Crypto Payment Products Show Gains, Blockchain Initiatives Announced for COVID-19 Data, Regulators Consider Blockchain Issues, Ethereum Classic Suffers 51% Attack

In this issue:

Announcements Provide Details on New Cryptocurrency Payment Products

Blockchain Use in COVID-19 Data, Food, Beverage Bottles and Wine Supply Chains

Regulators Consider Blockchain Issues in Tax, Banking, Securities and State Services

DOJ Targets Hackers and Darknet Vendors, Ethereum Classic Suffers “51% Attack”

Announcements Provide Details on New Cryptocurrency Payment Products

According to recent reports, a major U.S. mobile payments firm has announced that its Q2 revenue from selling bitcoin to customers through its Cash App application totaled $875 million – six times the corresponding amount in Q2 2019. In another recent announcement, a blog post noted that in only one year since its initial issuance, the ERC20 stablecoin, HUSD, now has more than $1.6 billion in tokens issued and is available in “nearly 20 markets.” HUSD is issued by a New York trust company in partnership with Huobi, a Singapore-based cryptocurrency exchange.

A San Francisco-based venture capital firm recently announced that it had “closed its second cryptonetwork and blockchain business-focused fund, with $110 million in commitments from undisclosed investors.” The firm noted that it would invest in “cryptocurrency tokens or equity.”

Binance, a major global cryptocurrency exchange, recently confirmed that it has begun shipping its new cryptocurrency debit card product to Europe. The Binance Card will allow users to spend cryptocurrencies by swiping the card through the readers of traditional point-of-sale systems. Another cryptocurrency exchange, Tauros, recently announced plans to offer a similar cryptocurrency debit card product in the Latin American market.

A startup hotel and accommodation booking platform recently announced that it has added 600,000 hotels and 1 million “holiday homes” to its travel platform, which allows payment to be made in a variety of cryptocurrencies. According to the company’s website, cryptocurrencies can be used to book more than 2.2 million hotels and accommodations worldwide through the company’s platform.

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Blockchain Use in COVID-19 Data, Food, Beverage Bottles and Wine Supply Chains

Last year, a group of bottlers for a U.S.-based global beverage company adopted a blockchain platform based on Hyperledger Fabric, with the goal of reducing friction and improving transparency and efficiency in cross-organization supply chain transactions. According to reports, the bottler group is now seeking to expand the solution to enable “a low barrier network joining process” for other bottlers of the same products. The group will reportedly use the Baseline Protocol to lower barriers to entry for bottling suppliers, streamline internal bottler-suppliers’ provision of products to the bottling network and benefit external suppliers by providing an “integrated, private, distributed integration network.”

A Chinese tech giant recently announced its plan to create a blockchain-based wine traceability platform in collaboration with China’s biggest and oldest wine producer. The platform is reportedly designed to trace the winemaking and sales processes, including planting, brewing, distribution and management, and to issue a unique traceable certificate for each bottle of wine it produces. The solution will seek to help distributors and sales outlets identify counterfeit bottles and bottles that failed quality-control tests.

In spring 2020, a major global technology firm launched both a new blockchain network to help healthcare organizations find new suppliers more quickly and an open data hub that provides users with streamlined access to verifiable COVID-19-related information. The firm has now announced a new contest for developers to submit ideas for how blockchain can assist in addressing COVID-19-related issues.

In responding to issues presented by COVID-19, VeChain and Avery Dennison Intelligent Labels recently revealed a new food traceability tool at the 14th International Internet of Things Exhibition, held in Shenzhen, China. The solution reportedly uses built-in food traceability templates and customizable tools and can be implemented almost immediately in existing supply chains for food manufacturers, suppliers and retailers.

For more information, please refer to the following links

Regulators Consider Blockchain Issues in Tax, Banking, Securities and State Services

Earlier this week, four legislators in the bipartisan Congressional Blockchain Caucus wrote to the IRS stating that the possible taxation of “staking” rewards as income could overstate taxpayers’ actual gains, hamper participation in important new technology and result in “a reporting and compliance nightmare” for taxpayers and the IRS alike. Staking allows cryptocurrency holders to earn income by participating in the transaction validation process on a blockchain network. When the cryptocurrency is staked, the underlying blockchain of that asset becomes more secure and efficient, and in exchange, the stakeholder is rewarded with more assets from the network. Alternatives to taxing staking rewards as income include taxing the rewards as interest payments or new property.

The Digital Asset Regulatory & Legal Alliance (DARLA), a group including fintech founders and senior legal counsel in the fintech space, wrote to the U.S. Office of the Comptroller of the Currency (OCC) this week, stating that better guidance is needed on fintech partnerships with national banks. The letter was in response to an advance notice of proposed rulemaking and request for comments issued by the OCC in May. Among other things, the DARLA letter emphasized that “providing banking services to fintech companies is not a high-risk endeavor” and that new regulations should be aimed at helping banks take advantage of technology innovation. Also, this week, a state-run commercial bank in Switzerland announced plans to launch cryptocurrency trading and deposit services through its banking subsidiary, making it the first Swiss state-backed lender offering such services.

The U.S. Securities and Exchange Commission (SEC) issued a solicitation request late last week, stating its intention to procure a tool to analyze smart contracts code within blockchains, including contract purpose, token type, purchase and sale restrictions, address whitelists and blacklists, modifications, and contract calls. The SEC reportedly will use the tool to support its efforts in monitoring risk, improving compliance and informing SEC policy with regard to cryptocurrency.

Last month, the California Blockchain Working Group issued a report to the California legislature analyzing the potential uses, risks and benefits of blockchain technology in state government and California businesses. The report identifies three recommended pilots involving the Department of Motor Vehicles, the Department of Food and Agriculture, and the Secretary of State’s State Archives Division.

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DOJ Targets Hackers and Darknet Vendors, Ethereum Classic Suffers “51% Attack”

Last week, the Department of Justice (DOJ) announced that three individuals had been charged in the Northern District of California for their alleged role in last month’s breach of several high-profile social media accounts, including those of former Vice President Joe Biden, Elon Musk and former President Barack Obama. The three individuals, including one juvenile, allegedly engineered the hack with a combination of technical breaches and social engineering, luring followers of approximately 130 accounts with a bitcoin scam promising an immediate doubling of their investment. The scam bitcoin account received more than 400 transfers worth more than $100,000 before it was shut down.

The DOJ also announced this week that a federal grand jury had indicted an American darknet vendor and a Costa Rican pharmacist for their illegal sale of opioids in exchange for bitcoin on the darknet and that a Missouri man pleaded guilty in federal court to attempting to purchase highly dangerous chemical weapons with bitcoin. Both cases can be traced to illicit marketing of illegal goods on the darknet, whose economy continues to flourish around the world. In Germany, dealers for the country’s largest online narcotics shop are scheduled to go to trial in Frankfurt soon for their role in trafficking massive amounts of illegal drugs on the darknet between September 2017 and February 2019. Prosecutors allege that the defendants gained more than 1 million euros ($1.2 million) from their trafficking scheme, which used bitcoin and other cryptocurrencies for payment.

This week, the Ethereum Classic blockchain suffered a “51%” attack. In this type of attack, the attacker gains control over more than 50% of network processing power, thereby allowing the attacker to alter the blockchain transaction history and “double-spend” the blockchain’s cryptocurrency. According to reports, Ethereum Classic has suffered from this type of attack twice in the past two years.

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