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Regulators Plan 'Global Sandbox' for Fintech Including Blockchain

A number of financial regulators from across the globe are forming a new alliance to facilitate the growth of financial technologies such as blockchain and distributed ledger technology (DLT).

The U.K.’s Financial Conduct Authority (FCA), which spearheaded one of the world’s first fintech sandbox programs, announced the Global Financial Innovation Network (GFIN) initiative on Tuesday, alongside 11 other member regulators from jurisdictions such as Hong Kong, the U.S., Australia and Abu Dhabi.

GFIN will primarily serve as a network of regulators to discuss policies regarding financial technologies, the statement indicates, as well as to develop a “global sandbox” that will give firms with “an environment in which to trial cross-border solutions.”

While the paper offers few details on how the regulators’ plan to create a supervised environment for blockchain startups, the FCA said the new alliance follows a consultation effort in February on the idea of an international sandbox.

Among the 50 responses it received at the time, the FCA said one key theme focused on how regulators around the world can work together to pilot cross-border payments based on DLT and how to regulate initial coin offerings, which often extend beyond borders.

In fact, several members of GFIN, including the Monetary Authority of Singapore, Hong Kong Monetary Authority and Abu Dhabi Global Market, are already working on cross-border payment corridors built with DLT.

Along with the announcement, the group jointly published a consultation paper seeking public feedback on the GFIN initiative by Oct. 14.

Just last month, the FCA also granted 11 blockchain crypto-related startups to the fourth cohort of its sandbox program – almost 40 percent of the 29 firms accepted – which can now trial their products in a regulated environment.

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Metals Exchange Forms Blockchain Group to Modernize Minerals Industry

A Switzerland-based trading platform for metal concentrates is forming a blockchain consortium aimed to streamline supply chains in the minerals industry.

To that end, Open Mineral – a startup established by a group of former employees from commodity trading and mining giant Glencore – said it has already started working with the ethereum startup ConsenSys to develop a platform dubbed Minerac. The firm did not disclose the names of the mining and financial firms that have so far agreed to join the consortium.

According to a report from Reuters, the project aims to have every party involved in mineral mining and trading logistics – from mining to shipping to storage and trading – participating as nodes of the new blockchain platform.

The goal of the project is to get rid of the existing complex and paper-heavy processes within the industry, and ultimately to allow the different parties to obtain updated logistics data simultaneously and transact trade documentation using smart contracts embedded in the blockchain.

As supply chain data is moved onto the distributed network, the report indicates, mining products can be traced with unique identification data that provides their point of their origin, allowing compliance with local laws.

Founded in 2017, the startup mainly serves to eliminate intermediaries for mining firms and smelters in a bid to reduce their costs when trading mineral concentrates.

The news of the new consortium comes just months after Open Mineral secured $2.5 million in a funding round in April, which was said to be specifically used for blockchain development, according to a news report from TechCrunch at the time.

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Big Insurers Are Uniting Behind R3's Blockchain Tech

R3 has scored another win in the insurance sector, giving the startup a wide lead over other distributed ledger technology (DLT) providers in the sector.

Revealed exclusively to CoinDesk, the RiskBlock Alliance, whose members include such insurance heavyweights as Chubb, Marsh and Liberty Mutual, has decided to build its first set of use cases using R3’s Corda platform.

The news comes soon after B3i, the European reinsurance consortium, decided to switch from Hyperledger Fabric to Corda. With the addition of RiskBlock, R3 now counts all the major insurance blockchain consortia as Corda users, including the Insurwave marine insurance platform created by EY and Maersk as well as regional initiatives in India and Italy.  

RiskBlock was officially launched in mid-2017 by The Institutes, an insurance research and education network, but the team behind the DLT consortium has spent at least two years testing enterprise blockchain solutions. Earlier this year, RiskBlock narrowed down its choices to a short list: Quorum (developed by JPMorgan Chase), Hyperledger Fabric, Corda, and Digital Asset.

“We went through an intense and laborious process and finally narrowed it down to two, which were Corda and Digital Asset,” Patrick Schmid, a vice president at RiskBlock, told CoinDesk, adding:

“It was a close race – and we haven’t worked out all the details yet – but we have decided on Corda and we are moving in that direction.”

RiskBlock was a founding member of the Ethereum Enterprise Alliance and much of the early work, including several proofs-of-concept, was done on a private version of ethereum, the world’s second-largest blockchain. However, the insurance consortium started to change course this year as it received input from member firms and also some of its potential partners.

