International Developments

ACI Blockchain and

Distributed Ledger Technology

Judith Rinearson

April 14, 2016

New York, NY

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• Introduction – What is Blockchain

• Themes

• Developments in

– Europe

– Asia

– Africa & Middle East

• Regulatory Concerns

• Conclusion

Agenda

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• The blockchain is a distributed-ledger technology that can help provide secure, fast, transparent transactions.

• To be effective, blockchain technology requires coordination and collaboration between banks, payment companies, trading platforms, and payment clearinghouses.

• The technology under the blockchain is not new – it is basically an encrypted database that is distributed across a computer network.

• “But what makes it different is it can only be updated when everyone on that network agrees, and once entered the information can't be overwritten, making it extremely secure and reliable.”

– BBC News – 29 March 201 6 - - http://www.bbc.com/news/business-35890616

What is “Blockchain”?

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The key to blockchain:

Data Accuracy and Security: a constant concern..

Tally sticks came into use in England after the Norman invasion. Tax assessments were recorded by cutting notches in a wooden twig and

then splitting the twig in two, so both sheriff & King had a durable record of the assessment. When it was time to pay up, the sheriff would

show up with the cash and his half of the tally to be reckoned against the King’s half.

Cunningham, W. Royal Revenues in The Growth of English Industry and Commerce during the Early and Middle Ages (Cambridge University

Press, 1915). [WITH THANKS TO DAVID BIRCH – CONSULT HYPERION]

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Then - -

• Cheap

• Long-Lasting

• Unalterable

• Understandable

And now add - -

• Fast

• Global

• Trackable/monitorable

Tally Sticks – Accounting Records – Databases – Blockchain

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• Key Themes

– Remittances

– Incubators & Garages

– Stock trades & Financial Markets

– Banking

– Settlement

– Peer to Peer payments and lending

– Bill payments

Global Developments in Blockchain

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Remittances

Visa Europe Makes Blockchain Investment

Visa Europe Collab, the card network’s innovation team, is working with

blockchain startup Epiphyte to explore blockchain-based remittances

platforms. The companies hope to spend the next two months testing a

blockchain-based remittances prototype on real-world transactions to see if

it’s effective.

Blockchain Developments in Europe

http://www.businessinsider.com/visa-europe-makes-blockchain-investment-2015-

11 Nov 2016

Blockchain technology, which powers bitcoin and other cryptocurrencies,

has the potential to simplify financial processes. It could enable

transactions to pass between two parties instantly and without the need for

centralized authorities like clearing houses. That improved efficiency and

increased security could simplify cross-border transfers and multi-currency

transactions, which are key for remittance organizations.

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Peer- to- Peer Lending and Payments

European Blockchain Incubator Launches First Public

Proof of Concept, MoneyCircles.com

MoneyCircles.com is a decentralised peer-to-peer lending app built

on Uphold (formerly Bitreserve) which allows circles of people to get

together and mimic a credit union to save & lend with one another

based on a ‘common bond’. By using smart contracts this allows for

total transparency and verifiability, a first in the financial services

market.

MoneyCircles.com is created by Outlier Ventures Ltd, Europe’s first

dedicated blockchain incubator setup to seed, develop and launch a

new startup every 3-6 months across a variety of sectors.

Blockchain Developments in Europe

http://www.coindesk.com/press-releases/blockchain-incubator-launches-moneycircles/

October 2015

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Blockchain Developments in Europe

Stock Trades & Financial MarketsNine of world's biggest banks join to form

blockchain partnership

Nine of the world's biggest banks including Goldman Sachs

and Barclays have joined forces with New York-based financial

tech firm R3 to create a framework for using blockchain

technology in the markets, the firm said on Tuesday.

It is the first time banks have come together to work on a

shared way in which the technology that underpins bitcoin - a

controversial, web-based "crytocurrency" - can be used in

finance.http://www.reuters.com/article/us-banks-blockchain-

idUSKCN0RF24M20150915idUSKCN0RF24M20150915

September 2015

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Settlement

Blockchain venture targets high-speed securities

settlement

A new blockchain technology venture, headed by the founder

of pan-European equities platform Chi-X, plans to deploy an

infrastructure that will rapidly speed up securities settlement.

