A look at green policy and crypto energy consumption in Japan.
Society is now witnessing the implementation of digital currencies, artificial intelligence (AI) and blockchain technology worldwide. These new digital technologies necessitate very high consumption of electric energy, which is currently produced with coal and fossil fuels that have adverse environmental effects. A global shift toward green energy will require the removal of the technological/infrastructural, financial and regulatory/tax-policy barriers. In this series, we evaluate the tax, digital technology and solar policies (including a space solar power satellite) of the top carbon dioxide-emitting countries.
In 2009, Japan — the Land of the Rising Sun — undertook important initiatives that set the tone for how it intended to solarize the world’s third-largest digital economy. Japan passed its Basic Space Law, which established a space power satellite (SPS) — the concept of collecting solar power in outer space and distributing it to Earth via satellites — as a national priority.
The Ministry of Economy, Trade and Industry (METI) of Japan sets the strategic energy plan for the world’s fourth-largest energy consumer and the sixth-largest emitter of CO2 — 90% of which is tied to hydrocarbon energy. METI believes that the impact of blockchain — which consumes large amounts of electricity — is huge and that its importance is similar to the emergence of the internet.
According to a World Economic Forum survey, global GDP stored on blockchain technology is expected to reach 10% by 2027. Therefore, in June 2018, Japan introduced a sandbox regime to accelerate the introduction of new business models and innovative technologies such as blockchain, AI and the Internet of Things.
The world’s largest technology investment fund — the $100 billion Softbank Vision Fund, which announced the launch of a second fund — and Japanese megabanks have been investing in and funding blockchain startups concerning applications in telecommunications, swift -payment system, solar energy, identity, health care, messaging, transportation, data security and fintech industries, both in Japan and globally.
Solar photovoltaic technology and its applications in solar energy in Japan
Japan’s Ministry of Technology and Industry (MITI) views solar photovoltaic power as an essential part of its digital economic transformation. Japanese science fiction author Haruki Murakami concurs “Japan, as an economic power, should find another source of power besides atomic energy. It may cause a temporary economic dip, but we will be respected as a country that does not use nuclear power.”
Solar photovoltaic (PV) technology — which converts light into electrical current — was born in the United States at Bell Labs when engineer Daryl Chapin, chemist Calvin Fuller and physicist Gerald Pearson worked together to develop the first silicon solar photovoltaic cell in 1954. The New York Times wrote that the silicon solar cell “may mark the beginning of a new era, leading eventually to the realization of one of mankind’s most cherished dreams — the harnessing of the almost limitless energy of the sun for the uses of civilization.”
First launched in 1974 by MITI, with METI joining in 2001, the Sunshine Project was a long-term comprehensive plan for the research and development of new solar energy technologies to resolve Japan’s energy and climate change problems. The program was heavily funded by the government because PV technology emits no CO2 while also being highly reliable and modular, and with lower construction and operational costs.
Starting in the 1980s, Japanese manufacturers began incorporating solar PV cells into electronic applications in various areas. In the late 1990s, Japanese government programs began promoting solar houses. In 2009, Tsutomu Miyasaka and his colleagues in Japan reported on perovskite compounds being light absorbers for solar energy applications, which outperform the efficiency of more established PV technologies and can be printed or woven into fabric. As a result, Japan emerged as the world’s third-largest solar energy power producer, with 45% of PV cells in the world being manufactured in Japan.
With the rise of Bitcoin and in the aftermath of the Fukushima nuclear plant disaster in 2011, the government encouraged the proliferation of decentralized solar energy by encouraging the production of more energy-efficient buildings, cars that combine solar panels with some form of energy storage as well as other devices. This compelled the solar energy sector to begin using blockchain technology. Professor Umit Cali of the University of North Carolina provided an exclusive comment, saying:
“In the solar energy sector, decentralized blockchain technology is used in person-to-person (P2P) energy trading, labeling, energy provenance and certification, smart metering and billing, electric vehicle charging and payments, and wholesale power trading and settlements.”
