Australia Post simplifies exchange selfies, Mastercard seeks to reshape crypto transactions, the Royal Mint is getting out of the stablecoin game, and bitcoin is property – per a Chinese court.
Here is what’s happening for Friday, October 26, 2018:
New Patent Claims Crypto Benefits from Fractional Reserve Banking
Per a patent application filed Thursday, financial services corporation Mastercard seeks to manage fractional reserves from cryptocurrencies.
Fractional reserve banking is a fiduciary system where only a fraction of deposits is backed by actual currency in hand and available for immediate withdrawal. This, in effect, frees up capital to be loaned out.
According to the application, Mastercard seeks to carry out plans that would allow merchants to interact with “blockchain currencies” through a method of simultaneous crypto and fiat currency storage. The proposed system would facilitate both fiat and crypto transaction from a digital wallet. Mastercard argues that applying crypto to the existing fiat payment infrastructure would allow cryptocurrency to benefit from the same risk assessment, fraud detection, and system efficiencies that allow for the quick processing of traditional transactions.
The application reads:
“There is a need to improve on the storage and processing of transactions that utilize blockchain currencies. Existing payment networks and payment processing systems that utilize fiat currency are specially designed and configured to safely store and protect consumer and merchant information and credentials and to transmit sensitive data between computing systems. Accordingly, the use of traditional payment networks and payment systems technologies in combination with blockchain currencies may provide consumers and merchants the benefits of the decentralized blockchain while still maintaining security of account information and provide a strong defense against fraud and theft.”
Australian Post Launches Digital iD, Allows Customers to Buy Bitcoin via Post Office
The Australian Post (the government’s postal service) has launched a new identification process that would take the sting out of exchange registration, allowing a new buyer to purchase bitcoin in just minutes.
Typically, when you buy bitcoin from an exchange for the first time, you must adhere to know-your-customer (KYC) regulations, which usually means submitting a selfie and a copy of your driver’s license and waiting a day or more for your identity to be verified manually. This process can scare off would-be purchasers.
Australia Post’s Digital iD service allows a person to digitally confirm his/her identity via a mobile app. The service uses facial biometrics and “liveness” testing to create a photo ID that can serve as absolute proof of one’s identity. The Australian Post has partnered with several exchanges – including Bitcoin.com.au, Caleb & Brown, Coin Jar, and Coin Loft – who have agreed to accept the new service to satisfy the KYC requirement.
In the United States, digital driver’s license programs are currently in pilot testing in several states, including Colorado and Wyoming.
UK Mint Scraps Plans for Gold-Backed Cryptocurrency
As reported by Reuters, the United Kingdom’s Royal Mint has halted plans to launch a gold-based crypto asset after the British government vetoed the plan and after a planned partnership with American exchange group CME failed. The project, which would have produced Royal Mint Gold (RMG), would reportedly have been the first instance of a developed economy’s government working directly with a crypto exchange.
The Mint announced plans in 2016 to issue up to $1 billion USD in the new token to give investors an easy way to buy and trade mint-held gold. CME withdrew from the plan in Autumn 2017, allegedly due to the firm’s management shift. Attempts to save the project by working with a crypto exchange were blocked by the British finance ministry, as it was too great a risk to the reputation of the Mint and the British government.
The Royal Mint sought to appeal to investors that wanted access to crypto assets but also the assurance of dealing with a trusted entity. With the Mint’s core business, the issuing of circulation coins, diminishing with the increased use of paperless money, it was looking for a new source of revenue.
Australia’s Perth Mint and the Royal Canadian Mint are working on similar projects.
Despite Ban, Bitcoin Should Be Legally Protected Like Property, Say Chinese Arbitration Court
On Thursday, an arbitration court offered a rebuttal to China’s central bank’s ban on cryptocurrency by ruling that bitcoin should be legally protected as property with economic value.
The ruling, issued by the Shenzhen Court of International Arbitration, involves a business contract for the transfer of cryptocurrency. The unnamed plaintiff signed an agreement with the defendant allowing the defendant to assume custody of the crypto assets on the plaintiff’s behalf. However, the defendant refused to return the portfolio to the plaintiff after the agreed-upon deadline, arguing that the ban makes it impossible to send the assets back to the plaintiff.
The ban imposed by the People’s Bank of China blocks banks and other financial institutions from trading or possessing crypto assets, undermines crypto trading activity in the nation and bans all initial coin offerings. It does not, however, ban individual possession of crypto assets.
Citing this, the arbitrator ruled that the assets – approximately 20 bitcoin, 50 bitcoin cash, and 13 bitcoin diamond – should be returned. “The Arbitration Court noticed that, after September 2017, major bitcoin exchanges operating in China at the time suspended their businesses. But technically, that fact does not prevent the defendant from sending the bitcoin and bitcoin cash at dispute to the plaintiff upon the agreed deadline,” said the arbitrator.
Be fast, be clever, be wise. Most importantly, be here Monday for your Daily Byte.
Translations by Google.
Frederick Reese is a politics and cryptocurrency reporter based in New York. He is also a former teacher, an early adopter of bitcoin and Litecoin, and an enthusiast of all things geeky and nerdy.
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