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Russia’s regulatory sandbox and the implementation of blockchain tech

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The main challenge companies face when testing and implementing innovative technologies is the need to amend existing legislation. Developing and testing new products based on distributed ledger technology requires special conditions that are often inconsistent with existing regulations.

The solution to this problem would be the introduction of a special “regulatory sandbox” regime. It means the creation of an ecosystem within which companies and state-owned enterprises can test their developments without legislative obstacles.

Federal law No. 258, “On Experimental Legal Regimes in the Field of Digital Innovation in the Russian Federation,” came into effect on Jan. 28. It allows new software to be tested to ensure that it is effective and useful, and then, on the basis of the results, to decide whether to change the current legislation to accommodate the innovation. Creating a “sandbox” in a certain limited area — e.g., within one city — will allow a certain number of companies to test their digital innovation products.

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In addition to DLT, the list includes artificial intelligence, big data, robotics, quantum technologies and others. In doing so, companies will be able to comply with current legislation, with a number of exemptions necessary for them to fully test the new software. In the long term, sandboxes will be an impetus for the creation of new jobs, the emergence of new organizations, and the increased competitiveness of Russian companies in the international market.

The introduction of an experimental legal regime, or ELR, will be possible in the following areas: financial activity, trade, construction, provision of state and municipal services and implementation of state control (supervision) and municipal control, medicine, transport, agriculture, industry, etc. The term of the sandbox is limited to three years and may be extended for another year by decision of the Russian government. It also accepts applications from organizations proposing the introduction of a special legal regime.

Russian sandbox prospects

Experts acknowledge that the creation of regulatory sandboxes will require an action plan coordinated with the regulator, and ELR participants will have to meet certain requirements. But the new federal law may result in a real opportunity for business representatives to work with innovations and new developments in the digital sphere under a special legal regime. The authorities, in turn, will assess the results and effectiveness of the experiment, deciding on the extension of the sandbox and the need for changes in legislation.

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One of the areas where testing in the sandbox can bring notable positive results is the housing and utilities sector. The use of DLT will reduce paperwork, simplify the payment procedure and make billing more transparent. Users will be able to interact directly with suppliers of resources and will know exactly for which services their money has been spent.

According to data provided by the Russian Ministry of Economic Development, eight projects have already been selected in Russia to be included in the regulatory sandboxes. Among them are the initiatives of Mobile TeleSystems, one of the major Russian mobile operators, which include a “smart hotel” without staff, the possibility of biometric identification when signing contracts for services without a physical presence (by phone), driverless transport and telemedicine. Or it will be able to use CryptoVeche, a blockchain-based voting system, to hold public hearings remotely in St. Petersburg. Then public hearings of local authorities can be moved online, which in turn will make this process more accessible and transparent for residents. Other projects included the nonprofit Big Data Association, the Tomsk Region Administration and the Russian Foundation for Advanced Research Projects.

ELR is a mechanism for “testing,” and the keyword here is: “experimental.” This is why the projects are not large, and the spheres are not the most massive, but they are prospective.

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Positive experience

In Russia, the central bank was one of the first to evaluate the prospects of creating sandboxes. In 2020, the first project — a blockchain platform for the issuance and circulation of digital rights — completed its pilot on the basis of the regulatory sandbox it created. The central bank provides opportunities for piloting innovative products in the financial sector; any interested organization can apply to participate in the sandbox.

Regulatory sandboxes are a tool that has been actively used in other countries for a while now. The first sandbox appeared in 2016 in the United Kingdom. It received more than 140 applications, of which 50 were approved by the regulator, and 41 companies successfully completed testing in 2017. However, statistics showed that the majority of applications were in the field of DLT and were presumably used to reduce the costs of existing financial products rather than to create new ones.

Sandboxes have been launched in other countries, and the United States, Australia, Singapore and Thailand have joined the list. As of November 2020, the number of countries is about 50, but some of them have significant differences in their approach to the creation of sandboxes. For example, the Singapore model is quite similar to the British model but involves stricter oversight by the regulator, the Monetary Authority of Singapore. In Australia, access to the sandbox is granted, among other things, to those companies that do not have a license to carry out a certain type of activity in which they plan to test innovations.