Privacy – or, rather, the lack thereof in a system forked from a public network – was the dealbreaker for these companies, according to Schmid.

“What we learned from testing ethereum was that our members found huge value in the smart contracts, and found huge value in blockchain-enabled technology. But they were a little bit concerned about data segregation,” he said.

“Even with a private variant of ethereum, their concern really was around data being stored, even if it’s encrypted and hashed, on every node in the system.”

The new RiskBlock applications are proofs of insurance (with the goal of weeding out uninsured motorists); more efficient forms of data sharing when a policyholder first notifies an insurer it will be filing a claim; subrogation (think of when your auto insurance carrier pays you after an accident and then pursues the other driver’s carrier for reimbursement), with a focus on blockchain-based net settlement; and parametric insurance, which is paid out automatically when a triggering event such as a natural catastrophe occurs.

In terms of a timeline, Schmid said, “Everything is in progress now. We anticipate that we’ll have POI and First Notice of Loss fully complete and ready for member testing before the end of summer.”

Insurance and interoperability

Landing RiskBlock is another important validation for R3’s technology at a time when the bank-owned startup is rumored to be struggling financially. The company is set to release the commercial version of its enterprise software next week.

“Over the last few months we have seen several insurers migrate to Corda due to its enhanced privacy and scalability; information is shared on a bi-lateral or multi-lateral basis, meaning parties that are not involved in the transaction will not see it,” said Ryan Rugg, global head of insurance at R3.

“Corda gives insurers the ability to integrate and secure disparate data sources, whilst simultaneously ensuring transparency across an interconnected network of clients, brokers, insurers and other third parties,” he added.

In a sense, B3i’s switch from Hyperledger to Corda made fellow insurance consortium RiskBlock more likely to settle on the R3 platform as well, all else equal.

That’s because, according to Schmid, the potential to “make interoperability an immediate thing” was a big factor in the platform selection process at RiskBlock.

“One of the major catalysts for us to narrow our selection process down to ranking Corda at the top was that it’s potentially also going to be leveraged by European reinsurers in the B3i initiative and by the InsurWave initiative – and some other smaller initiatives,” he said.

B3i, founded by insurance giants Allianz, Aegon and Swiss Re, and supported by AIG and AIA, gave similar reasons as RiskBlock in explaining its switch from Hyperledger Fabric to Corda.

After re-evaluating our criteria around data privacy, developer productivity and interoperability we concluded that Corda is a perfect fit for our insurance use cases and also for our future strategy for an insurance business network,” Markus Tradt, CTO at B3i, told CoinDesk.

Tradt said B3i’s vision goes far beyond single-purpose blockchain deployments for a specific use case and that his consortium is working with partners and third parties for application developments.

Hence, “interoperability is crucial for us,” he said, “To that end, we are actively pursuing collaboration or partnerships with other platforms and initiatives.”

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Enterprise Ethereum Alliance Unveils Common Blockchain Standards

The Enterprise Ethereum Alliance announced the release of a common technical specification on Wednesday, fulfilling a pledge the group made less than a month ago at an event in London.

Enterprise Ethereum Client Specification 1.0, unveiled during CoinDesk’s Consensus 2018 conference in New York, comes weeks after Jeremy Millar, a founding board member of the 500-plus-member group, spoke about the importance of common standards as a way to connect development efforts across the enterprise-focused, ethereum-based initiative.

It’s a significant moment for the group, which launched at the start of last year with backing from major corporates like British oil giant BP, Wall Street bank JPMorgan Chase and Microsoft, as well as stakeholders in the blockchain work such as ethereum startup studio ConsenSys, Nuco and BlockApps, among others. CoinDesk first reported on the group’s work in January 2017.

In statements, representatives from the initiative framed it as the result of a months-long collaborative effort between different stakeholders and one that widens access to the software.

Ron Resnick, executive director for the EEA, said of the release:

“The EEA’s Enterprise Ethereum Specification is the result of 18 months of intense collaboration between leading enterprise, technology and platform members within our technical committee. This EEA open-source, cross-platform framework will enable the mass adoption at a depth and breadth otherwise unachievable in individual corporate silos.”

Indeed, Resnick spoke about the work during a recent interview with CoinDesk, pointing to the process as one aimed at connecting the different software clients developed by group members.

“All the ethereum client companies see the need to agree on these building blocks and components and how they talk to each other, because if we don’t, then we don’t have a way to compete against the proprietary solutions,” he said at the time.