Reports published by Fitch Solutions Macro Research and Globadata conclude that over the next decade, decentralized solar technology may replace PV solar farms as the main growth-driver in Japan. Already, a blockchain-enabled solar energy-trading pilot project is set to link 100 solar rooftops of smart, zero-energy homes in the country, while another pilot project will administer an energy-trading marketplace using blockchain to connect a number of Japanese power production facilities with homes, offices, factories, batteries and electric vehicles.
Toyota Motor Corp. — which began testing high-efficiency solar cells for electric cars — has joined forces with the University of Tokyo and online renewable energy retailer Trende to test peer-to-peer vehicle-to-grid electricity trading using blockchain technology, which allows for electric vehicles to communicate with the power grid to buy and sell electricity to smooth out peak and low demand times.
Japan’s Marubeni Corp. has recently backed a blockchain-based power-purchasing platform called WePower that makes it easy for small- and medium-sized businesses to buy power from solar project developers, offering standardized, digital power purchase agreements to help underwrite new projects.
Japan is a predominantly mountainous land with varied weather conditions, and the area that a PV solar farm occupies is an important consideration, as it determines the yield. Accordingly, Japan has been creative in developing new PV solar energy generation stations at home and abroad — in seas, lakes, deserts and space.
Japan built the world’s first and largest floating solar plants. Its lakes and reservoirs are now home to 73 of the world’s 100-largest floating solar plants, which is up to 16% more efficient than land-based solar systems.
In cooperation with the National University of Mongolia, Japan is also participating in the project “Energy from the Desert,” with the Japan International Cooperation Agency (JICA) providing financial support covering up to half of the initial investment costs. Marubeni Corp. built the world’s largest PV farm, the Noor Abu Dhabi photovoltaic power project, in the Sweihan Desert of the United Arab Emirates, which recently began producing solar energy at $0.024 per kilowatt hour.
The Japanese Space Agency (JAXA) began its SPS program in 2009, with the goal to set up a one gigawatt solar farm in space that can transmit energy back to Earth by 2030. In 2015, Japan came closer to harvesting solar energy from space when it transmitted condensed solar power converted to microwaves to a receiving antenna, which converted only 5%-10% of the power required to power three PCs.
For space solar power generation to become commercially viable, 50% of the solar power generated in space needs to be transmitted to Earth. JAXA is also designing kite-like orbiters that will travel in low-earth orbit above the equator, with a transmitting antenna on the Earthward face and solar collectors on spaceward face in order to transmit solar energy to Earth. In 2010, JAXA has already successfully launched Ikaros, a solar space kite, that sailed through deep space and was propelled by solar energy. Small satellites are ideal candidates for this type of solar propulsion.
Environmental, regulatory and tax policy in Japan
Japan has inadequate energy resources and imports 87.4% of its hydrocarbon energy. It is the world’s largest importer of liquefied natural gas and third-largest importer of oil and coal.
Japan has lower levels of subsidies for fossil fuel consumption when compared to other G-7 countries, but higher subsidies for oil and gas exploration and coal production. Because efforts to compensate for the drop in nuclear power generation after the Fukushima nuclear crisis — which was triggered by the 9.1 Tohoku tsunami in Japan and which forced the shutdown of Japan’s entire fleet of nuclear 48 reactors, effectively terminating the plan to supply half the country’s electricity with nuclear power — resulted in far more support for fossil fuels and increased CO2 emissions compared to renewable energy.
Japan provides billions in taxpayer dollars for building highly polluting coal plants in Japan as well as overseas. Japan’s largest banks — MUFG and SMBC Group — along with other banks, have reportedly continued to finance fossil fuels with $1.9 trillion since the adoption of the Paris climate agreement. Therefore, Japan is the second-worst performer when it comes to reforming fossil fuel subsidies, according to a report by the Natural Resources Defense Council.
