Fast-paced developments continue around the promising blockchain technology. Blockchain attracted significant attention from people all over the world over the last few years, and it continues to be in the news in 2019 as well!
That’s not surprising, is it? With decentralization, distributed ledger, robust security, and smart contracts as its defining features, blockchain has the potential to transform the world as we see it today. Policy interventions on the part of governments and regulators, coupled with substantive research and development can help the blockchain technology realize its potential.
Indeed, a lot has happened on these fronts in 2019! Here, we take a look at the key developments around blockchain in 2019.
USA: Crypto gains more followers!
Bitcoin opened at $3,836.52 on 6th January 2019, and its opening price was $11,385.02 on 12th August 2019. It opened at $7,294.44 on 31st December 2019. Quite a roller-coaster ride, wasn’t it? Did you think that such fluctuations would put people off?
Americans thought otherwise! A significantly higher number of Americans invested in cryptocurrencies in 2019 than in 2018. In 2018, 7.95% of Americans held cryptocurrencies, however, it was 14.4% by the time 2019 ended. This signifies an increase of 81%, and an estimated 36.5 million Americans now hold cryptocurrencies.
Globally, the total investment in the blockchain/cryptocurrency sector amounted to $3.7 in 2019, and the number of deals was 741. The USA held the lion share of this, with $2 billion in investment and 324 deals.
2019 also saw plenty of developments on the blockchain/crypto regulatory front in the US. Three key financial regulators in the country have asked the cryptocurrency industry to abide by the banking laws. These regulators are the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and the Financial Crimes Enforcement Network (FinCEN).
On the other hand, the USA now has 5 states with crypto-friendly regulations. These states are Wyoming, Colorado, Ohio, Texas, and California. A June-2019 report identifies the USA as the country with the largest number of blockchain companies and blockchain-related patent applications.
Malta: The Mediterranean heaven for crypto?
The blockchain/cryptocurrency businesses and investors don’t want a lawless wilderness. They want regulatory clarity and regulations pragmatic enough to acknowledge the uniqueness of the blockchain technology. That hasn’t been forthcoming in many countries, though.
Malta, the small Mediterranean nation has had its fame as a well-known tourist destination with its ancient Megalithic temples. The last few years saw this country demonstrating a proactive and pragmatic approach vis-à-vis crypto regulations.
The small island country with a population of less than half a million has been working on a tax incentive system for blockchain/crypto businesses. Malta has also been working on clear and friendly regulations for the blockchain/crypto industry.
In September 2019, the Malta Financial Services Authority (MFSA) has announced a three-year strategic plan for the development of the crypto industry in the country. Known as the “Strategic Plan 2019-2021”, this plan sheds light on the “Malta Digital Innovation Authority” (MDIA), an organization of the Government of Malta. MDIA is expected to facilitate the development of the blockchain/crypto industry in the country.
The regulatory framework in Malta covers the crypto exchanges, brokerages, asset managers, traders, etc., and it specifies how these entities will operate in this country. Regulators in Malta acknowledge the challenges posed by crypto vis-à-vis money laundering and the financing of organized crimes like terrorism. MFSA plans to use cutting-edge technology to prevent fraud, money laundering, and funding terrorism.
Switzerland: “Crypto Valley” fosters more innovation
Zug, the Swiss city that’s the home to the famous “Crypto Valley” has seen plenty of interesting developments in 2019. Thanks to its crypto-friendly laws, the city plays a big part in driving collaboration and growth in the blockchain/crypto ecosystem. After all, the birth of Ethereum was here!
The city has a considerable concentration of FinTech, cryptocurrency, and blockchain start-ups. In May 2019, Crypto Valley Venture Capital (CV VC), a venture capital fund, set the ball rolling for its CV Labs incubation program. The program started in the autumn of 2019. CV VC made plans for investing up to $125,000 in seed funding into the 12 blockchain start-ups they selected for this incubation program.
“Crypto Valley Association” (CVA), the industry association based in Zug that plays a key part in driving the growth of the blockchain/crypto ecosystem in there is also working with Zurich Tourism, the marketing wing for the tourism industry in Zurich. The objective of this partnership is to bring blockchain awareness, tourism, and new businesses to Zurich.
