China’s internet regulator, the Cyberspace Administration of China(CAC) in a detailed document outlined a final draft of regulations concerning cryptocurrency and blockchain companies. The rules will come into effect starting February 19, and provide a set of guidelines that blockchain companies are required to follow.
According to the CAC’s director:The Regulations on the Management of Blockchain Information Services has been reviewed and approved by the Office of the Internet Information Office of the State Council and is hereby
promulgated and will be implemented as of February 15, 2019.
According to the final draft, the State Internet Information Office is responsible for blockchain regulations at a national level, apart from state or province-specific authorities who oversee the regulations in respective states.
China previously cracked down on ICO’s by banning them in 2017, along with banning domestic cryptocurrency exchanges, dealing a huge blow to local exchanges such as BTCC.
Some of the fleeting changes brought by the regulations include companies to record and log user activity, along with maintaining backups for at least six months. The data recorded should be handed over to the authorities when requested.
Moreover, the rules require companies to verify users based on their national ID and phone number
Registering Companies With Authorities
Apart from this, blockchain service providers are required to register with authorities within ten days of providing the service. This process is done through a ‘Blockchain Information Service Management System’. A pivot or a change made by the service provider requires going through the procedure once again within five days.
Once the filing process is complete, authorities will assess and enter the company into records within twenty days, reverting with a filing number. Companies are required to publically display their record number(eg: website, application mobile app)
Companies that develop new products are required to report the same to authorities to undergo “safety assessment in accordance with relevant regulations”.
Companies are also required to implement necessary changes in order to issue warnings to users, restrict and close accounts. Users who violate administrative laws and regulations should be reported to relevant authorities.
The extensive document, encompassing twenty-four articles explicitly states that users are not supposed to use blockchain centric services to engage in illegal activities.
Blockchain information service providers and users shall not use blockchain information services to engage in activities prohibited by laws and administrative regulations that endanger national security, disrupt social order, and infringe on the legitimate rights and interests of others
Companies are also required to set up a robust system for managing complaints and address them in a timely manner.
Periodic Inspections and Robust Security
Authorities under the central government will be conducting periodic inspections. Blockchain companies are required to maintain correspondence with authorities through the blockchain service portal and provide relevant information as requested.
The rules also dictate the requirement of strong security standards. This is perhaps because of the large amount of money lost owing to exchanges being hacked.
Any company found to be in breach of the stipulated rules will be required to amend their offering, and their service will be suspended until the issue is rectified. The rules also outline fines ranging from 5,000 yuan to 30,000 yuan. Apart from this, criminal prosecution is also stated as a possibility wherever necessary.
Given China’s stance on censorship, it is not a surprise that the same applies within the blockchain niche. Blockchain service providers are required to be equipped with necessary procedures to tackle content and other information that is unintended for the public. Apart from this, providers are required to formulate a set of rules and conventions, convey them to users and make sure they are followed.
For information content prohibited by laws and administrative regulations, they shall have immediate and emergency response capabilities for their release, recording, storage and dissemination. It should conform to the relevant national standards.
Overall, the regulations seem fairly stringent. It is yet to be seen how they affect companies within China. Given the crackdown in 2017, these regulations are not a surprise. However, they might have an impact on neighboring India, which is about to announce cryptocurrency regulations soon.
Waves Founder Sells Blockchain Startup to Russian Financial Consultant
A startup founded by the Waves platform team, Vostok, has been sold to one of the project’s earliest investors.
According to a report by Gazeta.ru, Waves CEO Alexander Ivanov “sold his stake” in the data management and smart city oriented project to Mark Garber of the financial consultancy GHP Group.
The Waves platform has developed blockchain solutions through partnering with some of Russia’s largest private and state-owned enterprises, as well as global firms, for institutional, industrial, and military use.
