Binance begins to restrict US users ahead of regulatory-compliant exchange launch

The world’s largest crypto exchange is going legit. Binance, which processes over $1 billion on a daily basis and for so long has embodied crypto’s wild west culture, announced that it will launch a U.S-based service — but, in the meantime, it is implementing restrictions for U.S. passport holders worldwide and those based in the country.

The company has grown to become one of the biggest names in crypto by allowing anyone to use its service to trade a myriad of tokens, many of which are unavailable or limited on other exchanges. But over the past year, Binance has matured and begin to offer more formalized services. Following fiat currency exchange launches in the UK, Uganda and Singapore, so Binance is opening a dedicated U.S. exchange to avoid uncertainty around its legality.

This week, Binance announced it is pairing up with BAM Trading Services — which Coindesk notes is FinCEN registered and has links to Koi Compliance, which counts Binance as an investor — to launch a U.S. exchange “soon.” That will mean, however a level of disruption for some U.S. customers in the meantime.

Chiefly, Binance will no longer permit U.S. passport holders to sign up its global Binance.com service. That’s according to the company’s updated terms and conditions — “Binance is unable to provide services to any U.S. person” — which were confirmed to TechCrunch by a spokesperson.

Existing users have a grace period of 90 days after which they will be unable to deposit funds to the site or make trades. Binance declined to state whether those bans will be administered by a geo-block on U.S. IP addresses, but it did confirm that U.S. customers will retain access to funds held in the service.

That 90-day period ends September 12, so that’s effectively the deadline for Binance to launch its new U.S. exchange if it is to avoid impacting its American user base.

The reality is that the situation is more nuanced.

U.S-based users could continue to use the service by browsing the site with a VPN. Binance allows its users to sign up for a limited account without KYC — i.e. providing verification documents like a passport copy — which allows trading but limits withdrawals to 2 Bitcoin per day. That won’t satisfy more professional traders — most of whom you’d imagine would already have an account on Binance by now — but it does leave a loophole for others.

Binance CEO Changpeng Zhao insisted that the long-term pay-off will be worth any compromise.

It’s certainly fascinating to watch Binance, which has historically been one of the most aggressive crypto companies, transition into a more regulatory-compliant business. At the same time, those who have been cautious, such as Coinbase, are beginning to add new assets.

In addition to the fiat ramp exchanges, Binance has launched a decentralized exchange and it is adding much-requested features such as margin trading. The company also took an investment from Singapore’s Vertex Ventures, one of a number of sovereign funds in the country, to develop its Binance Singapore service.

It hasn’t been plain sailing — the firm lost $40 million and briefly paused trading last month following a “large scale” hack.

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Telegram’s crypto tokens are (kind of) going on sale to the public for the first time

Telegram, the most hyped ICO in the history of ICOs, is finally making its tokens available to retail investors through a limited listing that will precede a full sale later this year — but there are a lot of catches.

The messaging company, which serves as the de facto chat app for the crypto community, raised a record-high $1.7 billion last year through a token sale that was limited to accredited investors. The listing saw unprecedented demand despite a project which, some industry critics argued, recycled old ideas and proposed unmeetable goals.

Now its Gram token will go on sale to regular crypto buyers for the first time next month through a listing on crypto exchange Liquid on July 10. The arrangement is a limited offering before a full public sale in October, but the U.S, Korea and Japan are among countries where it will not be sold.

It’s notable that Liquid, which recently claimed to have raised funding at a $1 billion valuation, hasn’t struck a deal with Telegram directly. Instead, it has agreed to list an undisclosed number of tokens held by Gram Asia, an organization headquartered in Korea that claims to be the largest holder of Grams in Asia. For now, neither side is saying how many will be on offer and at what price.

Indeed, the press release announcing the deal includes no contribution from Telegram — there is, for example, no quote from its reclusive CEO Pavel Durov — and it sources two media reports to claim that Telegram’s beta program on its testnet is apparently working as planned.

That’s a pretty strange situation, even for the world of crypto, since it is convention for companies to endorse sales and partnerships.

“Unfortunately, that’s Telegram and how they have operated from the beginning,” Liquid CEO Kayamori told TechCrunch in an interview this week.

