Bakkt Rolls Out Bitcoin Custody, Swiss Crypto Bank SEBA Opens For Public, Coinbase Card Launches in 10 More European Countries

This week (11-16 November) in Blockchain & Crypto was super interesting and really productive - Singapore's central bank and state investment firm have created a prototype multi-currency blockchain-based payments network together with JPMorgan, VC firm Andreessen Horowitz is launching a free, 7-week crypto startup school, Bakkt rolls out BTC Custody, and much much more!

About this and more, in the newest issue of Weekly Blockchain & Crypto Digest. Enjoy!

Singapore’s MAS, JPMorgan Unveil Multi-Currency Blockchain Prototype

Singapore's central bank and state investment firm have created a prototype multi-currency blockchain-based payments network together with JPMorgan.

A November 11 report from The Business Times indicates that the prototype is designed to enable payments denominated in different currencies to be completed on the same network.

The Monetary Authority of Singapore (MAS) — the city state’s central bank — led the development of the new solution, working in conjunction with state investment firm Temasek Holdings and the United States’ largest bank, JPMorgan Chase. 

The latter has acted in the capacity of infrastructure provider for the prototype’s development, which forms part of the bank’s existing research project “Ubin.” Ubin is now in its fifth phase and has to date focused on applications such as the use of blockchain for clearing and settling payments and securities.  

MAS expects the new network to provide businesses with significant cost efficiencies. The prototype is reported to provide interfaces for other blockchain networks to connect and integrate without friction. 

In a statement, MAS chief fintech officer, Sopnendu Mohanty, has indicated the broader ambitions of the partners, noting that:

We look forward to linking up with more blockchain networks to improve cross-border connectivity. This will be a big step forward in making cross-border transactions faster, cheaper and safer.

Under the aegis of Ubin, the partners have proceeded beyond technical experimentation to investigate the prototype’s commercial viability, engaging with over 40 financial and nonfinancial firms to explore the network’s numerous potential benefits.

Major transnational consultancy firm Accenture has been commissioned to publish a report with the results of the prototype by early 2020, which will also indicate additional features that could be provided by the network in the future.

VC Firm Andreessen Horowitz Launches Free 7-Week Crypto School

Venture capital firm Andreessen Horowitz (a16z) is launching a free, seven-week crypto startup school, scheduled to kick off in February 2020. 

The firm — well-known for its investments in crypto industry names such as Coinbase and Ripple — publicly announced the program on November 8.

According to the announcement, the program — which will entail lectures held in person in Menlo Park, California — will cover a broad curriculum for those seeking to found blockchain startups. In parallel, videos and curriculum materials will be freely accessible online.

A16z has stressed it will not take any equity from participants in the educational initiative but rather aims to accelerate the development of existing blockchain-focused projects as well as to encourage more talent to join the sector.

A selection of experienced entrepreneurs and technologists will coach students in areas such as product and technology design, organization development, go-to-market strategy and legal/regulatory best practices.

A16z outlines that, as is common to any new computing environment or technology:

Blockchains have endured a variety of challenges, false starts, and misconceptions. Some of the challenges are technical (e.g., scalability), some are product related (e.g., user experience), but many are due to the lack of widespread understanding of the technology’s capabilities, and the best practices required to take it mainstream.

Volvo Adopts Oracle’s Blockchain for Its Supply Chain

Volvo Cars announced last week that it is using Oracle’s blockchain platform to trace cobalt, one of the main components in electric car batteries. Following the unveiling of the company’s first fully electric car, the XC40 Recharge, Volvo has come up with a new business strategy that includes introducing an electric vehicle every year through 2025.

“Cobalt is at the heart of electric vehicle batteries, yet supplies are limited. Companies like Volvo are ramping up their production significantly, as half of Volvo cars will be electric by 2025. Each car requires 10-20 kilograms of cobalt in their batteries,” said Mark Rakhmilevich, Senior Director of Blockchain Product Management at Oracle.

