Coinbase is Now the World’s Largest Crypto Custodian by Assets Under Custody, Bakkt to Launch BTC Futures on Sept 23, IBM & Tata Joined Hedera DLT

This week (12-17 August) in Blockchain & Crypto was super interesting and really productive - New Zealand rules receiving income in Bitcoin legal and taxable, public distributed ledger Hedera Hashgraph has announced that IBM and Tata Communications have joined its governing council, Coinbase is now the world's largest crypto custodian by assets under management and much more!

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

New Zealand Rules Receiving Income in Bitcoin Is Legal & Taxable

New Zealand's tax authorities have ruled that income in cryptocurrencies is legal and provided guidance on how exactly it should be taxed.

In a tax information bulletin published on July 4, the New Zealand Inland Revenue Department summarised the provisions of the public ruling, made under s 91D of the country's Tax Administration Act 1994.

Specifically, the guidance on the income tax treatment of crypto assets applies to payments in crypto that form part of the employees’ regular salary and are fixed at a predetermined amount or rate — rather than, for example, payments that form part of an employee share scheme. 

Moreover, it applies only to salary and wage earners — not to self-employed taxpayers — covering both remuneration for services and bonuses, commissions and gratuities.

For a crypto asset-denominated salary to be taxable, the ruling determines that the crypto asset paid to employees must not be subject to a lock-up period and must be directly convertible into fiat currency, clarifying that:

“In the current environment where crypto-assets are not readily accepted as payment for goods and services, the Commissioner’s view is that crypto-assets that cannot be converted directly into fiat currency on an exchange [...] are not sufficiently ‘money like’ to be considered salary or wages.”

“Money-like” crypto assets are further defined as those that provide a general peer-to-peer payment system, rather than assets that function in a similar way to vouchers, shares or debt securities.

Thus for the wage to be taxable, the agency deems that a significant purpose of the crypto asset in question must be that it functions as a currency, or is otherwise to be pegged to one (or more) fiat currencies.

Indian Telecom Jio Reveals Blockchain Network for 330M Customers

Indian telecoms provider Reliance Jio Infocomm Limited (known as Jio) has pledged to build what it describes as one of the world’s largest blockchain networks.

Speaking at the company’s 42nd AGM (1.01) on Aug. 12, chairman and managing director Shri Mukesh D. Ambani said blockchain technology formed one of three main areas of expansion for Jio. 

Since debuting in 2015, the company has become one of India's major mobile networks, with a current user base of over 330 million people. 

“Over the next 12 months, Jio will install across India one of the largest blockchain networks in the world, with tens of thousands of nodes operational on day one,” Ambani promised. 

His comments came as India faces a backlash over its plan to ban cryptocurrency while championing blockchain technology at state level. 

IBM and Tata Become Governing Council ‘Owners’ of Hedera Hashgraph

Public distributed ledger Hedera Hashgraph has announced that IBM and Tata Communications have joined its governing council.

In a news release on Aug. 12, the platform described the addition of the two firms as a powerful endorsement of its hashgraph consensus mechanism.

Mance Harmon, the CEO of Hedera Hashgraph, said IBM and Tata Communications’ presence further decentralizes the platform’s governance, adding:

Our governance model, which includes a robust system of checks and balances, ensures power can’t be consolidated, while at the same time providing a stable and scalable platform on which developers can build.

Up to 39 multinational entities will make up the Hedera Governing Council. Each member can serve a maximum of two consecutive three-year terms, and they are responsible for eliminating the risk of forks and guaranteeing the integrity of the codebase.

A variety of enterprises from telecommunications, retail, law, financial services and technology are now represented on the council, Hedera said.

This governing council will be key in Hedera’s success says Leemon Baird, the company's co-founder and chief scientist.

"The members of the governing council are the actual owners of the company. They aren't just advisers. They are Hedera," explained Baird. "Hedera is an LLC that is split 39 ways — 39 companies own it, control it, and make all the decisions."

IBM’s vice president of blockchain technologies, Jerry Cuomo, described Hyperledger as the “de facto standard enterprises use to build, manage and deploy blockchain-based ledgers” — adding that he believes the platform could enhance and simplify the deployment of Hyperledger Fabric in enterprise environments.

