Bitcoin gets official blessing in Japan
Entrepreneurs do not often welcome regulation. For Japanese cryptocurrency start-ups, however, a framework put in place by the country’s financial authorities has been a boon.
Rules announced this year by the Financial Services Agency allow people to pay for goods and services with bitcoin and require cryptocurrency exchanges or remittance operators to be licensed and subject to annual audits. These have given bitcoin official approval.
“The Japanese have felt that cryptocurrencies are a scary thing but trading volumes have increased as many now see it as trustworthy thanks to government approval,” says Yusuke Otsuka, chief operating officer at Coincheck, a bitcoin exchange.
The FSA issued operating licences to 11 bitcoin exchanges late last month. Coincheck has applied for a licence and is hoping to receive approval next month, Mr Otsuka says.
The new digital currency rules come as other governments clamp down on cryptocurrencies. China, for instance, has banned companies from issuing their own virtual currencies and is cracking down on cryptocurrency exchanges.
However, for Japan, cryptocurrencies sit within the realm of fintech. The government and banking leaders hope that this sector’s businesses — ranging from artificial intelligence-led investment advisory groups to cloud data storage — will free up cash sitting in bank deposits and reignite the economy.
There has been domestic hand-wringing over the investment going into fintech ventures in Japan compared with that in other developed countries. Japan’s fintech sector, seen as a laggard, had investments of $65m in 2015. This compares with $12bn in the US, $974m in the UK and $69m in Singapore, according to consultants Accenture.
“We’re hoping that fintech will change economic and corporate activity,” says Takuya Fukumoto, director of industrial finance in the economy, trade and industry ministry. The ministry set out the government’s vision in August, calling for an increase in cashless consumer payments, digitising back-office functions and new technologies to enhance cash flow between companies.
Japanese banks, worried that fintech ventures will become mainstream players, are trying to gain exposure to new technologies by either creating a business or investing in a start-up.
Kazuhisa Shibayama, founder and chief executive of WealthNavi, a “robo-advisory” company that offers customers investment advice provided by AI, has been helped by the government’s push for fintech businesses.
When he started his company two years ago, the financial technology sector was not as well known as today.
“I was only told by venture capital investors after I started that my company was part of the fintech sector and that it was what people described as ‘robo-advisory’,” says Mr Shibayama.
He points out that for many fintech entrepreneurs, technology is only a tool to offer users better services at a cheaper price.
Many feel that unlike Japan’s manufacturing sector, where companies introduced the notion of kaizen, or continual improvement, financial services might have been left behind.
Anecdotally, Mr Shibayama says, the new enthusiasm for fintech among businesses and investors has led to more venture capital firms looking for investments.
However, fintech entrepreneurs and start-ups are scarce, he adds, with young people still choosing the traditional route of looking for jobs in established companies.
The fintech arena also struggles to attract many of Japan’s IT engineers and programmers, who tend to enter the country’s thriving gaming sector.
While some may end up in financial services, the cultural gap between the two industries can be hard to bridge.
Written by the Financial Times
Russia’s Largest Bank Joins Enterprise Ethereum Alliance
The Enterprise Ethereum Alliance just welcomed its first Russian member.
After signing up more than 100 businesses to build enterprise distributed ledger technology compatible with the ethereum blockchain, the group has added Sberbank, the nation’s largest bank, to its growing list.
Revealed in interview with CoinDesk, Sberbank framed its addition to the alliance as a new way to capitalize on international markets.
Evgeniy Kravchenko, head of trade finance and correspondent banking at Sberbank, told CoinDesk:
“The next step for our blockchain team will be operations with foreign-based financial institutions and other banks, to do some international transactions, to see how we can increase the transparency and improve the trust between banks and corporate clients.”
Already, Sberbank reported that it has completed at least two blockchain proofs-of-concept – one for a “smart” letter of credit and another for a letter of guarantee – working in cooperation with regulators, the minister of the economy, other banks and Russia’s International Chamber of Commerce.
Kravchenko, however, said that its entrance into the EEA is part of a bid to go beyond the initial use cases its already tested.
“We’ll be working with other banks on projects in other business areas, apart from trade finance: payments, lending, retail, everything that’s possible,” he added.
But Kravchenko was keen not to suggest that he’s limiting the scope of Sberbank’s work just alliance members.
Instead, he says the bank is interested in continuing to work with Russian banks who aren’t members of the EEA on new and existing projects.
“The more players on the network, the better the network will be,” said Kravchenko.
But Kravchenko is no blockchain maximalist. In fact, Kravchenko himself imagines a world where blockchain might not be exactly as necessary as some supporters think.
