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Visa is the “bridge” between payments and Blockchain technologies: responsible for cryptocurrencies | video

Published

8 months ago

30 May, 2024

We welcome Visa’s head of cryptocurrency, Kai Sheffield, to the show. Welcome, it’s great to be here. Thanks for having me. Thanks for sitting there while we did our little puppet show. Is fantastic. All right. So we’re at the 2024 consensus. Uh Tell us about what your experience has been so far. This is the second day. What were the vibes like for you? Is fantastic. I think there’s a lot of energy and momentum. We’re really excited to see what developers are building and, and really, how much, you know, Blockchain technology has started to mature and how the infrastructure has improved and you know, a lot of different payments use cases, you know, that you think that stablecoins, which you know, can help enable this. And so it’s been great to interact with a lot of customers, a lot of companies and partners in the payments ecosystem who are all researching and exploring how Blockchain technologies can be used to improve payment flows. Now Visa is one of the most important companies for payments of any kind in the world. And you’ve been there for a while as the head of crypto, I’m wondering from a couple of years ago, how have the conversations changed between then and now internally, like the ideas that you’re championing for the projects that you’re pushing, like Has the inside of a visa changed over time? So we’ve been making really steady progress, you know, consistently every week for five years now. And we actually built the crypto team in the depths of the bear market in late 2018, early 2019. And so our approach was really based on a long-term view. Uh Visa is said to be concerned with any technology that has the potential to improve payments. And so we wanted to take our time, you know, figure out how we could use these technologies to support, you know, our partners. Uh And, you know, we started experimenting with stable coins. We started doing a lot of research and a lot of training, you know, for our customers. And our goal is to continue making consistent and steady progress over the next decade. Uh And we’re really excited about the opportunities that particularly stable coins can offer five years for bulls and bears. It was a nice setup. We didn’t know that we were going to do this with our puppets, um internally. Has there ever been any pushback from anyone who challenged you during the bear market? For example, should we put time and effort into building this industry that seems to be quite unstable? I don’t think we’re, we’ve been really fortunate to be part of a company that has a culture that, you know, from the very beginning, from the early days of Visa and, you know, Dee Haw, you know, going back to the sixties, you know , recognize that value will be digitized. It’s going to move across a lot of different networks, and we want to be the single point of connection for customers, you know, to move value to a lot of different places in a lot of different payment flows. Uh And so we recognize that, you know, cryptocurrency prices are volatile. We don’t really care about the pricing, we care about the underlying technology and the ways in which it can be implemented within the payments ecosystem, but it takes time to do it and you have to do it in a client controlled, you know, secure way. Uh And so we’re really here for the long haul and we’ve continued to make steady progress, you know, despite current market cycles in a recent research paper on visas, I believe you and your colleagues have found that multi trillion dollar stability coin market, only a fraction of them are actually used by real people in terms of payment, I think 100 and 49 billion or some figure like that, which is a large number, but it is, it is not representative of the stable use of coins all in all. What do you think it will take to increase that number and increase the actual adoption of stablecoins as an appropriate means of payment. So, first of all, we think one of the unique aspects of stablecoins is the fact that you could see all the data, you know, on the chain. And so we’ve invested a lot of time and resources and how to understand the on-chain data and understand how stable coins are used. Uh And so we partner with AM Labs, we created a seen dashboard on chain analytics.com. And it was really this exercise of, you know, we use internally on chain data. Uh, you know, it answers some questions, it opens up a lot of other questions and we wanted to make it available as a free public tool and resource for our clients, for politicians, for the media. And you know, we started with these adapted transactions, you know, metric, you know, trying to filter out transactions that appear to be initiated, you know, by bots or as part of smart contracts. It’s not perfect. Uh So we’re not saying that’s it, that’s the end of it. But we think there’s so much opportunity that the industry can really use on-chain data to, you know, better understand how people are using stablecoins. And for us it’s not like stable coins are used by consumers to buy coffee. Its stablecoins are used for things like large-value B-to-B payments. Uh cross border, you know, peer to peer. Uh And so I think we’re just at the point where we’re crossing the divide between consumers