2 Weeks Ago

The market for offering custody services globally is massive, with the top 15 providers having over $131 Trillion of assets in custody.

As we see more institutions investing in Digital Assets, we will need to have organisations offering custody services to cater to this new asset class.

This opportunity has not been lost on custody providers, as one of the largest custody providers Northern Trust has for a while been rumoured to be launching a custody service for Digital Assets. Fidelity, Goldman Sachs, and Coinbase are already offering custody services for Digital Assets.

Intercontinental Exchange (ICE), that runs 12 different stock exchanges and with a revenue of over $6 Billion, has just acquired DACC which offer Digital Asset custody services for over 100 Cryptocurrencies for 13 Blockchains. It is understood that one of ICE’s subsidiaries, Bakkt, has applied to the New York Department of Financial Services to be a trust company, which will enable the firm to serve as a Qualified Custodian for digital assets.

Kingdom Trust, which is a US-based custodian, was the first custody provider to get Lloyds of London to ensure its Digital Asset custody service last year.

Nomura, the massive Japanese bank with over 26,000 staff and offices globally, announced last year a joint venture with Ledger and Global Advisor Holdings, (a Cryptocurrency manager based in Jersey in the Channel Islands), to launch an institutional-grade custody solution for digital assets. The three parties have established a company called Komainu, which is looking to offer custody services that will also cover the insurance, regulation, and certification of the Digital Assets that it offers custody services for.

It would appear that we are seeing a reversal to where we were before asset managers relied on nominees and custodians. In the 1970s, due to the huge amounts of paperwork that bearer securities created, nominees like DTCC were created. Interestingly, Digital Assets which can be traded and transferred using Blockchain technology, are not dissimilar to bearer securities as records of the ownership of these assets are not held by a third party.

This means the “bearer” (the person presenting the asset), is paid directly, should they wish to sell. Blockchain technology is able to record the transfer digitally of assets, efficiently and potentially at a cheaper price, and without the need for many of the current intermediaries - all of whom charge fees for their services, so adding to the friction costs of trading securities.
There is an argument that with the creation of Multisig wallets custodians are no longer required. A third party, like a trustee, could be appointed and authorised the transfer of assets from a digital wallet under agreed terms and conditions.

This type of trustee service is currently being investigated by trustee providers, like PTTrustees, for the holders of digital assets. So we can see that, as the adoption of Digital Assets increases, there are new as well as traditional custody service providers beginning to offer a range of services for pension funds, asset managers and banks, and no doubt there will be more to follow…

It is of note that trust companies are moving from The Channel Islands, where they...

Digital Assets
As more organisations turn to their lawyers for help and advice, lawyers themselves are struggling to recruit sufficient staff to fill their vacancies.

Many of the global law firms have been adding staff as demand has risen for data privacy and security legal expertise. Mary K. Young, a partner at Zeughauser Group, the law firm consultancy: “don’t focus on the crypto, focus on the blockchain. It will be a game changer.”

In Canada a new law firm is focusing just on CRYPTO believing that companies need help with this new asset class, a focus on the international challenges, without dwelling on national issues.

Lawyers advising on Blockchain technology will be need multi-disciplinary skills, especially those advising organisations in the financial sector. These lawyers will need financial services, data privacy, regulation, and technical knowledge to be able to effectively advise clients.

Given the recent price rises in many Digital Assets (partially fuelled by the rise of BitCoin and Ethereum), a number of firms that issued Initial Coin Offerings (ICOs) are now worth considerably more than they were a few months ago.

As we start to see regulators offering clearer guidance, as the SEC has recently, will plaintiffs engage law firms to start action against those organisations who would appear to have broken the law, when they originally carried out their ICO?

In a recent report from Oracle and Finxtra Research, “Key Drivers, Emerging Trends, and Development in Corporate Banking”, they discussed how Fintech start-ups are increasingly becoming a threat to the status quo that traditional banks have enjoyed for years.

