Blockchain News Issue. 6

moac.io

Published in

MOAC

8 min readJul 13, 2018

I. Commentary of the Week

The Korean Government Treats Digital Currency Exchanges as an ‘Industry’ For the First Time.

July 5: The Korean government is publishing ten industry classification standards for blockchains and digital currency, including standards for blockchain system construction, digital currency trading and distributed applications (DAPP) development. Digital currency exchanges will fall under the classification of ‘transaction or intermediary parties for encrypted assets,’ while blockchain projects like EOS and ETH will be classified as ‘blockchain based software developers or providers.’ A number of Korean government agencies, including the Statistics Bureau and the Ministry of Science, Technology, Information and Communication, have been collaborating to design the ‘Blockchain Industry Classification Scheme’ since June.

Commentary:

‘The Korean government has classified blockchains and digital currencies to solidify the various relationships that exist within the blockchain industry. The current blockchain system is so chaotic that classification can be beneficial from a regulatory perspective. Understanding the different roles within the industry, and knowing which projects to support, supervise or crack down on, will help bring order to the system.’

Ⅱ.Policy Developments

1.International

(1) The SEC is considering allowing ETF into the market, cryptocurrency and blockchain technology currently not under consideration.

July 3: The American Securities Exchange Commission (SEC) has decided by majority vote to allow exchange-traded funds (ETF) to enter the market without requiring a personal waiver. The proposal aims to speed up the application process, increase competition and innovation in the EFT market and provide investors with more investment options. The proposal failed to mention cryptocurrency or blockchain technology, so whether cryptocurrency-based ETFs will be subject to the new rules remains to be seen.

(2) The Federal Reserve believes that it’s too early to say that Bitcoin was the only driver of market adjustment in 2018.

July 3: Japanese economist Ukio Noguchi stated in a recent article that the Chicago Mercantile Exchange Launching Bitcoin futures triggered the sudden changeover from bull to bear market. The Federal Reserve stated that the rapid rise and subsequent decline following the launch of stock index futures doesn’t appear to be coincidental. On the contrary, these market trends are actually normal. There is no conclusive evidence that digital currency trends are comparable to the futures market. Therefore, it is still too early to say that the futures market was the only driver of market adjustment in 2018.

2. Domestics

The Municipal Committee of the Communist Party of China in Shanghai plans to accelerate the application of innovative technologies like blockchain in the financial sector.

July 5: The CPC Shanghai Municipal Committee commented on improving the city’s energy level and core competitiveness in a future-oriented manner. The statement pointed out that Shanghai will support deeper integration of finance and technology, accelerating the application of new technologies such as blockchain in financial services, financial infrastructure and financial supervision to improve overall financial service economy. The creation of financial service and technology innovation centers will accelerate as financial risks are effectively prevented and controlled.

Ⅲ.Industry Developments

1. International

(1) The nine largest banks in Europe have completed the first real-time blockchain transaction.

July 3: The nine largest banks in Europe announced that they completed the first cross-border real-time blockchain transaction through the jointly developed we.trade blockchain platform. We.trade is based on the IBM blockchain platform as well as Hyperledger Fabric technology. It was a joint endeavor by nine major European banks to improve the efficiency of cross-border transactions. Europe’s nine largest banks include: Deutsche Bank, HSBC, KBC, Natixis, Nordea, Rabobank, Santander, Société Générale and UniCredit.

2. Domestic

(1) China Securities Journal states that asset management agencies need to make full use of emerging technologies like blockchain to improve operational efficiency.

July 2: The China Securities Journal published that commercial banks should fully embrace financial technology to accelerate the creation of a smart investment and research system. The transition for the bank asset management business requires upgrading core capabilities, IT systems, risk control mechanisms, and integration of online and offline operations. It requires asset management organizations to fully utilize emerging technologies like blockchain, artificial intelligence and big data to improve operational efficiency to break through the traditional boundaries of time and space.

(2)Chinese Central Media: Blockchain technology has developed rapidly, and the field for applications are expanding.

July 3: The blockchain industry has prospered in 2018. Recent reporter research has discovered that blockchain exploration and application isn’t limited to the lower-layer platform. Internet and financial giants have already backed accelerating blockchain application in the finance, public welfare and commodity tracing fields, with finance receiving the most support. The general consensus in the industry is that technological innovations like blockchains are of great significance to the financial industry, and is expected to accelerate the process of ‘trustworthy digitization,’ and continue to drive finance to become ever more virtual.