who are already in the crypto space, trading crypto on an exchange using stable coins, you know, paying other people in crypto for there’s an infrastructure that can enable for mainstream consumers, particularly outside the United States in emerging markets, to pay each other, to pay companies in many of these flows, on the rails of Blockchain, but there’s still a long way to go. Um, we’re excited to figure out how we can partner with existing companies in the payments ecosystem to start integrating stable coins in unique ways. And we think it should be both together. It is neither a traditional payment network nor a stablecoin. Will it be how they can interact with each other to improve payments? Tell us something more about it. What is Visa’s role in the future of stablecoins? Yes. So we see ourselves as a bridge between Blockchain technology stablecoins and the existing payments ecosystem. One of the things we’re doing is investing in how we can use stablecoins within some of our core products. You know, for example, when you tap to pay with a Visa card, it’s immediately authorized and you could walk out of the store. But there’s a lot of things that have to happen in order for the money to move from the issuer of that card, you know, to the merchant bank on the other side. And so we started experimenting with stablecoins like us cc that run on blockchains like solana to give our customers the ability to settle with us, you know, on a Blockchain. So we can receive stable coins, you know, into an account that we have in a circle, we can then convert them, you know, to pay in fiat to the choir merchant. And so I think we have such a broad and diverse network of traditional financial institutions, fintechs and crypto companies. We are trying to understand how the visa can be a bridge so that not all those companies adopt stable coins and blockchain at the same time, let’s meet them where they are. If they want to use stablecoins, great, we could support it. They operate in traditional fiat. We’ll handle conversions, you know, within it. So we’re excited to see how we can play that role, that bridging role. And this reminds me that before the contestants I cut my hair before the conference, like we all do. Uh, my barbershop only takes cash. I said, oh, it was just about the fees because often small businesses don’t like credit cards because of the fees. He said no, it’s actually not because of taxes. It’s because on Fridays, if I get paid by credit card, I can’t go to the bank to withdraw the money because the banks are closed. So I’m wondering how Visa is thinking about actually helping small businesses use and realize that stable coins could allow for instant settlement and could accept digital payments. Uh and you don’t have to worry about things like banks closing on weekends. Yes. So, there’s a lot of things that we’re doing across the company trying to accelerate, you know, how quickly we can get money, particularly for small businesses. You know, we have a product called Visa Direct that you could do, push payments and be able to have a small business, get money straight to their debit card over a weekend. And so we don’t think that it’s just stable coins. We believe stablecoins have potential and, on the back end of existing Visa products, could potentially move money faster. But we believe there are many ways the payments ecosystem will continue to evolve and drive revenue by getting small businesses where they need them faster. It seems that Visa is focused when it comes to cryptocurrencies on stable coins. I have to ask you in 2022. I was so excited when I heard that Visa had trademark applications for things like NFTS and Metaverse and, and wallets. Uh what’s up with those? Is there any focus on this? They have been put aside while you focus on stablecoin research dashboards and look at how a visa can work with stablecoins. So we continued to follow the NFT ecosystem and the broader creator economy. Um, we think it’s definitely evolved and changed. And I think, you know, when we started, you know, exploring, experimenting with NFTS, NFTS were really only on blockchains like Ethereum and they were quite expensive to run and, you know, there was an ecosystem of, you know, the fine art that people were, collected. Now, I think some of the changes that we’re starting to see are around a lot of NFTS use cases like things like loyalty. You know, you can now mint NFTS for fractions of cents. And so we’re seeing interesting experiments with things like digital receipts and loyalty programs where if you own an NFT, you can get a discount on several purchases. And so, you know, the culture that we have is really trying to learn by doing and, you know, working with customers around proof of concepts. We have a visa consulting and analytics business where issuers and merchants have come to us to say, how do we incorporate NFTS into a loyalty program? And so we’re absolutely still interacting with the ecosystem and experimenting. I think we’ve just seen a lot of the use cases for NFTS evolve a little bit from where they were a few years ago, but overall, we’re still really excited about the broader economy and the role that blockchains could play within it. Hi, thank you so much for joining us this morning. We hope you enjoy the rest of the conference. Thanks for having me. It was great. That was the head of Visa’s Crypto Kai Sheffield.

