headquartered in Luxembourg for its attractive fiscal policy,  solves the friction associated with doing business in Africa by intermediating international remittances with Bitcoin in an effort that may result in greater trust and transactional volumes between businesses and consumers, including multinationals.

The role of international remittances to support the global economy has increased, but expensive fees and delays of legacy cross-border payments technologies has resulted in the emergence of blockchain solutions such as BitPesa.

“We believe that the two companies will be able to solve the problem of expensive commission and remittance time for international remittance by using the virtual currency whose distribution volume is expanding globally, digitizing international remittance service. We have reached a business tie-up for the company,” reports the Nikkei.

Sompo decided to partner with BitPesa to both contribute to security, safety, and health, as well as to further expand its customer base in developing countries, the insurance company said.

As part of the arrangement, Sompo Holdings will enter BitPesa’s capital as a shareholder and help the blockchain remittance service better navigate the financial sector. The Japanese firm will also be a participant in testing the technology on a number of remittances and settlements. BitPesa agreed to consider developing a blockchain application for the insurance field.

BitPesa now counts with two Japanese financial services companies to expand its international remittance service using digital currency. The two agreements, with SBI Remit and Sompo Holdings should help consumers move money between Japan and African countries without middlemen or banks as BitPesa greatly simplifies the process by using the Bitcoin blockchain to create new currency pairs.

The deal made with SBI Remit will target cross-border payments for businesses in a number of fields, including cosmetics, electronics, and car retailers. BitPesa enables direct currency pairs between Japanese yen and the fiat currencies of Ghana, Kenya, Morocco, Nigeria, Senegal, Tanzania, Uganda, and the Democratic Republic of Congo.

Related Reading: SBI Remit is Using the Blockchain to Make Money Transfers Between Japan and Africa

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ConsenSys and Amazon to Launch Ethereum Marketplace for Enterprise Blockchain

Kaleido, a subsidiary of ConsenSys, is launching a marketplace of plug-and-play services to help blockchain projects from proof-of-concept to live production business networks.

The firm, which announced the product at the Web Summit in Lisbon, is working with Amazon Web Services to provide the enterprise blockchain platform.

ConsenSys’ Kaleido Launches Marketplace for Plug-and-Play Enterprise Blockchain Solutions

According to the company, early adopters of the Kaleido Marketplace have eliminated 80 percent of the custom code required to build their blockchain project, saving time and energy to focus on what comes next.

The full-stack platform includes plug-and-play tools from Kaleido, Amazon Web Services, and third-party developers. A survey conducted by PwC in August 2018 found that 84 percent of executives said their companies were “actively involved” with distributed ledger technology.

However, due to a shortage of skills and talent across the industry, companies struggle to complete their blockchain solutions to get them up and running. The marketplace includes native AWS integrations, HD wallets for privacy and ID registries for organizational identity.

The platform also offers blockchain tools and services for smart contract oracles, supply chain management, and real-time legal contracts. Kaleido’s Blockchain Business Cloud has helped companies create more than a thousand blockchain networks, Sophia Lopez, chief operations officer and co-founder, claims.

“We’ve seen successful patterns of deployment as enterprise networks go into production and we’ve baked these best practices into the Kaleido Marketplace services, to help radically simplify the adoption of blockchain and eliminate some of the specialized blockchain expertise needed.”

Steve Cerveny, Kaleido co-founder and CEO, explained there is much more to an enterprise blockchain project than the distributed ledger itself. The platform, built in cooperation with Amazon Web Services and ConsenSys, aims to help firms adopt blockchain in their operations.

“The reality is only about 10 percent of an enterprise blockchain project is the blockchain itself. There are many other application, data and infrastructure components required to go into production. I’m very excited that we have a whole cloud of blockchain technologies pre-integrated for our clients to use. The Kaleido Marketplace is a one stop shop for all things enterprise blockchain.”

The announcement, made at the Web Summit in Lisbon, shows how ConsenSys is at the forefront of enterprise blockchain solutions.

The firm has recently made the news for partnering with ING Bank, Citigroup, MUFG Bank, Societe Generale, BNP Paribas, Credit Agricole, Koch Supply & Trading and Shell, to create an ethereum-based platform via a new firm called Komgo. Souleïma Baddi, its CEO, said the company uses the marketplace to select the best protocols in development and use existing building blocks for an optimized solution.

Related Reading: Ethereum Price Analysis: Regulation is Important for Joseph Lubin, the CEO of ConsenSys

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