One of its key findings was how Artificial Intelligence (AI) and Blockchain technology are able to securely store, interrogate, capture, and validate data, while removing the need for multiple records so improving the efficiency of data management . As many of the banks’ customers are becoming more global, and as economies are becoming more digital, banks are being asked to provide faster services - whether that be for cash or credit management, while improving the efficiency of money transfers at ever lower transaction costs.

One of the key factors is for a bank to maintain its customers' trust and confidence, as banks have traditionally been a place to store cash, borrow money and transact. However, in a survey carried out in the USA by Gallop, it has seen since 1979 to 2018, that confidence in banks has fallen from 60% to 30%.

Banks’ public image and trust, since the financial crisis in 2008, has been severely challenged as summarised by a quote from The American Banker magazine, “A lack of widespread trust raises questions about banks’ relevance in the digital age and leaves them open to further political attack.”

In a report back in 2015 from the World Economic Forum, it stated that it believed “Blockchain technology, replaces the need for third-party institutions to provide trust for financial, contract and voting activities”. Traditional banks, with their legacy IT systems, are struggling to adapt. FinTech firms that do not have diverse hard and software systems to maintain and integrate are able to embrace technologies like Blockchain and AI and offer solutions. This has led to traditional banks moving away from building more in-house solutions and turning to nimbler Fintech firms.

If we look at ‘Know Your Client’ (KYC) costs, firm Consult Hyperion states it can cost a bank between £10 to £100 per client to carry out these checks which, depending on the riskiness of the client may need to be done every year. While carrying out these checks, vast quantities of personal data need to be collected and then securely stored which creates its own set of challenges. Alternatively, KYC checks can be carried out by firms like Blockpass, which can offer KYC services for less than £2 per person, and it does not store the personal data, so does not have the onerous burden and complexities around storing of this information.  In the area of fraud detection, Teradata is an AI firm selling fraud detection solutions to banks. It claims it helped Danske Bank to reduce the bank’s false positives by 60 %, and this was expected to reach 80% as machine-learning continued improve the model. At the same Teradata has increased detection of real fraud by 50%.

Artificial Intelligence
Coss and ARAX have announced they are going to merge, which is being heralded by some as the first merger of two firms that had issued utility tokens by carrying out Initial Coin Offerings (ICOs).

The combined business will be able to enjoy economies of scale bringing together two management teams and create a much larger utility token for their users.

Coss, which stands for Crypto One Stop Solution, is a Digital Asset exchange based in Singapore, and ARAX is a Digital Asset wallet which supports seven different Blockchains and seventeen Digital Assets and has over 250,000 users.

As the price and the liquidity of Bitcoin and Ethereum (Crypto) have improved, it is now possible for firms that have carried out ICOs to start selling some of their Crypto assets, which could potentially have two consequences. Some of these firms will be sitting on Crypto assets that have become much more valuable in the last few months and are, in effect, “digital Cash shells “, which may well encourage merger and acquisition (M&A) activity.

On the other hand, as these firms now potentially have greater asset value, we could see more litigation. The potential for litigation was laid out recently by US law firm Polsinelli LLP, in their paper entitled “Cryptocurrency Class Action Lawsuits: A New Frontier”

As we start to see Security Token Offerings (STOs), which will potentially be backed by real assets, such as publicly quoted equities and bonds, it will not be too long before we see STOs also being caught up in M&A. Then the lawyers and regulators will need to work out how to equitably combine traditional assets with this new asset class…

Mergers And Acquisitions
Bloomberg reported last year that The Peoples Bank of China (PBoC) was looking to launch its own Digital currency, which would enable it to have more control and be able to track transactions, be able to reduce the Black market economy and even automatically refuse companies loans who had been blacklisted.

The PBoC has registered 78 patents since 2016, according to Bloomberg. In October 2018, PBoC was looking to recruit staff at its Digital Currency Institute, who have experience in software and encryption law. It would appear that China wishes to create a Digital Currency that is centrally controlled, arguably the opposite originally planned for Bitcoin when it was created in 2008!

