What Is the 0x Portal?

The 0x protocol is designed to revolutionize cryptocurrency trading and tokenization. A fair few projects already make use of this technology, although it can be very difficult to find out about such projects. The 0x Portal has therefore been designed to

JPMorgan Wants to Use Blockchain to Issue ICO Tokens

American investment banking giant JPMorgan Chase is pursuing a patent for a distributed system that uses blockchain technology to issue virtual depository receipts that sound suspiciously like initial coin offering (ICO) tokens. JPMorgan Wants to Host IPOs on a Blockchain The patent application, filed by JPMorgan in January and published by the U.S. Patent &

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Malta Stock Exchange Partners With OKEx to Launch Security Tokens Platform

mse

The Maltese government is gradually building a global market for cryptocurrencies as it continues to assert itself as the world's blockchain island with crypto-friendly regulations. Thanks to such accommodating legislation, cryptocurrency companies like Binance and OKEx have flocked to the country to build out their services.

Helping to further build these services, the Malta Stock Exchange (MSE) just announced the launch of its MSX PLC, an investment vehicle that will partner with leading crypto exchanges to create joint ventures in the country. For MSX PLC’s flagship partnership, MSE signed a Memorandum of Understanding (MoU) with digital asset exchange OKEx.

Speaking with Bitcoin Magazine, Joe Portelli, chairman of the Malta Stock Exchange, was full of optimism for the partnership with OKEx.

“We believe security tokenization will be the next major wave in the digital asset arena and expect other stocks exchanges to follow our lead,” he commented.

OKEx, who recently moved to Malta, will partner with the MSX to create an “institutional grade security-tokens trading platform” called OKMSX. The company, however, expects to finalize the Joint Venture by the third quarter of 2018, while the platform won't be launched until the first quarter of 2019.

The partnership would leverage OKEx's expertise for running a digital exchange and the MSE's “experience in regulatory compliance and client due diligence.”

Commenting on the partnership, Tim Byun, chief risk officer and head of Government Relations of OKEx, said he believes OKMSX will be a “milestone for the economic development of Malta.”

MSX also joined hands with German-based Fifth Force, the operator of Neufund, a platform that allows companies to tokenize equities and sell them via Equity Token Offerings (ETOs).

In a Medium post, Neufund says the partnership aims to build a “regulated and decentralized, global stock exchange for listing and trading tokenized securities alongside crypto-assets.”

Zoe Adamovicz, CEO and co-founder at Neufund, revealed in the press release that he was anticipating the pilot, which would help “test the market's reaction and realize overall project idea.”

Malta has been committed to creating a favorable environment for the blockchain industry. Just last week, Malta-based STASIS launched a stablecoin backed by the Euro. The country’s friendly laws have also convinced crypto heavyweights to set up shop on the island.







This article originally appeared on Bitcoin Magazine.

Genesis’ Peter Gabriel Invests in Blockchain Startup: Calling All Stations

Peter Gabriel invests in blockchain startup

Musicians have the resources to finance the things they support. Ordinary people try but often fail to have the required funding—which is why we tend to see celebrities investing in crypto and blockchain startups. The latest headline involving a celebrity moving into blockchain is as follows: Peter Gabriel invests in blockchain startup.

Peter Gabriel Invests in Blockchain Startup

You may remember Peter Gabriel as the former lead singer of Genesis, an English rock band formed in 1967.

Now, Gabriel, 68, is moving away from the music industry (so to speak) and into the blockchain ...

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Study Shows Many ICO Protocols Fail to Match White Paper Promises

Study Shows Many ICO Protocols Fail to Match White Paper Promises

On July 19, a group of interdisciplinary researchers from the University of Pennsylvania, with guidance from the esteemed Penn Law professor David Hoffman, published an in-depth study of initial coin offerings (ICOs) that promise innovative concepts like autonomous governance and operate by the belief that ‘code is law’. However, most of the ICOs the group researched failed to match the original contractual promises and the so-called ‘trustless trust’ offered by these projects had very little merit.