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Terra Can’t Catch a Break as Blockchain Gets $6 Million Exploited

Published

6 months ago

1 August, 2024

BlockChainGuardian Staff

Terra Can't Catch a Break as Blockchain Gets $6 Million Exploited

The attack, which exploited a vulnerability disclosed in April, drained around 60 million ASTRO tokens, sending the price plummeting.

The Terra blockchain has been exploited for over $6 million, forcing developers to take a momentary break the chain.

Beosin Cyber Security Company reported that the protocol lost 60 million ASTRO tokens, 3.5 million USDC, 500,000 USDT, and 2.7 BTC or $180,000.

Terra developers paused the chain on Wednesday morning to apply an emergency patch that would address the attack. Moments later, a 67% majority of validators upgraded their nodes and resumed block production.

The ASTRO token has plunged as much as 75%. It is now trading at $0.03, a 25% decline on the day. Traders who took advantage of the drop are now on 195%.

ASTRO Price Chart ASTRO Price

The vulnerability that took down the Cosmos-based blockchain was disclosed in April and involved the deployment of a malicious CosmWasm contract. It opened the door to attacks via what is called an “ibc-hooks callback timeout reentrancy vulnerability,” which is used to invoke contracts and enable cross-chain swaps.

Terra 2.0 also suffered a massive drop in total value locked (TVL) in April, shortly after the vulnerability was discovered. It plunged 80% to $6 million from $30 million in TVL and has since lost nearly half of that value, currently sitting at $3.9 million.

The current Earth chain emerged from the rubble as a hard fork after the original blockchain, now called Terra Classic, collapsed in 2022. Terra collapsed after its algorithmic stablecoin (UST) lost its peg, causing a run on deposits. More than $50 billion of UST’s market cap was wiped out in a matter of days.

Terraform Labs, the company behind the blockchain, has been slowly unravelling its legal woes since its mid-2022 crash. Founder Do Kwon awaits sentencing in Montenegro after he and his company were found liable for $40 billion in customer funds in early April.

On June 12, Terraform Labs settled with the SEC for $4.4 billion, for which the company will pay about $3.59 billion plus interest and a $420 million penalty. Meanwhile, Kwon will pay $204.3 million, including $110 million in restitution, interest and an $80 million penalty, a court filing showed.

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Google and Coinbase Veterans Raise $5M to Build Icebreaker, Blockchain’s Answer to LinkedIn

Published

6 months ago

1 August, 2024

BlockChainGuardian Staff

Google and Coinbase Veterans Raise $5M to Build Icebreaker, Blockchain's Answer to LinkedIn

Icebreaker: Think LinkedIn but on a Blockchain—announced Wednesday that it has secured $5 million in seed funding. CoinFund led the round, with participation from Accomplice, Anagram, and Legion Capital, among others.

The company, which is valued at $21 million, aims to become the world’s first open-source network for professional connections. Its co-founders, Dan Stone and Jack Dillé, come from Google AND Monetary base; Stone was a product manager at the cryptocurrency giant and also the co-creator of Google’s largest multi-identity measurement and marketing platform, while Dillé was a design manager for Google Working area.

The pair founded Icebreaker on the shared belief that the imprint of one’s digital identity (and reputation) should not be owned by a single entity, but rather publicly owned and accessible to all. Frustrated that platforms like LinkedIn To limit how we leverage our connections, Dillé told Fortune he hopes to remove paywalls and credits, which “force us to pay just to browse our network.” Using blockchain technology, Icebreaker lets users transfer their existing professional profile and network into a single, verified channel.