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Massive global experience with regulatory sandboxes shows that testing new products under experimental legal regimes helps attract investment, as investors are more willing to invest in companies participating in sandboxes. It also allows the latter to set up internal processes and determine pricing and business models.

Other legislative initiatives for the digital economy

In addition to the enactment of federal law No. 258, a number of other bills regulating relationships in the field of digital assets and innovation have appeared in Russian legislation over the past few years. Thus, the federal law “On Amendments to Parts One, Two, and Article 1124 of Part Three of the Civil Code of the Russian Federation” introduced the concept of digital law and described the nature of transactions conducted through smart contracts and signed using electronic digital signatures. It excluded the concept of “digital money” and equated digital rights with property rights, which leads to the need for changes in tax legislation.

The federal law “On Digital Financial Assets, Digital Currency and Amendments to Certain Legislative Acts of the Russian Federation” consolidated the concepts of digital financial assets, or DFA, and digital currency and defined the rules for attracting investments by organizations and individual entrepreneurs by issuing digital rights. The federal law regulates the issuance, accounting and circulation of DFA, making it transparent and clear to all participants.

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Plugin (PLI) Accelerates In Price Following Its Listing on Globiance And Bitrue

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Blockchain technology has the capacity to transform businesses more securely and efficiently. Moreover, the crypto industry is now submerged with billions of users which is achieved only because of blockchain technology. Besides, users prefer decentralized finance rather than the concept of centralization as DeFi does not require central financial intermediaries.

Consequently, the decentralized oracle platform Plugin offers a cost-effective solution to any smart contract that runs on the XinFin ecosystem. The Plugin provides a bridge for the smart contract with a real-time world, besides it supports different use cases. Significantly, the Plugin aims to solve high gas fees and to provide a stable system to its users in the crypto world. 

Listed On Bitrue And Globiance

Bitrue announced its listing of Plugin PLI on its platform after passing the BTRVote. Following its listing on Bitrue, the price value of the Plugin surged over 670% within 24-hours from the time of listing.

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Additionally, the next launch of PLI was on the Globiance exchange platform which was delayed from October 16 to October 20. The CEO of Globiance exchange, Oliver La Rosa, posted a tweet on October 13 regarding the listing of PLI on its platform. Following that, the post mentions that the exchange represents the “XDC Rapid Listing Initiative”.

In this listing partnership celebration, it is recorded that more than 90% of the “XDC Rapid Listing initiative” was already sold out. More so, the available trading pairs on Globiance are XDC, USDG, and GBEX. In addition, La Rosa insists traders buy their native tokens GBEX before October 30 as it is still on public sale. 

However, after the listing announcement from Bitrue, the price value of PLI jumped to its ATH at $2.50. Now, users expect that it may attain a new ATH after its listing on Globiance. At the time of writing, PLI was trading at $0.705 which is 6% down in the past 24-hours with a trading volume of $240,059.

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Mexican Company Launches Blockchain-Powered COVID-19 Test Certificates

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Medical services company MDS Mexico is using blockchain technology to prevent the forgery of fake COVID-19 tests in the Latin American country.

The COVID-19 crisis panic seems to be dissipating after almost two years; however, governments around the world are still searching for tools to control its expansion and allow their citizens to return to normal life.

A Mexican company is using blockchain technology to improve the reliability of COVID-19 diagnostic tests, using cryptography and the real-time auditability of the blockchain as a way to prevent counterfeiting and fraud.

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Fighting COVID-19 With Decentralized Technology

According to a report by Hispanic news outlet iProUP, medical services company MDS launched a rapid test application and interpretation service, as well as home PCR sample collection specifically designed to react to COVID-19. The results are delivered physically and digitally 24 hours later and will be certified with blockchain technology to guarantee in real-time the application of the test and the authenticity of the results.

Representation of a Digital Certificate protected with blockchain tecnhology. Image: MDS
Representation of a Digital Certificate protected with blockchain tecnhology. Image: MDS

As explained on its website, MDS produces a unique hash associated with the results of each test and generates a QR code that links to a digital certificate with personal information of the person who took the test, the results obtained, the physician responsible for administering the test and the date the test was taken.