In October 2012, Japan implemented a carbon tax of 289 Japanese yen (about $3) per ton of CO2 equivalent. The government plans to use the revenues of $2 billion generated from this carbon tax to finance clean energy and energy-saving projects. Hydrocarbon air pollution is a drag for renewable energy. Dust and other sky-darkening air pollutants slash solar energy production by an estimated 11.5% to 13%. The haze blocks sunlight from reaching the solar panels, and if the particles land on a panel’s flat surface, they cut down on the area exposed to the sun.
Japan also introduced a feed-in tariff (FIT) system in 2012 to lower solar power generation costs, which are double that of Europe thereby shifting the price of solar energy on the public to the tune of 2.4 trillion yen (roughly $22 billion) in the 2019 fiscal year alone, with a cumulative total of about 10 trillion yen (nearly $100 billion) since its introduction in July 2012. The government’s steady lowering of the FIT purchase price, which stands at 14 yen ($0.13) per kilowatt hour in 2019, has brought a drastic drop in profits for solar energy companies, triggering a wave of bankruptcies, which have reportedly risen year-on-year for five consecutive years since 2013.
Globally, subsidies and financing for fossil fuels continue to remain stubbornly high. According to reports, 2018 actually saw an increase in money going into new upstream oil and gas projects, while investment in renewable power of all kinds dipped 2%. The World Bank still funds the fossil fuel industry at least three times greater than renewable energy.
This is despite G-20 finance ministers’ commitment to working together in redirecting public investments to renewable energies through fiscal policy and the use of public finance. Despite the International Renewable Energy Agency reporting that the cost of solar electricity has tumbled 80% in recent years and with three-quarters of coal production now more expensive than solar energy, the fossil fuel industry still receives benefits from governments.
In the latest G-20 meeting in Osaka, Japan reiterated its dedication to the Paris climate agreement and to phasing out fossil fuel financing and subsidies in order to tackle climate change. Enhancing zero-carbon energy is an urgent task for the Japanese government, which is aiming to derive 44% of power from renewable (7% from solar energy) and nuclear power by 2030 to fuel its burgeoning digital economy. Fossil fuel subsidies significantly reduce the use of renewables, according to an OECD report.
According to scientific reports, earthquakes, volcanic eruptions, giant landslides and tsunamis become more frequent as global warming changes the Earth’s crust, swells sea levels, and triggers a repetitive cycle of severe natural disasters that cause extensive environmental and economic damage (e.g., it cost $315 billion to $728 billion to clean up the Fukushima nuclear reactor site alone).
On Aug. 12, Australian energy technology company Power Ledger and Japanese Kansai Electric Power Co. announced they completed a joint trial of a blockchain-based peer-to-peer trading system for post-feed-in tariff surplus solar power in Osaka. Their announcement came on the heels of a report that highlights multiple ways blockchain technology could disrupt the peer-to-peer solar energy trading sector. According to the report:
“Blockchain technology could alter the manner in which electricity customers and producers interact. Traditionally electric utilities are vertically integrated. Blockchain could disrupt this convention by unbundling energy services along a distributed energy system. For instance, a customer could directly purchase excess electricity produced from their neighbor’s solar panels instead of purchasing electricity from the utility.”
Japan intends to replace FIT’s fixed price system with a competitive bidding/blockchain-based peer-to-peer trading system for post-feed-in tariff surplus solar power system as soon as 2020. This would thereby reduce inequality and provide cheaper, cleaner energy that reduces CO2 emissions and would help promote digital development in Japan as well as across the world.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Blockchain project NEO is considering integrating Celer Networks layer-two scaling protocol to improve scalability.
Blockchain project NEO is considering integrating Celer Network’s (CELR) layer-two scaling protocol to improve scalability.
Faster transactions, more possibilities
As industry-focused news outlet Crypto Briefing reported on Aug. 17, John Wang, NEO’s director of Eco Growth, said that integration with Celer is under discussion. Celer’s platform is a solution that enables faster off-chain transactions both for payments and generalized off-chain smart contracts.
To transfer value across the network, Celer uses its native CELR tokes. According to the report, community members say that Celer is fifteen times faster than Bitcoin’s (BTC) Lightning Network. Commenting on the development, Wang said:
“A public blockchain is more than a currency: it needs to have the infrastructure for lots of users to come to it … to enable people to do anything.”