“Imagine clicking the login button and then seeing your entire network on LinkedIn, ChirpingFarcaster and email? Imagine how many introductions could be routed more effectively if you could see the full picture of how you’re connected to someone,” Stone told Fortune.

Users can instantly prove their credentials and provide verifiable endorsements for people in their network. The idea is to create an “open graph of reputation and identity,” according to the founders. They hope to challenge LinkedIn’s closed network that “secures data,” freeing users to search for candidates and opportunities wherever they are online. By building on-chain, the founders note, they will create a public ledger of shared context and trust.

Verified channels are now launched for

Chirping
Online Guide
E-mail
Wallet
Discord
Telephone
Teleporter

You can find them in Account -> Linked Accounts Italian: https://t.co/mRDyuWW8O2

— Icebreaker (@icebreaker_xyz) April 3, 2024

“Digital networking is increasingly saturated with noise and AI-driven fake personas,” the founders said in a statement. For example: Dillé’s LinkedIn headline reads “CEO of Google,” a small piece of digital performance art to draw attention to unverifiable information on Web2 social networks that can leave both candidates and recruiters vulnerable to false claims.

“Icebreaker was created to enable professionals to seamlessly tap into their existing profiles and networks to surface exceptional people and opportunities, using recent advances in cryptographically verifiable identity,” the company said, adding that the new funding will go towards expanding its team and developing products.

“One of the next significant use cases for cryptocurrency is the development of fundamental social graphs for applications to leverage… We are proud to support Dan, Jack and their team in their mission to bring true professional identity ownership to everyone online,” said CoinFund CIO Alex Felix in a statement.

Learn more about all things cryptocurrency with short, easy-to-read flashcards. Click here to Fortune’s Crash Course in Cryptocurrency.

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Luxembourg proposes updates to blockchain laws | Insights and resources

Published

6 months ago

31 July, 2024

BlockChainGuardian Staff

Luxembourg proposes updates to blockchain laws | Insights and resources

On July 24, 2024, the Ministry of Finance proposed Blockchain Bill IVwhich will provide greater flexibility and legal certainty for issuers using Distributed Ledger Technology (DLT). The bill will update three of Luxembourg’s financial laws, the Law of 6 April 2013 on dematerialised securitiesTHE Law of 5 April 1993 on the financial sector and the Law of 23 December 1998 establishing a financial sector supervisory commissionThis bill includes the additional option of a supervisory agent role and the inclusion of equity securities in dematerialized form.

DLT and Luxembourg

DLT is increasingly used in the financial and fund management sector in Luxembourg, offering numerous benefits and transforming various aspects of the industry.

Here are some examples:

Digital Bonds: Luxembourg has seen multiple digital bond issuances via DLT. For example, the European Investment Bank has issued bonds that are registered, transferred and stored via DLT processes. These bonds are governed by Luxembourg law and registered on proprietary DLT platforms.
Fund Administration: DLT can streamline fund administration processes, offering new opportunities and efficiencies for intermediaries, and can do the following:
- Automate capital calls and distributions using smart contracts,
- Simplify audits and ensure reporting accuracy through transparent and immutable transaction records.
Warranty Management: Luxembourg-based DLT platforms allow clients to swap ownership of baskets of securities between different collateral pools at precise times.
Tokenization: DLT is used to tokenize various assets, including real estate and luxury goods, by representing them in a tokenized and fractionalized format on the blockchain. This process can improve the liquidity and accessibility of traditionally illiquid assets.
Tokenization of investment funds: DLT is being explored for the tokenization of investment funds, which can streamline the supply chain, reduce costs, and enable faster transactions. DLT can automate various elements of the supply chain, reducing the need for reconciliations between entities such as custodians, administrators, and investment managers.
Issuance, settlement and payment platforms:Market participants are developing trusted networks using DLT technology to serve as a single source of shared truth among participants in financial instrument investment ecosystems.
Legal framework: Luxembourg has adapted its legal framework to accommodate DLT, recognising the validity and enforceability of DLT-based financial instruments. This includes the following:
- Allow the use of DLT for the issuance of dematerialized securities,
- Recognize DLT for the circulation of securities,
- Enabling financial collateral arrangements on DLT financial instruments.
Regulatory compliance: DLT can improve transparency in fund share ownership and regulatory compliance, providing fund managers with new opportunities for liquidity management and operational efficiency.
Financial inclusion: By leveraging DLT, Luxembourg aims to promote greater financial inclusion and participation, potentially creating a more diverse and resilient financial system.
Governance and ethics:The implementation of DLT can promote higher standards of governance and ethics, contributing to a more sustainable and responsible financial sector.

