I. Policy Trends

1. International

(1)America: Ohio’s bill defining blockchains and smart contracts has come into effect

August 7: A bill of great significance has come into effect today. Ohio Senator Matt Dolan filed a bill with state legislature in May of this year that clarifies the legal status of blockchain signatures and contracts. The bill SB300 failed to advance, but was in part included as an amendment into bill SB220, which was related to cybersecurity. SB220 passed the Senate in May and passed the House of Representatives in June, and has since been waiting for the Governor’s approval. Governor John Kasich finally announced last Friday that he has signed the bill, putting SB220 into effect. According to the act, records and contracts obtained through blockchain technology are considered to be electronic, and become an electronic format.

(2)India: The Indian government may launch its own cryptocurrency, with relevant guidelines being released on the first week of September.

August 7: A source has claimed that India may soon launch its own cryptocurrency. A source close to the developers told Zee Business that the government is currently researching cryptocurrency-related technology and applications, trying to find constructive ways to use this technology. The source also revealed that the blueprint for the native tokens will be ready by September 2018, with the final relevant cryptocurrency guidelines being released in the first week of September. The Indian government is currently undergoing negotiations with RBI, SEBI and other stakeholders.

(3)UK: The UK Financial Conduct Authority has announced the establishment of a new alliance strengthening cooperation with innovative financial technologies like blockchain.

August 7: The Financial Conduct Authority (FCA) has announced the establishment of the Global Financial Innovation Network (GFIN) to improve innovation cooperation between regulators and financial technology companies, including those in the blockchain chain sector. The FCA stated that the new alliance will work with 11 financial institutions and related organizations to help financial technology companies collaborate with regulators from different countries. GFIN’s aim is to consult on the development of technologies like distributed ledger technology, artificial intelligence (AI), securities regulation and ICOs.

4. SEC: The SolidX report published by the SEC provides arguments to support Bitcoin.

August 8: The US Securities and Exchange Commission (SEC) released a report to agency staff by the crypto startup company SolidX. Although the document itself fails to provide detailed information on the meeting, it does provide arguments for supporting Bitcoin, including significant changes in products, market structure and the overall situation since March 2017.’ The presentation clearly shows that Bitcoin and its market structure have undergone ‘significant changes.’ For example, multiple derivatives markets are now available for Bitcoin, including CME Bitcoin Futures and CBOE Bitcoin Futures.

5. Barkin of the Federal Reserve: Blockchain is a valuable innovation

August 8: Thomas Barkin, chairman of the Federal Reserve Bank of Richmond, stated that cryptocurrency still can’t provide the ‘kind of protection that money should bring to people.’ It’s difficult to imagine a currency that isn’t guaranteed by the government, but rather a group of strangers. Barkin also said that blockchain technology, the foundation for cryptocurrency, is a truly valuable innovation.

2. China

(1) Sichuan: The Sichuan Free Trade Zone Financial Services Bureau and the Prime Number Chain Network are working together to build a financial supervision sandbox system

August 6: The Financial Services Bureau of the Sichuan Free Trade Zone and the Prime Number Chain have worked together to build a financial technology sandbox system that successfully applies the diverse blockchain system to the supervision of real-time financial data. The system can provide pre- and post-regulation of financial transactions and control the occurrence of dangerous transactions.

(2) Shaanxi: The Shaanxi Province requires multiple departments to actively guide the development of digital economic and social organizations like blockchains

August 7: The Network Office of the Shaanxi Provincial Party Committe and the Shaanxi Provincial Civil Affairs Department issued the ‘Guiding Opinions on Strengthening the Construction of Social Organizations in the Provincial Network Communication Field.’ This requires municipal departments to actively develop, promote and guide the networks, development, reform, industrial credit, science and technology, business, culture, tourism, press and publication, radio and television, industry and commerce of the mobile internet, cloud computing, big data, Internet of things, artificial intelligence, blockchains, e-commerce, digital culture, digital marketing, mass innovation and entrepreneurship and other digital economic and social organizations.

(3) Mayor of Guiyang: Guiyang should collaborate with the Beijing Municipal Supply and Marketing Cooperative in the blockchain field

August 8: Chen Wei, deputy secretary of the Guiyang Municipal Party Committee and city mayor, and Li Dawei, deputy secretary and executive director of the Beijing Municipal Commission of Supply and Marketing Cooperatives, met in Guiyang. Chen Wei stated that the two sides should expand their extent of cooperation and further improve collaboration in the five fields of artificial intelligence, quantum information, mobile communications, Internet of Things, and blockchain in order to help Guizhou overcome poverty and take strategic action.

