BitLicense Feedback, Digital Yuan Trial and How US Bills Could Threaten Privacy5 min read
China will trial its digital yuan with a mega food retailer, U.S. bills are seriously threatening online privacy and an a16z alum is launching a venture firm focused on distributed tech. Here’s the story:
China wants to trial its digital yuan with online food seller Meituan-Dianping as well as another two Tencent-backed companies. The Beijing-based company has held talks with the research wing at the People’s Bank of China (PBoC) over trialling the digital yuan on its platform, according to sources speaking to Bloomberg. The exact details of the collaboration are not yet known. Listed in Hong Kong, Meituan-Dianping’s 400 million active users make it one of the largest food delivery platforms in the world.
Opposition politicians and dissidents in Russia are using bitcoin to fund their activities against President Vladimir Putin. “Our opponents understand they can’t cut us off from sources of funding because [if they try] at least a part of the donations will go into crypto,” Leonid Volkov, who manages political operations for Alexei Navalny, Putin’s most prominent opponent, said. “Last time our accounts got frozen, we saw an uptick in bitcoin donations.” The candidate has raised more than 600 bitcoin since 2016, and other non-governmental organizations and advocacy groups have followed suit.
Related: First Mover: UK Economy Setback Renews Questions of Bitcoin’s Resilience
Industry reactions made to the BitLicense have been overwhelmingly positive, said Linda Lacewell, superintendent of the New York Department of Financial Services. Lacewell, who took office last year, has created a conditional license allowing companies to partner with existing licensed entities to legally operate in New York, enabled self-certification of virtual currencies and has issued guidance on coin listings for licensed platforms.
Multiple bills that threaten encryption are moving through the U.S. Senate and could pose a threat to technology that protects users’ privacy. The Lawful Access to Encrypted Data (LAED) Act and the Eliminating Abusive and Rampant Neglect of Interactive Technologies (“EARN IT”) Act take aim at privacy tech and cryptography by mandating “backdoors” be installed for government watchdogs. “There’s no such thing as a backdoor just for good guys,” said Daisy Soderberg-Rivkin, a fellow focusing on children and technology at the R Street Institute, a policy think tank in Washington, D.C. “This opens up users’ information to a whole mess of bad actors.”
An Andreessen Horowitz (a16z) alum is launching a venture firm focused on building a crypto-powered “ownership economy.” Jesse Walden, who focused on blockchain investments at a16z, announced his Variant Fund in a blog post published Tuesday, which is backed by a16z’s Chris Dixon and Marc Andreessen, Union Square Ventures and Compound’s Robert Leshner. Separately, Evertas, an insurance provider focused on the cryptocurrency space, has raised $2.8 million in a seed round led by Morgan Creek.
A leaked FBI bulletin makes reference to OneCoin, in all but name, when detailing the money-laundering risks of private investment funds.
Related: Blockchain Bites: Chainlink’s Interest, Ethereum’s ‘ReGenesis’ and Crypto Taxes
In the bulletin, dated May 1, the FBI argues criminals and foreign adversaries of the U.S. “likely” use hedge funds, private equity and other investment vehicles to circumvent financial institutions’ anti-money laundering (AML) procedures.
OneCoin’s story is told, without naming the firm or its founders, as an example of a “fraudulent cryptocurrency investment scheme.” A known Ponzi scheme, the FBI details how the fraudsters maneuvered through the banking system, without ever disclosing the source of its funds, and was able to transfer stolen funds to “a series of purported private equity funds holding accounts at financial institutions, including those in the Cayman Islands and the Republic of Ireland,” according to the report.
Incidentally, two OneCoin promoters were found dead in Mexico last month.
“While OneCoin was a scam, the veiled references to its crimes in the FBI bulletin are a salient reminder that banks, not cryptocurrencies, were used to launder the ill-gotten gains,” CoinDesk reports.
Bitcoin is still consolidating with no clear direction in sight, but some alternative cryptocurrencies are soaring. The leading cryptocurrency has been trading the narrow range of $9,000–$10,000 for two months. Meanwhile, link, a token used on the decentralized oracle network Chainlink, is up 78% on a month-to-date basis and up 364% for 2020. And Aave’s lend token has increased by over 1200% so far this year, following the launch of mainnet in January.
Bitcoin Smart Contracts
Bitcoin Core contributor Jeremy Rubin has revealed his work on a new smart-contract language for Bitcoin, which he hopes will increase the “financial self-sovereignty” of users. The new language, called Sapio, could enable the building of stateful smart contracts, a type most commonly associated with the Ethereum blockchain. Bitcoin supports several different types of smart contracts, which are generally much more complicated to create than on Ethereum.
Ethereum 2.0 client Prysm is “basically ready” to launch, according to Richard Ma, CEO of Quantstamp, the code’s auditor. This news comes on the heels of last week’s announced push by network developers to launch the proof-of-stake (PoS) version of Ethereum before 2020 closes out. Prysm client’s code was “well-written and documented,” Quantstamp said in a blog post. The firm identified 65 issues relating to the granularity of timestamps, pseudo-random number generation and second preimage attacks on Merkle trees. Ten engineers combed over Prysm’s ETH 2.0 codebase, programmed in the Go language, for two months, Ma said.
J.P. Koning, a CoinDesk columnist and owner of the popular Moneyness blog, looks into the Federal Reserve’s annual “Survey of Consumer Choice” and determines bitcoin has American mindshare, but few users. According to the survey, in 2019, 70.7% of participants said they were familiar with bitcoin, up from 68.7% in 2018. Though out of 3,363 surveyed, effectively 0% had used bitcoin to make payments in the previous 12 months. “Bitcoin has succeeded in grabbing an impressively large chunk of American mindshare. However, common knowledge of bitcoin tends to be of poor quality,” Koning writes.
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