Top Crypto News – 06/03/2018

Korean Government Officials De Facto Banned from Holding and Trading Crypto


Public Officials De Facto Banned from Crypto

South Korea has reportedly “issued a ban on virtual currency holdings and transactions to all government officials,” Maeil Business Newspaper reported.

According to the document entitled “Virtual currency holdings and transaction-related information for civil servants,” the publication elaborated:

The personnel department requested that they [civil servants] refrain from holding and trading virtual currency even if there is no job relevance…This is the first time the government has formulated a virtual currency ban for all public officials.

Disciplinary Actions Encouraged but Not Defined

Korean Government Officials De Facto Banned from Holding and Trading CryptoThe publication quoted the personnel affairs department explaining that if employees trade digital currencies for their personal benefit, they “are in violation of the prohibition of forbearance obligations under the civil servants’ law,” especially if trading is done during work hours. “Even if there is no job relevance,” the officials “could be subject to discipline,” the news outlet conveyed and quoted a high-ranking official explaining:

The disciplinary issue is not a quantitative cut, but a problem of interpretation of the law. Each ministry should judge the possibility of discipline.

Additional Efforts

The Korean Financial Services Commission (FSC), the Fair Trade Commission, and other related departments have already warned their employees “to refrain from investing in virtual currency,” the news outlet added. Furthermore, the head of the Office of Policy Coordinator, Hong Nam, told all public officials to do the same in January.

Korean Government Officials De Facto Banned from Holding and Trading Crypto
The Blue House.

Last month, the Korean Anti-Corruption & Civil Rights Commission issued the “Code of Conduct Guide to Cryptocurrency” to all government departments and public agencies.

This document adds cryptocurrency to Article 12 of the Civil Servant Code of Conduct, prohibiting public officials from using “the information learned during their duties to assist in trading or investing” in cryptocurrency. In addition, the FSS, which is an independent agency, said that it will review its own code of conduct.

Earlier this year, a bill was introduced to require public officials to declare their cryptocurrency investments. It followed accusations that some government employees were involved in insider trading using undisclosed knowledge of future regulations as well as market manipulation.

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US City Mulls 18-Month Moratorium on Bitcoin Mining


A city in the U.S. state of New York could put an 18-month halt on new bitcoin mining operations in the area amid concerns from local officials.

Plattsburgh, according to reports, is weighing a proposed law that would impose a “moratorium on commercial mining operations” until city officials can consider “zoning and land use laws and municipal lightning department regulations.” It was spurred by concerns over excessive power use in the area, drawn from Plattsburgh’s access to hydroelectrical resources.

The proposed law was advanced by Mayor Colin Read, who told the Watertown Daily Times that the growth of crypto mining in Plattsburgh “has increased our power usage and put us over our threshold, and it is affecting our ratepayers.”

According to the text of the measure – which will be the subject of a public hearing on March 15 – the moratorium would provide a degree of breathing space around discussions “before commercial cryptocurrency mining operations [result] in irreversible change to the character and direction of the City.”

Speaking to WCAX, a local bitcoin miner said he understood the rationale of wanting to protect local constituents. But that said, David Bowman of Plattsburgh BTC added that he doesn’t think a full moratorium is necessary.

“I think it’s not a great idea to just completely ban the whole thing – it’s just too new,” he told the news outlet.

The conflict among local officials, bitcoin miners and city ratepayers has played out elsewhere in the U.S., including in Washington State’s Chelan County, which saw its own moratorium on high-rate customers – miners among them – amid a similar dispute in 2016.

Miners there ultimately saw their rates go up, though the region itself has attracted a number of mines given the hydro-power and relatively low cost of operation.

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Brazil Regulators Move to Block Bitcoin Mining Investments


Brazil’s Securities and Exchange Commission (CVM) has moved to suspend the offer of securities related to a local bitcoin mining operation.

In a February 28 statement, the securities regulator declared that the offering for HashBrasil being pitched to investors was not authorized, identifying how the solicitations were playing out across social media channels, including Facebook and Twitter.

“The [Authority] has identified that the company and the individual mentioned above are publicly offering…an investment opportunity related to quotas in [a] bitcoin mining investment group (‘HashBrasil’), using appeal to the public for the conclusion of contracts that may be included in the legal concept of security,” the agency wrote, according to a rough translation of the statement.

