The UK‘s Financial Conduct Authority has proposed a ban on cryptocurrency-related investment products to protect retail investors.
In an announcement released earlier today , the FCA said that cryptocurrency-based derivatives and exchange traded notes (ETNs) are “ill-suited to retail consumers who cannot reliably assess the value and risks.”
“Most consumers cannot reliably value derivatives based on unregulated cryptoassets,” said Christopher Woolard, Executive Director of Strategy & Competition at the FCA.
The FCA added the ban would prohibit the “sale, marketing, and distribution” of “all derivatives,” including “contracts for difference (CFDs), options, futures, and ETNs” that relate to an unregulated transferable cryptoasset, to retail investors.
According to the regulator, consumers need protection because; cryptocurrencies “have no reliable basis for valuation,” are often used to commit cybercrimes, witness “extreme volatility,” and because retail consumers lack adequate understanding of the investment tools.
“Prices are extremely volatile and as we have seen globally, financial crime in cryptoasset markets can lead to sudden and unexpected losses. It is therefore clear to us that these derivatives and exchange traded notes are unsuitable investments for retail consumers,” Wollard added.
Earlier this year, the FCA released the results of survey which showed that most cryptocurrency investors don’t really understand what they’re buying.
Before the potential ban becomes reality, it must go through a consultation process for the next three months. The FCA expects to have an official policy statement and handbook of rules in the first quarter of next year.
If the ban goes through, it’s likely to cause quite a few headaches. Any trading app, or exchange service that offers cryptocurrency-based CFDs would be prevented from selling the product in the country.
CFDs have been deemed high-risk as customers are often allowed to leverage their positions to potentially earn, but also lose, much more than they originally invested.
The FCA estimated that banning crypto-derivatives could have a substantial financial benefit to UK consumers saving them up to £235 million ($295 million).
Indeed, regulating CFDs may protect some investors, but there’s nothing to stop investors from buying into cryptocurrency itself, which is still subject to cybercrime, loss, volatility, and theft.
Earlier this week, the FCA also published a document outlining its latest rules for any CFD – so this crackdown on crypto-derivatives comes as part of a much wider attempt to regulate CFDs and binary options.
Coinbase doubles down on expansion, now available in 103 countries
Cryptocurrency exchange Coinbase has just announced that it now offers trading in over 100 countries, after adding support for a further 50 countries. It’s also doubling down on its USDC stablecoin, making it available in 85 countries.
In an announcement published earlier today , Coinbase revealed that crypto-to-crypto trading is now available in 50 new countries; it’s proprietary stablecoin is also now available in 85 countries (previously only available in the US). This expansion goes for both Coinbase and Coinbase Pro.
This time last year, Coinbase was available in 32 countries; with today’s news, the cryptocurrency exchange is now available in 103 countries. The 50 new countries are now able to access Coinbase as of today are listed below:
“Angola, Armenia, Aruba, Bahamas, Bahrain, Barbados, Benin, Bermuda, Botswana, Brazil, British Virgin Islands, Brunei, Cameroon, Cayman Islands, Costa Rica, Curaçao, Dominican Republic, Ecuador, El Salvador, Ghana, Guatemala, Honduras, Jamaica, Jordan, Kazakhstan, Kenya, Kuwait, Kyrgyzstan, Macau, Maldives, Mauritius, Mongolia, Montenegro, Namibia, Nepal, Nicaragua, Oman, Panama, Paraguay, Rwanda, Serbia, South Africa, Taiwan, Trinidad and Tobago, Tunisia, Turkey, Uganda, Uruguay, Uzbekistan, Zambia.”
Indeed, it certainly seems like Coinbase is intent on taking its cryptocurrency offerings to every corner of the globe. But it’s not all been sunshine and rainbows for the digital asset exchange in the last 12 months.
Earlier this year in April, following the “crypto-winter,” Coinbase fired 30 staff members and closed its Chicago office just one year after it opened.
Coinbase also came under scrutiny from Twitter users after it announced the acquisition of Neutrino, an Italian startup that used blockchain data to trace cryptocurrency transactions. Naturally users thought they were about to get spied on, and the hashtag #deletecoinbase quickly followed.
That said, in December last year, the exchange added a further 30 cryptocurrencies , including EOS, XRP, and a smattering of other shitcoins altcoins.
The expansion sees Coinbase join the ranks of other globally available exchanges like Binance. Notably, it’s seen fewer large scale hacks too – and it’s also taking care to comply with regulations in all the countries it’s doing business in.
How this Australian bank tracked 17,000 kilos of almonds with the blockchain
It’s not uncommon to read about how the latest firm has put something “on the blockchain.”
In fact, last year Hard Fork reported on a successful trial which saw the Commonwealth Bank of Australia put a shipment of 17,000 kilos of almonds on the decentralized tech.
But how exactly does one put almonds “on the blockchain?”
LX Group, manufacturer of blockchain-enabled shipment trackers, announced the launch of its latest blockchain tracker at Mobile World Congress (MWC) 2019 – the world’s largest mobile device exhibition – over the weekend.
