UK’s FCA opens up sandbox for more play

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In a week where the British government is losing Cabinet ministers on an almost daily basis as a result of party in fighting over the Brexit negotiations, making the pound sterling plunge in value, the UK’s financial regulator, the Financial Conduct Authority (FCA) has taken a bold step forward in recognising the potential of blockchain-based startups.

The FCA started a regulatory ‘sandbox’ some time ago in 2016 and it has just added its fourth cohort of startups to the process. The FCA received a total of 69 applications to participate in the exploration, and this week it has added 11 of the 29 successfully accepted applicants.

In its announcement regarding Cohort 4, the FCA revealed, “Applications came from a diverse range of firms operating across the financial services sector including in areas such as consumer credit, automated advice and insurance.”

The FCA also said, “We have accepted a number of firms that will be testing propositions relating to cryptoassets. We are keen to explore whether, in a controlled environment, consumer benefits can be delivered while effectively managing the associated risks.”

The startups in Cohort 4

One of the businesses in this cohort is 20/30. This London based financial firm is using the DLT to allow “companies to raise capital in a more efficient and streamlined way,” and it is partnering with the London Stock Exchange and Nivaura. According to the FCA’s press release, 20/30 will be issuing an equity token on the Ethereum blockchain. Capexmove, also in this new cohort is offering a similar service.

Another that stands out is called ‘Chasing Returns’. This startup is described as “Psychology-based risk platform that promotes good money management discipline and improves outcomes for customers that trade Contracts for Difference (CfDs). It acts like a digital coach, encouraging adherence to money management and risk exposure levels.”

While for those people with ID problems, ‘Community First Credit Union’ offers an “Initiative to facilitate creation of an identity token that supports customers who lack traditional forms of ID, in order to assist them in accessing bank account services in the UK.”

The latter perhaps answers the issues that many British immigrants have faced recently, most notably those who arrived from the Caribbean on the ‘Windrush’ and in recent months have found themselves at risk of deportation, because of lack of documentation establishing their British citizenship and right to stay.

The FCA has chosen a fascinating selection of startups for Cohort 4 and indicates its willingness to be open-minded and inclusive when it comes to envisioning a future for blackchain-based businesses. It certainly seems to be making better progress with blockchain than the government is with Brexit.

What decision will the SEC make about Ethereum?

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This week, Monday May 7th to be exact, the Security & Exchange Commission (SEC) started a series of meetings to decide whether Ethereum 9ETH) is a security. At the moment we’re not sure how the decision will turn out, but let’s think about what the SEC will be considering and how it might affect ETH owners.

If you’re an ETH owner, you might expect to see two extremes as a result of any decision: an unexpected high, or a devastating low. For example, if ETH is considered a security by the U.S. government, then there may be a negative, short-term price reaction. However, because Ethereum’s underlying technology, is borderless and does not depend on the opinion one country’s regulatory committee, its long-term prospects should be unaffected. And, if it is decided that it is not a security, then it is very likely that the long-term prospects of the technology and its financial standing within the community will prosper.

If no decision is made about the status of ETH we might see a major upsurge in the market, especially as Buterin and his developers have been talking up new solutions for scaling in recent days and while this might be a short-term uplift in the market, there is also reason to think it might become a long-term trend.

What is Ethereum saying?

For it’s part, ETH founders are sure that it is not a security. Joseph Lubin, one of the co-founders said prior to the SEC meeting this week: “We spent a tremendous amount of time with lawyers in the US and in other countries, and are extremely comfortable that it is not a security; it never was a security… many regulators that matter understand what Ethereum is.”

Will the SEC agree with Lubin’s assessment, and with the way other regulators claim to see it – that I what we’re waiting to find out.

 

 

EU to combat fake news with blockchain

 

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The election of Donald Trump as President of the United States brought with it, amongst other things, the whole idea of ‘fake news’. POTUS is always talking about it and has done a lot to create an environment where the public now doubt whatever they read.

