US – Advancing Blockchain Act

A great move towards blockchain adoption. A new US bill in Congress introduced this week by U.S. House Rep. Brett Guthrie asks the U.S. Federal Trade Commission to consider a national blockchain strategy! – Gartner predicts global blockchain use to generate over US$3 trillion by 2030 – Australia released its National Blockchain Roadmap in February 2020, also identifying enormous potential economic benefits for the country. 

Congressman Guthrie’s new Bill comes a few weeks after 11 members of the U.S. Congress petitioned the Treasury Department to use blockchain technology to aid in distributing COVID-19 relief funds. The petition letter calls for the US Government to leverage “American ingenuity, entrepreneurship, and innovation” – through reliance on blockchain and distributed ledger technologies(DLT). The request was presented in a letter from the lawmakers to Steven Mnuchin, secretary of the U.S. Treasury Department. The letter sent on April 23rd was made public on April 28 – See original Letter here.

Guthrie’s Bill Here -> Advancing Blockchain Act FINAL

So far The House of Representatives and U.S. Senators have introduced over 30+ congregational bills in which:

    · At least 13 bills focus on regulatory frameworks,

    ·  Around 5 bills promote ways blockchain technology can be used by the U.S. Gov including two newest bills covering the concept of a digital dollar, and

    · About 3 bills give attention to ways to empower central regulators prudential frameworks to use blockchain, Digital ID and AI.

It is very encouraging to see the level of interest by the US Congress which is now growing beyond what has typically been the interest of just a handful of legislators in previous years.
Categories –Blockchain

A Plan for Returning to Work After COVID19

Safety measures you may need to take to protect employees

Australian Prime Minister Scott Morrison announced the “3-Step Framework for a COVIDSafe” to put Australia back on the road to recovery from Coronavirus. It will be at the discretion of each state to implement each step and when, with the plan to have all steps in action by mid-July 2020. As businesses reopen and move towards recommencing their normal operations in accordance with the framework, employers will be asking their employees to return to the workplace. But as governments and businesses move forward, employers should have appropriate procedures in place to ensure that any employee returning to work following recovery from COVID-19 is safe to do so, without placing any other employees at risk. It is important that employers either review or develop a “Return to Work COVIDSafe Plan”. The plan will encourage an employer to constantly observe / assess public health orders that may be in place at a relevant time, ensuring employees are not exposed to breaching any relevant restrictions. As mid-May 2020,  some well known restrictions include physical distancing as well as observance of a “square meter rule” which may differ from workplace to workplace. As Australian businesses implement their “COVDSAFE Plan“, it is possible that employers are required to relocate workspaces, or introduce teams of workers who attend the workplace in shifts so fewer employees are present at any one time. Equally, travel to and from work should be considered as part of the plan and measures can include employers considering a staggering of employees’ start / finish times so that public transport is not crowded during peak travel times.

A recent survey done by US Qualtrics online survey giant has produced some prompting results when people were asked whether they were comfortable returning to the workplace, dining at restaurants, voting at polling places, and / or visiting other public spaces. Although this is a US based survey and results, nonetheless it is great feedback to assess if your company is ready to return to work and get on with business. Reported responses as provided by Qualtrics:

  • Most employees want assurance from public health officials like the Centers for Disease Control (63%) or the WHO (45%) to feel comfortable returning to the workplace.
  • People also expect their employers to keep them safe at work once they come back, with 69% saying they trust their company leadership to make the best decision on when employees should return to work, 16% reporting that they were neutral, and 15% who disagree.
  • 74% want their work facility to be thoroughly and regularly cleaned and disinfected
  • 63% want their company to consult with local and state authorities to make sure it’s safe to come back
  • 62% want strict policies about who cannot come to the office, like those who are sick or have recently traveled
  • 57% want masks available to anyone who wants one
  • ​Two out of three people (64%) say they want to be able to wear a mask at work, while nearly as many (61%) want to maintain social distancing
  • Workers are worried, not only about their own safety, but about the safety of their co-workers. They also understand that their co-workers’ health affects their own, and many want safety policies put into place before returning to work — like a temporary ban on handshakes and hugs (45%), or a policy that requires employees who travel for work or pleasure to self-quarantine for 14 days (38%).

The full Qualtrics report can be found here

The Australian Government and each Australian State has published guidelines for businesses as they prepare to recommence normal operations. Below, we outline some of these guides and policies that your business maybe able to use as a reference: 

It is important to acknowledge that the health and safety of employees is a main goal for employees to safeguard. Notwithstanding, business productivity is also of importance, as such it is paramount that employers are able to determine what can be required from employees, taking into account the pros and cons of allowing an employee to continue to work remotely, as we emerge from lockdown and into the future.