Using the Sibos conference as an example, he said it remains unknown if the technology could, say, replace or replicate the services offered by Swift, the interbank messaging service that also serves as conference host.
“I think blockchain may influience all the parties who are represented here, because all the banks are here, Swift is here. But the main message from my side is we need to do it together and jointly with other players.”
Sberbank office image via Shutterstock
JPMorgan Integrates Zcash Privacy Tech Into Quorum Blockchain
Now you see it, now you don’t.
The development firm behind the privacy-focused public blockchain zcash has announced the first integration of its zero-knowledge security layer (ZSL) into an enterprise blockchain, with JPMorgan today revealing it has added the functionality to its Quorum blockchain.
Derived from zcash’s zk-snarks technology, the code now integrated into Quorum obscures all identifiable information about a transaction – including the user’s public key and the amount transacted – while promising to also give accountants the ability to audit those transactions.
Zcash co-founder Zooko Wilcox told CoinDesk:
“What we have now done through our partnership with JPMorgan is use zcash technology previously pioneered in the open zcash cryptocurrency to create protected and auditable transfer of token ownership on the JPMorgan blockchain.”
To complete the project, JPMorgan partnered with Zcash Company (the firm that manages the open-source development of zcash) in May of this year and tapped into support from Microsoft.
“Today’s announcement is a prime example of how big banks and fintechs can work side-by-side to build groundbreaking technology for the financial markets,” Umar Farooq, head of blockchain initiatives for JPMorgan, said in a statement.
Crucially, however, the integration doesn’t have a so-called “god key” that would give some trusted authority the ability to go in and make changes after the fact.
Rather, Quorum’s private smart contract language, called Constellation, would require that when building a financial product that doesn’t require a centralized authority, the creator include the public key to all relevant regulators, giving them the necessary access to ensure compliance.
While the proof of a transaction’s underlying value can take 40 seconds, according to a senior JPMorgan exec with knowledge of the project, that process only occurs at the very last step of a smart contract workflow.
If the merging of the two technologies ends up doing what the developers claim, the results could be an entirely new ecosystem of financial products developed without the need of a central authority. As an example, the Depository Trust & Clearing Corporation could be removed from secondary trading.
“There’s been extensive investment in research and proofs-of-concept for blockchain in enterprise over the last several years, and very little of it has reached enterprise value yet,” Wilcox said, adding:
“One of the major blockers that has been preventing larger adoption is the privacy problem, and we have a live solution to that privacy problem for the first time.”
But while this is the first implementation of ZSL in an enterprise blockchain, it may not be the last.
As part of the announcement, JPMorgan and the Zcash Company jointly expressed plans to continue working together with other enterprises building blockchain technology. Further, variations of the ZSL integration could someday include different parameters to define the proofs.
In the initial implementation, those parameters came directly from zcash (which has a market cap of $559 million as of press time), but the JPMorgan source said they could be modified to accommodate other concerns in the future.
Also revealed, as part of an expansion effort to attract new talent, ZSL is scheduled to be released as open-source software at a future date. In this way, individuals and other organizations will be able to experiment and test new applications of the code.
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Zcash Company, the for-profit entity that develops the zcash protocol.
JPMorgan building image via Shutterstock – Written by CoinDesk
Bittrex Exchange Breaks Silence on Banned Accounts, Questions Remain
Following Cointelegraph’s coverage yesterday, Bittrex finally made a public statement about the thousands of accounts they’ve disabled. According to Bittrex’s website:
“We occasionally conduct compliance reviews and are working vigilantly to protect our service and our users from harm. As part of a compliance review, we have temporarily suspended certain accounts pending the completion of the review. The total number of suspended, closed, or banned accounts is very limited: less than 0.1% of the total accounts on Bittrex. More than 99.9% of Bittrex accounts are unaffected.”
Of course, everybody realizes that the vast majority of Bittrex’s accounts are working just fine. The problem is that thousands of accounts–the 0.1 percent–were (and still are) disabled.
Real money at stake
Bittrex is based in the US, so it’s understandable that compliance is important to the exchange. After all, the US is a patchwork of different regulations and laws, both at the state and federal levels.
The strange thing, though, is that Bittrex never bothered to inform the customers whose accounts they disabled of what they were doing and why. Some of the users who have emailed Cointelegraph claim to have rather large sums stored on Bittrex. One user pleaded to us:
“Please help me … I have about six Bitcoins in my account … I lose my money Please tell Bittrex to activate my account only for 10 minutes so that we can withdraw our money…please.”
