Weekly Blockchain Industry Report-19th Issue: Blockchain media were banned in China
By: Quqi Deng
Tags: Exchange, Crypto, ICO, Blockchain, Bitcoin

(August 18th –August 24th, 2018)

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Market Overview

This week, the daily average global cryptocurrency’s market capitalization was $211.715 billion, representing a 0.88% increase from last week. Among them, the Top 5 cryptocurrencies’ market cap increased by 1.93%;The daily average transaction volume was $12.45 billion, representing a 5.23% decrease. Among them, the Top 5 cryptocurrencies’ transaction volume decreased by 19.28%. All of them had a continued bear performance, EOS experienced a maximum decrease of 18.15% and ETH had a maximum decrease of 17.3% .

Among the top 10 cryptocurrency gainers this week, most of the projects were in the cryptocurrency and payment field. PKG token, a token in game industry, experienced the greatest increase in price by 233.96%.

Analysis of Top 200 Market Cap Projects

Until 12:00 p.m. of the releasing date, the market capitalization of the top 200 projects decreased by 0.18% compared with last week. Based on our classification of 4 categories: cryptocurrency and payment, basic chain and protocol, vertical chain and protocol, and vertical industrial application, the projects of the vertical chain and protocol sector decreased the most.

Through further classification of the vertical chain and protocol and the vertical industrial application sectors, it was found that company service sector experienced market cap increase of 21.59%, AI field’s market cap increased 11.93%. But the education projects took a hit, got a 13.48% market cap decrease.

Analysis of Newly Listed Projects

According to latest announcements from more than 30 exchanges including OKEx, Binance, Huobi, Bitfinex, Bithumb, ZB.com, Upbit, HitBTC, Bittrex, Poloniex, there are 6 newly listed cryptocurrencies. These projects are distributed in different industries including company service, tourism, E-commerce, AI, finance and health. What’s more, these newly listed cryptocurrencies concentrated on Bitfinex crypto exchange. BCEX’s price increased by 92.86%.

Analysis of Closed Public Offering Projects

There have been 42 closed public-offering projects this past week, with the soft cap totaling nearly 291 million USD. Among these projects, HYT has the largest soft cap, exceeding 100 million USD.

Important News on Global Governmental Policies this Past Week

Below is a list of some of the most important global news on governmental policies on blockchain and cryptocurrency. The picture below is for reference to how strict/loose some countries are with their regulations.

The US: US Republican congressman Warren Davidson recently invited 32 digital currency industry representatives and institutions to Capitol Hill to discuss ICO regulation. The meeting’s purpose is to prepare for the submission of a formal ICO regulatory proposal to Congress. It is reported that the discussion will be held on September 25. Participating digital currency leaders and institutions include A16Z, Ripple, NASDAQ, CME, Kraken Exchange, and Intercontinental Exchange.

Mongolia: Zanden Shartle, Director of the Cabinet Office of the Government of Mongolia, said that 87% of public services in Mongolia will be digitized in the future, and he presented the idea of Blockchain — New Economy — New Mongolia. Mongolia will launch a series of preferential subsidy policies to attract capital. The recently launched Mongolia National Blockchain Digital Assets Exchange will support national blockchain projects, offering technical and other support for national projects.

Russia: Russia’s non-profit independent election monitoring agency, National Public Monitoring (NOM), announced at a press conference in Moscow that it is preparing to pilot a blockchain-based electronic voting system. It is reported that the first Russian public observer conference, the Russian Fund for Free Elections and Association of Lawyers of the Russian Federation, was held at the initiative of NOM.

Nigeria: The Central Bank of Nigeria (CBN) said it is currently actively studying the encryption market so that it can develop a regulatory framework to protect each market participant. At the same time, CBN warned that financial institutions should not enter the encryption market until the regulations are introduced.

South Africa: The South African Revenue Service (SARS) is working to track digital currency transactions to determine whether people engaged in digital currency trading are evading tax. A commissioner of SARS said the key point was to identify traders. Since most traders use credit cards to purchase digital assets, SARS can investigate cases once they have correctly identified non-compliant traders.

South Korea: The South Korean government classified the digital currency exchange industry as a form of gambling, and prohibited venture capital companies from investing. Some analysts pointed out that this may indicate that the government believes that digital currency exchanges will have a greater negative impact on society than promoting the development of blockchain markets.

Keeping Up with the Blockchain Giants

August 18th

IBM submitted a patent application to the US Patent and Trademark Office (USPTO) for its project titled “Description of node features in blockchain.” The new system will allow distributed ledgers to have a set of nodes characterized by different functions. Nodes used to encrypt currency feature anti-money laundering (AML) functions. The information is automatically synchronized to the log, and can be checked by regulatory agencies connected to the node.

August 19th

Japan’s tech giant Softbank has signed a strategic partnership with the blockchain gaming company Ludos in Japan. The two parties aim to provide several channels for cooperation, including state-of-the-art game resources, product exchanges, and game redesign, bringing Ludos to a new stage.

