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.

Dutch court says BTC does have ‘transferable value”

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A Dutch court has made a very important judgement that could positively affect all Bitcoin (BTC) holders. The court ruling came in respect of a plaintiff who was owed 0.591 BTC according to court document, which was released on 20th March.

The plaintiff, Mr. J.W. De Vries lodged the complaint against Koinz Trading BV back in early February. Koinz is not a public company and had already been ordered by a court in the Middle Netherlands jurisdiction to pay Mr de Vries proceeds from mining, the 0.591 BTC, or make a penalty payment of up to €10,000.

It seems that Koinz failed to comply with the court’s demands to pay de Vries in BTC, and as a result were told, “pay up or be declared insolvent.”

What is interesting for those of us involved in the world of cryptocurrency, is the Dutch court’s statement with regard to Bitcoin having “all the characteristics of a property right”, and that therefore any claim to transfer of BTC under property rights is legitimate. The court text reads as follows

“Bitcoin exists, according to the court, from a unique, digitally encrypted series of numbers and letters stored on the hard drive of the right-holder’s computer. Bitcoin is ‘delivered’ by sending bitcoins from one wallet to another wallet. Bitcoins are stand-alone value files, which are delivered directly to the payee by the payer in the event of a payment. It follows that a Bitcoin represents a value and is transferable. In the court’s view, it thus shows characteristics of a property right. A claim for payment in Bitcoin is therefore to be regarded as a claim that qualifies for verification.”

The court also found that there was indisputably a contract between Koinz and Mr de Vries and that because the contract detail was set in Bitcoin, Mr de Vries should be paid in Bitcoin. As Cointelegraph states, “The court considers the legal relationship as a civil obligation to pay.”

The Dutch court’s decision is a step towards recognising Bitcoin as a legitimate currency, however not everyone is going in the same direction, The G20 Financial Stability Board (FSB) also issued a report on 20th March suggesting it is sticking with defining cryptocurrency as ‘assets’ and not a currency as the Dutch court ruling suggests. G20 claims that crypto “lacks the traits of sovereign currencies.” Mark Carnet, Governor of the Bank of England seems to agree with the FSB, because he made a similar statement last month, saying that in his opinion, “cryptocurrency has thus far failed to display the traditional characteristics of money.” He also said, “nobody uses it as a medium of exchange.” That’s not quite true Mr Carney, as the Dutch court judgment and others using BTC to pay for goods and services indicates.

Future World Governments

Political systems go through change, as history shows us, and as technology and society advances and changes, we are certain to see some alterations in the style of government around the world. There are a few ways that our governments may look dramatically different in the future and some of them are potentially terrifying. Here are five possible scenarios.

WGS17

A Noocracy

This is a political system based on the “priority of the human mind.” The concept comes from the Jesuit mystic Teilhard de Chardin, who saw this as a possible evolution of democracy that would create “a flexible and adaptable system comprised of conscious, systematic, and institutionalized elements which will operate in decentralized autonomous subsystems.” The upshot of a system like this is the development of a hive-like civilisation brain that integrates all individual minds, both human and AI, through information networks.

A Cyberocracy

In this system, governments would rule by the effective use of information. This could take two forms: one that supplants bureaucracy and technocracy as we know it, and or one that redefines the relationship between the state and society. It will be driven by decisions based on information, which means a government will seek to obtain as much information as possible about everyone and every entity. It is likely to result in a bureaucratic system run by administrative AIs.

A democratic global government

A global liberal democracy will be one capable of “ending nuclear proliferation, ensuring global security, intervening to end genocide, defending human rights, and putting a stop to human-caused climate change,” says George Dvorsky. We are already on the way to this in terms of culture and economics, but we have yet to reach the political stage. The European Union is an example of this type of government on a small scale.

A Futarchy

This system is the creation of economist George Mason and futurist Robin Hanson. They say that under a futarchy we would “vot on values, but bet on beliefs.” How does that work? Hanson says: “Elected representatives would formally define and manage an after-the-fact numerical measure of national welfare. Market speculators would set prices that estimate national welfare conditional on adopting proposed policies. When the market estimate of welfare conditional on adopting a policy is higher than the estimate conditional on non-adoption, that proposal becomes law.”

Post Apocalypse Hunter-Gatherers

Finally, there is the possibility that we will experience a catastrophic event – natural or man made– that forces us back into a paleolithic political system in which we will return to living in small tribal groups, existing by hunting and gathering for our existence.

Which type of futuristic government would you prefer if you had a choice? I look forward to hearing your views.

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