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BMW, Ford, GM: World's Largest Automakers Form Blockchain Coalition

Four of the world’s largest carmakers have joined tech providers and startups to form the biggest-ever consortium focused on applying blockchain tech in the automotive sector.

Announced Tuesday, the Mobility Open Blockchain Initiative (MOBI) has revealed founding members including BMW, Ford, General Motors and Renault. Also present among the ranks are the car-parts manufacturers Bosch and ZF as well as major companies (Accenture, IBM) and blockchain industry groups (Consensys, Hyperledger).

As such, while there have been a number of proofs-of-concept in the sector of late (last year, IBM and ZF tested a crypto car wallet), the consortium perhaps distinguishes itself through its broad representation, as well as the participation from groups backing both private and public blockchain systems.

Rather than push a particular type of distributed ledger, MOBI aims to create common standards and APIs to enable payments and data-sharing between cars – all in service of driving forward a new digital mobility ecosystem, from ride-sharing to self-driving vehicles and everything in between. 

Chris Ballinger, the chairman and CEO of MOBI, said that in his previous job at Toyota Research Institute he realized the need for a consortium after conducting several blockchain proofs-of-concept with startups. 

What is required to move those forward, he said, is a decentralized business network.

“You really have to have common standards and common ways for cars to communicate, to identify themselves and make payments,” Ballinger told CoinDesk, adding:

“But if each auto company is trying to develop its own car wallets or its own way of paying tolls, or providing a rise sharing service, it just doesn’t work; it’s the Tower of Babel.”

And while he started a fledgling consortium during his time at Toyota, Ballinger’s company was the only automaker on board with the idea. Still, it’s a concept that seems to have gained some steam with MOBI coming out of the gate with members that account for 70 percent of global car production, along with 30 other partners.

Dan Harple, the CEO of Context Labs, who is working closely with Ballinger, said the new consortium’s first step will be to establish a “minimum viable ecosystem” for gaining network effect.

The work will kick off with in-person member meetings to form project teams for areas such as vehicle identity and data tracking; ride sharing; mobility ecosystem commerce; and data markets for autonomous and human driving.

Internet’s original sin

All told, the MOBI consortium is perhaps the auto industry’s first coordinated response to the realization that data produced around cars is a valuable resource and that blockchain could help the automotive industry itself keep control of and manage this data. 

Stepping back, the fact that data lacks good property rights means it ends up in data silos of big tech companies which become quasi-monopolies and then just get bigger and bigger – what MIT’s Michael J. Casey (a CoinDesk columnist) refers to as “the Original Sin of the internet.”

But while the car is the next data battlefield that Apple, Google and Amazon are fighting over tooth-and-nail, MOBI sees blockchains offering a powerful tool for decentralization. Moreover, that data, once it is shared, can conceivably deliver benefits to society, such as improving road safety and reducing congestion.

“Everybody wants that data. Apple has their car play, Amazon is putting Alexa in the car, Microsoft Azure has their car system, Google’s got theirs,” Ballinger told CoinDesk, adding:

“The car is the fourth screen and the next big data battleground. It’s a trillion-dollar prize.”

As such, Ballinger anticipates many data opportunities going forward.

One is the data generated inside the car: the average commuter spends a couple of hours a day in their car, and increasingly they’re using the internet during that time – for instance, asking virtual assistants for directions.

“The opportunity here is if you can create property rights, then that data can eventually become self-sovereign and owned by whoever generates it – whether that’s an individual owner, a fleet operator, a city government perhaps operating traffic lights, whatever,” Ballinger said. 

Sensor data explosion

Another type of data that MOBI hopes to harness using distributed ledger tech is much more up for grabs.

That’s the data generated by the car itself via the multitude of sensors positioned within and around it. Connected cars today are producing about 25 gigabytes of data an hour and that figure is expected to increase by orders of magnitude in a future with vehicles (manual or autonomous) that have remote sensing methods like light detection and ranging (LIDAR).

“With these kinds of rich sensors, the cars will be producing massive amounts of data that probably not even 5G networks can handle,” Ballinger said. “Imagine real-time mapping in such detail that you could deliver a package with a robot to a door of somebody’s apartment or house.”

Added to that could be real-time weather sensors, cars that are negotiating rights of way with other cars, cars negotiating carbon pricing and pollution and the energy they use and so on, he continued.

All these data points, if managed and used correctly, could make being on the road much safer too.

While the likes of Google and Tesla are way ahead in terms of collecting self-driving car data, Ballinger believes it’s still going to take a half a trillion miles to develop cars that are really safe and can handle all the real-world driving situations, such as driving through cities in bumper-to-bumper traffic or navigating the highway in torrential downpours.

