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<img decoding="async" loading="lazy" class="alignright wp-image-5683" src="https://theblockchainmonitor.bakerhostetlerblogs.com/wp-content/uploads/sites/24/2019/08/Blockchain-Blog-Image-Blog-Post.jpg" alt="" width="438" height="230" />In this issue:
• <a href="#Blockchains">Blockchains on Broadway, Smart Contracts Make Headway, Food Supply Chain and Health Applications Continue</a>
• <a href="#CFTC">CFTC Says Ether Is a Commodity, Crypto Trading and Payments Markets Expand</a>
• <a href="#Federal">Federal Agencies Warn on AML and Bring Civil Actions; DOJ Brings Down Darknet Site</a>
<a id="Blockchains"></a>Blockchains on Broadway, Smart Contracts Make Headway, Food Supply Chain and Health Applications Continue
By: <a href="https://www.bakerlaw.com/DianaJStern">Diana J. Stern</a>
The National Science Foundation has awarded SimplyVitalHealth Inc. a grant to further develop its blockchain protocol, Nexus, which seeks to “decrease healthcare costs by enabling data access through blockchain.” According to a press release, Nexus is compatible with the Health Insurance Portability and Accountability Act (HIPAA).
In supply chain news, KT, a South Korean telecommunications company, is working with the Korea Muslim Federation and B-square Lab to develop a blockchain-based platform that authenticates halal food. KT intends to transform a largely paper-based process by issuing blockchain-based certificates and utilizing unique QR codes to track products. In another development that would transform the chocolate supply chain, Dutch NGO FairChain Foundation is working with the United Nations to insert a code inside wrappers for The Other Bar chocolate. Consumers scan the code to donate a blockchain-based token to the farmer who produced the cocoa and to receive discounts on future chocolate bar purchases. Reports state that many cocoa farmers currently do not earn a living wage, despite chocolate production being a €92 billion industry.
An Asian news outlet reported this week that the Mobility Open Blockchain Initiative, a consortium of international automobile manufacturers, will soon begin testing a blockchain-based system that assigns digital IDs to automobiles, enabling the collection of data throughout the lifetime of a vehicle. According to reports, among other features the system would enable automatic payment of parking fees and highway tolls.
This week, the largest theater operator on Broadway announced a pilot with startup True Tickets. Starting next year, the pilot will leverage the True Tickets’ blockchain-based mobile ticketing platform to reduce fraud in the secondary market for theater tickets. In other news, a multinational professional services firm launched a blockchain-enabled solution for governments that tracks and improves processes for financial management of public funds. The City of Toronto has already piloted the platform to test how it can improve reconciliations and interdivisional fund transfers by increasing transparency and efficiency.
Finally, yesterday, Canadian multinational media conglomerate and smart contract startup OpenLaw announced a proof-of-concept to test how the Canadian firm’s flagship document automation product, Contract Express, can integrate with OpenLaw and the Ethereum blockchain. According to reports, Contract Express can be used to input the initial data for the agreements, and then OpenLaw can hash certain data points on the Ethereum blockchain. As a result, users could configure smart contracts to preprogram how certain tokens should be sent among parties.