Technology like what is found in LX’s blockchain-enabled tracker allows firms to “put” their wares on the chain. Obviously, you can’t physically put almonds on the blockchain, but you can publish data – a lot of data – about their whereabouts, their condition, and their environment on a decentralized ledger.
What’s in a blockchain tracker?
When it boils down to it, blockchain trackers are not too dissimilar to conventional shipment trackers. Except you guessed it, they come with additional functionality that enables them to communicate directly with a blockchain. In the case of LX, it’s a privatized Ethereum-based blockchain.
LX’s trackers are equipped with GPS, WiFi, LTE-M, a host of environment sensors, Bluetooth, and a battery that’s allegedly fit for three-years use. This gives them all the communicative powers they need to be able to monitor the conditions of shipments as they move around the world.
But what about the blockchain?
Well, the trackers are also fitted with, what LX calls a “crypto core”, which takes care of all the interactions with the blockchain. In this case, the “crypto” part refers to the cryptography it uses to encrypt data – it has nothing to do with cryptocurrency.
Simon Blyth, director of LX Group, told Hard Fork that “the ‘crypto core’ is a hardware accelerator optimised for high speed, low power encryption tasks. It enables the cypher process to get done fast,” he continued. “The device can wake, read sensors/location, encrypt the data and send it across the network then sleep again – much faster than if a [conventional] processor was used to perform the cypher.”
In many ways the “crypto core” is what’s more commonly known as an application specific integrated circuit (ASIC), a term usually used in reference to cryptocurrency mining rigs. It’s a piece of hardware designed to do a very specific task, and because of this, it’s often quicker and more efficient than general purpose processors which have to be designed to deal with a range of computational tasks.
Tracking shipments using blockchain
So, how does it work in action?
Let’s say a grocery store buys a shipment of fish that needs to be transported in a temperature controlled container, and must reach the store in three days. With one of LX Group’s trackers, the entire supply chain can be monitored to ensure the shipment reaches its destination, on time, and in the optimum condition.
What’s more, if the temperature in the container gets too high, a smart contract can be executed to alert the shipping firm to investigate and check its refrigerator unit is working correctly. Or, if worse comes to worst, and the produce reaches its destination and it’s started to rot, the entire supply chain can be examined to find out when, where, and who is responsible for the mishap.
As the shipment is sent around the world, the LX tracker continually captures environment data, encrypts it using the “crypto core,” and writes it on the blockchain for all members of the supply chain to see. With the information being available to everyone in the supply chain, there’s an element of transparency, and no one can pass the blame. But of course, it’s a private blockchain, so only approved parties can view or add data to this specific ledger.
Indeed, you don’t necessarily need a decentralized ledger to track goods in this way, but by uploading relevant environmental information to a blockchain, smart contracts can be executed based on the environmental changes that might occur during shipping. This should mean there’s a higher level of autonomy and accountability in an otherwise manual and labor intensive process.
Back to the fish example. Let’s suppose there’s a commercial agreement which gives the buyer a discount of 10% for everyday the shipment is late. A smart contract can be programmed to action this real-world agreement based on the environmental data supplied to the blockchain from the tracker, with little need for human intervention.
The challenges
It might all sound simple enough, but there are a number of security concerns; for LX Group it’s all about being able to trust the data written on the blockchain.
As these devices are often left out in the wild to fend for themselves, there’s a very real danger that they are tampered with, or even physically hacked. So, not only is the data they gather encrypted for security, but the devices are designed to be physically robust enough to resist nefarious hands and inclement weather.
LX’s primary concern is that the “device provides inaccurate information that is then used by a smart contract, which in turn is executed incorrectly,” Blyth told Hard Fork. “Imagine a large transaction (penalty or reward) between two parties being executed incorrectly because a device ‘got it wrong.’”
Indeed, LX is well aware of what’s at stake. To combat potential mishaps, its trackers refer to what it calls “oracles,” to ensure data can be trusted. In simple terms, an oracle is a data source, one of the device’s onboard sensors, or an entire device in its own right.
When deciding whether to action a smart contract or not, “multiple oracles” need to corroborate the information, otherwise the smart contract won’t be executed. In the case of the fish, GPS alone isn’t responsible for reporting the location of the shipment.
The smart contract will also look to WiFi location data, cell network data, other trackers, and in some cases other official, third-party data sources to corroborate the whereabouts of the shipment.
Sure, nothing is ever truly unhackable , but by using multiple oracles LX reduces the risk of its devices being hacked by increasing the number of attack vectors that need to exploited to dupe the system.
In many ways, these devices are about replicating real world contractual agreements held across supply chains and, where possible, automating them to minimize human intervention and remove the potential for human error.
Blyth told Hard Fork, “there are no additional trials planned with the Commonwealth Bank of Australia.” The next phase for the company is to develop more commercial grade hardware to support large numbers of blockchain-monitored supply chains.
Putting things “on the blockchain” is a bit misleading. In reality, only data can be put on the blockchain, not physical goods. But with trackers like LX’s it certainly looks like all kinds of goods will be put “on the blockchain” in the not so distant future.
Want to find out more about cryptocurrencies and blockchain technology? Check out our Hard Fork track at TNW 2019 !