August 20th

58 Group launched its blockchain service platform 58BaaS, which provides a complete set of blockchain deployment, application development, real-time monitoring, and flexible scalability solutions. It will also provide better technical support for recruitment, used cars, real estate and other services. Yao Jinbo, president and CEO of 58 company, also confirmed the news in his WeChat moments and said that “trust can create a better society”.

August 21th

A white paper entitled Datong Trusted Consortium Blockchain Technology, written by a team of experts from Shenzhen Datong Industrial Co., Ltd. (000038), and advised by network information security and blockchain experts from Beijing University of Posts and Telecommunications and technical service experts from Blockchain Tech (Beijing) Co., Ltd, was officially released.

August 22th

The Bank of Thailand (BOT), the country’s central bank, has announced that the first phase of its Central Bank Digital Currency (CBDC) initiative will be used for interbank funds transfer. Under Project Inthanon Phase 1, the BOT and the eight participating banks will collaboratively design, develop and test a proof-of-concept (PoC) prototype for wholesale funds transfer by issuing wholesale CBDC. The eight participating banks are Bangkok Bank, Krungthai Bank, Bank of Ayudhya, Kasikornbank, Siam Commercial Bank, Thanachart Bank, Standard Chartered Bank Thai and HSBC.

August 23th

Ant Financial said that Alipay will be used as a vector to explore how mobile payment security and blockchain technologies might be more widely used in Chongqing municipal governance, public travel and spending, and various businesses in the future.

August 24th

According to the official website of the Bank of China, it recently completed US dollar international remittance between customers in Xiong’an, Hebei Province, and Seoul, through its cross-border blockchain payment system. This is the first international remittance business completed by a domestic commercial bank using its own blockchain payment system.

Hot topic of this week: A large number of Blockchain media were banned. Chinese government is getting serious to crackdown domestic ICOs

On the evening of August 21, a large number of crypto-related WeChat official accounts were shut down. As of press time, media that have been confirmed to be banned include Jinse(AKA Cointime), Huobi News, Huobi Blockchain, BiShiJie, DeepChain, Bitcoin.Wu, DPRating, TokenClub, CoinLab and Coin Daily. The Tencent WeChat team responded that some official accounts were suspected of publishing information on ICOs and virtual currency trading hype, violating the Interim Provisions on the Development and Management of Instant Messaging Tools for Public Information Services. All content on these accounts has been blocked, and they have been permanently banned.

The severe ICO rectification in China began on September 4, 2017, when the People’s Bank of China and other 6 ministry departments issued a joint statement titled Notice on Preventing Financial Risks from Token Issuance, where they reiterated that ICOs are illegal fundraising mechanism, and they are suspected of illegally selling tokens, illegally issuing securities, illegal fundraising, financial fraud, pyramid schemes, and other illegal activities. The statement said authorities are banning all organizations and individuals from raising funds through ICOs. The central bank added that individuals and organizations that have completed ICO fundraising should make arrangements to return the funds. The statement specifies that token financing trading platforms may not exchange fiat currency with tokens or virtual currencies, may not act as a central counterparty in the purchase, sale, or trade of tokens or virtual currencies, and may not provide pricing service or information intermediary for tokens or virtual currencies.

The statement notes clearly that the specific rectification targets of this round are projects financing with token issuance, and exchanges that provide fund or information for such these projects. However, the government quickly expanded the scope to include all virtual currency trading activities, including virtual currencies without ICOs such as Bitcoin. In October 2017, major virtual currency trading platforms announced that they had terminated service and quit the Chinese market. Since then, virtual currency transaction in China has officially lost the RMB channel.

CN Stock reported on July 6 that Zhang Yifeng, Dean of the China Banknote Blockchain Technology Research Institute, revealed the progress and effectiveness of the virtual currency clean-up and rectification in an interview. He said that 88 domestic virtual currency trading platforms and 85 ICO trading platforms targeted by local governments have essentially achieved risk-free exit. Less than 1% of the world’s total BTC trade is in RMB, as opposed to more than 90% earlier. Zhang also pointed out that based on the preliminary results, the People’s Bank of China and relevant departments adopted a series of targeted clean-up measures in response to new types and situations of illegal financial activities to prevent possible financial risks and moral hazard. The specific measures have included blocking oversea’s virtual currency trading platforms, and strengthening the clean-up and rectification, starting from payment and settlement. This media ban can be understood as regulators’ re-statement of zero tolerance for ICOs.

In the past year, thanks to effective suppression of virtual currency speculation, the Chinese blockchain industry achieved sounder and more orderly development. Internet giants like “BAT” and financial institutions such as major banks have further increased investment in R&D and application of blockchain technology. Major universities have also established blockchain research centers and related courses. At the same time, the number of blockchain security service providers is growing quickly, marking the beginning of industry self-discipline. The next serious issues for the industry will include further eliminating the negative impact of speculative bubbles, fully promoting the development of blockchain technology, and tapping into greater commercial value.

Appendix: Upcoming Crowdfunding Projects（8.25–8.31)

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*Credits go to Quqi Deng for his superb research!