(3) Xunlei has officially joined Hyperledger to accelerate blockchain technology and empower the real-world economy.

July 4: Xunlei officially announced that it officially joined the Linux Foundation’s Hyperledger project, becoming the latest in the organization’s international blockchain alliance. Hyperledger is an open source project initiated by the Linux Foundation in 2015 to promote blockchain digital technology and transaction verification. More than 120 global companies and organizations have joined, including Microsoft, Intel, Cisco, JPMorgan Chase, and IBM. The goal of the organization is to build an open platform that meets different scenario needs in different industries and streamlines business processes.

(4) Blockchain Gaming: Gamania will launch a virtual item exchange based on blockchain technology.

July 4: Gamania announced at the Asian Blockchain Summit that it will introduce blockchain technology to the gaming industry. A virtual item exchange supporting a variety of trading methods will be launched before the end of the third quarter. Lu Junxian, chief operating officer of GASH and director of thee virtual item exchange, said that the combination of blockchain technology and game item exchange will guarantee the number of game publishers using blockchain technology. He hopes to provide players with a more reliable and secure trading history . The platform will give the gamer party IIO (the first public release of virtual items) the ability to directly issue valuable blockchain items.

IV. Voices

1.Scholars: Yang Dong of China’s Renmin University: The biggest blockchain application scenario may be in the government supervision field.

July 2: According to the overseas edition of the People’s Daily, Yang Dong, director of the Center for Financial Technology and Internet Security at Renmin University, believes that the largest application scenario for blockchains may be in the area of government regulation. Blockchain is a revolution in relationship creation and involves restructuring at the regulatory and legal levels. Compared to human supervision, better results could be achieved if local business, tax, social security, real estate and other regulations were enforced on blockchains.

2. Austrian Economist Ron Paul: Digital currency and precious metals can combine to counter the declining global economy.

July 2: The liberal and Austrian economist Ron Paul stated in his recent paper ‘The Dollar Dilemma’ that today’s monetary system is in bad straights, and precious metals and digital currency can coexist to combat the declining global economy. According to Paul, the demand for storage and speed can have an influence in the choice of currency, and distributed ledger technology seems to work outside the digital currency realm. The combination of gold and encryption technology will prove to be easier to implement than it will be for people to adapt to the new currency concept. Digital currency may help to protect privacy, especially when it comes to large transaction settlements over large distances.

3. Financial Columnist Xiao Lei: Digital currency will be subject to strong supervision once it is classified as a security.

July 3: Financial columnist Xiao Lei believes that in the future, regulation of digital currency will be even more differentiated than it is now. More open nations will directly define it as a kind of foreign exchange and regard it as a financial asset. But the majority of countries will be more conservative and will initially refuse to accept it as a currency. Rather, it will be pegged as a commodity or security, depending on the situation. There are also countries that are considering using this historic opportunity to take advantage of the market and establish standards. Each country has different factors to take into consideration. And in the long run, they are all just different regulatory ideas. It’s not a problem for investors if digital currency is classified as a foreign exchange. If it is classified as a commodity, then they can go to centralized exchanges to trade. But if it is classified as a security, then the thought process of investors will change, and they’ll demand greater restrictions on the trading venues, which will put tremendous pressure on the new currency.

4. Online Product Expert: Blockchain games will be the next promised land.

July 4: Internet product expert Lan Hu published an article stating: Blockchain games will be the next promised land.’ The article backs up the statement with the following reasons:

1.Blockchain games are still in their early stages, meaning that there’s a huge profit window. Many people still look down on and misunderstand blockchain games, but for small and medium-sized game makers looking to cut their own slice out of the market, this would be prime time to jump in.

2. Blockchain games are a new variety of games and are fundamentally opposed to traditional gaming. Regarding the current situation, the fastest way for blockchains to shape the industry isn’t to focus on the consensus mechanism, but rather to focus on the token mechanism itself and how to achieve a self-circulating distribution model. This may cause some waves in the future and could have an enormous impact on the gaming industry. The article also stated that current opportunities for blockchain games lie mainly in the field of game assets, such as Cryptokitties and speculative gaming applications.