While cobalt is a key mineral for making lithium-ion batteries, the majority of cobalt production comes from the Democratic Republic of Congo, a region criticized for its unethical cobalt mining conditions.

According to findings from Amnesty International, children as young as seven are working in life-threatening conditions in the DRC to mine cobalt that ends up in smartphones, tablets and cars each year. Young children and adults are often paid only $1 a day to work under these perilous conditions.

Volvo will be applying blockchain technology to provide global traceability in all raw products used throughout its supply chain. Rakhmilevich explained:

Volvo is ensuring that their supplies of cobalt are clear and safe from unethical issues by tracing raw materials on the Oracle blockchain. We’ve been working with Volvo since this summer to implement a material tracking application that captures data relevant to different points in the manufacturing process.

Volvo has also partnered with traceability-as-a-service provider Circulor to trace raw materials through the supply chain to its battery manufacturer and then to Volvo cars. This end-to-end solution would ensure transparent and reliable data sharing, significantly boosting transparency of the entire raw material supply chain.

Following a successful pilot with Oracle and Circulor this summer, Volvo Cars has now reached an agreement with its two global battery suppliers, CATL of China and LG Chem of South Korea, to implement cobalt traceability starting this year.

Both Oracle and Circulor will operate the blockchain technology across CATL’s supply chain, while the Responsible Sourcing Blockchain Network, together with responsible sourcing specialists RCS Global and IBM, will roll out the technology in LG Chem’s supply chain.

Data captured on the Oracle blockchain platform will include the cobalt’s origin, attributes such as weight and size, the chain of custody and information establishing that participant behavior is consistent with globally recognized supply chain guidelines.

“We’ve been working with Volvo and Circulor, to implement a material tracking application on top of the Oracle blockchain,” Rakhmilevich said. “This will capture data relevant to different points across the manufacturing process, such as time, location, weight, size and more, to ensure that all materials being used are accurate.”

Blockchain is an ideal solution for tracking materials across a supply chain, as the technology creates records of transactions that can’t be changed while also enforcing a common set of rules about which data can be recorded. This lets participants across a network independently verify and audit transactions.

“After ensuring that all materials are accurate, we record each data point from those transactions on the blockchain, making that data immutable and transparent across the network,” Rakhmilevich noted.

According to Rakhmilevich, Volvo, CATL and seven other companies (participants in this supply chain) currently record about 28 million material scans and other production events monthly on the Oracle blockchain platform. While he is confident that this will scale over time (and eventually evolve into other aspects of the supply chain, like tracing lithium and nickel), the real challenge is properly managing materials.

“There are a number of complex stages that cobalt and other materials go through to ensure that data points are captured at origin. This data must then be scanned and secured, so it’s important to make sure that data from physical sources is captured appropriately,” Rakhmilevich explained.

According to Caspar Rawles, senior analyst at Benchmark Mineral Intelligence, it’s great that Volvo is using blockchain to track its cobalt, but much of the DRC’s cobalt comes from small, independent mines. Child labor and a number of fatal accidents have been reported in such small-scale, so-called "artisinal" mines.

Although Volvo is tracking its materials, the company also needs to carefully follow cobalt through the entire supply chain, from where it is mined all the way to where it is shipped in China. This ensures that materials are not then blended with other minerals coming from the DRC.

“Volvo needs to trace cobalt not only from the mine but also to where it is being shipped, up until batteries are placed in cars, to ensure that materials are not being blended with unethically sourced items,” Rawles said.

While there are obstacles, Rawles also noted that Volvo has taken the first steps to demonstrate that using technology can ensure sustainability and ethically sourced products:

As more carmakers produce electric vehicles, they need to realize that dealing with the supply chain will be a crucial aspect. It’s good to see that Volvo is taking this approach now with blockchain technology.

An upcoming planned hard fork in Bitcoin Cash will impose relatively simple technical changes to its consensus mechanism that will not split the chain, despite some turbulent undercurrents in the coin’s community regarding issues which have recently become difficult to ignore. Disloyalty and perhaps manipulation among miners, or just the possibility of such, has refocused the conversation ahead of the November 15 fork. 