(4) Wuhan: Wuhan City will collaborate to create a joint blockchain research laboratory

August 9: Hubei Province’s Wuhan City Procuratorate and Wuhan University have signed the ‘Smart Inspection and Innovation Institute Blockchain Inspection Collaborative Laboratory’ cooperative agreement. Representatives from all parties gathered at the joint blockchain lab to conduct on-the-spot investigations and provide suggestions for joint office construction and project research and development. The laboratory will research blockchain to explore blockchain technology applications within the procuratorate.

(5)Ministry of Industry and Information Technology: The MIIT will promote the healthy and orderly development of the blockchain industry

August 9: The Ministry of Industry and Information Technology has revealed that blockchain technology in China is continuing to produce new innovations, and that the industry is beginning to form applications for the supply chain finance, credit reporting and product tracing fields. The MIIT will work to strengthen interaction with various localities and departments to create healthy development environment for the blockchain industry. Doing so will promote the robust and orderly development of the industry. The MIIT proposes that this will accelerate the promotion of blockchain technology innovation and application, particularly in increasing computing power, storage capacity and integration penetration to build a beneficial industrial ecology and promote industry development.

(6)Guiyang Municipal Party Committee Secretary: Guiyang plans on creating a blockchain ‘Guiyang staple’ brand

August 11: Zhao Deming, secretary of the Guiyang Municipal Party Committee, said at the special work conference ‘Shubo Avenue’ held in Guiyang City that it needs to to strengthen content support and actively produce international ‘Guiyang staple’ results in big data, internet, artificial intelligence, and blockchain. Guiyang Mayor Chen Yu stated that it’s necessary to use this Shubo Dadao event as a motivator to promote the deep integration and accumulation of next-generation information technology like artificial intelligence, quantum information, mobile communications, Internet of Things and blockchain, to expand the digital economy.

Ⅱ: Industry Trends

1. International

(1)Google: Google is about to enter the blockchain BaaS field

August 6: Google is working with BlockApps, a company that provides a blockchain service platform, to become involved in areas that it has never before been involved in, and may soon develop its own blockchain service platform. Such an initiative would allow Google to join the ranks of other giants like Microsoft, IBM and Amazon, which all already have blockchain solutions of their own in this area.

(2) Japan: Japanese construction company Maeda has introduced a blockchain data management system

August 9: The Japanese construction company Maeda Construction has introduced a new data management system based on blockchain technology. The frequent entering and leaving of so many people at the cooperative company and other related personnel makes information data management a difficult problem to solve. By introducing blockchain technology (including decentralized ledgers, etc.), Maeda Construction has made management of information data like design drawings much stricter, making it more difficult for these confidential data to be taken away from the building site. Maeda Construction has begun to introduce this blockchain information data management system in public infrastructure construction projects like airports.

(3)World Bank: The World Bank will use blockchain technology to sell bonds for the first time

August 10: The World Bank will use blockchain technology to sell bonds for the first time, commissioning the Commonwealth Bank of Australia to arrange for the sales. According to reports, the bond will be called Bondi, meaning a ‘new debt instrument provided by blockchain.’ Arunma Oteh, head of finance at the World Bank, said that the bank believes that emerging technologies can also provide transformative but also discreet possibilities for them to continue to innovate, respond to investor needs and strengthen the market. According to the CBA, bond issuance will be conducted using a proprietary Ethereum blockchain. The bank’s goal is to sell the bonds later this month, raising about $100 million. It’s reported that this new blockchain technology will reduce the time required resolve such securities from five days to a few seconds.

(4) Volkswagen: Volkswagen is building their own blockchain solution

August 10: Volkswagen has announced that it’s developing actual use cases for BTC, ETH and IOTA. The company and its subsidiaries are working on encryption and blockchain solutions, driving them to become mainstream. According to reports, Volkswagen said in its latest announcement that the car manufacturer is building its own blockchain solution that will be based on IOTA, Ethereum or some other blockchain technology. Volkswagen wants to provide added value for its customers, providing projects with greater security, greater transparency and more ways of working together.

2. China

(1)Blockchain: The Blockchain boom is cooling down, making it difficult to recruit talent and get financing

August 6: According to results released by the Wuyou website and Zhilian Recruitment, blockchain talent recruitment salary showed a significant decline when compared with the recruitment boom at the beginning of the year. In addition, a number of blockchain leaders stated to a reporter for the International Finance News that ‘We’ve been recruiting, but can’t get anyone.’ Industry experts analyzing the blockchain boom of the first half of the year in comparison to the current state say that due to the decline in currency value and financing, the entire industry is in a downturn state, making the talent market return to a more rational state.