New prospects for scaling
In March, major crypto exchange Binance’s token launch platform, Binance Launchpad, completed a $4 million sale of CELR tokens, following two other initial coin offerings such as the BitTorrent (BTT) token sale in January and the Fetch.AI (FET) token sale in February.
Earlier in August, blockchain-based decentralized application platform (DApps) Tron (TRX) released a sidechain scaling solution, the V1.0 code, designed to enhance and ensure the supposedly unlimited scaling capacity of the Tron mainnet. This will purportedly let DApps consume less energy and run with higher security and efficiency on Tron.
New Zealand has published a new ruling on salary and bonuses paid in crypto being subject to a pay-as-you-earn tax. But what does that actually mean?
The national tax authority of New Zealand, the Inland Revenue Department (IRD), has recently published binding rulings and guidance for salaries and bonuses paid in crypto, made under s 91D of the country’s Tax Administration Act of 1994. This ruling applies only to salary and wage earners and not to self-employed individuals, and only for services performed by an employee for a fixed amount and as a regular part of his/her remuneration.
While some may find this as proof that New Zealand has officially declared that income paid in cryptocurrencies is legal, the future of crypto adoption is not as bright as one might imagine. This ruling simply establishes professional guidance for companies and employees on how to tax crypto-based salaries by maintaining cryptocurrency status as an asset and not as a currency.
The published document cited the New Zealand’s IRD commissioner, who has even made an effort to state that crypto is not a currency, not legal anywhere and even doubted its ability to be a store of value. According to Commissioner Naomi Ferguson:
“In the Commissioner’s view, crypto-assets are property. Crypto-assets are not ‘money’ as commonly understood (at least not at the present time). In particular, because crypto-assets are not issued by any government, they are not legal tender anywhere. Further, although acceptance of certain crypto-assets as payment for goods and services is increasing, they are not “generally accepted” as payment. Given the extreme volatility experienced to date, there are also issues around some crypto-assets’ ability to be a store of value.”
Not exactly the desired outcome we were hoping for from a government ruling.
What exactly is this ruling all about?
There are two main issues: salary paid in crypto and bonuses paid in crypto. The commissioner of New Zealand’s tax authority has been asked to provide guidance and issue a ruling on how remuneration paid in crypto should be taxed when received by employees as part of their regular payments.
According to the ruling, crypto assets that are part of an employees salary or bonus will be subject to pay-as-you-earn (commonly known as PAYE) tax or Fringe Benefits Tax (FBT). In order for crypto salaries and bonuses to be considered under PAYE, they cannot be subject to a “lock-up” period, they can be converted to fiat currency on an exchange, a significant purpose should function as a currency, or their value is pegged to one or more fiat currencies. Other types of crypto assets paid to an employee that are not subject to PAYE will be subject to FBT.
Is this ruling considered groundbreaking as far as tax authorities’ acceptance of employee payments in crypto?
“Does virtual currency paid by an employer as remuneration for services constitute wages for employment tax purposes? […] Yes. Generally, the medium in which remuneration for services is paid is immaterial to the determination of whether the remuneration constitutes wages for employment tax purposes.”
Nevertheless, the fact that the IRD published clear and detailed guidance to these particular issues signals that tax regulators are taking crypto seriously and know that it cannot be ignored anymore. The level of detail in this ruling is much higher than the ones we saw outlined in the 2014 IRS guidance.
Back in September 2018, a group of blockchain and cryptocurrency professionals and enthusiasts proposed a document for New Zealand’s IRD that suggests “accepting cryptocurrency as payment for taxes.” The proposal acknowledged the difficulty of liquify crypto to fiat as a tax payments barrier and suggested that crypto tax payments will encourage compliance. The recommendations also included tax exemption for trading crypto for other crypto.
