US Bank and Trust Companies Move Forward with Cryptocurrency Services
By: Robert A. Musiala Jr.
This week Avanti Bank & Trust was granted a bank charter from the Wyoming State Banking Board. According to a press release, the charter gives Avanti the same powers as national banks in its approved business lines. The press release notes that Avanti’s approved business plan includes “a tokenized U.S. dollar called Avit™*; custody services for digital assets as a ‘qualified custodian’ under the Investment Advisers Act; API-based online banking services, where customer deposits must be 100% backed by reserves; and prime services for digital assets.”
In related news, late last week a Wyoming-based trust company that provides wealth management services to high net worth individuals and family offices received a “No-Action Letter on Custody of Digital Assets and Qualified Custodian Status” from the Wyoming Division of Banking. The no-action letter gives the trust company authority to provide custodial services for digital assets, “including virtual currency and digital (tokenized) securities” under Wyoming law.
According to recent reports, the largest bank in the U.S. has said that its digital currency, JPM Coin, “is being used commercially for the first time this week by a large technology client to send payments around the world.” Late last week, the same bank reportedly issued a report noting that while bitcoin is more appropriately characterized as a “risk” asset than a “safe” asset, the “potential long-term upside for bitcoin is considerable.”
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Cryptocurrency Debit Cards Launch in the United States and Mexico
By: Robert A. Musiala Jr.
This week a major U.S. cryptocurrency exchange, in partnership with a major U.S. financial services firm, launched the first cryptocurrency debit card to be made available in the U.S. The crypto debit card will enable users to spend their cryptocurrency by using the debit card to make in-store and online purchases, as well as withdraw funds in U.S. dollars from ATMs. According to a press release, the crypto debit card is now available to customers in “nearly 30 countries, including the UK and across Europe,” with the first U.S. customers to be approved this winter.
In similar news from abroad, Paxful, a peer-to-peer cryptocurrency marketplace, has reportedly partnered with a Spanish bank to launch the first-ever crypto debit card to be made available to customers in Mexico. According to another recent report, “almost half of all bitcoin traded on the P2P exchange Paxful is exchanged for gift cards.” The report noted that up to $20 million worth of bitcoin is exchanged for gift cards on Paxful every week.
Earlier this month a major U.S. blockchain payments firm published its annual Blockchain in Payments Report. The report finds that blockchain payment solutions are scaling; digital assets are increasingly being considered for facilitating payments, especially when paired with blockchain technology; and industry innovators are realizing significant growth, even amid COVID-19.
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Blockchain Developments in Protocols, Healthcare, Copyrights, E-Signatures, IoT
By: Jordan R. Silversmith
Last week, a major U.S. technology company announced a new partnership with a New York-based blockchain company. By way of this collaboration, the technology company, which has mostly focused its blockchain offerings on HyperLedger Fabric, will now be able to offer blockchain solutions that leverage the R3 Corda blockchain. While the two companies have been competitors in the area of permissioned enterprise blockchain, the collaboration will now allow each to offer more solutions that leverage blockchain protocols initially developed by the other company.
A recent report on the role of blockchain in the global healthcare market predicts significant growth in the use of blockchain through 2027. The market is expected to reach a valuation of USD 5,798.0 million by 2027, the report says, even taking into account the effects of the pandemic.
A new plug-in from a leading web publishing platform will now allow users to timestamp content on the Ethereum blockchain. Timestamping, which creates a unique hash for the latest version of the content added to a blockchain, provides proof that the owner of the content created it and that the content has not been tampered with. To that end, the company hopes the new plug-in will help with copyright issues.
A prominent electronic signature business recently announced its vision for how blockchain-based “smart agreements” will work. The business plans to work with a company focused on smart contracts to create a new way for e-signatures to be integrated into the blockchain framework. The goal of the functionality is to enable e-signatures to become active pieces of IT infrastructure that can communicate with external resources.
The Sovrin Community released a new white paper last week on the interaction between the “Internet of Things” (IoT) and the concept of self-sovereign identity (SSI). The white paper addresses the current lack of a universal means to distinguish one “thing” from others or to determine what that thing is permitted to do. According to the white paper, this lack of identity and authority in IoT objects hampers the development of multiparty IoT services and ecosystems and makes it more difficult to provide effective solutions to the growing threat of cyberattacks. The white paper runs through several use cases and shows how SSI-enabled devices can use cryptographic methods to validate the identity of IoT objects.
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Enforcement Actions Target Crypto SIM Swapping and Ponzi Schemes
By: Joanna F. Wasick
This week, the U.S. Attorney’s Office announced indictments related to a plot to steal cryptocurrency and various electronic accounts, including social media accounts. The scheme allegedly involved registering fraudulent internet domains that appeared to be from legitimate wireless providers, sending “phishing” emails and taking over wireless phone numbers. The defendants are also alleged to have used electronic account credentials stolen from employees and affiliates of wireless providers to access those companies’ computer networks without authorization. The indictment states that after getting access, the defendants took over victims’ wireless accounts through “SIM swapping,” whereby customers’ mobile numbers, which are linked to unique subscriber identity modules (SIMs), were instead linked to SIMs installed in a device controlled by the defendants or their co-conspirators. Defendants then were able to access the victims’ other accounts, including email, social media and cryptocurrency accounts.
Last week, Spanish National Police arrested Santiago Fuentes, the operator of cryptocurrency arbitrage firm Arbistar 2.0 and charged him with financial fraud and money laundering. Arbistar reportedly served about 120,000 users who together invested about $520 million dollars in bitcoin into Arbistar’s trading bot. Last month, investors began accusing the platform of being fraudulent after Fuentes claimed a “computer error” disabled trading bot withdrawals and erased more than a quarter of the funds. An investigation firm tracking the case has reportedly found that Fuentes was actually running the platform as a Ponzi scheme.
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