(2) Dalian Huaxin: Building a new supply chain finance model based on blockchain technology

August 10: Dalina Huaxin and Jingtong Network Technology Co., Ltd. reached a strategic cooperation, with both parties deciding to build a new supply chain finance model based on blockchain technology. The two parties combine Dalian Huaxin’s financial industry solutions advantages with the technical strength of Jingtong Network Technology’s lower layer blockchain platform to serve customers in the government and finance industries.

(3) Vice President of China Everbright Bank: Fundamental technologies should be built with a blockchain technology platform as a foundation

August 6: Li Jie, Vice president of China Everbright Bank, said that if he built a digital bank, it would be built with a biometric identification platform, intelligent voice and text capabilities and a foundation of blockchain technology to provide technical support for the rapid application of new technologies. Everbright Group and Jingdong Group formally signed a strategic cooperation agreement strengthening their collaboration in financial innovation fields like the internet of things, blockchain and cloud computing prior to this statement.

(4)Hong Kong: Seven banks in Hong Kong embrace trade finance blockchain platforms to solve financial risk control issues

August 6: Seven banks in Hong Kong are working together to promote the development of a Hong Kong trade finance blockchain platform. The banks are: ANZ, Bank of China (Hong Kong), Bank of East Asia, DBS Bank, Hang Seng Bank, Hong Kong and Shanghai Banking Corporation and the Standard Chartered Bank (Hong Kong). The platform is led by the Hong Kong Monetary Authority (HKMA), and has designated the Hong Kong Trade Finance Platform to undertake the tendering and operation of the platform, with the seven banks being responsible for expenditures.

(5)Zheshang Bank: Blockchain technology can ‘turn lead into gold’ and activate receivables

August 7: A relevant authority of Zheshang bank introduced a receivables chain platform, which uses blockchain technology to convert accounts receivable and payable of enterprises into electronic payment settlement and financing tools. The ‘Midas touch’ activation of receivables will be used to pay and transfer to both upstream and downstream enterprises, and can also be used to pledge assets to finance banks and reduce new liabilities, thus stabilizing corporate leverage.

(6)China Railway: China Railway’s China-based Supply Chain Group’s sister companies rely on blockchain and other technologies to create a modern supply chain

August 7: Huiteng Jinkong, a subsidiary of China Railway’s China-based supply group, relies on blockchain and other technologies to create a new modern supply chain finance model. Zeng Peng, general manager of China Railway’s China-based supply chain group, can rely on big data, blockchain and other technology to identify market trends and analyze risks, including corporate risks and market risks.

(7)Chief Information officer of the Bank of China: Bank of China has piloted blockchain technology applications in 12 different projects

August 9: Liu Qiuwan, chief information officer of the Bank of China, stated that the Bank China has tested blockchain technology on 12 different projects, mainly focusing on data sharing, cross-border payments, cryptocurrency, digital invoicing, etc. According to the 2017 global blockchain corporate patent rankings, Bank of China has 11 blockchain patent applications, ranking 20th among international corporations and ranking first in the domestic banking industry.

(8)Suning: Suning has officially launched the ‘Xingji Home’ blockchain product

August 9: Suning launched the blockchain product ‘Xingji Home’ on August 8th. Reports state this product is based on blockchain technology. This product achieves data and traffic flow in the home business model through scenario integration. This product incorporates Suning’s customer scenarios, including Chaoran Xingqiu and Gouwu Cheng.

Ⅲ. Cryptocurrency

(1)Cryptocurrencies: The number of cryptocurrencies internationally has reached 1,600, with the majority being empty currencies

August 6: Tencent Security jointly released the ‘Blockchain Security Report for the First Half of 2018’ with Zhidao Chuangyu. It points out that there are currently more than 1,600 cryptocurrencies worldwide, with a large number of these being ‘empty currencies’ that are completely unsupported by physical projects, and are thus considered worthless.