Also read: Japan Tax Agency Says Individuals Earning $1,800+ in Crypto a Year Will Declare Tax

University of Pennsylvania Study Looks Into Whether ICO White Paper Promises Match the Project’s Codebase  

Study Shows Many ICO Protocols Fail to Match White Paper PromisesThis week, researchers from the University of Pennsylvania and Penn Law professor David Hoffman have published an interesting working paper on ICOs called “Coin Operated Capitalism.” The paper was authored by university members Shaanan Cohney (computer science PHd),  David Wishnick (a fellow at Penn Law’s interdisciplinary Center for Technology), and Jeremy Sklaroff (Penn’s JD/MBA program).    

The study’s authors surveyed and audited the top 50 ICOs that raised the most funds in 2017 and researchers looked at whether or not the ICO promises made by the promoters and white papers actually matched the technology’s codebase. The study finds that there are glaring differences between what the ICOs’ code delivers and what the creators promised to their investors.

“The automated mechanisms found in code—known as ‘smart contracts’—are not the only way entrepreneurs can deliver on their promises,” Wishnick explained.

But, according to proponents, they are what make ICOs innovative.

Study Shows Many ICO Protocols Fail to Match White Paper Promises
Researchers from Penn Law looked at ICOs such as Tezos, Filecoin, EOS, Bancor, Tron, Tenx, Civic, Chainlink, Storj, Power Ledger, and many more.

Only 20% of 50 ICO Codebases Matched the Promoter’s Promises

Out of the 50 ICOs surveyed, using both the white papers (contracts) and the codebases (delivered or non-delivered promises), a great deal of the ICO code and their associated ICO contracts did not match. In fact, only 20 percent of the 50 contracts surveyed matched their promises to code 100 percent of the time. “Nearly 60 percent made a least one governance promise that was missing from the code, and 20 percent had two or more mismatches,” the study’s authors emphasize.

“Surprisingly, in a community known for espousing a techno-libertarian belief in the power of ‘trustless trust’ built with carefully designed code, a significant fraction of issuers retained centralized control through previously undisclosed code permitting modification of the entities’ governing structures,” the working paper explains.

In Contrast to Traditional Law, the Smart Contract Community Is Full of Energy But So-Called Autonomous Protocols Need Vetting and Code Auditing

The paper concludes that the informality of smart-contract production does lead to “risks” but also “creativity”. Smart contract developers are far more creative than a “community of lawyers who tend to recycle language from agreement to agreement without much thought,” the study states. In contrast, the smart contract community has a lot of passion and energy, the researchers explain. But the study shows the manufacturing of smart contracts and blockchain promises must be evaluated and scrutinized closely.   

“Beyond the production of smart contracts and blockchain code, our study also highlights the importance of the ecosystem through which crypto code is vetted, audited, and made legible to the outside world,” the paper concludes.

What do you think about the Penn Law working paper that details most ICO code does not match the promises tied to the project? Let us know what you think in the comment section below. 


Images via Shutterstock, and the University of Pennsylvania


Bitcoin.com there’s a bunch of free helpful services. For instance, have you seen our Tools page? You can even look up the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more.

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TRON (TRX) Now Supported on Ledger Nano S

Ledger Nano S supports TRON

Ledger Nano S supports TRON: TRON (TRX), the world’s eleventh largest cryptocurrency by market cap, has just made the big announcement that it is now supported on the popular cold storage wallet the Ledger Nano S.

Thanks @LedgerHQ for supporting $TRX on your hardware wallet Ledger Nano S! pic.twitter.com/QoyDb9zbzF

— Justin Sun (@justinsuntron) July 18, 2018

But things don’t appear to be all sunshine and rainbows just yet.

Connection Issues

One user reported an error when trying to connect to TRON on the Ledger Nano S.

anyone else ...

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Bermuda Is Quickly Gaining Favor as a Jurisdiction of Choice for Digital Assets

bermuda

Bermuda is well known as a global center for financial services as the island operates the largest reinsurance market in the world. Now, Bermuda is aggressively diving into the fintech sector with two clear objectives: to promote the island as the jurisdiction of choice for fintech entrepreneurs and to establish its new regulatory framework as the universal standard for initial coin offerings (ICOs), digital assets and virtual currencies. By doing so, Bermuda’s Premier and Minister of Finance E. David Burt hopes to diversify Bermuda’s economy and encourage new development ― monetary, educational and cultural ― in the island.

If recent developments are any indication, Bermuda is perhaps well on the path to quickly becoming the global leader for the issuance of digital assets. When discussing international interest in Bermuda’s initiative, the premier has stated, “Bermuda’s leadership in the development of a fintech industry supported by a sound regulatory base is attracting the attention of the world. This government’s determination to produce the right framework for growth in this area has set a high standard.”