China is looking to launch its own Digital CurrencyTo be called “Digital Currency for Electronic Payment”, and the governor Zhou Xiaochuan of the PBoC, was recently quoted saying its focus would be on “convenience, rapidity, and low cost in a retail payment system while taking into account security and protection of privacy.”

Meanwhile, ahead of a G20 meeting in Osaka in Japan in June this year, the Japanese have launched a manual for Cryptocurrency regulation as it looks to try and coordinate the approach that countries currently take. In some jurisdictions, regulation is minimal, while others take a more stringent or draconian approach.

Digital Currency
Serena Williams, who has won 23 tennis Grand Slams, has revealed via her Instagram (which has had over 22,000 likes) that she set up a Venture Capital fund in 2014, which has Coinbase as one of its investments.

Coinbase is a US-based Cryptocurrency exchange which was established in 2012. It has over 13 Million accounts, making it the largest Digital Exchange globally and, following its last $300million fund-raise, was valued at $8 Billion.
However, Serena would appear not to be alone, as there has been an increase in the amount invested in Crypto assets as the chart indicates.

According to Crypto Fund research, there are more than 750 different funds which invest in Crypto assets and have been set up as either Crypto Hedge funds or Crypto Venture capital funds. The value of the assets that these funds managed at the beginning of 2019 was $10 Billion which, despite the poor performance during 2018, was $3.5 Billion more than the start of 2018.
For those wishing for more information on 25 of some of the better-known and larger funds which invest in Digital Assets, this link may be helpful.

It has long been a challenge for artists to protect their intellectual property (IP), and ensure that they are paid fairly for their creations.

As we see more and more IP being created and circulated digitally, this has become a bigger challenge. There is now a massive market online: a billion people use Instagram, to post photos and images for example.

Some of these images “go viral” and are re-used globally by individuals and sometimes by corporations for their own marketing purposes, with no fees paid to the originator. While the likes of Getty images has armies of lawyers to protect their image rights, it is very hard for individuals to take action for themselves against those who use their IP.

However, this is beginning to change. Pinterest’s first employee has just started a new business:
Markerplace, to address this problem. Using Blockchain technology one is able to create, in effect, a digital record enabling an image to be sold on a limited-edition basis.

Another company, called File Protected, has a Blockchain solution too. This firm has been set up by Andy Rosen, a world-renowned photographer who was deeply involved with punk music in the 70’s in the UK and then moved to LA, producing videos for the pop music industry in the 80’s and 90’s. Andy has built a Blockchain-powered platform which enables IP rights to be transferred securely and transparently, allowing licensing agreements to be created and fees to be monitored using digitally.

This is a growing market as corporations are increasingly engaging with people on Instagram to help promote their products and services, using their photos and endorsements as part of these firms’ digital marketing strategy. There over
8 Million people using Instagram who have 50,000+ followers and who could potentially monetise their Instagram accounts.

Intellectual Property
Performing Arts
The USA government has announced that it intends to increase the amount it spends on Blockchain technology to $123 Million by 2022, compared to $10.7 Million in 2017, which would be a 1,000% increase!

Meanwhile, US investment into Blockchain technology outside of the government is expected to swell by over $37 Billion by 2025 from $1.8 Billion in 2018, which would be a compound annual growth rate of over 44%.
In Europe, a survey reported that it would spend by 2022 $3.5 Billion on Blockchain technology, and it cited as well as (financial services), manufacturing, resources, and distribution as the key areas in which it believes money will be invested in.
In spite of the naysayers, who have decried Blockchains and Digital Assets, we are starting to see governments, and multinational commercially-minded corporations investing in this technology and new asset class.

Blockchain technology is impacting our lives in many ways, and while there were lots of headlines in 2017 and 2018 about the price of Bitcoin and how Ripple had risen in value in a 12 month period by over 37,000%, large corporations have been busy behind the scenes.

Indeed, as the link at the end of this article illustrates, big businesses across the globe have been investing and trialing various projects to ensure that they are not left behind.

Blockchain technology offers a powerful combination of better security, greater efficiency, reducing costs of transactions and in many cases, reducing the number of parties which need to be involved in a transaction - and/or movement of goods and services.

