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In this issue:
• <a href="#Australia">U.S. and Australia Explore Blockchain Solutions, Global Blockchain Survey Published</a>
• <a href="#Cryptocurrency">U.S. Cryptocurrency Debit Card Launches, Gaming Firm Announces Token Initiative</a>
• <a href="#SEC">SEC and Industry Promote Regulatory Compliance Solutions for Blockchain Market</a>
• <a href="#OSC">OSC Issues Report Finding QuadrigaCX Operated Like a Ponzi Scheme</a>
<a id="Australia"></a>U.S. and Australia Explore Blockchain Solutions, Global Blockchain Survey Published
By: <a href="https://www.bakerlaw.com/RobertAMusiala">Robert A. Musiala Jr.</a>
This week, Simba Chain announced that it has been awarded “a two-year, $1.5 million contract by the U.S. Air Force to fund a Phase II Small Business Innovation Research (SBIR) project.” According to a press release, Simba Chain will work with “one of the world’s largest aerospace corporations” on areas that include “introducing blockchain into the Air Force’s cybersecurity, logistics, and programming training curriculum and research.”
The Australian government, in partnership with several private sector firms, recently published a report on its “RENeW Nexus” project, which “was conceived to understand the potential of localised energy markets and how technology can facilitate better outcomes for the energy system.” The report includes a section on “Blockchain specific benefits” for the electricity markets that discusses the potential for faster settlement of energy transactions through “the use of blockchains, smart contracts and smart metering.”
According to reports, the U.S. member of the most widely used supply chain standards body in the world recently completed “[t]he first phase of a multi-phase proof-of-concept focused on supply chain visibility and included solutions that leveraged blockchain, cloud and other traceability technology.” And finally, this week a Big Four accounting and consulting firm published its third annual Global Blockchain Survey. Some highlights from the survey include the following:
<ul>
<li>Blockchain’s standing as a top-five strategic priority continued in 2020 with a clear majority of respondents.</li>
<li>Respondents are open to using an array of digital assets in their business models, with “enterprise controlled” digital assets, “general asset backed” digital assets and decentralized cryptocurrencies having the most interest.</li>
<li>Financial transactions and data privacy top the list of areas that respondents see benefiting most from a global digital identity.</li>
<li>Blockchain consortia face a full array of challenges to attract new members, with rules and participant roles and responsibilities heralding the list.</li>
</ul>
For more information, please refer to the following links:
<ul>
<li><a href="https://www.prnewswire.com/news-releases/simba-chain-secures-a-1-5-million-contract-with-the-us-air-force-301076618.html">SIMBA Chain Secures a $1.5 Million Contract With the U.S. Air Force</a></li>
<li><a href="https://www.powerledger.io/wp-content/uploads/renew-nexus-project-report.pdf">RENeW Nexus: Enabling resilient, low cost & localised electricity markets through blockchain P2P & VPP trading</a></li>
<li><a href="https://consumergoods.com/gs1-us-completes-food-traceability-proof-concept">GS1 US Completes Food Traceability Proof-of-Concept</a></li>
<li><a href="https://www2.deloitte.com/content/dam/insights/us/articles/6608_2020-global-blockchain-survey/DI_CIR%202020%20global%20blockchain%20survey.pdf">Deloitte’s 2020 Global Blockchain Survey</a></li>
</ul>
<a id="Cryptocurrency"></a>U.S. Cryptocurrency Debit Card Launches, Gaming Firm Announces Token Initiative
By: <a href="https://www.bakerlaw.com/JordanRSilversmith">Jordan R. Silversmith</a>
Earlier this week, BitPay announced the release of its prepaid debit card. According to a press release, the product is the first-ever prepaid debit card in the U.S. to use cryptocurrency funds. The press release notes that the card “can be loaded with dollars that are converted from cryptocurrency” and automatically reloads when funds run out. Meanwhile, an iconic gaming company announced a partnership with Unikrn, an esports betting company, to better integrate the company’s Ethereum-based ERC20 token with Unikrn’s cryptocurrency ecosystems. According to a press release, through the partnership, Unikrn will gain access to the gaming company’s signature video game catalog while providing crypto technology and new wagering opportunities and experiences through Unikrn’s platform.
A recent report highlighted data from Crystal Blockchain finding that Seychelles, a small island nation at the edge of the Somali Sea, led the world in cross-border bitcoin transactions in 2019. The Crystal Blockchain analysis examined flows of bitcoin between exchanges around the world and found that Seychelles, with fewer than 100,000 people, beat out the second-place United States in both funds sent and received. The Crystal dataset includes an interactive map showing the flow of bitcoin transactions around the world.
For more information, please refer to the following links:
<ul>
<li><a href="https://bitpay.com/blog/introducing-new-bitpay-card/">Introducing The New BitPay Card</a></li>
<li><a href="https://apnews.com/4a8664fcbdd95af8993fce8bfcc7ab26">Atari(R) Teams Up with Unikrn to Deliver Enhanced Shopping, Betting, and Gaming Functionality to Atari Token</a></li>
