At a glance
- India’s crypto scene, now uncorked by the Supreme Court
- South Korea’s new blockchain regulations
- French court declares bitcoin legal tender
- Twitter storms over STEEM
- Microsoft, EY and Consensys launch new Baseline protocol for privacy
- HTC’s new Exodus 5G Hub
- Headlines in China: coronavirus impact, paperless parking and more
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Listen to Forkast.News Editor-in-Chief Angie Lau and Senior Editor Sam Reynolds discuss the top blockchain news from around the world.
From the Editor’s Desk
India is suddenly very interesting in the world of blockchain. If you’re an investor, traditional firm or multinational — pay attention.
With India’s Supreme Court overruling RBI’s banking ban on cryptocurrency, the industry is now poised to come back with a roar in the world’s second-most populous country. Look for a resurgence in India’s crypto exchanges, while blockchain talent and developers return to building the technology ecosystem that serves India’s supply chain — from financial services to e-commerce and everything in between. We predict sunnier skies for India, with potential rain clouds in the form of the central bank’s legal appeal and potential political backlash on the ruling.
In this Current Forkast, we also bring you other top headlines around the world, including regulations in South Korea, bitcoin news from France, a new Ethereum protocol and of course, blockchain happenings in China. Read on for the latest on how the coronavirus has affected China’s businesses, as well as Beijing’s first blockchain invoice for its citizens and government services.
The Forkast.News team has curated these top stories and added more — our own analyses, news judgment and insights — to inform you on what is shaping the current conversation on blockchain. Look to this and future Current Forkasts as a guide to what you, your teams and others in the blockchain space are talking about around the digital watercooler. Our job is to stay on top of the pulse of what’s next in this emerging technology… because it is important, and it matters to you.
Dive in!
Angie Lau,
Founder & Editor-in-Chief
#1 What’s next for India?
By the numbers: #IndiaWantsCrypto / #IndiaGetsCrypto – 2,650% increase in Twitter search volume
The long-awaited verdict has finally arrived as India’s Supreme Court overturns the 2018 ban that kept cryptocurrency exchanges locked out of dealing with financial institutions.
- As the community celebrates, crypto leaders predict a revival of India’s exchanges and growth in the country’s tech labor market.
- However, The Economic Times cited anonymous sources in reporting that the Reserve Bank of India (RBI) is now gearing up to file a review petition over concerns the ruling could threaten the banking system.
Forkast.Insights | What does it mean?
India is the world’s second-largest country, and until this ruling was reversed, a total black hole for the cryptocurrency industry.
Since the RBI ban, the industry is a very different place. Many bad actors responsible for the ICO crash of 2017 have been pushed out, and legitimate products like security token offerings (STOs), which work with regulators, are now in the mainstream. The nascent industry of tokenization of assets is also on the rise, and from that comes investment opportunities in fractionalized ownership and a chance for wage earners in developing markets to build equity and increase their net worth.
The reversal of the RBI ban is the first step in stabilizing the industry in India. The next step is for regulators to work with industry in crafting regulations that would allow the market to flourish. Here we have some good news: India’s securities regulators have largely been amalgamated into one — the Securities and Exchange Board of India. Having one centralized bureau in a country as large as India means that policy can be fleshed out and deployed in a robust and expedited fashion without inter-agency squabbling.
#2 South Korea creates new regulatory framework
By the numbers: #cryptocurrency – over 5,000% increase in Twitter search volume
- The National Assembly amends the “Act on Reporting and Using Specified Financial Transaction Information,” a framework for regulating virtual asset service providers (VASPs) and legitimizing cryptocurrencies.
- However, small and medium VASPs are now threatened by stricter standards as the blockchain industry braces for restructuring.
Forkast.Insights | What does it mean?
South Korean investors rode the waves of crypto-euphoria in 2017, but also were hit hard by the subsequent bust. A 2017 survey conducted by job portal Saramin showed that 30% of salaried employees in Korea owned cryptocurrencies, with the average Korean investor owning a portfolio worth approximately 5.66 million won ($4,734 USD).
At its peak, the Korean won was one of the most traded fiat currency pair, sometimes rivalling the Japanese yen in liquidity despite Korea being a much smaller market. As such, when the great cryptocurrency bust came in late 2017 and early 2018, retail investors were wiped out.
After this crash, regulation was a certain thing, and the end result is a regulatory framework that looks to work with the industry as opposed to fight it. By creating regulation to bring the industry out of the cold, and create procedures like KYC (know your customer) and AML (anti-money laundering) certifications, the industry now has regulatory certainty and possibly a chance to flourish in the country.