Bermuda’s Innovative Digital Assets Regulatory Framework

While some nations have inhibited the development of digital assets (e.g., China and South Korea), most others have not yet passed legislation germane to the asset class. Bermuda, in contrast, seeks to set the market, implementing a comprehensive and prudential regulatory framework designed to create a supportive business environment that fosters development. The government has collaborated with a partnership of regulators, external consultants and other private sector representatives to develop a best-in-class system that will serve as the standard for other jurisdictions (the Bermuda Standard).

Bermuda has passed legislation that it believes will establish the necessary regulatory framework to guide its initiative. The legislation governs two distinct categories of business:

  • issuers who launch ICOs for their own crowdfunding purposes, which are regulated by amendments to the existing Companies Act 1981 and Limited Liability Company Act 2016 (collectively, the ICO Act), and by the Registrar of Companies (ROC) and

  • issuers of virtual currencies and operators of digital asset exchanges, as well as individuals who provide services related to digital assets, which are regulated under the new Digital Asset Business Act 2018 (DABA) and by the Bermuda Monetary Authority (BMA).

Bermuda seeks to embrace the potential afforded by digital assets but not at the expense of tarnishing its pristine international finance reputation. The Blockchain Task Force, comprised of government, industry, legal and technology professionals, collectively drafted these bills to set reasonable and credible regulation. The task force has also issued additional regulations and guidance on critical topics, such as cyber security and prudential business standards. Bermuda recognizes that digital assets present significant risks that require robust anti-money laundering (AML) and anti-terrorism financing (ATF) regulations but believes that the ICO Act and DABA are suitable safeguards.

The Initial Coin Offering Act

The ICO Act was passed in May 2018 and regulates offerings of “digital assets,” which includes various types of digital coins and tokens (i.e., equity, security and utility) that are issued as ICOs. Specifically, the ICO Act defines “digital assets” as:

[A]nything that exists in binary format and comes with the right to use it and includes a digital representation of value that ―

  1. is used as a medium of exchange, unit of account, or store of value and is not legal tender, whether or not denominated in legal tender;

  2. is intended to represent assets such as debt or equity in the promoter;

  3. is otherwise intended to represent any assets or rights associated with such assets; or

  4. is intended to provide access to an application or service or product by means of blockchain[.]

ICOs are a “restricted activity” that requires the consent of the Minister of Finance prior to a public offering, which is a sale to more than 35 investors. The ICO Act is silent as to private sales to 35 investors or fewer. Assisted by the FinTech Advisory Committee, the Minister of Finance will review each proposed ICO to ensure that the issuer satisfies the base criteria that the issuer purports in its offering document, which often is the issuer’s white paper. Once consent is granted, the issuer must file its ICO offering document (subject to certain exemptions, including, but not limited to, if the digital assets are listed on an appointed stock or digital asset exchange) with the ROC.

With respect to timing, the issuer should be able to incorporate within the typical 48-hour period using Bermuda’s standard incorporation procedures, assuming all know-your-customer (KYC), AML and ATF issues have been addressed from a due diligence perspective. However, because express consent from the Minister of Finance is a precondition to issuance, it is advisable that the issuer file its ICO offering document with the Minister of Finance as early as possible.

The ICO Act requires that the offering document at minimum include certain information, such as a description of the project and its timeline with any proposed project phases and milestones, the amount of money equivalent (in Bermudian Dollars) to be raised and its allocation among purchasers of digital assets at each offering point, and any rights or restrictions on the digital assets to be offered. The ICO Act also requires that the offering document include a general risk warning and a statement as to how the prospective purchasers’ personal information will be used.

Many provisions of the ICO Act are similar to the Bermuda statutes regulating initial public offerings. For example, the requirement to file the ICO offering document with the ROC and to submit updates of same to the ROC on a going-forward basis. The ICO Act also requires issuers to include a general risk statement identifying the potential ramifications to investors should the ICO fail. In addition, the ICO Act requires issuers to collect, verify and maintain investor identity information in accordance with AML and ATF laws. Finally, the ICO Act contains criminal offenses and imposes civil penalties of up to BD$250,000 for making materially untrue statements in the ICO offering document.