These issues have gone unaddressed in the “planned hard fork” coming tomorrow, a term which has been politicized to mean community strife and a chain split — but in this case, is something rather benign. 

The minor upgrades are compatible with all miners and should enhance basic functionality for users across the chain — something that’s hard to disagree with. The only echo of dissent is heard by those who believe the recent anomalies indicate that BCH needs more serious repair. 

Problems in both the Bitcoin or Bitcoin Cash communities are still intertwined, years after their separation. The similarity of BCH and BTC blockchains for mining and the ease with which miners switch between them are two of the biggest issues plaguing both chains in terms of providing the best conditions for payment. 

This issue is still present even as BCH itself is set for a new iteration termed Bitcoin ABC. The community is still arguably neglecting a potentially flawed Difficulty Adjustment Algorithm (DAA), updated in a widely-criticized proposal made by BCH influencers two years ago, which may be signaling to miners that the control they’ve enjoyed so far isn’t soon to be reined in.

Bakkt Rolls Out Bitcoin Custody

Institutional Bitcoin trading platform Bakkt has announced it has launched its custody feature for its entire client base following regulatory approval.

In a blog post on November 11, Bakkt said it had received the go-ahead from the New York Department of Financial Services (NYDFS) to offer custody services to any institution. Previously, the option was only available for those trading its Bitcoin futures.

Commenting on the release, Bakkt described the custody tool as “the critical link in the institutional adoption of Bitcoin.”

“Safely storing digital assets demands a comprehensive approach to custody. Institutions and sophisticated investors need more than cutting-edge technology. They require proven infrastructure, robust operational controls, and independent oversight,” the blog post added.

CoinMarketCap Now Provides Crypto Investors With Data on Liquidity

Leading crypto data site CoinMarketCap has announced the launch of its new metric to compare exchanges and token pairs based on liquidity.

The announcement comes from The Capital, CoinMarketCap’s inaugural conference in Singapore on November 12, and the tool is now live on the company’s site. The new metric will reportedly incorporate data from 3000 crypto assets.

Intending to filter out market manipulation, CoinMarketCap will reportedly base the new liquidity metric on adaptive data. Carylyne Chan, Chief Strategy Officer at CoinMarketCap, elaborated on the firm’s aims with their methodology:

We believe our adaptive methodology will make our metric very difficult to ‘game’ as orders would need to be placed close to the mid-price, or risk being counter-productive to the Liquidity metric scoring.

Elaborating on what this adaptive methodology consists of, Chan said:

With the new Liquidity metric, orders that are closer to mid-price or current market prices are given heavier weightage. Those orders further are discounted. The extent of the discount adapts according to the absolute liquidity of the market-pair, by studying the order book depth and distance from mid-price.

The firm said that it sees its new metric as a way of escaping dependence on volume reporting, which is often subject to wash trading and other means of manipulation on different exchanges. At The Capital, Chan said that “volume has lost its value as a metric.” She further explained CoinMarketCap’s desire to shift focus away from volume:

Today, we are introducing a new metric to highlight what matters most to investors and traders: liquidity. With our Liquidity metric, we hope to provide public good to the crypto markets by encouraging the provision of liquidity instead of the inflation of volumes.

Chan explained that CoinMarketCap is still working to expand the number of exchanges provided the company with data on liquidity:

While volume is a single number reported by exchanges, Liquidity requires us to apply our adaptive algorithm to the order book data received, which requires some time. At the moment, we have received order books from 70% of the listed exchanges. We highly encourage any exchange who hasn't submitted their order book data yet to do so, as our Liquidity metric will become the default ranking soon.

Swiss Crypto Bank SEBA Opens For Public

Switzerland-based cryptocurrency bank SEBA has launched its services for professional investors and enterprise clients, according to an official news release published on November 12.