Despite that ominous radio silence, Kayamori assured us that this token listing is above board and very much part of the plan for TON — the ‘Telegram Open Network’ project that’s being developed by the funds raised through the ICO.

Kayamori said that TON is on track to make a full launch as early as October and that this partial listing from Gram Asia is part of that overall strategy.

Sure, that’s the rhetoric, but it is easy to assume other reasons behind the sale. Such as that Gram Asia is cashing in on anticipation of the full launch or, worse, that the group is dumping its tokens before a product.

Kayamori claimed that isn’t the case.

“A public sale was always planned for the window between the testnet launch and mainnet [full] launch,” he said. “They wanted to work with a regulated exchange to see how it goes before it gets listed [in full] in October.”

“Telegram already has an ecosystem, developers and early token buyers and TON ventures, there are already communities being built up. Based on discussions within these communities, GRAM Asia has put its best step forward to do this public sale,” Kayamori added.

The “regulated” part is important.

One of the reasons Telegram kept quiet during the token sale was to avoid running into legal problems, such as those that fellow chat app Kik is experiencing right now. That caused plenty of issues at the time — with scammers cashing in on demand and token buyers themselves left confused — and the approach means there are many caveats around the sale on Liquid.

Most notably, the Gram tokens will not be tradeable.

Buyers will essentially buy tokens from Gram Asia which, until the tokens are released in October, will be held in USDC — the stable coin backed by Coinbase among others. Only when the distribution process begins will the buyers receive their tokens, but the process itself will be divided into four tranches with one-quarter of the buyer’s tokens distributed every three months.

Kayamori conceded that there may be unofficial over the counter trading, but Liquid “can’t control” that.

Liquid is betting that listing Telegram’s Gram tokens, even in small quantity, will boost its exchange

Then there are aggressive limits on who can buy.

The exchange will require rigorous KYC for prospective buyers, and there is a significant list of countries where Gram tokens will not be sold, and that includes the U.S. and Japan.

The full list is as follows:

Afghanistan, Albania, Bahamas, Belarus, Bosnia & Herzegovina, Botswana, Burundi, Cambodia, Canada, Central African Republic, Cote D’Ivoire, Crimea, Cuba, Democratic People’s Republic of Korea, Democratic Republic of Congo, Eritrea, Ethiopia, Ghana, Guinea, Guinea-Bissau, Iran, Iraq, Japan, Kosovo, Kyrgyzstan, Laos, Lebanon, Liberia, Libya, Macedonia, Malawi, Mali, Moldova, Mozambique, Myanmar (Burma), Pakistan, Serbia, Somalia, South Sudan, Sudan, Syria, Tanzania, Timor-Leste, Trinidad & Tobago, Tunisia, Turkmenistan, Uganda, United States of America (USA), Uzbekistan, Venezuela, Yemen, and Zimbabwe.

Kayamori said he is confident that there will be significant demand despite those restrictions. He explained there is the potential to add more tokens if the allocation — the size of which is not being shared — sells out.

Liquid doesn’t have anything like the volume of top exchanges Binance, OkEx and others that do more than $1 billion in trading daily — Coinmarketcap data ranks it 83rd with over $900 million traded over the last seven days — but it tries to stand out with a focus on regulation. That’s to say that it adheres to regulation in markets like Japan, the bet being that some companies will prefer that approach for their token sales or buying.

That’s worked in terms of this deal with Gram Asia, but it remains to be seen whether it can go from a splashy partnership to one that actually drives significant trading, user engagement and new sign-ups.

For Telegram, the Liquid listing will be an early but limited look at the market’s appetite for its token.

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Is there potential for blockchain in copyright and licensing applications?

By all accounts, we appear to be in the early stages of a classic “hype cycle” about the potential for uses of blockchain technology. Careful analysts need to filter out that noise, but, as with all technology bubbles, there are blockchain skeptics, and blockchain enthusiasts.

I am somewhere in the middle — currency speculation, in my opinion, is nothing but a big distraction; it is improving information services that I am interested in. And I’m most interested in technologies that show promise in bringing more accuracy and efficiency to the worlds of copyright and licensing.