What is interesting is that when you look at the list Forbes has compiled, typically of $ Billion businesses, they are from a wide variety of industries. It is more of a case of which business sector is not going to be transformed or impacted by Blockchain technology and, as CB Insights reported, listed 50 different industries and how they could change as a result of using Blockchain technology.

One way to look at Blockchain is to use a sporting analogy. In a game of rugby or football (soccer for our US readers), a player kicks the ball, then another player passes the ball and then passes to another team member, and then to another before they hopefully score. All these transactions are recorded in real time and all players and spectators can watch the game. Blockchains, in effect, digitise a series of shipments, transactions, and movements in real time, with much greater transparency between the relevant parties in the same way video records a football match. Once the parties have agreed what has happened (“blocks”) is real, the new blocks is added to the chain - hence Blockchain. Therefore, in effect, it enables the recording of transactions accessible to all parties involved and so no one can disagree or alter the information (who did “the throw-in” and who “scored”).

At any stage of the game and after it, everyone has an accurate, commonly-agreed picture of every move throughout the match.

Nike, the world’s largest shoe manufacturer and the most valuable apparel brand in the world, has filed a trademark “CryptoKicks” which could lead to it launching its own Cryptocurrency.

This rather bold claim is on the back of Nike’s trademark application, which states “Financial services, namely, providing a digital currency or digital token for use by members of an online community via a global computer network; facilitation of financial transactions using unconventional currency systems and bartering...”

Interestingly, earlier this year, Nike launched trainers that lace themselves, called HyperAdapt. Therefore, will CryptoKicks support an incentive scheme for people wearing these trainers? After all, Nike apparel, with its distinctive logo, is as a form of advertising medium while being worn. So, the more you wear your trainers, the more CryptoKicks you could earn!

Facebook is looking to launch Facecoin on WhatsApp in India, but will Nike beat it and have CryptoKicks up and running before Zuckerberg is out of the blocks?

Nike, like Facebook, has a global audience, who are using their goods and services on a daily basis and both firms need to stay relevant, engaged, and keep the attention of their customers while finding ways to encourage them to repeat purchases.

How long before we see other global brands launching their own Cryptocurrencies for engagement, reward, and payment mechanism?

Social Media

3 Weeks Ago

The giant Dutch bank, ING, has called upon the cryptographic skills of Stanford University in California, University College London, and start-up Blockstream, to offer greater privacy when transferring Bitcoin, by hiding certain transaction details.

ING are calling this new method ‘Bulletproof”, and claim it is 300 times more efficient than some other methods of sending Digital currencies. Interestingly, this new method may be extremely helpful as a way to record data using Blockchain technology and still comply with GDPR regulations across Europe.Keeping user-information and data private has been a real challenge for exponents of Blockchain technology, and has led to some organisations turning to private or permissioned Blockchains.

Bulletproof Blockchains could also be ideal for security tokens, especially where the underlying asset is a publicly quote equity or may contain price-sensitive information. It would appear that, as it is now possible using ING’s bulletproof system, it could be possible to carry out transactions using a Blockchain, but not disclose the price of the asset, who is the buyer or seller, or how much is being transacted.

This would be a real breakthrough and would help to allay compliance officers’ concerns within asset managers and banks about having price-sensitive information in the public domain.

Enthusiasts of Digital Assets believe that if user's transactions can be made private and not available to prying eyes, it might help minimise scams and frauds, and attract more investors.


4 Weeks Ago

The London Stock Exchange (LSE), which is one of the largest regulated exchanges globally, has issued an STO worth £3 million on the LSE’s Turquoise platform.

This is the first STO, or as some are calling it an Equity Token-Offering (ETO), for The LSE, and has been carried out within the Financial Conduct Authority’s (FCA) Fintech Sandbox for a company called 20/30.

Nivaura helped with the 20/30 issue, and had previously been involved in launching a bond on the Ethereum network, claiming that by using Blockchain technology the costs of issuing a bond could fall by as much as 65% to 80%.