Vostok, in particular, aligned with the Russian state-owned conglomerate Rostec in 2018 to securely manage data for the firm’s 700 industrial entities. Additionally, the startup was instrumental in roadmapping the “digital economy” as part of the “Strategic Development Objectives of the Russian Federation up to 2024,” announced by President Vladimir Putin.
Ivanov told Gazeta:
“I would like to focus on the international development of the Waves Platform. The tasks of building a decentralized Internet of the new generation based on the blockchain (the so-called Web3), which we implement in Waves, require my one hundred percent concentration.”
Though details of the deal have not been disclosed, Garber plans to integrate Vostok’s digitalization solutions in GHP’s mining, production, and logistics projects.
Gazeta also reports that Garber holds a stake in the container transporting company Fesco and serves on the board of another trade logistics company, called TransContainer.
Vostok was formed in 2018. Its”Gorod N” project saw a partnership with Nizhny Novgorod region administrators to develop a civic voting and public budgeting solution, which reportedly enables citizens to vote on where tax dollars are spent.
Garber intends to keep the startup’s development team aboard, but will elect a new supervisory board. As part of their initiative to strike larger international deals, Waves will open a Berlin office.
Tether Stablecoin to Launch on 5th Blockchain
The popular and sometimes controversial stablecoin tether (USDT) is to launch on a fifth blockchain.
Announced by the (mostly) U.S. dollar-backed token’s issuer on its website, the news means traders will have a USD stablecoin option on omni, ethereum, tron, EOS and, soon, algorand.
“Extending Tether into the Algorand ecosystem is a fantastic opportunity for us to further contribute to blockchain interoperability and collaboration. … We are very excited about the potential this enables for other projects in the decentralised ecosystem and we eagerly await working closely with many of them in the future,” said Tether CTO Paolo Ardoino.
Tether is widely used by traders to move money in and out of cryptocurrencies like bitcoin without needing to exchange back into dollars with each trade. Crypto exchanges also use the token to transfer funds between each other to avoid having to move lots of bucks through not always cooperative banks.
Despite its widespread use in the crypto markets, the stablecoin has had its issues – including accidentally minting $5 billion USDT during a chain swap process last weekend.
Long a concern to users and regulators, Tether has never released a full accounting audit to prove its coin is backed by USD, as it claimed for years. Its lawyer recently acknowledged that, in fact, USDT was only about 74 percent backed by fiat equivalents as of April 30.
Tether’s relationship with its sister firm, crypto exchange Bitfinex, has also come under the spotlight, with claims the token has been used to prop up the price of bitcoin.
New York’s Attorney General’s office has further alleged that Bitfinex lost $850 million and subsequently used funds from Tether to secretly cover the shortfall, and said that Bitfinex had operated in the state without a license.
40-Strong Blockchain Insurance Group B3i Appoints CEO
Insurance industry blockchain group B3i, which is now building DLT solutions for some 40 member firms, has appointed John Carolin as chief executive officer.
Carolin, who joined B3i as chief financial officer in March 2018, had served as interim CEO since March of this year.
B3i began life back in October 2016 as a blockchain consortium and later became an independent company owned by 17 insurance and reinsurance industry big hitters like Allianz, Munich Re, Swiss Re, Tokio Marine, XL Catlin and Zurich.
The company added $16 million to its coffers back in March 2019, after suggestions it was trying to raise as much as $200 million, according to some reports.
Last month B3i, which aims to use distributed ledgers to streamline back-office processes and claims handling, held a hackathon to let industry members test its platform.
Speaking about the B3i hackathon, Carolin said:
“Our team of subject matter experts is highly motivated, especially following the very positive feedback received last month at our Hackathon to test the initial product.”
Last year, B3i decided to switch from Hyperledger Fabric to R3’s Corda platform. The move was followed soon after by another blockchain insurance consortium, RiskBlock, also moving to Corda.
“I look forward to leading the B3i team as we execute on a bold vision to enable better insurance through frictionless risk transfer,” Carolin added.