As reported, SEBA Bank AG (formerly SEBA Crypto AG) is a fully-regulated institution, having secured a banking and securities dealer license from the Swiss Financial Market Supervisory Authority (FINMA) in August of this year.

According to the announcement, the bank’s services are now fully operational for a range of prospective clients, including corporates, asset managers and professional private investors. SEBA will seek to attract clients from selected foreign jurisdictions starting in December.

In a statement, SEBA CEO Guido Buhler emphasized that those opening an account with SEBA should be able to take full advantage of the digital asset sector’s potential without having to sacrifice security. He added:

We are proud to have founded a bank within 18 months, raised CHF 100 million [$100.5 million] in capital from investors and obtained a banking and securities dealer license.

As part of its account services, SEBA is offering a SEBAwallet app, e-banking services and SEBA card facilities, with support for five major cryptocurrencies: Bitcoin, Ether, Stellar, Litecoin and Ether Classic. 

The bank provides investors with both crypto-crypto and crypto-fiat conversion services online and SEBA cards are supported at 42 million points of sale globally, paving the way for the “mass introduction of cryptocurrencies,” according to Buhler.

Notably, SEBA is also rolling out enterprise accounts for blockchain firms and their employees, closing what it identifies as an important gap in the domestic sphere.

As reported, fellow Swiss cryptocurrency bank Sygum — which was also issued a banking and securities dealer license from FINMA in August — has in parallel conducted negotiations with regulators to seal a banking license in Singapore.

As a regulated institution, Sygnum equally aspires to roll out digital asset custody, brokerage and tokenization services for accredited investors and institutions.

Ant Financial Tests Its Enterprise Blockchain

The financial technology subsidiary of Chinese e-commerce giant Alibaba, Ant Financial, started testing its enterprise blockchain platform.

According to local news outlet Sina Finance on November 12, the Senior Director of Technology and Business Innovation at Ant Financial, Jieli Li, announced the development at the World Blockchain Summit at Wuzhen. The firm’s plans to launch its own blockchain platform were first reported in September last year.

During the event, Li said that the platform — dubbed Ant Blockchain Open Alliance — will go live three months after the testing period. The platform aims to support small and medium-sized businesses by allowing them to cut costs and expand their reach.

While the platform’s name includes the word “open,” Li explained that not everyone will be able to run the network’s nodes. During a November 11 interview with local news outlet CCValue he said:

As for the selection of node operators, we are more cautious. [...] Because to form a credible value network, not only do they need to be a consensus accounting node, but they also need to provide authoritative endorsements.

Li said that educational and certification institutions are more desirable node operators as they will ostensibly lend credibility to the blockchain. Node partners will be selected based on the industries in which they operate, with physical location in the country being irrelevant. No organization entrusted with running a node has been announced so far.

In September, Ant Financial also partnered with pharmaceutical giant Bayer Crop Science, Monsanto’s owner, to develop a blockchain solution for the food and crop industry.

Bitcoin’s failed hard fork attempt from 2017, SegWit2x, was “extremely dangerous and irresponsible,” says a CEO who was formerly one of its biggest supporters.

Bakkt Plans to Roll Out Cash-Settled Bitcoin Futures Contract

Bitcoin futures trading on the Intercontinental Exchange (ICE)’s Bakkt platform will expand to include a cash-settled option, COO Adam White has revealed.

Speaking at the Invest: NYC conference on November 12, White reportedly stated that Bakkt “has the intention of offering a cash-settled contract as well” as its existing Bitcoin-settled product. 

According to unnamed sources reportedly familiar with the roadmap, the cash-settled monthly Bitcoin futures will be offered via ICE’s Singapore-based clearinghouse, ICE Clear Singapore, and traded on the ICE Futures Singapore exchange. The exchange is notably accessible to futures traders signed up to ICE anywhere worldwide.

The sources claimed that ICE is in discussions with the city state’s de facto central bank, the Monetary Authority of Singapore, but is targeting a launch date before the end of 2019.

The prospective cash-settled product was reportedly mooted in response to customer demand and will be based on data provided by Bakkt’s physically-settled contract.

