Crypto Weekly (22/1): Malaysia develops harsh regulations along with positive attitudes toward crypto

Remitano gladly brings you some of the most highlighted news from the last week.


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Malaysia develops harsh regulations along with positive attitudes toward crypto: 15 new regulations concerning the crypto sector came into effect in Malaysia. After the implementation of these new regulations, the country’s crypto sector may have to go through tough legalization processes. However, strict regulations are expected to attract more investors as it will lead to improved security.

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Ethereum team lead: Constantinople hard fork to activate in late February


Core developers of Ethereum (ETH) have postponed the activation of the Constantinople hard fork until late February. Peter Szilagyi, team lead at Ethereum, explains that the activation will take place at block number 7,280.000, which is expected to be mined on Feb. 27, 2019.

The upgrade will reportedly be implemented as “a single fork on mainnet and a post-Constantinople-fixup fork on the testnets to get them back in line feature wise with the main network.”

The new deadline comes in the wake of an unexpected delay over a recently discovered security vulnerability allowing a reentrancy attack, which has been detected in Constantinople’s code by smart contract audit firm ChainSecurity.

The upcoming Constantinople hard fork is an upgrade to the ETH network, which encloses separate Ethereum Improvement Proposals (EIPs) in order to soften the transition from the current proof-of-work (PoW) to the more energy efficient proof-of-stake (PoS) consensus algorithm.

Once implemented, the improvements would purportedly fundamentally change the Ethereum blockchain, preventing any backwards compatibility — meaning that network nodes must either update synchronically with the entire system or carry on running as a separate blockchain entity.

OECD calls for ‘delicate balance’ in global ICO regulation

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The Organisation for Economic Cooperation and Development (OECD) has stated that global regulators should work together to facilitate the development of initial coin offerings (ICOs).

The document calls for regulatory clarity and a supervisory framework for ICOs, defining such moves as “a stepping stone to their safer use for financing purposes.” The report also underlines the importance of standardized disclosure requirements, enhanced investor protection Anti-Money Laundering (AML) and Counter Terrorist Financing (CFT) measures.

A separate document dedicated to the highlights of the report states:

“A delicate balance will need to be achieved in the development or application of regulatory and supervisory requirements which do not deprive the ICO mechanism of its speed and cost benefits, particularly when it comes to smaller size offerings.”

The same document also states that given the global nature of ICOs, there is a need for international cooperation to prevent regulatory arbitrage. According to the text, such collaboration will “allow ICOs to deliver their potential for the financing of blockchain-based SMEs [small and medium enterprises], while adequately protecting investors.”

The OECD is an organization that describes itself as an “economic counterpart to NATO,” with a mission to “help governments achieve sustainable economic growth and employment and rising standards of living.” Last year, the OECD then announced the “first major international conference” dedicated to blockchain and the organization has been cautiously enthusiastic about blockchain technology.

South African gov’t has no plans to ban crypto in recent consultation paper

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The South African Reserve Bank (SARB) has issued a consultation paper assessing the benefits and risks of cryptocurrencies. The paper, developed jointly with a number of the country’s government agencies, was announced in an official statement published Jan. 16.

In the document, titled “Consultation Paper on Policy Proposals for Crypto Assets,” South Africa’s government clarifies that it does not intend to ban either cryptocurrency trading, or crypto payments at the moment.

The consultation paper further proposes that all crypto asset trading platforms, as well as custodial services, payment service providers, and crypto ATMs, should be required to register with the the Intergovernmental FinTech Working Group (IFWG). IFWG was recently established by the South African government with the goal of fostering fintech innovation while maintaining uninterrupted functioning of the financial markets.

According to the paper, crypto-related businesses will have to comply with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) requirements of the Financial Intelligence Centre Act.

The consultation paper has been jointly developed by several major state agencies, such as the Financial Intelligence Centre (FIC), Financial Sector Conduct Authority (FSCA), National Treasury (NT), South African Revenue Service (SARS), and the SARB, the central bank of South Africa.

According to the agencies’ joint statement announcing the paper, the document will be open to public feedback until Feb. 15, 2019.

Malaysian cryptocurrency regulation to classify digital assets, tokens as securities

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The Malaysian finance minister, Lim Guan Eng, reportedly said that the Capital Markets and Services Order 2019 came into effect on Jan. 15. The new regulation classifies digital currencies, tokens and crypto-assets as securities, placing them under the Securities Commission’s authority.

Any person operating unauthorized initial coin offerings (ICOs) or digital asset exchanges in Malaysia will be reportedly facing a 10-year jail sentence and a 10 million ($2.4 million) ringgit fine.

Eng noted the positive outlook of the Ministry of Finance on the cryptocurrency industry, stating: “The Ministry of Finance views digital assets, as well as its underlying blockchain technologies, as having the potential to bring about innovation in both old and new industries.” He noted that the ministry believes digital assets offer both an alternative fundraising method and a new asset class for investors.

Additionally, the Malaysian government was still undecided whether to legalize cryptocurrencies or not. Still, it has reportedly been clear since November of last year that Malaysia will enact regulations for cryptocurrency and ICOs in Q1 2019.

Thai stock exchange plans to launch a token trading platform

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The Stock Exchange of Thailand (SET) is looking to capitalize on investor interest in cryptos by offering a new digital assets exchange.

According to a report from Bangkok Post on Thursday, the SET is planning to apply for a license from the country’s Ministry of Finance to operate the platform.

The move comes as the exchange looks to capture the growing investor demand for cryptos. The stock exchange will work to have a sound technical system in place for the offering, as well as a digital wallet for token storage, with the aim being to launch this year.

Pattera, who is also chairwoman of the Association of Securities Companies, added that securities company members of the SET already plan to apply to become brokers and dealers to trade on the new exchange.

While the ministry grants the licenses, the country’s Securities and Exchange Commission actually regulates crypto businesses in the country under the “Emergency Decree on Digital Asset Businesses B.E. 2561 (2018).

Thailand first announced its crypto licensing rules in July of last year, with 20 crypto firms applying for the license within a month. The rules require projects that intend to offer crypto services to gain approval from the SEC before starting operations.

IBM-backed blockchain platform to improve supply chain management in mining industry

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Major tech firm IBM has partnered with MineHub Technologies to deliver a blockchain solution that will improve supply chain management in the mining and metals industry.

MineHub is a company that uses technologies including blockchain to develop cost-saving applications for the metals and mining industry. The newly announced mining supply chain platform will be built on the cloud-based IBM Blockchain Platform powered by the Linux Foundation’s Hyperledger Fabric.

The solution targets the inefficiencies of the global mining and metal market — which is estimated at $1.8 trillion. These include excessive paperwork, manual data processing, and lack of transparency between supply chain parties. It will reportedly also be designed to improve logistics and financing, as well as reduce costs.

The companies envision the digitization of the supply chain via the creation of a ledger shared between the parties that will provide an aggregated, real-time view of transactions and data flowing through the supply chain, and will only be open to permissioned participants.

It will “increase the level of automation, reduce reliance on intermediaries and increase the speed at which goods are transferred from miners to end buyers,” the release further suggests.

The development of the platform will also be supported by such companies as gold producer Goldcorp Inc., ING Bank, mineral exploration company Kutcho Copper Corp., trading firm Ocean Partners USA Inc., and precious metals streaming company Wheaton Precious Metals Corp., representing a consortium formed by MineHub.

The first use case will reportedly be built on the MineHub platform, managing concentrate from Goldcorp’s Penasquito Mine located in Mexico on its way through the market. When ore is mined, the mining company will upload the relevant data, including sustainability and ethical practices.

Collected by Remitano