The Digital Asset Business Act

DABA, which was passed in June 2018, regulates “digital asset business” conducted in or from Bermuda. “Digital asset business” is defined as engaging in the business of providing to the general public any activities that fall within one of five specific categories: (1) issuing, selling or redeeming virtual coins, tokens or other forms of digital assets; (2) operating a payment service provider business that uses digital assets, including fund transfer services; (3) operating an electronic exchange; (4) providing custodial wallet services; or (5) operating a digital asset services vendor.

To be clear, companies issuing ICOs as a funding mechanism for their own business are not regulated under DABA, as such activities are within the scope of the ICO Act. However, companies that issue ICOs for others will be regulated under DABA.

Digital asset businesses must apply for one of two licenses under DABA unless exempt:

  • Class F – The applicant shall be licensed to provide any or all of the digital asset business activities.

  • Class M – The applicant shall be licensed to provide any or all of the digital asset business activities for a defined period determined by the BMA, which may be extended upon application to the BMA.

The Class F license is a full digital asset business license, whereas the Class M license is a “sandbox” license that allows startups to experiment with new products or services for a limited period of time. The tiered licensing scheme bolsters Bermuda’s initiative to create a supportive business environment that attracts fintech innovation to the island while simultaneously ensuring customer protection. The BMA may impose limitations as necessary with respect to the nature and scale of the business permitted under either license, which can include limits on the scope of the digital asset business activity or the manner of operating the digital asset business.

When applying for either the Class F or Class M license, an applicant must submit certain information to the BMA, including the applicant’s business plan that states the nature and scale of the digital asset business, its management arrangements, and its policies to assure compliance with Bermuda’s AML and ATF laws. The BMA has authority to demand additional information as may be reasonably required to determine the application.

Bermuda’s Initiative Moving Forward

This year, Bermuda will adopt additional regulations and issue further guidance to support the development of digital assets and its broader fintech initiative. These endeavors should solidify the island as the jurisdiction of choice for international fintech entrepreneurs and confirm the Bermuda Standard as best-in-class.

Earlier this month, the government of Bermuda announced that it intends to introduce a new class of bank to encourage the development of the fintech industry. A proposed amendment to the Banks and Deposit Companies Act 1999 will allow for the formation of “Restricted Banks” that reportedly can better serve the fintech sector. The amendment will outline categories of business that Restricted Banks may serve and include a provision that allows for future amendments as fintech evolves.

This summer Bermuda will launch a national electronic identification ledger (E-ID) using blockchain technology. E-ID will provide a single platform that licensees can use to efficiently comply with KYC, AML and ATF rules. E-ID is designed to comply with international rules and regulations, such as the Personal Information Protection Act in Bermuda and the General Data Protection Regulation in Europe. E-ID will also enable individuals to control third-party access to their data by allowing them to grant permissions for specific data for a defined period of time. In addition, the use of the blockchain should provide increased efficiencies through the elimination of duplicative efforts, the aggregation of verified data and instant customer authentication.

Bermuda’s Blockchain Task Force has announced that, later this year, it will establish a legal and regulatory framework for virtual currency exchanges. Reportedly, this initiative is scheduled to become operative in September 2018.

News of Bermuda’s business-friendly regulatory environment is spreading quickly, and, not surprisingly, fintech companies are moving to the island. In April 2018, the Burt signed a memorandum of understanding (MOU) with Binance Group, operator of the world’s largest cryptocurrency exchange and leader in digital exchange development and fintech, with a market capitalization of $1.3 billion. In May, the premier signed a MOU with Shyft Network Inc., which provides blockchain-based identification solutions for KYC and AML-compliant data transfers.

In June, the premier signed an MOU establishing a strategic partnership with interests from the Republic of Korea. The MOU involves B-Seed Partners (Republic of Korea), FinHigh Capital (United States) and BFS Holdings Ltd. (Bermuda), as partners in a new Bermudian joint venture, Bermuda FinTech Accelerator (BFA). BFA plans to deploy a developed pipeline of fully-funded fintech projects, including token sales and cutting-edge fintech technology that is not yet available on the Island, which will benefit the community through efficiencies, the creation of jobs and educational opportunities. Also in June, Arbitrade Ltd. announced its intent to establish its global headquarters in Bermuda with plans to launch its own ICO and digital asset exchange in August or September 2018.

