Global
World Economic Forum
The World Economic Forum released a paper offering a vision for blockchain governance. This methodology--constructed by blockchain superstars Don and Alex Tapscott--shows a pathway for unifying a fragmented ecosystem. The paper is making headlines due to increasing global interests in using the technology in social impact areas like global remittances, foreign aid transactions, and land title registration in developing countries, as well as its implications for anti-money laundering and cybersecurity risks. Richard Samans, Head of the Global Challenges Team and Member of the Managing Board at the World Economic Forum, has this to say:
“This report helps us to understand that a distributed blockchain ecosystem need not be a disorganized one, and improved governance need not imply formal governmental legislation or regulation.”
Source: World Economic ForumAsia Pacific
The Hong Kong Securities and Futures Commission (SFC) and the Australian Securities & Investments Commission (ASIC) are two major securities regulators recently signed a cooperation agreement to pool resources which would foster innovation and build regulatory knowledge-sharing in the fintech and distributed ledger marketplace. These two jurisdictions are major hotbeds for financial technology startups and blockchain innovations thanks to their business friendly economy. High points from the press release:
“The agreement provides a framework for information sharing between the two regulators. This will enable ASIC to keep abreast of regulatory and relevant economic or commercial developments in Hong Kong and to use this to inform Australia's regulatory approach."
United States
Accounting Blockchain Coalition
The Accounting Blockchain Coalition—comprised of the largest accounting & financial advisory firms—took action to create global accounting standards and lesson plans to help regulators grasp the core foundation of blockchain’s potential use cases. The coalition—which includes PwC, Deloitte, EY, KPMG, and Accenture—indicated the most popular use case among their clients is supply chain management--an area lacking transparency and real time information sharing across a complex set of suppliers. For instance, using a distributed ledger to track food ingredients across its chain of suppliers would've allowed Chipotle to monitor and contain its Ecoli outbreak in 2015.
Coindesk quotes Griffin Anderson, head of blockchain accounting at blockchain startup ConsenSys:
"[The groups] are there to support the regulatory bodies and standard setting bodies around the globe and help them, advise them to deliver this technology throughout their institutions."
Federal Government sizzling blockchain summer
The General Services Administration (GS) will host a blockchain forum with other Washington agencies on July 18, aimed to foster adoption of distributed ledger technology within the government. The GSA is asking every agency participant to prepare to share a potential use case of blockchain in the provision of public services. This is a broader effort by the GSA to coordinate with federal agencies on innovative digital services to make public information available by using artificial intelligence assistants such as amazon Alexa, Microsoft Cortana, and Google Assistant.
Source: GSA U.S. Congress
Congress recently introduced an anti-money laundering bill that causes concern in the digital currency community about duplicating compliance already in place under current laws. This bill—known as the Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017, is a newer version of an older bill originally introduced in 2011, back when the crypto currency market was much smaller by market cap.
Source: CUTimesAn analysis by Coin Center concludes that existing guidance already stipulates that entities engaged in digital currency transactions are treated as money service businesses and are therefore subject to the Bank Secrecy Act. The Financial Crimes Enforcement Network, or FinCen, the U.S. Treasury arm that enforces anti-money laundering regulations, issued this guidance in 2013, and has been working with businesses for several years on policies and practices surrounding virtual currency. The current bill would potentially be counterproductive to those regulatory efforts. The full analysis is here: https://coincenter.org/entry/congress-s-new-anti-money-laundering-bill-likely-duplicates-existing-law-on-digital-currency
Source: Coin CenterState/Local Policy - Delaware passes major blockchain regulation
The Delaware State General Assembly this week approved amendments to legally allow the trading of stocks on the blockchain (i.e. distributed ledger). The governor is expected to sign the bill into law by the end of the month. This legislative action could spur broader issuance of stocks using distributed ledger (i.e. distributed ledger shares), which could eliminate certain intermediaries from the process and in turn benefit corporate shareholders. Delaware is among several big states taking an active stance on blockchain and cryptocurrency, including Texas, Nevada, and New Hampshire.
Special Theme
INITIAL COIN OFFERING
Initial Coin Offerings (ICO) are all the rage, which is why it made headlines in the mainstream media this week, including CNBC, Bloomberg and the NY Times. The NY Times article cites data from market research firm Smith & Crowna highlighting 65 ICO projects that have raised a total $522 million in these crowdfunding events. The common theme in this largely unregulated market is that exponential growth in ICO investments could prompt regulatory officials to take a formal stance, out of concerns related to fraud and abuse.
The difficulty stems from regulatory uncertainty around whether a coin offering fits the traditional definition of security--like traditional shares issued in an Initial Public Offering (i.e. Facebook IPO). If so, digital tokens being sold would have regulatory implications for the Securities Exchange and Commission to cover investor protections.