In the past we generally accepted that what we read in newspapers or heard on news bulletins was reasonably close to the truth, although the smart people have always been aware that every paper has a specific political agenda and that any story needs to be read with that bias in mind. But, now we have reached a stage where completely false stories are pumped out, with social media channels being the chief way of ensuring they spread like wildfire.

The European Commission (EC), according to an article published in Techcrunch, has announced that it is going to use blockchain technology in a bid to combat the spread of ‘fake news’ and its press release said it has “identified blockchain as a critical part of what it will call the Code of Practice on Disinformation, which it intends to introduce by summer 2018.”

The announcement also stated that blockchain is, “one of emerging technologies which are changing the way information is produced and disseminated, and have the potential to play a central role in tackling disinformation over the longer term.”

The EC points to the fact that DLT can aid the transparency, reliability and traceability of news on the Internet. It said:

“Innovative technologies, such as blockchain, can help preserve the integrity of content, validate the reliability of information and/or its sources, enable transparency and traceability, and promote trust in news displayed on the Internet. This could be combined with the use of trustworthy electronic identification, authentication and verified pseudonyms…”

The commission’s next step is to develop the EU-wide Code of Practice on Disinformation that will be published by July 2018.

This represents a new application of blockchain technology in a very important arena – that of the news media. We cannot underestimate the value of once again being able to know that information has been verified and sources checked. And those who claim that certain stories are ‘fake news’, as POTUS frequently does, will find it harder to do so. This could change voters’ views in elections, as well as of government policies, in the coming years. We will be able to trace the trail of truth and lies, and that will be a good thing.

 

 

 

 

U.S. government takes the Internet backwards!

U.S. government takes the Internet backwards

On Monday 23rd April, net neutrality in the USA ceased to exist. The net neutrality rules introduced during the Obama era prevented Internet service providers from blocking, slowing down or prioritising Internet traffic.

According to a report from Business Insider, this could lead to a whole new era of ‘build your own Internet.’ One company, is already piloting a programme in Venice, California, and guess who it is? Yes, it’s WeTransfer!

WeTransfer, as many of you will be aware is the file transfer company that businesses use on a regular basis when files, especially those with high resolution images, are just to big to be sent via email. The company, which started in Venice, CA, is partnering with another Los Angeles outfit called Community Broadband Project “to create a “mesh network” — a decentralized series of wireless routers that allow customers to get online without going through an ISP.”

What is a mesh network?

The short answer is that a mesh network is usually local. It can be created when households in an area install routers, called ‘nodes’ that are then connected to local antennas. And, that creates a local network.

The FCC is taking the country back in time

WeTransfer’s President, Damian Bradfield believes that what the U.S. government is doing via the Federal Communications Commission (FCC) is taking the country backwards in time to an era when a provider could tell you whether you could access Skype or BitTorrent. He said: “Fundamentally we believe the power shouldn’t be with the ISPs to make those sorts of decisions.”

Grassroots resistance

What WeTransfer is doing is a form of grassroots resistance to the end of net neutrality. Mesh networks can sidestep the influence of powerful ISPs like AT&T. Until now, the use of this type of network has been confined to rural areas with little or no broadband coverage, but it may now become more widespread.

WeTransfer alongside the Community Broadband Project is offering an independent connection to households in the Venice area. “We were looking for a way that not only we could benefit from an internet that is net neutral, but also some degree educate people around us that there is an alternative,” Bradfield said.

WeTransfer is funding the project and it is still in the beta testing stage in the Venice area. Eventually they hope to offer a service that is cheaper than those of the large ISPs.

Ultimately, WeTransfer wants the FCC to reinstate net neutrality rules. States such as California, Oregon, and Washington are in the process of passing their own state-level net neutrality laws. However, he is not hopeful about a return to net neutrality, because the FCC commissioner Ajit Pai is against the Obama-era rules. But, as several states and companies are suing the FCC over this, perhaps there is some hope it might change.