Luxembourg’s approach to DLT in finance and fund management is characterised by a principle of technology neutrality, recognising that innovative processes and technologies can contribute to improving financial services. This is exemplified by its commitment to creating a compatible legal and regulatory framework.

Short story

Luxembourg has already enacted three major blockchain-related laws, often referred to as Blockchain I, II and III.

Blockchain Law I (2019): This law, passed on March 1, 2019, was one of the first in the EU to recognize blockchain as equivalent to traditional transactions. It allowed the use of DLT for account registration, transfer, and materialization of securities.

Blockchain Law II (2021): Enacted on 22 January 2021, this law strengthened the Luxembourg legal framework on dematerialised securities. It recognised the possibility of using secure electronic registration mechanisms to issue such securities and expanded access for all credit institutions and investment firms.

Blockchain Act III (2023): Also known as Bill 8055, this is the most recent law in the blockchain field and was passed on March 14, 2023. This law has integrated the Luxembourg DLT framework in the following way:

Update of the Act of 5 August 2005 on provisions relating to financial collateral to enable the use of electronic DLT as collateral on financial instruments registered in securities accounts,
Implementation of EU Regulation 2022/858 on a pilot scheme for DLT-based market infrastructures (DLT Pilot Regulation),
Redefining the notion of financial instruments in Law of 5 April 1993 on the financial sector and the Law of 30 May 2018 on financial instruments markets to align with the corresponding European regulations, including MiFID.

The Blockchain III Act strengthened the collateral rules for digital assets and aimed to increase legal certainty by allowing securities accounts on DLT to be pledged, while maintaining the efficient system of the 2005 Act on Financial Collateral Arrangements.

With the Blockchain IV bill, Luxembourg will build on the foundations laid by previous Blockchain laws and aims to consolidate Luxembourg’s position as a leading hub for financial innovation in Europe.

Blockchain Bill IV

The key provisions of the Blockchain IV bill include the following:

Expanded scope: The bill expands the Luxembourg DLT legal framework to include equity securities in addition to debt securities. This expansion will allow the fund industry and transfer agents to use DLT to manage registers of shares and units, as well as to process fund shares.
New role of the control agent: The bill introduces the role of a control agent as an alternative to the central account custodian for the issuance of dematerialised securities via DLT. This control agent can be an EU investment firm or a credit institution chosen by the issuer. This new role does not replace the current central account custodian, but, like all other roles, it must be notified to the Commission de Surveillance du Secteur Financier (CSSF), which is designated as the competent supervisory authority. The notification must be submitted two months after the control agent starts its activities.
Responsibilities of the control agent: The control agent will manage the securities issuance account, verify the consistency between the securities issued and those registered on the DLT network, and supervise the chain of custody of the securities at the account holder and investor level.
Simplified payment processesThe bill allows issuers to meet payment obligations under securities (such as interest, dividends or repayments) as soon as they have paid the relevant amounts to the paying agent, settlement agent or central account custodian.
Simplified issuance and reconciliationThe bill simplifies the process of issuing, holding and reconciling dematerialized securities through DLT, eliminating the need for a central custodian to have a second level of custody and allowing securities to be credited directly to the accounts of investors or their delegates.
Smart Contract Integration:The new processes can be executed using smart contracts with the assistance of the control agent, potentially increasing efficiency and reducing intermediation.

