Canada in Focus

The price of bitcoin has fallen again, leaving it at an extreme low – especially when compared to the price in December 2017 when it was over $20,000 CAD. The drop has been seen across the wider cryptocurrency market, including Rillple’s XRP and Ethereum. Analysts attribute the drop to several causes, but say there is an overall fear in the market surrounding security and blockchain technology itself.

Elections Canada, the agency responsible for policing the federal political fundraising efforts, is now polling parties on how best to manage contributions made with bitcoin and other cryptocurrency platforms. The agency has released a draft interpretation note detailing how these types of transactions should be handled. Parties will have until January 21 to submit their views on the issue, and will determine whether or not changes should be made to the final version of the note. Elections Canada has currently taken the position that cryptocurrency donations are considered non-monetary.

Following a previous announcement, Deloitte announced a plan to help The Institutes RiskBlock Alliance expand into Canada. This move could signal a significant step towards the development and international grown for blockchain-based insurance applications. RiskBlock also announced that it would chair blockchain standards for ACORD, the global body responsible for setting insurance industry standards.

The Canada-based securities broker Finequia has partnered with Nivaura, a capital markets technology company building a new way for automated issuance and administration of financial products under the auspices of the U.K. Financial Conduct Authority’s “sandbox” regime. The partnership will deliver a fully tokenized bond-issuing in the UK. The news was announced in a press release this week, and mentioned how the type of tokenization in question is still relatively unexplored in the crypto space. The two companies will run a test on the Ethereum network, including registration and a token distribution before its official launch.

On the World Stage

The U.S. Department of Energy has announced federal funding of up to US$4.8 million for universities working on projects related to blockchain technology. Projects under the initiative are aimed at achieving more affordable domestic energy resources, improved electric grids, analytical results for coal plants, improved water reuse processes, or investigation on coal fly ash.

While the U.S. government is adopting blockchain technology in some departments, others are still skeptical. Meltem Demirors, the CSO of CoinShares says that a Bitcoin ETF is “absolutely not” going to be approved by the U.S. Securities and Exchange Commission (SEC). Demirors says that there are still fundamental concerns with respect to market stability and oversight.

NECTEC, Thailand’s national electronics and computer technology centre, has started a system of e-voting which revolves around blockchain technology. They believe that by utilizing blockchain technology, they will be able to ensure a safer voting process, which will be less susceptible to fraudulent voting practices. NECTEC is an administrative organization, which works under the Ministry of Science in Thailand.

In other news, two notable European regulators have both called for cryptocurrency and ICO rules at the EU level. The European Banking Authority (EBA) has urged the European Commission to examine whether unified crypto rules are required across the region. As a result, the EBA has asked for a comprehensive analysis to determine what action may be needed.

Canada in Focus

Earlier this week, Coinsquare, Canada’s premier cryptocurrency trading platform, acquired BlockEQ for $12 million. BlockEQ is the leading cryptocurrency wallet on the Stellar network and will be used to help Coinsquare and its users further connect with the world of cryptocurrency.

Bitcoin, the largest digital token, has slumped as much as 10 per cent, reaching the lowest level since September 2017. Several other cryptocurrencies, including Ether, Litecoin and XRP, were hit even harder. The Securities and Exchange Commission plan to decide by February 27, 2019 whether to approve a proposed ETF from SolidX Partners Inc.

Cryptocurrency firms have added to BC Hydro‘s electrical load by almost 40 per cent, but only a fraction of that business has materialized so far. In recent years, BC Hydro was keen to attract and offer discounted rates on electricity for cryptocurrency miners . Some economists are now warning BC Hydro, saying they should be cautious about engaging with the crypto-mining industry as it brings few economic benefits to the communities where they set up.

Canada-based DMG Blockchain Solutions, a cryptocurrency management company, has announced the signing of a Mining as a Service (MaaS) contract with a blockchain company. The new customer will require DMG to host approximately seven megawatts worth of Bitcoin mining capacity for them.