A simple email from Bittrex, either before or immediately after accounts were “temporarily suspended,” would have probably gone a long way toward reassuring users that they would eventually receive access to their funds.
Another user, who posted in the comments of our initial article yesterday, complained of the way Bittrex has handled communication:
“No matter what the reason is: not responding to clients, no explanation, not even one single twitter post. That alone is enough to remove my funds from Bittrex.”
He is correct that, prior to Cointelegraph’s article yesterday, there had been absolutely no public communication at all from the exchange. Likewise, many of the emails we received from Bittrex users complained of tickets that had gone days without being answered, so apparently they never privately communicated with their users either.
Bittrex never replied to our request for comment.
Bittrex also wrote:
“Any reports that Bittrex miscalculated or misapplied its exchange fees, that there is a security problem with the exchange, that Bittrex lost any coins stored on users’ behalf, or that Bittrex is banning people trying to access Slack to discuss the status of their accounts are incorrect. We are committed to making Bittrex a strong, safe, and compliant exchange where people can securely participate in the digital currency economy. We ask for patience from our highly valued customers. As for us, we plan to ‘keep calm, and carry on.’”
Somebody isn’t telling the truth; Bittrex claims that they never banned anybody from Slack who tried to enquire about their accounts, but we’ve received a number of emails claiming that the exchange had done exactly that.
Bittrex is apparently keeping calm and carrying on, but what about the users affected by their move? At the moment, the exchange is either not responding to tickets or is lagging far behind. The latter would not be surprising, as a number of Bitcoin and altcoin exchanges have been hammered with higher-than-usual user support ticket volumes, including Poloniex and Coinbase.
Customers are left wondering if, and when they will have access to their funds. We have asked Bittrex these questions, and if we receive a response, will follow up with our readers.
Written by CoinTelegrpah
Terminally-ill Man Borrows over $300,000 to Invest in Bitcoin, is a Millionaire Now
Back in May, CCN covered the story of a redditor that went by “gingerbreadfutters.” The redditor published a thread in which he claimed to have been watching bitcoin price trends for a while and, being a risk taker, decided to put it all-in on bitcoin. According to him, he took an equity loan on his house for $325,239, which allowed him to purchase 191.118 bitcoin.
At the time, the redditor stated he had a terminal disease, and added that if bitcoin were to reach the $10,000 mark he would move to the West Coast to “get away from all the angry people” that live where he resided.
Various redditors criticized the move, while others wished him luck. When the redditor bought his bitcoins, one coin was worth $1,700 as the cryptocurrency had just hit a new all-time high. Now, as bitcoin soars past $5,700 we decided to take a look at the numbers and see how much gingerbreadfutters has, assuming he didn’t sell any of his coins, and that nothing happened in the meantime.
At press time, one bitcoin is worth $5,736 according to data from CoinMarketCap, which means he now has about $1,096,258.58 worth of bitcoin. The cryptocurrency’s value has been surging, partly thanks to its growing acceptance, partly due to rising global demand, and partly due to SegWit2x hard fork in November.
The Chicago Board of Exchange (CBOE), one of the largest exchange groups in the world, announced a partnership with Gemini, the cryptocurrency exchange owned by the Winklevoss twins. The partnership allows CBOE to use Gemini trading data to power bitcoin derivatives and indices, but still needs to be approved by the Commodity Futures Trading Commission (CFTC).
Bitcoin’s market cap recently went over the $93.8 billion mark, and the cryptocurrency ecosystem’s market cap is now at $174 billion. Billionaire Wall Street mogul Mike Novogratz recently stated that he believes one bitcoin might soon be worth $10,000. If so, gingerbreadfutters will nearly have $2 million worth of the cryptocurrency– more than enough to move to the West Coast.
Bitcoin’s new all-time high was, as expected, met with a lot of criticism from those who believe they’re warning others of impending doom, such as financial analyst Gary Shilling, who called bitcoin a “black box.”
As covered by CCN, as mainstream acceptance of bitcoin grows, and as public figures keep pointing their fingers at it, the price increase should continue, as it is, after all, enjoying free publicity. As bitcoin closes in on the $6,000 mark, its becoming bigger than investment banking giant Goldman Sachs.
Similar bitcoin investments have been done in the past, as previously stated by redditor jhansen858:
“Some guy did that like 2 or 3 years ago when it was at like 500 and people told him he was an idiot. You will be fine as long as you don’t lose your nerve”
Gingerbreadfutters’ account has been deleted, presumably due to unwanted attention, as once someone who has a lot of money puts that information out there, bad actors might try to get a piece. If he did hold on to his coins, his bold investment has certainly paid off.
Featured image from Shutterstock.