Nivaura recently raised over £20 million from Linklaters, Allen Overy, and the LSE to develop their business as they believe that Digitising the issuance of bonds and equities for private and publicly quoted businesses is here to stay.

No doubt other exchanges around the world will be keeping a close watch on the LSE, as they will not want London to steal too big an advantage in this sector, which is attracting considerable institutional interest around the world!

Digital Assets
The key to success for many businesses is having strong and effective distribution, and this is what Telegram (200+Million), Twitter (300+Million), Facebook (2.3 Billion + 1.5 Billion using WhatsApp and 1 Billion using Instagram) have already done.

So, all three firms, with their existing distribution could enable each one of them to launch their own Digital Currency and try and take a slice of the $5+Trillion foreign exchange market (as estimated by the Bank of International Settlement). On top of this, there are the internal cash, credit and debit card transactions every day within each country across the world, so the potential size of the market to go for is huge.

In the $508 Trillion global publicly quoted equity and bond market, there is also the potential for a successful Digital Currency provider to target these assets too, if the former NASDAQ CEO and chairman, Robert Greifeld is right. He believes that by 2022, all Wall Street financial instruments such as bonds, real estate, and equities will be tokenized. For tokenised, think of digital, and Silicon Valley organisations have many of the digital skill sets needed to become competitors to the traditional Wall Street incumbents.

One of the key factors holding back mass adoption of Digital Assets, is that dealing in Digital Assets is not very user-friendly, but I suspect Facebook, Telegram or Twitter will soon work out how to solve this challenge.

Facebook is looking to issue Facecoin, Telegram is rumoured to be going to launch GRAM and Jack Dorsey, the founder of Twitter, also the founder of Square - a financial services payments business are currently hiring engineers as it gears up its Crypto skills. Jack Dorsey is known to be supportive of Digital Assets, just look at his Twitter feed, so will Square’s Crypto skills be used within Twitter?

Social Media
Digital Assets
In a survey of over 150 universities and endowments in Canada, USA and UK, 94% of the respondents said that they had already invested in Crypto assets - 54% directly and 46% using different types of funds, and only 7% said they were looking to reduce their exposure over the next year.

The survey, although released recently, was conducted in Q4 2018, i.e. when many Digital Assets prices were considerably lower than they are currently, and the sentiment was much more negative to this asset class.

However, the survey revealed that there are still concerns about investing in Digital Assets, such as custody, liquidity, and regulation.

Harvard, with its $39 Billion foundation, is reportedly going to invest $11.5 Million into Blockstack, which will be the first Security Token Offering (STO) that will comply with SEC A+ Regulations, as Blockstack looks to raise $50 million later this year.

Muneeb Ali, co-founder, and CEO of Blockstack PBC, said in the press release:

“Blockstack has been working with securities lawyers to create a legal framework that can enable blockchain protocols to comply with SEC regulations. Our framework is consistent with the latest SEC guidance released last week. Upon qualification, we believe that this offering may be the first time a blockchain project receives approval to access the public U.S. securities markets.”

This is clear evidence that institutional investors have been buying Digital Assets. As we see more   STOs being launched, which will be subject to much tighter regulation, custody providers ought to be able to offer their services to these types of assets. This is important as the lack of custody providers is another reason cited as to why institutions have not significantly invested in Digital Assets to date.

Within hours of the news about the fire at the Notre Dame cathedral Bitcoin owners, were being asked to send funds to help in the restoration of the Parisian landmark.

The appeal was initiated by a French journalist, and Gregory Raymond, on Twitter, he hoped such charitable actions by owners of Bitcoin could illustrate to the lawmakers that Digital Assets can be used for good, and not just the small percentage of criminal uses often cited by regulators and naysayersIt is not just Crypto donations that are being accepted.

The CEO of Kering, which owns Gucci and Queen Alexander,
have given $100 million, and the owner of LVMH has pledged $200 million. Mere mortals can send fiat too as The Friends of Notre-Dame de Paris has a donation page, or one can use GoFundMe or JustGiving.