Yet, blockchain-based systems will help here as well.

While at Toyota, Ballinger took part in a proof-of-concept involving startup BigChainDB which used a blockchain to create property rights for data so it could be shared among car makers, which could then use it to train machine-learning algorithms. According to Ballinger, sharing this data is the only way we speed up the process of getting safe, self-driving cars on the road. 

“No company is anywhere close to having that amount of data and won’t any time soon,” said Ballinger, adding: 

“That data might be out there, but nobody is sharing it and so the day when we get safe cars is probably further away than it otherwise could be.”

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22 European Nations Form New Blockchain Partnership

A group of 22 European nations has formed a new blockchain partnership aimed to exchange information on the technology.

The countries, including the U.K., France, Germany, Norway, Spain and the Netherlands, signed a declaration on Tuesday establishing the new group, dubbed the European Blockchain Partnership, according to a release from the European Commission.

The collaboration is aimed to avoid “fragmented approaches” to the technology by sharing technical and regulatory expertise among member states, as well as creating ways to promote blockchain applications across the EU-wide Digital Single Market.

Mariya Gabriel, European Commissioner for Digital Economy and Society, stated that all public services will use blockchain technology in the future, and that the partnership would turn the “enormous potential of blockchain into better services for citizens”.

As well as enabling member states to work together, the partnership also aims to facilitate the interoperability and implementation of blockchain services.

Gabriel continued:

“Blockchain is a great opportunity for Europe and member states to rethink their information systems, to promote user trust and the protection of personal data, to help create new business opportunities and to establish new areas of leadership, benefiting citizens, public services and companies.”

The news comes soon after the EU launched the Blockchain Observatory and Forum in February. Soon after, the European Commission said it would host a Fintech Lab to foster emerging technologies including blockchain starting from the middle of 2018.

The new partnership follows a study conducted by the EU last November that assessed potential of an EU-wide blockchain infrastructure.

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Telecoms Blockchain Group Touts Demo Success, New Members

A number of worldwide multinational telecoms firms have joined the Carrier Blockchain Study Group (CBSG) to advance efforts in applying blockchain technology within the industry.

According to today’s announcement by Japan’s SoftBank, the study group will see United Arab Emirates’ telco Etisalat, Spain’s Telefonica and Philippine’s PLDT as new members. In addition, two firms from South Korea will also join the initiative: KT Corporation and LG Uplus, a subsidiary of LG.

As CoinDesk has reported previously, the CBSG was established in September last year – a move led by several global major telecoms firms including SoftBank and U.S. firm Sprint in order to research and develop an international cross-carrier blockchain platform and ecosystem.

Wonseok Cho, vice president of LG Uplus, said in the statement:

“By establishing blockchain between carriers, we can provide differentiated services by securing transparency, security and real-time transactions.”

In the release, the group also touts its recent success in demonstrating a cross-carrier blockchain payment system to initiate phone bill top-ups, as well as mobile wallet roaming and remittances.

Further down the road, the CBSG plans to trial a blockchain platform to power mobile wallet roaming among Japanese and Taiwanese travelers in 2018. The new members are also expected to pilot CBSG’s existing blockchain use cases in their businesses.

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Banks and the Blockchain Blues

Noelle Acheson is a veteran of company analysis and member of CoinDesk’s product team.

The following article is an exclusive contribution to CoinDesk’s 2017 in Review.


Like the misleading opening of a well-crafted thriller, the blockchain bustle in the banking sector is sending a confusing message.

To see how, let’s take a brief look at the timeline:

  • In 2013, the news was full of banks shutting down bitcoin company accounts and worrying about being displaced by the innovation.
  • This continued in 2014, while a handful of brave institutions began to look at the underlying technology.
  • In 2015, we started to see the emergence of “thought leadership” from some incumbents, as well as promises of imminent blockchain trials and launches.
  • These began to materialize and multiply in 2016, as use-case testing spread.
  • And in 2017, we have seen an even greater number of trials, proofs-of-concept and prototypes, as well as the growth of financial consortiums.

It appears that confidence is increasing.

Or is it?

Given the seemingly frenzied activity over the past couple of years, we should be asking ourselves where the results are. Successful trials are great, but why have they not led to real-world use? Why is there so much applause and fanfare for work that has yet to show a practical application in banking? Why have countless promised deadlines come and gone with no follow-up?

Superimpose the scarcity of implemented blockchain projects over the subsequent silence around most of the trials from 2015-2017, and the implied confidence that we are close to useful solutions starts to weaken.