For more information, please refer to the following links:
<ul>
<li><a href="https://www.artificiallawyer.com/2019/10/17/thomson-reuters-links-with-openlaw-for-smart-contract-express-project/">Thomson Reuters Links With OpenLaw For ‘Smart Contract Express’ Project</a></li>
<li><a href="https://www.prnewswire.com/news-releases/simplyvital-health-inc-awarded-competitive-grant-from-the-national-science-foundation-for-its-hipaa-compatible-blockchain-protocol-300936327.html">SimplyVital Health, Inc. Awarded Competitive Grant from the National Science Foundation for its HIPAA Compatible Blockchain Protocol</a></li>
<li><a href="https://www.zdnet.com/article/kt-to-apply-blockchain-for-halal-food-authentication/#ftag=RSSbaffb68">KT to apply blockchain for halal food authentication</a></li>
<li><a href="https://www.springwise.com/sustainability-innovation/food-drink/UN-chocolate-bar-uses-blockchain-to-track-living-wage">CHOCOLATE BLOCKCHAIN PROGRAMME SUPPORTS COCOA FARMERS</a></li>
<li><a href="https://www.fastcompany.com/90418176/its-not-bitcoin-the-musical-but-blockchain-technology-is-coming-to-broadway">It’s not ‘Bitcoin the Musical,’ but blockchain technology is coming to Broadway</a></li>
<li><a href="https://asia.nikkei.com/Business/Automobile/Blockchain-turns-cars-into-payment-vehicle-for-drivers">Blockchain turns cars into payment vehicle for drivers: Honda, BMW and others help develop automobile ID system set for US trials next month</a></li>
<li><a href="https://www.ey.com/en_gl/news/2019/10/ey-launches-public-finance-management-blockchain-solution-to-improve-efficiency-and-transparency-in-governments">EY launches public finance management blockchain solution to improve efficiency and transparency in governments</a></li>
</ul>
<a id="CFTC"></a>CFTC Says Ether Is a Commodity, Crypto Trading and Payments Markets Expand
By: <a href="https://www.bakerlaw.com/JoannaFWasick">Joanna F. Wasick</a>
The chairman of the Commodity Futures Trading Commission (CFTC) recently stated that ether is a commodity and therefore falls under the CFTC’s jurisdiction. While the CFTC had previously announced its view that bitcoin was a commodity, this was its first official statement on ether, and it comports with the position of the Securities Exchange Commission (SEC) that neither bitcoin nor ether is a security. The CFTC chairman also stated that “forked” assets – cryptocurrencies created by forks from the original cryptocurrency (e.g., bitcoin cash or bitcoin gold) – should be treated by regulators the same way as the original asset.
In capital markets news, earlier this week trading platform eToro launched a new portfolio that trades cryptocurrencies based on AI analyses of Twitter posts (tweets). In the foreign markets, late last week, SE Digital Co. Ltd., a subsidiary of a leading Thai financial services firm, obtained SEC approval to operate in Thailand as an initial coin offering portal. The company plans to launch the country’s first investment token with a target transaction size of between two and three billion Thai Baht. Also last week, a major Australian precious metals company announced the launch of the Perth Mint Gold Token, a digital token backed 1:1 by GoldPass certificates issued by the Perth Mint, the world’s largest refiner of newly mined gold.
Acceptance of cryptocurrency as a form of payment continues to increase. According to a major British online real estate portal and property website, the seller of a property in Durham County priced at 1.2 million British pounds will accept bitcoin as a method for payment. Additionally, a California-based luxury electric car automaker now accepts bitcoin as payment for car sales and services at its flagship store in Newport Beach. And the Bermuda government announced this week that it will accept payments for taxes, fees and other government services in USD Coin (USDC), a stablecoin backed by U.S. dollars that was launched a year ago by a major cryptocurrency exchange and a U.S. fintech and cryptocurrency firm.