Elsewhere in Switzerland, Vontobel, a famous Swiss bank has offered its “Digital Asset Vault” in 2019. It’s a plug-in platform that other financial services institutions can use for storing and trading crypto assets on behalf of their clients. Vontobel has partnered with Taurus, a Swiss blockchain/crypto company for this.
Julius Baer, another Swiss bank has entered into a partnership with SEBA Crypto, a Swiss start-up. This partnership will enable Julius Baer, the 3rd largest bank in Switzerland to store, trade, and invest in digital assets.
UK: London continues to be a key blockchain/crypto hub
London has been considered a key hub for blockchain/crypto developments in the UK and Europe. That trend continued in 2019. In this year, Nickel Asset Management, a UK-based hedge fund manager has raised $50 million for the new digital assets arbitrage strategy fund it has launched. It’s the first such fund in the UK to be managed by a UK Financial Conduct Authority (FCA)-regulated company.
In November 2019, London was the venue of Sibos 2019. Hosted by Swift, Sibos is globally recognized as an important financial services event. Representatives from giants like IBM, Google, Deutsche Bank, etc. attended the event, which saw 11,000 delegates and 600 speakers from all around the world. The event witnessed key discussions around how blockchain has the potential to disrupt the world of business.
Gibraltar: An increasingly prominent hub for the blockchain/crypto companies
Gibraltar, the small British overseas territory on the south coast of Spain is fast becoming a hub for the blockchain/crypto companies. Gibraltar legalized and regulated ICOs in 2018, and the territory had created its “Distributed Ledger Technology Regulatory Framework” in the same year. These developments had already categorized Gibraltar as a crypto-friendly territory.
Gibraltar has further consolidated its position in 2019, and the territory is on its way to becoming a hub of choice for blockchain start-ups. High-ranking government officials in Gibraltar express keenness to enable innovative and high-quality blockchain companies to operate in a fully regulated and licensed manner.
Several crypto exchanges have received a license to operate in Gibraltar since the roll-out of the aforesaid regulatory framework. In October 2019, Vega, a Gibraltar-based blockchain start-up has announced that is has received $5 million funding in a private seed round. The company is creating a protocol that will enable its users to create and trade derivatives on a fully decentralized platform.
South Korea: A notable push by the government to develop a blockchain ecosystem in the country
South Korea is an important country as far as the global blockchain/crypto ecosystem is concerned. This is attributed to investments in crypto as well as technical developments around blockchain in this country.
The government in South Korea has announced that it will back blockchain start-ups with a $9 million fund in 2020. Crypto projects and crypto exchanges are outside the ambit of this funding support.
The Bank of Korea (BOK), which is the central bank of South Korea has indicated its openness to explore digital currencies. BOK has planned to form a task force for research on this during 2020.
KT, the largest telecom company in South Korea has announced its foray into digital currencies. The company has issued a blockchain-based digital currency called Dongbaekjeon in Busan, which is one of the largest cities in South Korea. It works as a card, and it went live on 30th December 2019.
Incidentally, the government in South Korea has declared Busan as a “regulation-free” zone for blockchain development. This move is expected to fetch $25 million in investments in this city by 2021.
China: Embracing blockchain while resisting crypto
China is widely considered a powerhouse for blockchain research and development, however, it has continued to resist cryptocurrencies since 2017. The country has continued this trend in 2019, and November 2019 reports suggested that five Chinese crypto exchanges have stopped operating in the country.
This is in marked contrast with the enthusiasm the country displays about blockchain. None other than Xi Jinping, the Chinese president has endorsed blockchain in October 2019 and asked the country to embrace the opportunities that this technology offers.
Observers believe that China could roll out its state-backed digital currency soon, amidst reports that Chinese government grants have been established to help blockchain projects. E.g., the city government in Guangzhou has set up a $140 million subsidy fund to support the blockchain development industry.
Experts observe that the Chinese government understands the value that blockchain could offer in the storage and exchange of data. They state that the country is keenly exploring this technology to streamline many government services.
What 2020 could bring for blockchain
While 2019 has been exciting, the blockchain technology still has a lot of ground to cover to fulfill its potential. The growing blockchain/crypto ecosystem will need to work on several aspects, e.g., technology innovations, helping governments and regulators to formulate pragmatic regulations, and blockchain adoption. 2020 couldn’t come sooner!