On the World Stage

The story resonating around the world is clear: this week’s substantial drop in the price of bitcoin. It has fallen nearly 20 per cent in the last five days, causing it to reach a 15-month low. Major outlets, such as CNN, are indicating that a possible reason for the plunge is the uphill battle convincing the Securities and Exchange Commission (SEC) to approve more bitcoin EFTs.

Recently, the SEC ordered fund manager CoinAlpha Advisors LLC to pay a $50,000 USD fine following what it deemed to be an unregistered securities sale. The fund reached out to possible investors, raising more than $600,000 in the process. While CoinAlpha did file a “Notice of Exempt Offering of Securities,” the company was not eligible for an exemption and did not otherwise register with the SEC. As such, it effectively solicited securities investors in a breach of the law.

On a more positive note, Mastercard has filed a patent for a method of anonymizing transactions on a blockchain. The patent was filed to the United States Patent and Trademark Office and outlines the use of one or more intermediary addresses to hide the source and destination of funds on a blockchain transaction. The goal is to increase the anonymity of those associated with a blockchain address.

Finally, Facebook seems to be heading into the blockchain space. After speculation circulated among the crypto-currency community this past year, Facebook has issued a job advertisement to hire a blockchain software engineer. It remains unclear as to what specific project Facebook is working on, though it is now clear that they are now entering this market.

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Canada in Focus

Major audit and consulting firm Deloitte will help the Institutes RiskBlock™ Alliance blockchain consortium expand into Canada. The US based consortium, which represents 31 risk management and insurance companies, focuses on the application of blockchain technology in the insurance industry. The move is part of the alliance’s international expansion strategy, beginning with collaboration with Canadian-based property-casualty and life insurers.

Canadian-based cryptocurrency trading platform Coinsquare has  announced that it has secured an official banking relationship with one of the major Canadian banks. The company has not yet released the details of the relationship, though CEO Cole Diamond says, “this is a tremendous boost not only for Coinsquare but for the entire Canadian cryptocurrency industry.”

While not known for their high-tech industry sector, Medicine Hat, Alberta is facing the high energy demands poised by cryptocurrency mining in their region. As a result, environmentalists and residents have expressed concern about the unprecedented energy usage. The reliance on fossil fuels is a danger identified by environmentalists, though the Toronto-based mining company Hut 8, who are operating in the area, have indicated that renewable energy is not reliable enough to sustain their business.

Canada’s first ever Bitcoin mutual fund, First Block Capital Inc. has said that Canada is a better environment for emerging technologies than the United States. CEO Sean Clark discussed the underlying factors in detail with CCN, indicating that the regulatory bodies understand the benefits of the technology, and are open to innovation more generally. In comparison, Clark says the United States have been less open to embracing this technology.

On the World Stage

Computer manufacturer Dell EMC has announced plans to invest in emerging technology, including blockchain. The company said on Wednesday that it is looking at blockchain, artificial intelligence, and cloud compliance. The interest in blockchain comes from the company’s top clients beginning to adopt the technology. Dell EMC is looking to help these clients manage the new workloads on Dell servers.

Companies investing in blockchain technology is a trend that we are likely to see continue as the technology becomes more prevalent. This week, telecommunications giant AT&T announced the creation of a suite of blockchain solutions designed to work with technology from IBM and Microsoft. The technology will aim to bring additional transparency and accountability to the most complex supply chains.

It is not only businesses that are embracing the technology; an arbitration body in the Chinese city of Nanjing has launched an online ruling system which apparently has a built-in blockchain network for depositing and storing data in legal disputes. The product is still in its testing phase but once complete, will change the way data is stored. The Nanjing committee asserts that the online system will allow parties involved in contract disputes to simultaneously view digital evidence over a tamper-proof and distributed network. The integration of blockchain tech is two-fold; to facilitate the issuing of rulings within 30 days following a filing and in loweing the costs incurred during legal disputes.