Tax authorities now understand much more than the basics of “crypto as an asset or currency.” They know exactly how it should be done in practice. Now, all eyes are on the IRS to provide its detailed clarifications, as it promised.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Earlier this past week Ripple (XRP) along with the aggregated crypto markets faced an incredibly sharp sell-off that sent XRP reeling down to lows of $0.25, which marked a significant pullback from the mid-$0.30 region where it has previously found stability.
Although the crypto was able to post a small bounce today, analysts are still noting that XRP broke below its 2018 support level, which could mean that significantly further losses are imminent.
Ripple (XRP) Finds Support Around $0.25
This past Wednesday, XRP incurred a significant influx of selling pressure that sent its price reeling down from over $0.30 to lows of roughly $0.25, at which point it found some strong support that allowed it to climb slightly higher.
It now appears that the $0.25 region is a strong level of support, as it has bounced each time that it has visited this region.
Importantly, unlike many other major altcoins, XRP is currently trading below its 2018 lows, and has now set a fresh low since it first began its downwards ascent from highs of nearly $4.00 in early-January of 2018.
Will XRP Drop Further in Near-Future?
Although analysts are not sure what has been the root cause behind Ripple’s lackluster price action throughout 2019, some investors have pinned it on regulatory concerns regarding its potential status as a securities product, which others have linked it to Ripple – the FinTech company closely associated with XRP – offloading massive amount of XRP onto the markets each quarter.
Regardless of what the cause might be, The Cryptomist, a popular cryptocurrency analyst on Twitter, noted in a recent tweet that the recent drop marked a break below its 2018 support level, which could mean further losses are imminent.
“$XRP: Relieved I sold last week! Support from August 2018 has now broken. However, I am adding some here as we potentially have a falling wedge here. Breakout would test previous support,” she explained while referencing the below chart.
Relieved I sold last week!
Support from August 2018 has now broken
However, I am adding some here as we potentially have a falling wedge here. Breakout would test previous support pic.twitter.com/80nxtEntUY
— The Cryptomist (@TheCryptomist) August 16, 2019
As the week wraps up, it is unclear as to whether or not Bitcoin’s price action will guide that of Ripple’s, or if the crypto will operate on an individual basis as it continues to face intense selling pressure.
Featured image from Shutterstock.
The post Ripple (XRP) May Face Grim Future Despite Today’s Bounce appeared first on NewsBTC.
Most major cryptocurrency markets have seen a slight drop today, with Bitcoin price falling below the $10,200 point.
Saturday, Aug. 17 — Most major cryptocurrency markets have seen a slight drop today, with Bitcoin (BTC) falling below the $10,200 price point, according to data from Coin360.
Market visualization. Source: Coin360
BTC is trading at around $10,197 at press time, down roughly 3% on the 24-hour period to press time. Today, BTC saw a drop to as low as $9,765 before trading sideways around its current level. Bitcoin is now down almost 14% on the week, while on its monthly chart the coin is up by 6.73%.
Bitcoin 7-day price chart. Source: Coin360
The second-largest cryptocurrency by market cap, Ether (ETH) started the day at $182.96. The altcoin mirrored Bitcoin’s drop earlier today, subsequently experiencing a gradual and jagged decline over the course of the day. Ether has lost over 14% on the week and 11% in terms of its monthly performance.
Ether 7-day price chart. Source: Coin360
XRP is currently trading in the green at around $0.263, leaving it up 0.46% over the past day. Earlier today, the altcoin saw an upswing to $0.267. On its weekly and monthly charts, XRP is down by 11.43% and 14.24% respectively.
XRP 7-day price chart. Source: Coin360
As reported earlier today, Bitcoin SV blockchain developer and blockchain organization service Open Directory creator synfonaut launched a consulting service called Office Hours. This service connects developers in need of assistance with experienced Bitcoin SV developers for help on Bitcoin SV projects.
Also today, Cointelegraph reported that crypto lending firm Nexo had paid its token holders a total of $2,409,574.87 in dividends, reaching an annualized dividend yield of 12.73%.