To avoid the falsification of negative results, we began to certify the SARS-CoV-2 detection tests with blockchain technology and cryptographic signature, which protects the information in a unique, immutable, and unalterable QR Code that can be verified worldwide.

Mexico: Pro-Blockchain, Anti-Bitcoin

Mexico is one of the Latin American countries where the application of blockchain technology has known use cases that transcend the monetary.

As an example, the local Congress of Quintana Roo in Cancun, Mexico, experimented with the implementation of the Avalanche blockchain to digitize the records of the local public administration. The project was successfully implemented in March at the cost of 600,000 Mexican pesos (USD 290,000).

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However, the week the congress decided not to renew the contract on the grounds that the use of blockchain was “overqualified” for the needs of the Legislative Branch, i.e., the costs outweighed the benefits.

Similarly, the National Chamber of Commerce (CANACO) of Querétaro, Mexico, had already announced the availability of a digital vaccination passport issued in alliance with the blockchain company Xertify, which would allow locals to digitize their physical certificates issued by the authorities after a payment of about 400 pesos.

However, when it comes to finance, the use of cryptocurrencies – especially Bitcoin – does not enjoy the same support from the authorities.

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The country’s Central Bank has already stopped an initiative by the president of Banco Azteca to offer Bitcoin compatibility, and acted against 12 cryptocurrency exchanges for being linked to criminal cartels. Even last week, the country’s president even ruled out the use of Bitcoin as legal tender.

So, at least for now, in Mexico, the financial revolution and the blockchain revolution will walk two very distant paths.

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Benefits of Blockchain Technology to Businesses

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The year 2008 saw the introduction of bitcoin (decentralized electronic cash system). Since then, many more cryptocurrencies have been introduced to the market and turned doubters into believers. Those who had misgivings have slowly and surely embraced it as the future and alternative to fiat currency. Indeed, it is correct to say that the blockchain technology has greatly evolved and with it, a whole lot of benefits across industries (from finance to medicine).

Many businesses across different sectors are now looking for ways in which they can integrate the blockchain technology into their infrastructure. Without a doubt, it is correct to say that the future is here. We are firmly in the era of the blockchain technology and cryptocurrencies are slowly providing a paradigm shift to the way we view fiat currency and even transact. That said, how do businesses benefit from the blockchain technology?

If you thought that solutions brought about by blockchain are confined to the exchange of cryptocurrencies, you couldn’t be more wrong. Through its decentralized nature, businesses across various sectors and industries stand to benefit in the following ways.

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1. Increased And Greater Efficiency

As a decentralized digital currency, blockchain has fully done away with the need for middlemen especially when making payments or engaging in transactions of whatever nature be it in the real estate or any other lucrative industry. When you compare blockchain to conventional financial services, there is no denying that it’s faster, instantaneous, and its peer to peer decentralized nature made transactions to be more efficient.

2. Transparency

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If there is something that puts blockchain on a different level, it has to do with the fact that transaction ledgers for public addresses is accessible for viewing by pretty much anyone. This level of transparency and an unprecedented layer of accountability is one of the reasons why blockchain has become very popular with businesses. This greater transparency has in essence held businesses to higher standards and essentially made them to be more open and ascribe to higher levels of integrity in so far as their dealings with customers is concerned.

Source: Pixabay

3. Traceability

The beautiful thing about the blockchain ledger is that every single time there is an exchange of goods or a transaction recorded in the blockchain, there is an audit trail. This audit trail is instrumental in providing an irrefutable proof of ownership or simply to let a person know where goods came from. This improved traceability provided by blockchain is instrumental especially in industries or sectors where verifying authenticity of transactions or traded assets improves efficiency and customer confidence.

4. Security

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Where security is concerned, blockchain is way ahead of other record keeping systems. Why is this the case? Well, every new transaction is not only linked to a previous transaction but also encrypted. There are zero chances of a transaction being altered and this gives individuals a sense of security and trust. The decentralized nature of blockchain also ensures that individuals can transact without having to answer to central governments.

To sum it up, if you are a business in whatever sector, you cannot afford to wish away the key benefits of blockchain outlined in this post. If you are keen on being transparent, efficient, and keen on winning the trust of your customers through secure transactions, blockchain is the way to go. The future that was blockchain is now here with us.

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