There has been some backlash to the amount of money raised for Notre Dame which within a few days is over $750 Million as some claimed there are worthier causes….

The French Finance minister is trying to encourage other European countries to develop a set of rules as to how Cryptocurrencies are to be regulated and taxed, following France’s parliament passing legislation last week on how intermediaries handle these assets.

Known as the “Plan d’action pour la croissance et la transformation des entreprises,” (Pacte) it reportedly enables insurance companies in France to invest in Digital Assets.

France is keen to encourage tech innovation and different types of funding that Digital Assets have been using like Initial Coin Offerings. The French are keen to have some controls and regulations, to ensure that investors are protected from fraudulent activities from firms looking to create Digital Assets, but not to protect investors from losses should they occur.

Regulations vary wildly by country within Europe as there is no pan-European legislation. However, local regulators across Europe are imposing restrictions on platforms that do not have the correct permissions to offer brokerage services. The European Union has previously proposed that firms offering services in the Digital Asset sector be subject to its anti-money ‎laundering and countering terrorist financing regulations.‎

As more governments understand the transformational impact that Digital Assets are able to have on their economies, we are likely to see more jurisdictions formulating legislation to encouraging the adoption of Digital Assets. The alternative is, that because these assets are Digital, companies will base themselves in countries that are more accommodative.

Digital Assets
KT Corporation (KT), Korea’s largest telecoms company, is launching its new 5th generation internet service and will be using Blockchain technology to provide additional security, which they believe is important especially for the growing Internet of Things (IoT) market.

The reason they are focussing on IoT is, that according to KT, 99% of IoT devices have been subject to some form of hacking, but KT hopes that by using Blockchain technology they can make IoT devices more secure.Korea has been at the forefront of Blockchain and Digital Asset adoption, and KT had only a few weeks ago announced it was to trial the K Token in a city called Gimpo, in Korea. The K token is designed to help residents and shops in Gimpo to be able to carry out transactions faster and more efficiently, and interestingly, is also going to be used to help in social and community projects.

There has been a considerable number of patents being issued by companies on a global basis for applications using Blockchain technology, recently including Accenture, IBM and Thomson Reuters.

Accenture has filed in the US, a Blockchain patent around the interoperability of Blockchains, which a key concern for corporations as they do not want to be ‘locked-in’ using a Blockchain that will not interact with other Blockchains.

IBM’s patent involves the use of data and Blockchain technology for self-driving cars to asses nearby drivers’ behaviour. Collecting data from a variety of different sensors and then calculating the most - likely maneuvers of nearby vehicles/drivers.

Thomson Reuters patent, which is filed in the USA, is around storing identity-related data securely on a ‘token‘ on a Blockchain. 

One of the reasons companies register patents is to have evidence that they own Intellectual Property (IP) and so increase the intangible assets they possess. It is then possible, depending on where the company is based, to enjoy significant tax advantages. Depending on which country a firm files a patent, it is possible to claim tax relief going back for up to TWO years on most of the expenses relating to the creation of the patent, and associated research and development costs. This is significant, as even for small start-up companies it may be possible to offset not just corporation tax, but VAT and employment taxes such as National Insurance.

The chart shows the dominance of China in terms of Blockchain patents. One of the reasons for applying for a patent in China is that the income derived from an activity that has a patent enjoys a lower potential tax as the burden is reduced from 25% to 15%. Source: Coin Telegraph.

However, while The Chinese government is desperately keen to be an IT powerhouse, a significant % of the patents that are filed in China do not get granted. In 2017, China filed over 1.3million patents, which was an increase of over 600% from the 204.00 in 2008. To offer some context there were 525,00 patents filed in the USA in 2017, which was an increase of 20% from the 429,000 filed in 2007. However, of the 1.2 million Chinese applications only 26% were actually granted, while in the US over 50% of applications applied for, were successfully granted.

Companies globally are often valued on their intangible assets, such as their Intellectual property and brand value, so having a number of patents helps when they look to raise capital, or when they come to sell the business. This, coupled with generous tax breaks, may help explain the rise in patent applications around the world, although if you wanted to be cynical, patents are being sorted to gain some control over Blockchain technology for the future!