Bitcoin (BTC) has incurred a significant amount of volatility as of late which was perpetuated yesterday by news regarding the release of Bakkt’s physically settles Bitcoin futures product, which many investors view as a bullish development for the entire markets.
In addition to this, growing interest from China may help Bitcoin’s price climb higher in the near-future.
Bitcoin Stabilizes Above $10,300 After Recent Recovery
Despite the strong recovery from the bout of capitulation that sent BTC to its weekly lows, many analysts still believe that Bitcoin’s technical formations point to further bearishness in the near-future, which may be supported by the gap in the crypto’s CME futures chart, which currently exists at $8,500.
Despite this, Alex Krüger, an economist who focuses primarily on cryptocurrencies, explained in a recent thread of tweets that there is no guarantee that the gap will ever be filled.
“Even though gaps often fill, gaps are not meant to be filled. Gap filling is a combination of random variations (price moves), self-fulfilled prophecy (traders assign value to gaps), and lack of support/resistance within gaps (i.e. no trades inside),” he explained.
3/ Even though gaps often fill, gaps are not meant to be filled. Gap filling is a combination of random variations (price moves), self-fulfilled prophecy (traders assign value to gaps), and lack of support/resistance within gaps (i.e. no trades inside).https://t.co/NvE3JDTZQv
— Alex Krüger (@krugermacro) August 17, 2019
Will Positive Factors Help BTC Buck Recent Downtrend?
Assuming that a drop to $8,500 is not imminent, it is important to note that the markets have incurred robust fundamental developments as of late, which may help it reverse its recent downtrend and begin climbing higher.
Krüger further noted that there have been multiple bullish developments as of late that could help Bitcoin reverse its recent downtrend.
“Positive factors: Bakkt coming online Sep/23. Fidelity, Ameritrade, ETrade (awaiting news), HNWI & Macro traders interest. Macro narratives (false, but who cares). Retail interest trending (though still low). (Chinese interest in particular tripled in 2019, see,” he explained while referencing the below chart.
15/ Positive factors
Bakkt coming online Sep/23
Fidelity, Ameritrade, ETrade (awaiting news)
HNWI & Macro traders interest
Macro narratives (false, but who cares)
Retail interest trending (though still low)
(Chinese interest in particular tripled in 2019, see ) pic.twitter.com/KJ6NlfkG3F
— Alex Krüger (@krugermacro) August 17, 2019
Assuming that the aforementioned fundamental factors, in combination with growing interest from China, helps Bitcoin reverse its recent downtrend, it is likely that $12,000 will be the next major level of resistance for the cryptocurrency.
Featured image from Shutterstock.
The post Will Growing Interest from China Propel Bitcoin’s Price Higher? appeared first on NewsBTC.
The upcoming implementation of the California Consumer Privacy Act of 2018 has grave implications for businesses utilizing blockchain technology…
The California Consumer Privacy Act of 2018 (CCPA), which goes into effect on Jan. 1, 2020, has signaled a new push in the United States to strengthen and broaden privacy regulations, similar to the trends seen in the European Union through the passage and implementation of the General Data Protection Regulation (GDPR).
The CCPA affords covered consumers new privacy rights not otherwise enjoyed here in the U.S. Under the CCPA, an entity qualifying as a “business” must provide:
- Abbreviated disclosures regarding the personal information that is collected from or about covered consumers (Cal. Civ. Code § 1798.100).
- Certain other expanded disclosures regarding personal information collected from or about covered consumers (id. § 1798.110(a)).
- Disclosures regarding the sale or disclosure of personal information for a business purpose (id. § 1798.115).
- An opt-out from the “sale” of personal information (id. § 1798.120).
- An opt-in requirement before selling a minor’s personal information (id. § 1798.120(c)).
- The ability for covered consumers to access and/or delete personal information collected from or about them (id. §§ 1798.105, 1798.100(d)).
Subjected businesses must also implement measures to prevent discrimination against consumers who exercise their rights under the CCPA (id. § 1798.125). Because of these new obligations, the implementation of the CCPA may bring about drastic challenges for organizations that are utilizing blockchain technology.