#3 France declares bitcoin tender legal
Local media outlet Los Echos publishes a story bringing light to a landmark decision that happened late last month (Feb. 26) that flew under the radar for almost two weeks.
- According to Los Echos, the Commercial Court of Nanterre recognized bitcoin as legal tender during a dispute between Paymium and UK-based BitSpread.
- The trial questioned the ownership of Paymium’s 1,000 BTC loan to Bitspread, which occurred before the 2017 Bitcoin Cash hard fork.
Forkast.Insights | What does it mean?
France’s decision to categorize bitcoin as legal tender is a step in the right direction, and also has implications both for taxation and on the utility of bitcoin as a medium to settle transactions.
Should bitcoin be considered property, and not tender, it would be subject to capital gains tax. Those accepting or trading in bitcoin would have to be cognizant of any capital gains for their holdings. Furthermore, the tax and regulatory burden of this would deter the adoption of bitcoin as a medium of transaction.
Being considered tender also subjects bitcoin to laws regarding money laundering and transmission. At the same time, there have been cases thrown out because money transmission laws were wrongly applied to bitcoin. Consider the 2016 case in Florida of Michel Espinoza. Espinoza was on trial for illegally transmitting and laundering $1,500 worth of bitcoins to undercover agents who intended to use them to purchase stolen credit cards. The charges were specific: money transmitting and laundering — not the intent to commit fraud with the stolen cards. However, the presiding judge agreed with the argument Espinoza’s attorney presented that bitcoin is not money, and therefore money transmission and laundering laws do not apply.
Ultimately, for the sake of regulatory certainty, it’s better that bitcoin be considered tender. It gives law enforcement an extra set of tools to go after those using it as a medium of crime, and it removes the deterrent of capital gains tax for those that want to use it as a medium of exchange.
#4 Gathering Steem
By the numbers: #Steem — 2,450% increase in Twitter search volume
Following recent Steemit acquisition, Justin Sun and top exchanges Huobi and Binance are under fire for allegedly taking advantage of the platform’s DPoS protocol and centralizing a public blockchain. Sun claims the hostile acquisition was a response to a hack that would have “nullified” the STEEM network.
- @justinsuntron: “We had a difficult choice,” he responded.
- CZ then admitted his approval on behalf of Binance and apologized for thinking “wrongly.” The STEEM community continues to fight against hostile takeover, urging Binance to #powerdow.
Forkast.Insights | What does it mean?
TRON’s decision to attempt to move the Steemit blockchain over to its own blockchain proved to be a disaster. Sun’s decision to force a fork of the Steemit blockchain was seen as a power grab by stakeholders of the Steemit community as well as its user base. While TRON owns the company behind Steemit, the user base has said loudly and clearly that it prefers the status quo instead of being folded into the TRON network.
#5 A new Baseline for privacy
By the numbers: Baseline protocol ––over 5,000% increase in Google search volume
EY, Microsoft and Consensys announced the launch of Baseline protocol.
- “The Baseline protocol integrates multiple technologies including zero knowledge proofs (ZKP), off-chain storage and distributed identity so that enterprises can set up and synchronize processes and agreements using common standards, with full privacy, and without storing sensitive business information on the blockchain itself,” EY said in a statement.
- By integrating ZKPs to address privacy concerns, the Baseline protocol aims to provide more confidence for enterprises’ private adoption of the public blockchain, Ethereum.
Forkast.Insights | What does it mean?
When enterprise-grade software is developed on the blockchain, that blockchain is often a private and permissioned chain. By using a private blockchain, enterprises are adding an extra layer of privacy and security. Interlopers cannot have a peek at their activity on the blockchain, nor can hostile actors attack it.
There’s also the issue of cost. Setting up a proper, permissioned private blockchain is an expensive endeavor and a deterrent for anyone wishing to use the technology. Secondly, having hundreds or more private permissioned blockchains operating in silos increases the centralization of data.
The Baseline protocol seeks to reverse this trend. By providing public domain tools to completely cloak transactions, smart contract logic and communications via the Ethereum Mainnet, the hope is that enterprise-level organizations will have an incentive to use the public Ethereum blockchain as their fears will be assuaged.
Should the Baseline protocol succeed, there likely will be more migration back over to Etherum’s Mainnet instead of splintered and siloed permissioned networks. The extra brainpower working on the Ethereum Mainnet will further improve its technical capabilities while squashing bugs and security holes.