The new venture, called SETL, will enable market

participants to move cash and assets directly between each

other, and to facilitate the final settlement of transactions.

SETL is led by Peter Randall, former CEO and founder of

Chi-X, and Anthony Culligan, founder of peer-to-bitcoin

trading site Roolo.

Blockchain Developments in Europe

http://www.thetradenews.com/news/Regions/Europe/Blockchain_venture_targets_high-

speed_securities_settlement.aspx July 2015

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Incubators & Garages

IBM to Open Blockchain ‘Garages’ in Singapore,

Tokyo, NY and London

Tech giant IBM has announced that it will open so called IBM Garages in Singapore, Tokyo, New York City and London where its experts will be able to collaborate with local developers on the design and implementation of blockchain technology for business.

The initiative is part of IBM’s wider plan of pushing blockchain usage for businesses and came simultaneously as the corporation had unveiled its latest suite of services entirely dedicated to facilitating the development, design and implementation of blockchain technology for developers and businesses

Blockchain Developments in Europe & Asia

http://fintechnews.sg/1590/blockchain/ibm-open-blockchain-garages-singapore-tokyo-ny-

london/ Feb 2016

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Stock trades and financial markets

Asia's Largest Stock Exchange Operator Partners

IBM for Blockchain Applications

Japan Exchange Group, operator of the Tokyo Stock

Exchange will begin experimenting with blockchain

technology for post-trade solutions such as clearing and

settlement of trades. The operator will team up with IBM

Japan for the project.

The operator of Asia’s largest stock exchange is joining IBM

Japan to run blockchain tests for clearing, settlement, and

other operations.

Blockchain Developments in Asia

https://www.cryptocoinsnews.com/asias-largest-stock-exchange-operator-partners-ibm-

blockchain-applications/ February 2016

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Banking

Accenture: Asia-Pacific Banks Should Develop

Blockchain Strategies

Asia-Pacific (APAC) banks, credit card firms and startups

can be expected to increasingly focus on blockchain

technology in the coming years, according to a new report by

Accenture.

The management consulting services firm, which has

recently been assertive in voicing its opinions on the

emerging technology, stated that this trend would coincide

with the need for FinTech firms to streamline operations and

comply with regulations.

Blockchain Developments in Asia

http://www.coindesk.com/accenture-asia-pacific-banks-blockchain-strategies/

November 2015

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Banking

Africa’s big banks are betting on fintech startups and

bitcoin to beat disruption

African banks have been late to the fintech party, but after leaving huge swaths of the population to get their financial services from telcos (most famously Safaricom’s M-Pesa in Kenya), banks here are increasingly seeing the continent as a testing ground for new financial technologies like bitcoin and the blockchain.

“You have a headwind from Silicon Valley and Europe blowing into Africa now around the disruption in fintech. The banks are really nervous and they want to get ahead of this,” says Mbwana Alliy, managing partner at African technology venture firm, the Savannah Fund.

Blockchain Developments in Middle East & Africa

http://qz.com/618674/africas-big-banks-are-betting-on-fintech-startups-and-bitcoin-to-beat-disruption/

Feb 2016

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Incubators & Garages

Bitcoin and Blockchain Will Help Africa Achieve Global

Inclusiveness, Says Kenyan Blockchain Incubator Founder

Space Kenya Networks Limited, a Kenyan web development company, recently announced the launch of its blockchain incubator BitHub. CCN spoke with the director of Space Networks Kenya and founder of BitHub to discuss the crypto- and bitcoin-space in Kenya.

In a statement found on the website, BitHub describes its mission as: “Solving problems using innovative Blockchain solutions that are currently under development across the World.” Furthermore, the company says:” We believe that blockchain solutions will make substantial contributions to rethinking existing structures in the following political, social and economic sectors.” The company aims to “Bring together a consortium of individuals, organizations, and expertise to drive the development and adoption of blockchain technologies especially within the African continent,”

Blockchain Developments in Middle East & Africa

https://www.cryptocoinsnews.com/bitcoin-and-blockchain-will-help-africa-achieve-global-inclusiveness-says-

kenyan-blockchain-incubator-founder// Jan 2016

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Bill Payment

Blockchain Smart Meters: Solution to Africa’s

Utility Crisis and Struggling Schools?