<li><a href="https://cointelegraph.com/news/tiny-tax-haven-accounts-for-36b-of-cross-border-btc-transactions">Tiny Tax Haven Accounts for $36B of Cross-Border BTC Transactions</a></li>
<li><a href="https://crystalblockchain.com/bitcoin-flow-map">International Bitcoin Flows Analytics Map from Crystal Blockchain</a></li>
</ul>
<a id="SEC"></a>SEC and Industry Promote Regulatory Compliance Solutions for Blockchain Market
By: <a href="https://www.bakerlaw.com/RobertAMusiala">Robert A. Musiala Jr.</a>
Late last week, the U.S. Securities and Exchange Commission’s Strategic Hub for Innovation and Financial Technology (FinHub) announced the launch of a series of “virtual peer-to-peer meet-ups (P2Ps)” to facilitate “meeting with FinTech industry participants to help inform regulatory approaches and engage on particular projects and issues.” The first theme of the series is regulatory technology (RegTech), with virtual meetings taking place the week of July 6.
Several blockchain firms announced regulatory compliance initiatives this week. The Algorand Foundation announced a partnership with blockchain analytics firm Chainalysis that will seek to implement transaction monitoring and compliance processes for the ALGO token. Fireblocks, which provides wallet infrastructure and settlement solutions, also announced a partnership with Chainalysis that will reportedly allow the Fireblocks platform “to monitor cryptocurrency transactions in real-time, setting a new security and compliance standard for its customers.”
Additionally, this week the Stellar Development Foundation announced proposed updates to the Stellar blockchain protocol that are intended to make it “easier to tokenize regulated assets like securities.” According to a blog post, the protocol updates would allow issuers of regulated tokenized assets on the Stellar blockchain to require certain authorizations before the tokens can be transferred by third parties.
For more information, please refer to the following links:
<ul>
<li><a href="https://www.sec.gov/news/press-release/2020-130">FinHub to Host Virtual Meet-Ups</a></li>
<li><a href="https://algorand.foundation/chainalysis">Algorand Foundation Partners with Chainalysis for Anti-Money Laundering Compliance Solution</a></li>
<li><a href="https://www.prnewswire.com/news-releases/fireblocks-integrates-with-chainalysis-to-set-a-new-compliance-and-security-standard-for-financial-institutions-and-cryptocurrency-businesses-301075255.html">Fireblocks integrates with Chainalysis to set a new compliance and security standard for financial institutions and cryptocurrency businesses</a></li>
<li><a href="https://www.coindesk.com/stellar-update-exchanges-local-regulation">Stellar Proposes Changes Allowing Exchanges to Better Enforce Regulations</a></li>
</ul>
<a id="OSC"></a>OSC Issues Report Finding QuadrigaCX Operated Like a Ponzi Scheme
By: <a href="https://www.bakerlaw.com/TeresaGoodyGuillen">Teresa Goody Guillén</a>
The Ontario Securities Commission (OSC) has issued a report of its staff’s findings from their review of Quadriga and its operations. The review was undertaken to determine how the platform was run, the cause of its collapse and where the money went. The key finding is that Quadriga operated like a Ponzi scheme. The report indicates that the now-defunct cryptocurrency exchange, which went into bankruptcy a few months after founder and CEO Gerald Cotten was reported to have died in India, “was an old-fashioned fraud wrapped in modern technology” and the collective loss of investor funds was at least $169 million. The OSC report indicates that the facts it uncovered about Quadriga apply only to Quadriga and should not be construed as indicative of similar misconduct on other crypto asset trading platforms. The report includes the below key regulatory takeaways for investors and crypto asset trading platforms.
Key takeaways for investors:
<ul>
<li>In Canada, many crypto asset trading platforms are not registered.</li>
<li>Using a crypto asset trading platform carries risks.</li>
<li>Platform clients should conduct due diligence and be alert for signs of fraud.</li>
</ul>
Key takeaways for crypto asset trading platforms:
<ul>
<li>Crypto asset trading platforms may have to register with the OSC and should take appropriate steps to comply with Ontario securities law.</li>
<li>Platforms should ensure that they have systems and controls in place to manage risks.</li>
<li>Platforms should disclose key information to clients.</li>
</ul>
For more information, please refer to the following links:
<ul>
<li><a href="https://www.coindesk.com/quadriga-was-a-ponzi-scheme-ontario-securities-regulator-says">Quadriga Was a Ponzi Scheme, Ontario Securities Regulator Says</a></li>
<li><a href="https://www.osc.gov.on.ca/quadrigacxreport/web/files/QuadrigaCX-A-Review-by-Staff-of-the-Ontario-Securities-Commission.pdf">QuadrigaCX: A Review by Staff of the Ontario Securities Commission, April 14, 2020</a></li>
</ul>

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Blockchain Technologies and Digital Assets

U.S. Air Force Explores Blockchain, Global Blockchain Survey Published, Crypto Debit Card Launches, Compliance Initiatives Announced, Quadriga CX Report Published

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