Ankur Jindal, global head of corporate venturing and innovation and Tata Communications, expressed excitement at the prospect of joining other forward-looking businesses to deliver the potential of distributed ledger technology (DLT) to the wider economy. He added:

Innovations such as DLT, AI, and IoT change the way organizations and people interact with each other and with the world. These emerging technologies can be harnessed to strengthen our efforts to improve operational efficiencies and enable our customers’ digital transformation worldwide.

Crypto Derivatives Exchange Blade Raises $4.3M From Coinbase and Others

A soon-to-launch cryptocurrency derivatives exchange has raised $4.3 million from major investors such as the cryptocurrency platform Coinbase and the investment firm SV Angel. The exchange Blade is scheduled to launch in three weeks’ time.

Blade’s funding and plans come by way of a TechCrunch report on Aug. 12. The report notes that in particular, Blade is aiming to provide trading for cryptocurrency-based perpetual swap contracts with three new improvements.

First, the perpetuals contracts will be drawn up using standard, simple contracts. Second, the perpetuals will use Tether’s stablecoin USDT for settlement and margins. Third, trades can be leveraged up to 150 times their price for cryptocurrency trading pairs.

As explained in the report, crypto perpetuals allow traders to bet on the price of a cryptocurrency with respect to another currency. However, unlike futures, perpetuals do not have an expiration date. As indicated in the report, Blade currently provides a listing of their cryptocurrency pairs for perpetuals. At press time, the upcoming exchange lists seven different trading pairs.

Blade CEO Jeff Byun commented on the company’s aims for their derivatives platform, saying:

In the long term, we want to be the CME of crypto [...] Coinbase and Binance are building this foundational structure for crypto, but I think we are too and in a sense that derivatives are at their core about risk transfer, we want to be building the foundational layer for risk transfer in the crypto markets.

Dallas Mavericks Become Second NBA Team to Accept Bitcoin

The Dallas Mavericks have become the second NBA team to accept Bitcoin as a means of payment for match tickets and merchandise. A tweet from cryptocurrency payment processor BitPay confirmed the news on Aug. 13. 

Cryptocurrency adoption has been on the horizon for the Mavs since early last year, when team owner and billionaire tech investor Mark Cuban hinted that fans would soon be able to use Bitcoin to buy tickets to the team’s games.

A year and a half later, Cuban’s plans have materialised and the Mavs join their NBA rivals, The Sacramento Kings, in rolling out cryptocurrency access for their fans. 

The Sacramento Kings became the first NBA team to accept Bitcoin for promotional products as well as for tickets as early as 2014.

According to an excerpt from a Dallas Mavericks press release shared by industry sources on social media, the Mavs — like The Sacramento Kings — be using BitPay’s services to process their fans’ Bitcoin payments.

Cuban’s prior involvement in the crypto space includes investments in both a digital currency hedge fund and an ICO, as well as the launch of the Ethereum-based Mercury Protocol back in August 2017.

The investor has this summer voiced his opinion that Facebook’s Libra cryptocurrency is a big mistake and could even be dangerous. This month, he also said he believes Bitcoin is fundamentally similar to gold from an investor’s perspective.

Alibaba Files US Patent for Blockchain Domain Name Management System

Chinese online retail giant Alibaba has applied for a United States patent entitled “Domain Name Management Scheme for Cross-Chain Interactions in Blockchain Systems.” 

Alibaba filed its latest application on Aug. 15 in a continuation of an application filed in November 2018. According to the filing, Alibaba intends to patent a system that uses what they call a “unified blockchain domain name” (UBCDN) in order to denote and share information. In the system, Alibaba proposes to use a computing system to generate a UBCDN message which contains a blockchain domain name and a chain identifier that is paired with that name.

Specifically, the filing states that the UBCDN message contains “a UBCDN of the blockchain instance, a digital signature of an owner of the UBCDN of the blockchain instance (a UBCDN owner) on the UBCDN, and a domain certificate of the UBCDN.”