Bankymoon, a South African-based Bitcoin solutions company, is changing how people pay for utilities, making them more affordable. Bitcoinist spoke with Lorien Gamaroff, founder and CEO of Bankymoon, to find out more about the utility crisis in Africa and what Bankymoon is doing to solve it. Lorien, a South Africa native, shared with us about the crisis and how it is impacting Africans and the education systems

Today, Africa is in a state of crisis due to its current unsustainable utility metering system. This metering system is what’s referred to as “post-paid,” meaning consumers pay after they have consumed the utility. Many Africans find it difficult or impossible to pay their utility bills due to inflated utility costs and inefficient payment solutions. The crisis is severe. Lorien states

Blockchain Developments in Middle East & Africa

http://insidebitcoins.com/news/blockchain-smart-meters-solution-to-africas-utility-crisis-

and-struggling-schools/34940 Sep 2015

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Currency

Blockchain: The next mobile phone for Middle

East and Africa?

Recently Tunisia replaced its self-created e-Dinar digital currency with a

blockchain-based version. Was this a case of federal “cognitive

dissonance”? After all the fundamental pillar of distributed ledger

technology is the lack of a central authority, a truly democratized system

where participants need to ‘agree’ for transactions to be final and

irreversible. Tunisia, a North African country with a population of 11

million, has now the unique distinction of being the world’s first country to

issue national currency using blockchain technology. While the

technology is still evolving, it definitely has immense potential towards

disrupting several industries especially with regards to Middle East and

Africa.

Blockchain Developments in Middle East & Africa

https://www.linkedin.com/pulse/blockchain-next-mobile-phone-middle-east-africa-pinaki-aich

Jan 2016

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Incubators & Garages

Dubai Government Backs Expansive Blockchain

Research Effort

An innovation center established by Sheikh Mohammed bin Rashid, vice

president and prime minister of the United Arab Emirates (UAE) and emir

of Dubai, has announced the formation of a research council focused on

blockchain technology.

Launched in 2015, the Museum of the Future was created with the

mandate to encourage innovation and help foster investigation of new

technologies within the Middle Eastern nation. The keystone of the

project will be an architectural centre (estimated to cost $136m) and set

to be completed in 2017.

Blockchain Developments in Middle East & Africa

http://www.coindesk.com/dubai-government-backs-expansive-blockchain-tech-research-

effort/ feb 2016

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• Concerns Raised by the UK’s Open Data Institute -- in

response to the Government Chief Scientific Advisor’s Report

on Distributed Ledger Technology: January 2016

– Too much hype

– Too little consideration about the risks

– Like most new technologies, blockchains could cause significant

damage if used indiscriminately.

– Cases where people are trying to bolt old, failed or impossible policy

and business ideas onto the new technology

– People “unnecessarily reinvent things that work perfectly well.”

– We’ve seen many ideas that would put new personal data into

blockchains but learnt that, if misused, this will create significant new

privacy issues.

– The core problems that blockchain technologies help to address is of

growing importance and an area that shows some promise, but few

people are thinking about it.

Regulatory Concerns

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• Need for industry standards

• Need for more trained technical coders and computer engineers

• Premature regulation – state licensing laws on virtual currency being extended to non VC products and services

• How to eliminate “the settlement issue” - eventually all transactions need to be settled, but we can’t see how to do it without using bitcoin or other digital currencies.

• Large bank and financial service companies dominate and crowd out smaller competitors

• Moving too quickly, inability to keep up with change

• Impact on legacy systems

Industry concerns

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• Blockchain is Global

• A True Primordial Soup of Innovation

• No one is waiting for regulators

• But they’ll be there soon enough…

Conclusion

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Judie Rinearson

Partner, Bryan Cave LLP

Telephone London: 44 (0) 20-3207-1280

Telephone New York: 1-212-541-1135

Judith.rinearson@bryancave.com

Questions?