FDA DSCSA Blockchain Pilot Report Released, Consortium Formed for Energy Grids

A final report provided in February 2020 to the U.S. Food and Drug Administration (FDA) has been released with details on the FDA’s Drug Supply Chain Security Act (DSCSA) Blockchain Interoperability Pilot Project. The project participants included four major global firms from the technology, pharmaceutical, grocery/retail and audit/consulting industries. The DSCSA sets a deadline of Nov. 27, 2023, for members of the pharmaceutical supply chain to build an electronic system to verify, track and trace prescription drugs as they are distributed in the United States. The four firms participating in the pilot project propose a blockchain solution as a response to the DSCSA requirements. The firms “believe that blockchain technology with its shareable ledger, immutable data, and inherent ability to track drug provenance, is uniquely qualified to address the various challenges of the pharmaceutical supply chain.” According to the report, the pilot program was successful in demonstrating that a blockchain-based system can (1) “provide a common record of product movement by connecting disparate systems and organizations to meet DSCSA 2023 interoperability requirements in a secure way” and (2) “[i]mprove patient safety by triggering product alerts and increasing visibility to relevant supply chain partners in the event of a product investigation or recall.”

According to reports, the same technology firm from the DSCSA pilot has created a blockchain consortium with three of Europe’s electricity grid operators. The consortium will reportedly leverage the Hyperledger Fabric blockchain protocol and will focus on solutions to enable the transition to renewable energy. In another recently released report, a major global consulting firm provides a “C-Suite Briefing” covering “5 Blockchain Trends for 2020.” The five trends identified by the report are (1) The Hype Is Over, (2) Evolving Platforms, (3) Adoption Rates Across Industries, (4) Governance Is Critical and (5) The Rise of Tokens.

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New Crypto Funds, Crypto Broker-Dealer Applications, Blockchain Securities Clearing

A major U.S. venture capital firm has announced the launch of its $515 million Crypto Fund II, which is said to focus on the “next generation” of payments and decentralized finance (DeFi) companies. This comes after an initial $350 million fund the firm launched in mid-2018. Crypto Fund II’s focus on payments is reported to be on systems in which the recipient immediately possesses the actual value upon clicking “send” without third-party dependencies, as opposed to a delayed settlement process. With respect to DeFi, Crypto Fund II is reported to focus on financial services (such as lending, derivatives, insurance, trading, crowdfunding, etc.) that are built on top of blockchains and embrace “the open internet, including 1) open access to anyone in the world; 2) commitment to open source code; 3) permissionless extensibility by third-party developers; 4) minimal-to-no fees; and 5) encryption-backed security and privacy.”

tZERO has announced that it is seeking to become a FINRA-registered broker-dealer by Q2 of 2020, with the intention to expand trading by combining equity and traditional securities with crypto and digital assets. tZERO Markets, the proposed future retail broker of the business, submitted its application to FINRA last year and is awaiting approval.

According to recent reports, a major U.S. clearing agency and derivatives clearing organization that has been designated a “systemically important” financial market utility under Title VIII of the Dodd-Frank Act is in the process of moving its stock lending infrastructure to a technical platform underpinned by the Axcore blockchain. According to reports, each participant in a deal will run its own nodes on the Axcore blockchain, and thus provide participants with direct access to the same data in real time, as opposed to a series of messages requesting and receiving data. Development of the blockchain platform began in early 2019 with the proof of concept and is scheduled to be ready for clients in 2022.

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CLibra Association Hires CEO, Crypto Payments Firms Report Growth and Gain Licenses

The Geneva-based Libra Association has hired the current chief legal officer from a large international financial institution, and he will soon become the Association’s first CEO. Stuart Levey is reported to be starting in the new position this summer and will be based in Washington, D.C. Levey’s career had been mostly in public service before his prior role at the financial institution. Levey began his career at the U.S. Justice Department, where he served as the principal associate deputy attorney general before joining the U.S. Department of the Treasury. At the Treasury Department, Levey’s work included oversight of the Office of Foreign Assets Control and the Financial Crimes Enforcement Network. Levey’s imminent arrival at the Libra Association comes at a time when the organization has scaled back its original plan to create a global stablecoin directly tied to a basket of fiat currencies and securities and applied for a license before FINMA, the Swiss Financial Market Supervisory Authority, to launch its platform.

In a Securities and Exchange Commission (SEC) quarterly filing, a U.S. fintech and payments company reported that bitcoin revenue in its Cash App topped fiat revenue for the first time in Q1, with gross profit growing 115% year over year. The Cash App brought in $222 million on all its fiat-powered services in the quarter, while revenue from bitcoin was $306 million. Still, the SEC filing by the company noted that gross profit on the Cash App continues to be coming mostly from fiat revenue.

In other payments news, it is reported that Eris Clearing has secured a virtual currency license from the New York State Department of Financial Services. Eris Clearing is the clearing and settlement arm of the ErisX platform for spot and regulated futures on cryptocurrencies. To date, the ErisX entities are licensed to operate in 47 states and jurisdictions, including New York.

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Bitcoin Network Difficulty Increases Prior to ‘Halving,’ Bitcoin Mining Map Published

According to reports this week, the Bitcoin Network mining difficulty has neared its all-time high as the Bitcoin Network approaches the much anticipated “halving” event, which is expected to take place close to May 11. The Bitcoin Network mining difficulty measures the computer processing power needed for Network nodes (i.e., miners) to compete for the bitcoin rewards granted to nodes that are first to verify new “blocks” of transactions on the Network. The “halving” will reduce the newly mined bitcoin on the Bitcoin Network from 1,800 bitcoin per day (12.5 bitcoin per “block”) to 900 bitcoin per day (6.25 bitcoin per “block”). According to reports, following the “halving,” the mining difficulty is expected to drop. Related reports note that the Bitcoin Network’s total node count recently fell to 47,000, the lowest since 2017. The decline in nodes supporting the Bitcoin Network may be linked to the recent increase in difficulty of mining new transaction “blocks” on the Network.

The University of Cambridge recently published a “Bitcoin Mining Map,” which “visualises the approximate geographic distribution of global Bitcoin hashrate” and shows the “average hashrate share by country.” The Bitcoin Mining Map also includes “a second map with an exclusive focus on China’s hashrate distribution by province.” The map reveals that more than 65% of the hash power supporting the Bitcoin Network is located within China. In other mining news, according to recent reports, a Turkish company was granted approval to set up what is expected to be the largest cryptocurrency mining operation in Iran to date.