As further specified in the patent application, this UBCDN system is intended to be used as a unified means of managing domain names in cross-chain interactions across blockchain systems. The patent cites several instances in which this technology could be useful, including for blockchain managers. The application reads:

Furthermore, the UBCDN can include a human readable identifier or label, helping users to memorize and reach a blockchain instance easily, and thus promoting adoption or use of the blockchain instance. As an example, owners or operators of public blockchains, private block chains, or consortium blockchains can choose blockchain domain names that correspond to their names, helping users to remember the identifiers of the blockchain instances.

The patent also cites the system as an improvement over existing interoperable blockchain networks, saying:

Unlike existing cross-chain implementations such as COSMOS, that uses a relay chain for cross-chain interactions, in which each blockchain is assigned an identifier (ID) within the relay chain network but the ID only has a local scope and cannot be reused in other relay chain networks, in the described domain name scheme, the UBCDN can be used and is recognizable globally by all blockchain instances in the unified block chain network.

Crypto Mining Company CoinMine Secures $2.5M in Seed Round

Cryptocurrency mining company CoinMine has received a fresh injection of funds from a $2.5 million seed round led by the investment company M13.

Coinmine announced the successful fundraiser in an official blog post on Aug. 15. As part of the announcement, Coinmine said it will continue to support more cryptocurrencies and ship out “over-the-air” updates. 

The company offers a product called Coinmine One, which is an all-purpose cryptocurrency mining computer that costs $700.

The announcement also included a shoutout to previous investors, who include familiar names such as Coinbase Ventures and Anthony Pompliano. Robot Ventures also invested in Coinmine in Q1 2019. Robot Ventures, for its part, is a blockchain-focused Venture Capital firm which has in turn received funding from Ripple’s Xpring, which funds Ripple-related development initiatives.

Additionally, Coinmine says its mission is to support Bitcoin and other decentralized information protocols. As per the announcement, Coinmine believes that decentralizing computation will lead to a corresponding decentralization of information and value, as related to the ideology behind Bitcoin.

Coinbase Custody Buys Xapo Institutions, Continuing Rapid Expansion

UMajor crypto exchange Coinbase announced the news in a post on the company’s blog Aug. 15. The news follows rapid growth on the part of Coinbase’s year-old custodial wing, which only two months ago reported assets under custody (AUC) valued at $1.3 billion. 

According to the announcement, the new acquisition puts Coinbase Custody’s AUC at $7 billion.

Xapo is itself a major crypto wallet provider who has apparently been in negotiations with Coinbase Custody over the sale of its institutions business since the middle of May this year.

The announcement claims that Coinbase Custody now stores on behalf of more than 120 clients in 14 different countries. In affirming the company’s commitment to its institutional services, Coinbase wrote: “Our institutional range of products provides a seamless, powerful and compliant ecosystem for our clients to trade, store and interact with their crypto.” 

In July, Coinbase CEO Brian Armstrong said in an AMA session that he hoped to see Coinbase shift its focus from trading to broader adoption within the economy in the next five years. and Custody Platform in US

Bakkt has announced the coming launch of its much-anticipated platform for daily and monthly futures in the United States in a blog post on Aug. 16. Having received approval from the necessary regulators, the launch is scheduled for Sept. 23.  

Bakkt’s physically delivered futures have been the subject of a great deal of anticipation, with the company initially announcing its launch August 2018 before being subject to repeated delays over compliance issues. Satisfying the Commodity Futures Trading Commission (CFTC) has proven particularly challenging. The company began testing in earnest on July 22.

Per the announcement, Bakkt has hosted numerous events in New York and Chicago — cities critical to the U.S. futures market. They have also sat down with regulators from the CFTC as well as the Securities and Exchange Commission (SEC). 

Bakkt will be partnering with Intercontinental Exchange Futures U.S. and Intercontinental Exchange Clear U.S. to provide its futures contracts.

Institutional services and custody have been a growing market in crypto, with major U.S. exchange Coinbase announcing the addition of Xapo’s Institutions into its custodial operation last night. After the announcement, Coinbase CEO Brian Armstrong commented on the major rise in institutional clients for crypto services, saying: 

Whether institutions were going to adopt crypto or not was an open question about 12 months ago. I think it's safe to say we now know the answer. We're seeing $200-400M a week in new crypto deposits come in from institutional customers.

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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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