What does the CCPA mean for blockchain?
Blockchain technology is being used to develop solutions and tools that provide individuals much greater control over their data. The technology’s often public and immutable ledgers promise to introduce a new level of transparency into how individuals’ data is being used. Blockchain technology (particularly when it is employed in a public/permissionless environment) is decentralized in a manner that often means that the way that data is stored, processed or otherwise used does not necessarily depend on a centralized authority or single “steward” or “controller.” In many ways, blockchain technology upends traditional models of collecting and storing personal data by enabling decentralization — thus removing third-party intermediaries.
However, most data privacy laws, including the CCPA, presume the operation of the traditional data model, which makes them difficult to reconcile with a decentralized or distributed data model. Thus, despite the fact that the CCPA aligns philosophically with many of the goals of blockchain technology (i.e., data integrity, cybersecurity and transparency), several inherent features of most blockchain technologies can pose compliance challenges — in particular, blockchain’s decentralized structure and the immutability of data entered into the blockchain ledgers.
Much of the uncertainty surrounding the CCPA (both generally and as it applies to blockchain technology) stems from the statute’s broad definitions. For example, the definition of personal information encompasses “information that identifies, relates to, describes, is capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household.” (Id. § 1798.140(o)(1)). Despite calls for the legislature to provide further clarification — including those voiced during the state attorney general’s multiple public forums pending the passage of any additional amendments — the statute, as it is currently written, becomes effective on Jan. 1, 2020.
Notably, enforcement actions by the attorney general may be brought six months after the publication of final regulations or Jul. 1, 2020, whichever is sooner (Id. § 1798.185(c)). Civil penalties include injunctions and fines of up to $2,500 per violation and aggravated fines of up to $7,500 per intentional violation. Note that consumers are afforded a limited private right of action in situations when their personal information is “subject to an unauthorized access and exfiltration, theft, or disclosure as a result of the business’s violation of the duty to implement and maintain reasonable security procedures and practices.”
When are blockchain businesses subject to the CCPA?
The CCPA’s obligations are limited to “businesses,” which are defined as any for-profit company doing business in California that collects personal information and satisfies at least one of the following thresholds:
- Receives an annual gross revenue in excess of $25 million.
- Annually buys, sells, or, for commercial purposes, receives or shares personal information of at least 50,000 California consumers, households or devices.
- Derives 50% or more of its annual revenue from “selling” California consumer personal information.
Note that “doing business” is undefined by the statute and could be construed to encompass a blockchain platform with nodes that operate in California or that collect data from Californian consumers (Id. § 1798.140(c)(1)).
Though the first prong of the CCPA threshold test is fairly self-explanatory, the second and third prongs are less straightforward. The mere act of hosting information on a blockchain could be considered “sharing” personal information, particularly when nodes are treated as “devices” under the second prong of the test. For example, the existence of 500 nodes on a blockchain network that all maintain a copy of the ledger may constitute “sharing” under the statute (although there is currently no regulatory guidance on this topic).
The definition of “selling” is also very broad. It includes “renting, releasing, disclosing, disseminating, making available, transferring, or otherwise communicating orally, in writing, or by electronic or other means” personal information for “other valuable consideration.” (Cal. Civ. Code § 1798.140(t)(1)). What constitutes “other valuable consideration” remains unspecified.
Therefore, it appears from the facial language of the statute that blockchain companies could be considered to be “selling” personal information simply by hosting and operating a blockchain platform through which people and entities can exchange personal information — particularly if the blockchain company charges a fee (whether in tokens operable on the blockchain or some other form of external consideration) to access the blockchain or derives other “valuable consideration” from the hosting and operating of a platform that facilitates personal information exchange.
Similarly, it is possible that node operators or miners in a blockchain environment who receive tokens or cryptocurrency in exchange for performing transaction validation or ledger confirmation services to the network would be similarly considered to be “selling” because they are “communicating […] by electronic or other means” personal information that is written to the blockchain. If a covered business is found to be “selling” personal information, additional notice, disclosure and other obligations will apply — even if the business has not engaged in what would traditionally be considered a “sale” for monetary consideration.