Coinbase Card Adds XRP and Launches in 10 More European Countries

Coinbase’s Visa debit card has expanded support for five more cryptocurrencies in ten new jurisdictions, the firm announced in two separate tweets on November 14. Launched in April 2019, Coinbase Card now supports a total of nine cryptocurrencies in 29 countries in Europe.

The Coinbase Card’s new supported cryptos include XRP, Stellar, Basic Attention Token, 0x and Augur, enabling users to spend using the listed currencies. The five coins join other major supported cryptocurrencies like Bitcoin, Ether, Bitcoin Cash and Litecoin.

According to the new announcement, Coinbase Card is now available in Bulgaria, Croatia, Denmark, Hungary, Iceland, Liechtenstein, Norway, Poland, Romania and Sweden. 

Coinbase, a major United States-based crypto exchange and wallet service, debuted its Visa debit card in the United Kingdom on April 10. The card allows Coinbase users to make purchases with digital currencies from their Coinbase accounts. In order to complete the purchase, Coinbase converts customers’ crypto funds into fiat money for a fee.

Walmart Canada Rolls Out Blockchain-Based Freight and Payment System

Walmart Canada — the retail giant’s Canadian branch — has rolled out an automated blockchain-based network for freight tracking and payments management, according to a November 14 press release.

The new system, which was developed in collaboration with blockchain company DLT Labs, is designed to improve freight and payment processing, enabling users to automatically trace deliveries, verify transactions and handle payments and reconciliation.

The release further states that the network can be integrated with a business’s legacy system and “manages, integrates and synchronizes all the supply chain and logistics data in real time, aggregating the data between Walmart Canada and its fleet of third-party trucks on a shared ledger.”

John Bayliss, senior vice-president of logistics and supply chain at Walmart Canada, noted the efficiency of blockchain technology when handling massive loads of inventory:

This new dynamic and interactive blockchain technology platform is creating complete transparency between Walmart Canada and all of our carrier partners. Blockchain is enabling a material advance in our smart transportation network, with expedited payments, extensive cost savings and other benefits among our supply chain. Moreover, this degree of improved efficiency represents a powerful platform for us to continue to reduce our environmental footprint and continue our leadership in environmental sustainability.

JPMorgan Automates Derivatives Margin Payments With Blockchain Tech

Major global investment bank JPMorgan has developed a new blockchain-based solution for derivatives designed to speed up cash and collateral transfers. The tool was developed in partnership with California-based fintech firm Baton Systems and aims to enable the real-time movement of transfers to multiple clearinghouses, the firm announced November 14.

The current process requires collateral custodians to manually coordinate multiple systems and reports. Integrated with JPMorgan’s proprietary automation system, the new solution reportedly eliminates manual intervention in the collateral process and therefore expedites the collateral workflow. 

According to the announcement, the platform automates margining and collateral flows and allows users to see the flow of assets between JPMorgan and the participatory clearinghouses. 

The announcement does not specify whether the solution is based on JPMorgan’s Quorum blockchain platform.

Anthony Fraser, head of global clearing operations and trading cost management at JPMorgan, noted that the technology reduced the time needed for collateral processes from hours to near real-time. He added that the system has already led to faster payments as well as more efficient reporting for all parties in the collateral lifecycle.

Blockchain technology has previously been used in collateral transfers. In June 2019, major stock exchange operator Nasdaq successfully piloted a blockchain-based proof-of-concept (PoC) providing a 24/7 securities collateral solution. The PoC reportedly enabled parties to handle the margin call, the securities collateral delivery and the return process within minutes.

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About: I am a business developer, sales professional, FinTech strategist, as well as Cryptocurrency and Blockchain enthusiast. I'm highly passionate about Financial Technology and Digital Innovation, and strongly believe that it will change the world for the better. Apart from my daily job at a global payments startup where I'm leading company's expansion into Europe , I'm an active member of FinTech community and a TechFin evangelist.

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