So, does blockchain technology show meaningful promise for real-world copyright and licensing applications? Let’s take a closer look.

What are blockchains, and why should I care?

What is a blockchain? Why are so many startups and techno-pundits going on and on about it? What sort of problems can it solve, and who has these problems? And, more importantly, what is it good for (in the sense of being useful)?

Simply and practically put, in this context a block is a unique number, derived mathematically through computing. This number is applied for a single use, which typically would be as the root identifier for a digital work of any sort. Examples of a work protected by such a blockchain would include a document (PDF) or the source code for a program, or a digital image, or anything in a fixed form represented in ones and zeroes.

Once established as the root identifier, any changes to the digital work are written — more numbers — into the blockchain, which is then distributed, through a network, to all the parties participating in this block, at each of whose “locations” third parties (including but not limited to “others involved with the work”) can see the applicable updated information. This distribution of updates explains why blockchains are categorized as “distributed digital ledgers,” such that the entire transaction history of any item provided with a blockchain is, in theory, always updated and available to inspection.

For the purposes of this article, any time I say “blockchain” I intend to refer to a distributed digital ledger technology, whether one that already exists, or is invented in the near future. I don’t mean any particular implementation. And, although the recent spate of articles talking about blockchain is probably a direct result of its association with cryptocurrencies, such as the well-known and controversial Bitcoin (although Ethereum and later implementations seem to represent an improvement on the original concept), I think it important to note that tradeable currency of any sort is not a necessary part of blockchain implementations.

Rather, as at the amusement park or in collecting comics, while it is always possible to use unique tokens to trade, it is not a required and inevitable result of using the technology. Rather, cryptocurrencies introduce an additional element to the theory and practice of blockchain — the token — which is an element of no concern to our focus here.

As with any promising and potentially disruptive technology, it will stand or fall on the usefulness it demonstrates in addressing real-world problems.

Of course, there are many applications for which blockchains simply aren’t suitable. A critical reader can easily find as many papers criticizing the hype around blockchain as a new “snake oil” as those suggesting that the technology holds promise.

For now, let’s assume that these limitations can and will be overcome in the next 3-5 years. Where might we be then — in terms of the potential for practical implementation of this technology — in addressing important problems surrounding licensing in copyright and perhaps other IP?

For one, copyright registrars or similar entities could create a blockchain to serve as a global registry, and then invite significant rightsholders and consumers in as nodes — this would meet the “no-personal-trust-required” mindset of blockchain enthusiasts. I’d see this as supplementary to existing systems and relatively fast to implement.

A blockchain-derived content identifier, when used in the service of creators and their works, could become one of many unique identifiers already in place, such as ISBN, ORCID, DOI, ISNI, ISRC and so forth. The International Standard Content Code (ISCC) is an experiment in exactly this vein.

The simplest and easiest fix to a copyright problem a simple blockchain might bring is the old (and nearly useless) “poor man’s copyright,” which boils down to creating a simple timestamp for your work by snail-mailing yourself a copy via the USPS. The folks over at Rightschain are seeking to take that old hack up a notch, although problems of cost-at-scale may limit broader feasibility.

Note, too, that blockchains are unlikely to be of much use in mitigating run-of-the-mill infringements; it is still just too easy to crop or screen-scrape or dumb-down the high-quality version of record and create a “good enough to pirate” version. And this is likely to remain true for some time.

Although I can foresee significant difficulties with the grayer areas of custom licensing, and may even be unhelpful when it comes to legitimate fair uses, blockchains might serve as a natural fit for storing the sale and terms of more routine licenses. For example, producing and distributing e-books. Self-executing contracts — ones that are limited to entries in the ledger — might be quite useful in such a context. Essentially, the license contract could include (or exclude) resale of the rights and the ledger could enforce it.

In the rarefied domain of copyright recordation, terminations and transfers, I can envision a blockchain that is quite useful in providing access to the public about updates in the reversion of rights back to a creator, or transfer to a new agent, or other recorded rights transactions of that sort.