For more information, please refer to the following links:
<ul>
<li><a href="https://finance.yahoo.com/news/cftc-says-cryptocurrency-ether-is-a-commodity-and-is-open-to-ether-derivatives-133455545.html">CFTC says cryptocurrency ether is a commodity, and ether futures are next</a></li>
<li><a href="https://www.bloomberg.com/news/articles/2019-10-15/crypto-portfolio-will-analyze-twitter-to-gauge-trader-sentiment?srnd=cryptocurrencies">Crypto Portfolio Will Analyze Twitter to Gauge Trader Sentiment</a></li>
<li><a href="https://www.bangkokpost.com/thailand/pr/1769989/">SE Digital keen to democratise Thai financial markets as the official ICO Portal</a></li>
<li><a href="https://cointelegraph.com/news/thailands-first-regulated-ico-portal-targets-98m-token-offering">Thailand’s First Regulated ICO Portal Targets $98M Token Offering</a></li>
<li><a href="https://www.infinigold.com/news/infinigold-launch-perth-mint-gold-token">InfiniGold to launch the Perth Mint Gold Token</a></li>
<li><a href="https://cointelegraph.com/news/uk-real-estate-firm-accepts-bitcoin-for-sale-of-150-year-old-church">UK Real Estate Firm Accepts Bitcoin for Sale of 150-Year-Old Church</a></li>
<li><a href="https://www.karmanewsroom.com/news/karma-automotive-brings-bitcoin-to-flagship-store/">KARMA AUTOMOTIVE BRINGS BITCOIN TO FLAGSHIP STORE</a></li>
<li><a href="https://cointelegraph.com/news/luxury-car-manufacturer-begins-accepting-bitcoin-for-vehicle-sales">Luxury Car Manufacturer Begins Accepting Bitcoin for Vehicle Sales</a></li>
<li><a href="https://www.coindesk.com/bermuda-now-accepts-usdc-crypto-for-taxes-and-government-services">Bermuda Now Accepts USDC Crypto for Taxes and Government Services</a></li>
</ul>
<a id=""Federal"></a>Federal Agencies Warn on AML and Bring Civil Actions; DOJ Brings Down Darknet Site
By: <a href="https://www.bakerlaw.com/JonathanDBlattmachr">Jonathan D. Blattmachr</a>
Last Friday, FinCEN, the CFTC and the SEC issued a joint statement warning digital asset space players of their AML/CFT obligations under the Bank Secrecy Act (BSA). The statement emphasized that covered entities must establish and implement an effective AML program, and have certain recordkeeping reporting obligations, including filing suspicious activity reports. The agencies reminded those dealing with digital assets that simply labeling an asset or activity something does “not necessarily align with” how the BSA or other federal rules or regulations may classify them: “The nature of the digital asset-related activities a person engages in is a key factor in determining whether and how that person must register with the CFTC, FinCEN, or the SEC.”
Also last Friday, the SEC announced a temporary restraining order against two offshore entities the Commission alleges were conducting an illicit digital token offering in the U.S. and abroad. The SEC alleges that Telegram Group Inc. and subsidiary TON Issuer Inc. began raising capital in January 2018 to fund their operations. The complaint against the companies alleges they failed to register the token offers and sales, 2.9 billion tokens worth $1.7 billion, which the SEC avers are securities.
This week the CFTC filed a civil action against David Saffron and Circle Society Inc. related to a Ponzi scheme Saffron allegedly ran through Circle Society. The complaint alleges that for nearly two years, defendants tricked U.S. individuals into handing over $11 million worth of bitcoin and U.S. dollars to trade off-exchange binary options on foreign currencies and cryptocurrency pairs. The defendants allegedly guaranteed returns up to 300%, but instead misappropriated the funds.
A federal grand jury has indicted a South Korean national for operating the largest child exploitation market by volume of content. Hundreds of users in the U.S. and 37 other countries have been arrested and charged. The darknet site offered 250,000 videos for sale in exchange for bitcoin. The DOJ is seeking forfeiture of the bitcoin and to give the funds to the victims.
For more information, please refer to the following links:
<ul>
<li><a href="https://www.sec.gov/news/press-release/2019-212">SEC Halts Alleged $1.7 Billion Unregistered Digital Token Offering</a></li>
<li><a href="https://www.cftc.gov/PressRoom/PressReleases/8053-19">CFTC Charges Nevada Company and its Owner in $11 Million Cryptocurrency Fraud and Misappropriation Scheme</a></li>
<li><a href="https://www.sec.gov/news/public-statement/cftc-fincen-secjointstatementdigitalassets">Leaders of CFTC, FinCEN, and SEC Issue Joint Statement on Activities Involving Digital Assets</a></li>
<li><a href="https://www.justice.gov/opa/pr/south-korean-national-and-hundreds-others-charged-worldwide-takedown-largest-darknet-child">South Korean National and Hundreds of Others Charged Worldwide in the Takedown of the Largest Darknet Child Pornography Website, Which was Funded by Bitcoin</a></li>
</ul>

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