A New York Times journalist has reported that Facebook has been talking to Venture Capital (VC) firms to raise $1 Billion to invest in its cryptocurrency project.

Facebook is looking to launch Facecoin in India on its WhatsApp platform later this year, and it is thought Tim Draper, a VC manager who backed Skype, Bitcoin ( five years ago) and Coinbase, is considering to participate and invest.

Facebook is allegedly going to issue a stablecoin, although it is not clear yet whether it will be pegged/linked to the US$, or to a basket of international currencies. Given Facebook‘s global reach of users, a stablecoin based on a basket of currencies could be an interesting proposition. While the concept of investing in a basket of currencies is not new, as it has been possible to invest in such an asset for a while and there are Exchange Traded Funds (ETFs) securities that offer this exposure, a stablecoin that gives exposure to a basket of currencies would be unique as a Digital Asset.

Mark Zuckerberg, the founder and CEO of Facebook, who is reportedly worth over $66 Billion, has spoken a lot about Facebook’s plans to launch its own Digital Currency, and his company now has over 50 people working on this project, including David Marcus, the former President of PayPal.

Some are predicting that Facebook is looking to offer an alternative to the US$ and emulate the success that We Chat in China has had, offering a money transfer solution. In any event, with Facebook’s financial muscle and strong balance sheet (as it is sitting on over $40 Billion of cash and investments), it is surprising that it is looking to raise more capital. So, what else is this global titan, which has been the subject of so much recent criticism up to now, and will the launch of Facecoin really enable Facebook to attack the lucrative financial services sector?

There could be a much bigger story here as Facebook looks to further monetise our behaviour and gather even more data about what we buy and sell, then selling this data to their advertising clients. Facebook could reward users, based on the number of “likes and shares” people make, whether it be on Facebook, WhatsApp or Instagram, as they are all part of the same organisation. How long though will it be before we see Amazon, Apple, Google Microsoft, etc. issuing their own Digital currencies, bypassing banks and governments, in a scramble to be the go-to Digital alternative payment mechanism?

Social Media
DLA Piper (DLA),  one of the world’s largest law firms with over 4,900 lawyers and offices in 40 countries, are working with Tokeny, who were set up in 2017.

They bring both traditional market experience and a platform that uses Blockchain technology. The intention is to bridge the gap between Blockchain and finance to help companies navigate them themselves to raise capital in a landscape that is increasingly digitised.

DLA, with its global network of offices, is looking to offer a cost-effective way to help companies that want to issue a Digital Asset in initially up to 15 different jurisdictions. Working with Tokeny’s platform, depending on where the company is based and in what jurisdiction they want to attract investors firms will be able to have access to DLA’s expertise.

The bad news is that Tokeny uses a new acronym: “T-REX” (Token for Regulated Exchanges) so investors need to learn this along with ICO, STO, IEO, DPO, Direct Access and good old IPO (as discussed in last week’s edition…).

The Digital Securities Alliance that DLA has created with Tokeny is significant, given the number of corporate clients that DLA look after in many different jurisdictions. It will no doubt lend credibility to Digital Assets and encourage reputable organisations to consider how T-Rex (which will be subject to far greater regulation that Initial Coin Offerings (ICOs) have) can help firms raise capital.

Digital Security

A Month Ago

Boerse Stuttgart the German Stock Exchange, has launched its Crypto trading App, according to an official tweet dated January 31st.

The App has been developed by FinTech Sowa Labs — a subsidiary of Boerse Stuttgart Digital Ventures in an effort to make trading cryptocurrencies for investors more accessible and easier. A feature of the App is the Cryptoradar. This tool uses artificial intelligence to analyze 250,000 tweets per day from the crypto community, filter them by relevance and present them in a user-friendly format. Users will be able to gain an overview of market sentiment on Twitter in real time and can keep up to date discussions around cryptocurrencies.

A new UK start-up, International Property Network (IPN), have completed what they believe to be the first blockchain based property transaction, involving banks, conveyancers, agents, legal teams, buyers and sellers using Blockchain technology.