#6 HTC Exodus 5G Hub
By the numbers: 3,350% increase in Google search volume
Exodus has announced a 5G blockchain router that can run a full bitcoin node via Zion Vault. HTC says that Exodus will power the decentralized web.
Forkast.Insights | What does it mean?
Earlier this week, Forkast.News took a deep dive into HTC’s blockchain phone as part of a special three-part series on telecom, and explained how it’s different from other self-described “blockchain” handsets. We concluded that of all the “blockchain” phones on the market, the Exodus from HTC may be the most legitimate offering as its ambitions are grounded and realistic: secure storage of your keys.
But the Exodus 5G Hub seems to be a solution in search of a problem. HTC launched a non-blockchain branded version of the hub last year in conjunction with Sprint. There’s no question that there’s a use case for a 5G hub — such a device will allow multiple phones, tablets or notebooks to tap into one 5G connection. But is there really a need to add a blockchain component to it? A glance at HTC’s marketing materials shows that the hub has the same blockchain functionality as the Exodus phone. While it’s understandable that a user would want to keep their keys on their phone, would they really want to keep them on their hub?
#7 China blockchain news and trends
01 Think Tank in Beijing published new research scrutinizing how the COVID-19 crisis has affected blockchain companies in China. Its key findings:
- The coronavirus outbreak caused a short-term negative impact on blockchain-related companies in China, but the negative impact is likely limited in the long term.
- More than 80% of companies said the COVID-19 epidemic slowed down their work pace, cost a large amount of money on fixed spendings and disrupted their cooperation with other organizations.
- Compared to the number of epidemic-prevention applications that use artificial intelligence (AI), cloud computing and other mature technologies, the scale of blockchain applications for epidemic prevention is still small. This is because the Chinese blockchain industry is still in its early stage, and the technology needs to be improved.
- More than 60% of blockchain companies adjusted their short-term development strategy due to the COVID-19 outbreak and 22% made long-term strategy adjustments.
Beijing issues the city’s first blockchain electronic invoice and conveys the capital’s intention to join major cities such as Shenzhen, Guangzhou and Hangzhou in a blockchain-based tax services and management era.
- The first blockchain electronic invoice was issued at Hanway International Plaza parking lot, which is set to start Beijing’s promotion of blockchain invoices in all parking lots throughout the city. This is deemed an attempt to phase out paper-based invoices to simplify life and tax services.
Forkast.Insights | What does it mean?
As documented in Forkast.Insight’s China Blockchain Report, China leads the world in enterprise blockchain implementation. Here we have two instances where a pain point has been identified and blockchain technology deployed to address the issue.
China has struggled with tax compliance, and blockchain is a way to simplify tax compliance while simplifying reconciliation of accounts. Smart contracts and unpaid invoices could be referred to collections agencies and recorded on credit scores all without the need for intermediaries or middlemen. Furthermore, business expense claims — such as parking at a downtown parking lot — would need to match up with a respective entry on the blockchain, which means it would be impossible to create fraudulent business expenses.
Spending on implementation of blockchain technology within China is something to watch in the early years of the 2020s. Although some analyst firms believe that the United States will be the leader in this category, given the strategic importance that Beijing has attached to blockchain, China is on track to leapfrog the US in this area in the early part of the decade.
Huobi Labs, one of China’s leading crypto exchanges’ research branch, has published its China Blockchain Entrepreneurs White Paper 2020.
- According to its report, only 10.83% of entrepreneurs in the blockchain industry received small early-stage investments.
- In spite of the continuous blockchain-supporting policies from provincial and municipal governments across China, the industry still faces difficulties in development.
- While 63% of the global blockchain patents come from China, they largely come from giant companies like Tencent, Alibaba, and PingAn.
Forkast.Insights | What does it mean?
The lack of venture capital and angel investment being deployed to early-stage blockchain companies in China is not a testament to the lack of faith investors have in the technology, but rather an overall cooling of the venture capital industry in the country.
As investment research firm EqualOcean points out, given the consolidation of the technology sector in China into a few mega unicorns, the excitement and deal flow in the sector has subsided. At the same time, China’s economy has begun to slow and investors are looking overseas, including Southeast Asia, for the next big opportunity. Furthermore, after the blockchain crash of 2018, up to 90% of blockchain-focused VCs left the market, which left less capital available for firms to compete over.
It’s a tough time for small firms in China to raise capital. Despite the enthusiasm from the government for blockchain, these small companies ironically might have an easier time in the US, which is still home to the lion’s share of blockchain-focused VC firms.