(2)Bitcoin: Yale University research report reveals that Bitcoin prices are affected strongly by ‘momentum effect over time’

August 9: Yale University economists Aleh Tsyvinski and Yukun Liu conducted a comprehensive economic analysis of cryptocurrencies and blockchain technology for the first time, discovering that cryptocurrencies have no effect whatsoever on the return of most common stock markets, currencies, commodities and macroeconomic factors. On the contrary, the researchers claim that digital currency returns can be predicted by factors specific to the digital currency market. One of these factors is the ‘momentum effect over time.’ Tsyvinski and Liu believe that if the price of Bitcoin rises within a week, then it’s likely to continue to rise of the next week. The researchers pointed out that the sharp rise in Bitcoin prices spurred higher market demand, leading to greater investment. The study showed that Bitcoin’s ‘momentum effect over time’ is statistically significant for Ethereum and Ripple.

(3)Cryptocurrency: Turkish currency collapses while the volume of local cryptocurrency trade surges

August 11: On Friday, after the Turkish Lira hit a record low against the US dollar, the volume of Turkish cryptocurrency trade surged. The data shows that the trading volume of the Turkish crypto exchanges Paribu, Btcturk and Koinim increased by more than 100% over 24 hours, but the absolute amount was still low in comparison major global crypto exchanges. The country’s largest crypto exchange, Btcturk, has a 24-hour trading volume of approximately $11.6 million.

IV. Voices

(1)Director of the Industrial Economic Research Institute of the Ministry of Industry and Information Techology: Blockchain’s effect on the real-world economy is obvious

August 6: Yu Jianing, director of the Industrial Economic Research Institute at the Ministry of Industry and Information Technology, said that blockchain’s effect on the real economy is obvious, and is mainly reflected in reduced costs, improved efficiency, optimized collaborative environments and the guiding of the deflation of funds. This promotes high-quality development of traditional industries and provides new momentum for accelerating industrial transformation and upgrades.

(2)Cryptonews: Governments can track all financial transactions through sovereign cryptocurrencies

August 9: According to a Cryptonews review article, governments can use blockchain in myriad ways to strengthen its influence on society

Use sovereign cryptocurrency to track all financial transactions on a licensed ledger Use blockchain-based digital identification technology to track comings and goings of residents Create a fixed social credit scoring system Possibly store tampered records on a public chain

(3)Wang Yifei, Vice President of the Zhejiang High Court: The court has an open mind towards the use of blockchain electronic deposits as evidence

August 9: China News Publishing and Broadcasting Network published the article ‘Blockchain: A New Type of Judicially Recognized Deposit.’ Wang Fei, vice president of the Intellectual Property Office of the High People’s Court of Zhejiang Province, said in an interview that the court still has an open and neutral stance towards including blockchain deposits as a kind of electronic evidence for case analysis and identification. The new problems arising from this technology still force it to be determined on a case-by-case basis. The court will neither reject blockchain technology itself because it belongs to a new type of technology, nor will it lower its certification standards because blockchain technology is difficult to modify or delete. Evidence will still be judged according to the relevant legal provisions towards electronic evidence.

(4) Liu Shaojun, China University of Law and Political Science: The country is studying the issuing of sovereign cryptocurrency.

August 10: Liu Shaojun, director of the Center for Financial Law Studies at the China University of Law and Political Science, stated that the legal nature and security of electronic payments differs from cash. It will be difficult for society to accept consumers being forced to use higher-risk payment methods. Moreover, the state is studying the issuance of sovereign cryptocurrency to solve this problem, which may meet security and ease of payment needs. Liu Shaojun also said that although electronic payments is a developing trend, it may not necessarily become a deposited currency or electronic currency payment, it may become a sovereign currency payment.

(5)Wang Bingsheng of the Chinese Academy of Social Sciences: There is no institutional space in the blockchain industry

August 10: Wang Binsheng, special professor of the Chinese Academy of Social Sciences, publicly stated that 2018 being the year of blockchain recognition is unquestionable. There will be no space here for institutions in the future, because it won’t be necessary with the dissemination of information. He also believes that the present is in a movement of asset transferring, and expecting huge returns is unrealistic. The movement has just begun, and no one can predict what the future will bring.

Ⅴ.Market Trends

(1)Renaissance Macro Research Jeff deGraaf: Short-sell once Bitcoin falls below key support levels

August 9: Jeff deGraaf, head of technical research at Renaissance Macro Research, said in a report to clients that if Bitcoin’s value falls below this year’s key support level, it will cause ‘permanent damage’ to the cryptocurrency, and investors are advised to short it. He explains that risk becomes extremely high one the market trend forms a parabola. Usually, a price decrease violently after reaching the peak form a falling triangle within a few months. Once the bottom completely falls below the support level, permanent damage is sustained, even leading to ‘game over.’

(2)Market: BTC fell 12.7% this week, with an amplitude of 16%

August 6 to 11, Source: BITFINEX

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