Lastly, President Julius Maada Bio of Sierra Leone, announced a new initiative to create a national blockchain-based credit bureau. This announcement was made at the U.N. General Assembly meeting on Thursday. The project is in partnership with technology non-profit Kiva, the U.N. Capital Development Fund, and the U.N. Development Programme. This “credit bureau of the future” is being poised to radically transform the country’s financial landscape.

Welcome to Navigator’s weekly update “Banking on Blockchain”. Each week, we put together a curated list of the latest news highlights and announcements for blockchain in Canada and around the world.

Click here to have an expanded edition of “Banking on Blockchain” emailed to you every week

Canada in Focus

The Government of Canada has delayed the update on crypto regulations from this fall until 2020. The delay is a result of the elections expected in the country in 2019. Once the regulations are updated, it will take a 12 month period for them to become effective. The Blockchain Association of Canada says that the delay is good news for the economy and that the best approach to crypto regulation may be for government to observe and intervene as little as possiblle.

Wasaga Beach Ontario has fallen victim to a cyber attack as members of the Town’s administration noticed unusual messages on their computers. The Town was plagued by Rasomeware, requesting the equivalent of $144,100 CAD in Bitcoin. While some of the data was recovered, the Town did pay nearly $35,000 in Bitcoin, an additional $37,000 in consulting fees, and incur productivity losses of over $250,000.

While ransomeware attacks are causing some small towns to be fearful of cryptocurrencies, others are embracing the technology. Ocean Falls, British Columbia, a town with a population of less than 100 converted an old mill into a 24-hour bitcoin mine. The remoteness of the region provides the benefit of inexpensive electricity prices, and the town is hoping the new mine will increase its population.

Moving down the coast to Vancouver, the former Chief Operating Officer of Shair.com Global Digital Services Ltd. Jason Bradley Arnold has been accused of taking up to $7 million CAD in cryptocurrency. Shair.Com filed suit against Arnold in July, alleging he had unjustly enriched himself, misappropriated company property and breached his duties to the firm

On the World Stage

Building off their digital ID system in Canada, technology giant IBM is widening their work with self sovereign identify technology, designed to give individuals more control over their personal data. The company is working with the Hu-manity.co #My31 app that just became available on iOS and Android mobile devices. The app’s name is a nod to the idea that legal ownership of one’s data should be a “31st human right” in addition to the 30 already ratified by the United Nations.

As the debate between proof of work and proof of stake continues, the creator of proof of stake based cryptocurrency, Sunny King has returned with an idea to simplify the development and maintenance of blockchains. Supernode proof of stake (SPoS) requires specialized hardware to operate, and is focused on an era that blockchain is used widely in technology. The concept of SPoS isn’t far from delegated proof-of-stake, or DPoS, in that it allows for the concentration of staking pools.

Crypto exchange Gemini founders Cameron and Tyler Winklevoss have won a patent for a cold storage method of storing cryptocurrency involving air-gapped computers, geographically remote vaults, plastic cards and, possibly, papyrus. They plan to develop a network of computers capable of generating accounts for storing cryptocurrencies or cryptocurrency-related exchange-traded products (ETPs). As part of a security measure, the computers would be isolated except when necessary to transfer assets, essentially acting as a cold storage device.

In other news, the Chinese Supreme People’s Court ruled that blockchain can now legally be used to authenticate evidence in legal disputes. Part of the new regulation specifies that internet courts in the country shall recognize the legality of blockchain as a method for storing and authenticating digital evidence, provided that parties can prove the legitimacy of the technology being used in the process.

In Australia, the financial regulator has indicated that it will take a new approach when regulating cryptocurrency exchanges. The Australian Securities and Investments Commission said it is developing a new framework that will apply the principals for regulating market infrastructure providers to crypto exchanges.