More, while pseudonymization may help obfuscate data, it does not render the subject data nonpersonal. Because the statute applies to personal information that is “capable of being associated with, or could reasonably be linked, directly or indirectly” with the individual, such techniques may prove insufficient due to the risk of reidentification.
How can a blockchain business best address compliance with the CCPA?
Businesses that deploy blockchain technology should carefully consider the extent to which personal information is written to blockchain-based ledgers and whether there are ways to mitigate the problems that arise from this appertaining to the demands and requirements of the CCPA.
For example, businesses might consider storing personal information off-chain (i.e., not on the blockchain) while using the ledger to track and mediate access to the personal information. This type of solution could enable the business to directly reference the off-chain personal information for reporting obligations under the CCPA while maintaining the integrity of its ledger, and without necessarily putting the data on-chain, such that the business could not delete that data upon request. In this scenario, deletion is simple: By simply taking the data off-chain, any immutable references on-chain become references to nonexistent data and are rendered meaningless.
However, off-chain workarounds can add unwanted complexity that is at odds with many blockchain platforms’ goals of simplicity and transparency. Furthermore, these workarounds often fail to solve the security concerns presented by having parallel data sources in the status quo that blockchain-based solutions so elegantly address.
If an off-chain solution is impractical, blockchain businesses could consider taking all data obfuscation steps available to depersonalize the data as much as possible (e.g., applying salting, encryption and hashing techniques to all on-chain data). However, data on the blockchain is almost always associated with a ledger’s public key (i.e., ledger address) and is therefore connected to the person or entity that was adding data to that address. Accordingly, public keys could be deemed “personal information” under the CCPA to the extent that they belong to or can be tied to a California consumer.
Finally, businesses should begin taking steps to comply with the CCPA as soon as possible: In a 2018 conversation at Perkins Coie LLP, Eleanor Blume, the special assistant to the California Office of the Attorney General, emphasized that companies would be evaluated on their CCPA compliance in part by the preventative measures they took in 2019.
The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This discussion is not intended as legal advice.
This article was co-authored by Joe Cutler, Charlyn Ho, Anna C. Mourlam, Marina Gatto and Thea Percival.
South Korea’s “Bit-Island” Jeju announced the Blockchain Hub City Development Research Service.
South Korea’s “Bit-Island” Jeju announced the Blockchain Hub City Development Research Service on Aug. 13.
An island with blockchain ambitions
Local news outlet JejuDomin reported on Aug. 14 that Jeju announced the Blockchain Hub City Development Research Service on Aug. 13. Furthermore, the author of the report stated that cloud services provider Tilon will carry the research. Per the report, the budget meant to cover the costs of the project amounts to 175 million won (nearly $145,000).
In April local news outlet BusinessKorea reported that Busan — South Korea’s second most populous city — has been picked over Jeju as the preferred location for South Korea’s blockchain regulation-free zone.
The island that does not surrender
Jeju previously hoped to become the local initial coin offering (ICO) hub, after being granted the status of regulation-free zone. Still, the latest developments show that the island is still fighting for relevance in the blockchain and cryptocurrency industry.
As part of the project, parties involved will reportedly analyze and investigate advanced use cases for blockchain technology and derived services, and also develop a blockchain service model suitable for Jeju Island. Future strategy director of Jeju Island Noh Hee-seop commented on the development:
“We expect that this research service will contribute to the establishment of Jeju as a blockchain hub city that maximizes the potential of blockchain technology, the core technology of the 4th Industrial Revolution.”
After first banning ICOs in September 2017, South Korean state financial regulator the Financial Services Commission announced that it will not lift its ban on ICOs in the country at the end of January.
Busan looks to release local crypto
As Cointelegraph reported in July, Busan city authorities are seeking to develop a blockchain-based digital currency project in collaboration with BNK Busan Bank, a subsidiary of local holding company BNK Financial Group.