As with any promising and potentially disruptive technology, it will stand or fall on the usefulness it demonstrates in addressing real-world problems to which answers are sought by real people. If there are costs — and there inevitably are costs — those who will bear them need to be convinced by clear creation of new value.

Not persuaded? I, too, remain skeptical. But on balance, I do wonder if, given the real-world content and rights issues that the industries that depend on copyright and licensing already have to deal with on a daily basis, a critical look a few steps ahead into a promising technology is warranted.

What do you think?

Disclosures: I own no cryptocurrencies, have never owned any and don’t expect to own any. I have no financial stake in any of the companies I have mentioned. 

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Facebook's cryptocurrency may debut this month

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Facebook’s long-rumored cryptocurrency may be on the cusp of launching, and with a few twists to boot. The Information sources say the digital money is expected to premiere later in June. The social network is reportedly planning a big push that would include bonuses for merchants that adopt it, not to mention real-world kiosks where you could exchange conventional cash. Employees in the project would even have the option of being paid in the currency.

And in case you’re wondering: yes, Facebook would be fully aware of the public’s possible reluctance to trust Facebook with their finances. While the blockchain would supposedly be “far more centralized” than the likes of bitcoin with 100 or fewer nodes in its payment network, the company would tap outside firms to help run the system. It would charge them licensing fees ($10 million per partner) and roll that into backing the currency with traditional money to keep it stable. You might not experience the roller coaster rides of competing formats.

Facebook has already declined to comment on the rumor. If it’s true, though the details suggest Facebook is betting big on the technology. To some extent, it has to. On top of the need to establish trust, this would be a “borderless” payment system that could help offset volatility in some official currencies. A smooth launch might be vital to ensuring healthy uptake, not to mention avoiding trouble with regulators who are already skittish about crypto.

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Aion Network introduces first blockchain virtual machine for Java developers

Aion Network, a non-profit dedicated to creating tools to promote blockchain technologies, announced a new virtual machine today that’s built on top of the popular Java Virtual Machine. Its ultimate goal is increasing the popularity of blockchain with developers.

Aion CEO Matthew Spoke says one of the barriers to more widespread blockchain adoption has been a lack of tooling for developers in a common language like Java. The company believed if they could build a virtual machine specifically for blockchain on top of the Java Virtual Machine (JVM), which has been in use for years, it could help promote more extensive use of blockchain.

Today, it’s announcing the Aion Virtual Machine (AVM), a virtual machine that sits on top of the JVM. AVM makes it possible for developers to use their familiar toolset while building in the blockchain bits like smart contracts in the AVM without having to alter the JVM at all.

“We didn’t want to modify the JVM. We wanted to build some sort of supplementary software layer that can interact with the JVM. Blockchains have a set of unique criteria. They need to be deterministic; the computing needs to happen across the distributed network of nodes; and the JVM was never designed with this in mind,” Spoke explained.

Aion set out to build a virtual machine for blockchain without reinventing the wheel. It recognized that Java remains one of the most popular programming languages around, and it didn’t want to mess with that. In fact, it wanted to take advantage of the popularity by building a kind of blockchain interpreter that would sit on top of the JVM without getting in the way of it.

“Rather than trying to convince people of the merits of a new system, can we just get the system they’re already familiar with on top of the blockchain? So we started engineering towards that solution. And we’ve been working on that since for about a year at this point, leading up to our release this week to prove that we can solve that problem,” Spoke told TechCrunch.

Up to this point, Aion has been focusing on the crypto community, but the company felt to really push the blockchain beyond the realm of the true believers, it needed to come up with a way for developers who weren’t immersed in this to take advantage of it.

“Our big focus now is how do we take this message of building blockchain apps and take it into a more traditional software industry audience. Instead of trying to compete for the attention of crypto developers, we want the blockchain to become almost a micro service layer to what normal software developers are solving on a day-to-day basis,” he said.

The company is hoping that by providing this way to access blockchain services, it can help popularize blockchain concepts with developers who might not otherwise have been familiar with them. It’s but one attempt to bring blockchain to more business-oriented use cases, but the company has given this a lot of thought and believes it will help them evangelize this approach with a wider audience of developers moving forward.

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