Having been a part in some of these initiatives leading to the MOUs, we agree that, at the moment, Bermuda provides an attractive alternative to other jurisdictions where ICOs are allowed and accepted. Whether or not Bermuda will become a leading jurisdiction will depend, in part, on the rate and volume of ICOs, the establishment of digital asset exchanges to create liquidity, the development of digital asset management businesses, the extent to which digital assets are linked to fiat, and, ultimately, the expansion of digital banking.

Huhnsik Chung is a partner at Stroock & Stroock & Lavan LLP in New York with more than 25 years of legal experience in the financial services industry. Nicholas Secara is a senior associate in the firm’s New York office practicing in the financial services industry. They can be reached at hchung@stroock.com and nsecara@stroock.com. This is a guest post by both Chung and Secara. Views expressed are their own and do not necessarily reflect those of Bitcoin Magazine or BTC Media.

This article originally appeared on Bitcoin Magazine.

Barclays Pursues Blockchain Patents to Create Digital Currency Network

Barclays, the UK’s biggest bank, has applied for three U.S. patents that collectively outline a system that uses blockchain technology to combine the pseudonymity of cryptocurrency with the legacy financial system and its KYC/AML regime. The London-based bank first applied for the three patents in July 2016, though they were only published by the U.S.

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Institutional Investors Are in Love With Bitcoin, Grayscale Report Reveals

Grayscale

In its recent Digital Asset Investment Report, Grayscale Investments LLC, an investment company that specializes in cryptocurrency funds, revealed that it has raised $250 million through new asset investments in this year alone. The investments come despite a slump in the cryptocurrency market’s prices, which has seen bitcoin's price decrease by nearly 50 percent during the same period.

The report came two days before a Bloomberg interview in which Larry Fink, the CEO of BlackRock — one of the largest asset managers in the world — said institutional investors were not interested in cryptocurrency.

Setting the record straight, Barry Silbert, CEO of Grayscale Investments LLC, tweeted his company's investment report, which shows that "56% of $250 mm raised till date came from institutional investors."

Investments Breakdown 

Grayscale, who has been bullish on cryptocurrencies since its launch in 2013, reveals that $248.39 million has been poured in its investment offerings in the first half of 2018 alone, marking the “strongest inflows of any six month stretch in the history of [its] business.” This breaks down into an average weekly investment of $9.55 million, with the company declaring that they had "seen fresh inflows during each week" of the year.

The report continues to show that, while most of the company's investment products have been down for the first half of the year, they have seen tremendous gains since launching their products. The Bitcoin Investment Trust, which the company claims is the "first publicly quoted bitcoin investment vehicle," is up by 4107.1 percent since it launched in 2013 but down 59.8 percent this year.

Ethereum Classic, another fund that has seen an increase of 270.3 percent since going to market, is currently down by 47.7 percent. The company's other investment products haven't fared much better this year, which doesn't come as a surprise as 2018 has been hard on the market.

Institutional Investors

While the progress made by Grayscale is quite encouraging, perhaps the most salient finding is where the money is coming from.

Speaking to Bitcoin Magazine, Grayscale Investments Managing Director Michael Sonnenshein hails the report as a positive for the market as it demonstrates a "meaningful inflow of institutional capital into digital assets."

"We anticipate this trend to continue as investors look to diversify their portfolios by adding exposure to digital assets," he continued.

The company has a diversified investor base, which includes accredited individuals, retirement accounts, family offices and institutional investors. The report states that 56 percent of its investment came from institutional investors, with an average investment of $848,000. The next largest investment group are accredited individuals (20 percent), followed by Retirement Accounts (16 percent) and Family Offices (8 percent). Of these investors who have bought into the company's products, 64 percent are Americans, 26 percent are investors from the Cayman Islands, and the remaining 10 percent are from other regions around the world.

The bulk of Grayscale investors funds have been allocated toward the Bitcoin Investment Trust. Institutional investors might favor it more because its value is directly related to the market, much like the index fund these traditional investors are probably accustomed to. Their favor also likely stems from bitcoin being the most popular digital asset in the world.

Grayscale Investments LLC is a one-stop shop for investors who want to benefit from digital currencies without actually holding them. The company offers a range of funds, including Single Asset Investment Products, like the Bitcoin Investment Trust, and the Digital Large Cap Fund, which offers diversified exposure to the top digital assets by market cap.


This article originally appeared on Bitcoin Magazine.