U.S-based law firm Squire Patton Boggs, U.K-based law firms Ashurst and Clifford Chance, Barclays, Commerz Real, SBI Nihon SSI, BBVA, Swiss Re and Royal Bank of Scotland are among 40 companies on IPN’s platform as they all seek to reduce the costs of real estate transactions while significantly speeding them up.

IPN has also been working with HM Land Registry’s Digital Street project to explore how they are able to use Blockchain technology to improve how it interacts with different parties.

IPN claims that cost-savings could be as high as $160 Billion p.a. as the current system is very reliant on analogue, predominantly paper-based, systems. The ability for many independent parties to work together on a property transaction in the same online environment progressing it in real time is revolutionary and could reduce the time to complete property transactions from months to weeks.

IPN, which harnesses R3’s Corda Blockchain, say recent trials have illustrated that businesses can use the platform within a few days without the need for complex changes to their back-office systems. This is because rather than creating yet another information storage, it provides a secure means of transacting with users’ existing technology - with each party retaining control over their own data.

This not only removes some of the GDPR challenges and other compliance issues, but also allows the various players to retain control, and their independence, while removing the cost of continuous re-checking and reconciliation of facts and information by each party at its ‘border’ - which adds much delay, cost and friction.

The platform could prove to be significant internationally too. It has the potential to greatly assist many projects globally which are looking to tokenise real estate portfolios in an effort to have greater transparency and liquidity, whilst also making property investments available to smaller investors via fractionalisation.

Real Estate
MISE has reportedly invested over 40 Million Euros into Blockchain projects, as Italy looks at using its wine industry to bring greater transparency to products made in Italy.

It is hoped this will empower the fight against counterfeits and fraudulent products claiming to be made in Italy, made elsewhere.

Fraud is a real challenge for the wine industry: It is estimated that the Italian wine industry loses over Euro 2 Billion due to wine fraud. This has encouraged Ernst and Young  (EY), to use Blockchain technology to help vineyards via its EY Ops Chain, originally launched over two years ago.

It is not just Italian vintners who are turning to Blockchain. Bufala Campana, famous over the world for its mozzarella, is using Blockchain technology and QR codes that can be scanned, using a mobile phone, to trace the products’ provenance.

One of the first companies to use Blockchain to trace the origins of a product was Everledger, which brought greater transparency to the diamond industry.  It is now turning its attention to wine, using Near-Field Communication (NFC) technology, via tiny silicon chips within labels and corks. These can be scanned, and the bottle’s provenance traced, giving consumers confidence they are buying wine as stated on the label.

Food & Beverages
IMF MD Christian Lagarde recently chaired the meeting – “Money and Digital Payments’ where the CEO of Circle (part owned by Goldman Sachs) extolled the benefits of a sovereign currency using Blockchain technology, allowing globally trade not rely on central clearing institutions.

Meanwhile in MFU- Japan’s largest bank has confirmed that it is to issue its own Blockchain powered digital currency later this year. Is it believed that digital wallets will replace physical wallets in the future.

This announcement follows Mizho’s statement that it was launching a digital currency, J Coin, pegged to the Japanese Yen, which will use QR codes scanned from a mobile phone. So far, Mizho have signed up 60 banks onto their new “Banking Digital Currency Platform”.

The Japanese seem to be taking a more accommodating stance towards Digital Assets, with proposed legislation being discussed that would relax their tax treatment. Which may explain why we are seeing a number of initiatives in Japan being announced.

In the UK, we have seen the announcement that Coinbase are to launch a VISA debit card that will allow conversion of digital assets to fiat and withdrawal cash from ATMs/ cash machines. The intention is that the card will be rolled out to other European countries in the coming months. Although users will be disappointed to see that transactions charges of 2.49% are to be levied, while usually there are no transactions charges using other types of debit cards.  However, an interesting feature of the new Coinbase debit card is that they will notify users if their passwords are found on other websites, automatically blocking the Coinbase card as a way to protect card users.

Digital Currency