Two sides

On the one hand, I don’t want to belittle the considerable investment that has been sunk into blockchain explorations in finance. Far from it, the knowledge acquired is an essential building block in the systems of tomorrow, in finance and other sectors.

And I still believe that finance – the “plumbing” of our economy – is one of the more compelling use cases for the technology.

What’s more, there is plenty of interesting stuff going on. Trade finance and cross-border applications are two main areas of focus, and we will almost certainly see solid progress in these applications over the next couple of years. And many other intriguing trials are far along, with possible launches in 2018.

But on the other hand, the empty promises and quiet disappointments are starting to take their toll.

Interesting reports are getting lost in the noise, as most announcements these days appear to be along the lines of, “Hey, we’re looking at blockchain!” – it would be more surprising to read a headline proclaiming that a bank is not interested in the technology.

With so many consortiums to join, potential use cases to announce and opinions on bitcoin to share with the world, it’s getting easier than ever for a bank’s PR department to get its name in the press.

Be careful what you wish for

This is self-defeating.

First, there’s the loss of credibility. Looking back at the broken assurances from the past two years, we understandably take today’s pronouncements with a grain of salt.

Second, there’s the creeping suspicion that the technology isn’t all it’s cracked up to be. If it was so good at streamlining processes and reducing costs, why isn’t it already in the field?

Third, the level of noise is starting to induce an indifference to the progress. I’m sure I’m not the only one for whom bank CEO pronouncements trigger a boredom-induced numbness. And every time I read that a consortium has added yet another member, I’m reminded of what the collective brain power has yet to produce.

If the PR agencies could quieten down a bit, and if the press could be more selective about what it writes up, we could get a better sense of what really is happening “under the hood.”

Unfortunately, PR agencies and marketers are not known for their restraint. And us journalists and commentators need to inform you of what the incumbents are doing, even if it’s just talking, since they are both enablers and barriers to widespread adoption.

So, I expect that in 2018 we will continue to see empty announcements and mindshare positioning from the banking sector. The noise level will continue to increase, compounded by even more opinions on cryptocurrencies and token sales, as well as a stream of “me too” experiments that seem to repeat what has already been done.

My wish list

However, the eternal optimist in me hopes that the flurry will soon start to condense into substance.

The scattershot approach of many blockchain teams will consolidate into a few viable projects, as most use case explorations end up shelved due to regulatory obstacles, scant engagement or lack of buy-in from senior management. The “low-hanging fruit” targets will gradually be replaced with distributed ledgers, and lessons learned will nourish more complex ambitions.

Instead of fluff pieces that regurgitate press releases, the media will start to use its deepening knowledge to more carefully select what’s worth writing about, and will spend more time talking to those actually doing the work. PR agencies will start to turn down the volume, realising that we’re not so gullible anymore.

And perhaps we’ll be able to talk more about how hard it is to go from lab to production, the difficulty of choosing the right problem to work on, the risk of operating in regulatory fog, and the struggle to get not only senior management buy-in but also the requisite partners on board. We would love to learn from mistakes, to hear more about the successful trials stuck in limbo, and to get a glimpse of what criteria are used in deciding to abandon a project.

That said, I also hope 2018 brings productive success to all those, in finance or not, who are working on blockchain applications – we are looking forward to reporting on your hard-won successful implementations that bring us a step closer to a better distributed and more trustworthy financial system.

But, please, keep the boring stuff to yourselves.

Have a different take on 2018? Pitch your idea to CoinDesk’s editors. Email news@coindesk.com to learn more.

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South Korean NH Bank Joins R3 Distributed Ledger Consortium

South Korean NongHyup Bank (NH Bank) has joined the R3 distributed ledger consortium.

With the move, NH Bank, a Seoul-based agricultural bank, aims to collaborate with the enterprise-focused group’s other members in fostering developments in blockchain technology.

According to a Business Korea report, an official from the the bank said:

“We will acquire technology by joining the consortium and apply it to various sectors of NH Nonghyup Bank such as the financial and economic sectors.”

The bank will further propose a pilot project that will look to commercializing blockchain technology in collaboration with fintech firms.

NH Bank is also a part of South Korea’s new blockchain consortium, formed last December, which focuses on building tools for managing trade finance processes. Other members of the new group include Dongbu Securities, Yuanta Securities Korea and Kiwoom Securities.

R3’s member network consists of more than 160 international members from across various industries, including financial institutions, technology firms, trade associations and others.

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