These changes are expected to bring several benefits to the Luxembourg financial sector, including:

Fund Operations: Greater efficiency and reduced costs by leveraging DLT for the issuance and transfer of fund shares.
Financial transactions: Greater transparency and security.
Transparency of the regulatory environment: Increased attractiveness and competitiveness of the Luxembourg financial centre through greater legal clarity and flexibility for issuers and investors using DLT.
Smart Contracts: Potential for automation of contractual terms, reduction of intermediaries and improvement of transaction traceability through smart contracts.

Blockchain Bill IV is part of Luxembourg’s ongoing strategy to develop a strong digital ecosystem as part of its economy and maintain its status as a leading hub for financial innovation. Luxembourg is positioning itself at the forefront of Europe’s growing digital financial landscape by constantly updating its regulatory framework.

Local regulations, such as Luxembourg law, complement European regulations by providing a more specific legal framework, adapted to local specificities. These local laws, together with European initiatives, aim to improve both the use and the security of projects involving new technologies. They help establish clear standards and promote consumer trust, while promoting innovation and ensuring better protection against potential risks associated with these emerging technologies. Check out our latest posts on these topics and, for more information on this law, blockchain technology and the tokenization mechanism, do not hesitate to contact us.

We are available to discuss any project related to digital finance, cryptocurrencies and disruptive technologies.

This informational piece, which may be considered advertising under the ethics rules of some jurisdictions, is provided with the understanding that it does not constitute the rendering of legal or other professional advice by Goodwin or its attorneys. Past results do not guarantee a similar outcome.

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New bill pushes Department of Veterans Affairs to examine how blockchain can improve its work

Published

6 months ago

31 July, 2024

BlockChainGuardian Staff

New bill pushes Department of Veterans Affairs to examine how blockchain can improve its work

The Department of Veterans Affairs would have to evaluate how blockchain technology could be used to improve benefits and services offered to veterans, according to a legislative proposal introduced Tuesday.

The bill, sponsored by Rep. Nancy Mace, R-S.C., would direct the VA to “conduct a comprehensive study of the feasibility, potential benefits, and risks associated with using distributed ledger technology in various programs and services.”

Distributed ledger technology, including blockchain, is used to protect and track information by storing data across multiple computers and keeping a record of its use.

According to the text of the legislation, which Mace’s office shared exclusively with Nextgov/FCW ahead of its publication, blockchain “could significantly improve benefits allocation, insurance program management, and recordkeeping within the Department of Veterans Affairs.”

“We need to bring the federal government into the 21st century,” Mace said in a statement. “This bill will open the door to research on improving outdated systems that fail our veterans because we owe it to them to use every tool at our disposal to improve their lives.”

Within one year of the law taking effect, the Department of Veterans Affairs will be required to submit a report to the House and Senate Veterans Affairs committees detailing its findings, as well as the benefits and risks identified in using the technology.

The mandatory review is expected to include information on how the department’s use of blockchain could improve the way benefits decisions are administered, improve the management and security of veterans’ personal data, streamline the insurance claims process, and “increase transparency and accountability in service delivery.”

The Department of Veterans Affairs has been studying the potential benefits of using distributed ledger technology, with the department emission a request for information in November 2021 seeking input from contractors on how blockchain could be leveraged, in part, to streamline its supply chains and “secure data sharing between institutions.”

The VA’s National Institute of Artificial Intelligence has also valued the use of blockchain, with three of the use cases tested during the 2021 AI tech sprint focused on examining its capabilities.

Mace previously introduced a May bill that would direct Customs and Border Protection to create a public blockchain platform to store and share data collected at U.S. borders.

Lawmakers also proposed additional measures that would push the Department of Veterans Affairs to consider adopting other modernized technologies to improve veteran services.

Rep. David Valadao, R-Calif., introduced legislation in June that would have directed the department to report to lawmakers on how it plans to expand the use of “certain automation tools” to process veterans’ claims. The House of Representatives Subcommittee on Disability Assistance and Memorial Affairs gave a favorable hearing on the congressman’s bill during a Markup of July 23.

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