The agency also threatened to fine the operators of Hash Brasil R$5,000 per day – worth roughly $1,500 – if they failed to comply with the suspension.

Signs indicate that the warning has all but scuttled the projected. In a post on Facebook from March 1 – the day after the CVM’s initial statement – the team behind Hash Brasil indicated that they had temporarily ceased their activities in light of the posting.

“We will be informing the measures that will be taken by us to defend and preserve the interests of our customers, always in a regular and legal way,” the statement read.

Regulators in Brasil have struck a largely dismissive tone on cryptocurrencies in the past, including critical comments from the country’s central bank. Last October, for example, central bank chief Ilan Goldfajn said that he believes bitcoin is a pyramid scheme.

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Patent Data Reveals the Banking Sector’s Strange Relationship with Bitcoin


Banks Can’t Get Enough of Blockchain

Bankers, together with the rest of the traditional investment world, missed the boat with bitcoin. Save for a few notable exceptions, they didn’t believe the internet funny money peddled by anarchists and cypherpunks would catch on. At first, they were right. But then, following a few false starts, it did. Big time. Now, the banking sector and Wall Street at large can’t get enough of bitcoin, whether it’s launching futures trading desks, acquiring exchanges (such as the Goldman Sachs-affiliated Circle takeover of Poloniex), or even launching their own blockchains.

Financial Companies Have Filed 150 Cryptocurrency Patents

As reported two weeks ago, banks are among the most prolific filers of cryptocurrency patents, with Bank of America leading the charge. This suggests a couple of things. Firstly, that major banks quietly admire bitcoin and the blockchain that powers it. And secondly that they may have dropped the ball with bitcoin, but are determined to make up for lost time. Their ethos now seems to be “If you can’t beat them, join them”. Of course, just because Bank of America is merrily filing cryptocurrency patents doesn’t mean it’s about to launch its own $BOA coin.

Bitcoin Patent Report has compiled a list of companies within the banking sector that have been prolific on the cryptocurrency front. Aside from Bank of America, which heads the list, there are some other intriguing entrants that make the top 10. All are multinationals; Toronto-Dominion Bank has 85,000 employees for example, and Fidelity another 45,000. These are the sort of institutions with the means to assign a project team to blockchain and throw some money at it “just in case”. Should they succeed in creating the next cutting-edge consensus algorithm, or devise a blockchain with insanely high throughput, the bank – thanks to the patent applied – will profit. And if nothing comes of the venture, well, it’s a drop in the bucket to them.

Patent Data Reveals the Banking Sector’s Strange Relationship with Bitcoin
The top 10 banks to have filed cryptocurrency patents.

The Actual Number of Banking Patents Is Higher Still

While official figures show around 150 cryptocurrency patents to have been filed by major financial institutions, the actual figure is likely to be two or three times higher. Patent applications are generally not published until 18 months from when they were first filed, and much of the explosive growth and investment in all things crypto has occurred within this period. In reality, the number of patents filed by the banking industry could be closer to 500. Paypal, which can be loosely considered a like-for-like competitor with cryptocurrency, is a notable entry on the list, with 11 patents to its name. It recently filed a patent for an “expedited cryptocurrency transaction system”.

Patent Data Reveals the Banking Sector’s Strange Relationship with BitcoinThe internet of the future is one in which everything is online and interconnected. The wall separating traditional finance and cryptocurrency has already gone from stout to paper-thin as innovators from both sides have hopped the divide, blurring the lines between what’s crypto and what’s fiat. Throw in the rise of of the Internet of Things, whose devices may end up on quasi-blockchains that share certain characteristics with bitcoin, and there’s a flurry of innovation. It’s no surprise that banks are trying to position themselves at the heart of it, not least to future proof themselves.

In recent weeks, Goldman Sachs, Bank of America, and JP Morgan have all cited the threat posed by cryptocurrencies in their annual filings to the SEC. While bitcoin isn’t about to replace the SWIFT banking system anytime soon, cryptocurrencies present a new economic system. Given the disruptive potential of blockchain technology and the cryptocurrencies associated with it, it’s no wonder that major banks are quietly securing a stake. Patent data is just one of several indicators that show the giants of the financial system are taking cryptocurrency very seriously.

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