Is Australia’s News Media Legislation Introducing the Right Balance Across Global Digital Platforms?

The new law is designed to make global search platforms pay local news sites for content

It has been dubbed Australia’s “News Media Bargaining Code” – a world-first mandatory code of conduct to force tech giants to pay Australian media companies for news results (including links and snippets) searched through their platforms. The proposed legislation is the outcome of the 2017 Australian Competition and Consumer Commission’s (ACCC) Digital Platforms Inquiry. A final report was released in mid-2019. 

The Government’s response to this inquiry established a “roadmap for a program of work and series of reforms to promote competition, enhance consumer protection and support a sustainable Australian media landscape in the digital age” and considered to adhere to the following commitments[1]:

  • ACCC to be tasked with monitoring and reporting on the state of competition and consumer protection in digital platform markets.
  • Evaluating the perceived bargaining power imbalance concerns between digital platforms and media businesses.
  • Launching a staged process to reform media regulation towards an end state of a platform-neutral regulatory framework.
  • Ensuring privacy settings empower consumers, protect their data and best serve the Australian economy.

The preliminary position for the Australian Government was for the ACCC and industry to establish the proper mechanisms of a workable framework that will address the Government’s commitments and industry’s concerns. To this extent, it assigned the ACCC the task to facilitate the development of a voluntary code of conduct. After some stakeholder’s interaction, the ACCC advised the Government that businesses were “unlikely to reach voluntary agreement” and subsequent dealings over the introduction of a voluntary framework broke down, prompting the government to look at making the code mandatory. The process of the news code deliberation has involved moving through long public consultation phases as well as establishing a senate committee and multiple public hearings.

On 9 December 2020, the Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2020 was introduced to Parliament. The proposed code is enforceable and compels the major digital platforms, namely Google and Facebook, to pay Australian media companies for use of news content. As expected, content creators have been generally supportive of the code, while data platform owners have been strongly opposed. The code also included provisions for enabling certain data rights, algorithm transparency on ranking of news and fines for no compliance – such fines being large enough to ensure giant social media platforms do not simply ignore them. Expected fines can be up to 10% of local turnover, $10M or three times the benefit gained from a breach.

Specific key areas of the new mandatory code are making the giant platforms uncomfortable, claiming further that the code – as it stands – is unworkable. There have also been some alleged threats from the two digital giants against Australia such as scaling back market participation or platform pull out and service shutdowns. The code will initially apply to Facebook NewsFeed and Google Search, with the possibility of other digital offerings being added in the future.

The Australian Government intervention comes amid comparable attempts introduced across the United States, Europe and South America. In analogous terms, past efforts have already been made to address the imbalances caused by the perceived believe that most of the advertising revenue gains have benefited the two tech social media platforms. Governments, policy maker and traditional industry around the world believe that the search and social media giants have used their global reach, tech dominance and access to data across offerings to leverage and take a dominant share of the digital advertising business. Furthermore, the fallout of CV19 has sparked a collapse in advertising revenue leading to regional outlets shutting or scaling back operations. There is also the argument that journalist’s organisation and news publishers used to direct their distribution networks but now most of the distribution is directed through Google and Facebook who take most of the value.

Josh Frydenberg, the Australian Federal Treasurer points out to the “large degree of destruction” caused by the duopoly of digital giants and how this had endangered the survival of traditional media companies – in a recent interview he said: “You can’t save all papers and all jobs. We are not seeking to protect traditional media businesses from the rigours of competition or the rigours of the digital world. We are seeking a level playing field”. According to the ACCC, Google and Facebook had about AU$6B of the online advertising market in 2018, and currently somewhere between 8 and 14% of searches on Google come up with news stories. ACCC’s inquiry has also found that for every $100 spent on digital advertising in Australia, $53 goes to Google, $28 to Facebook and only $19 goes to other participants.

Platform giants have already made use of their size, reach and technology strength to effectively push their agenda and ignore smaller jurisdictions. For instance, Spain in 2014 attempted by law to force Google to pay for news going through its aggregator product, Google then responded by shutting down the services there. Likewise, in more recent events, Google after initially balking at paying for news content through months of negotiations, France has now eventually forced Google to make digital copyright payments for online news content under a reformed European Union copyright / neighbouring law – the French framework agreement payment and criteria are somewhat different to the Australian code.

But is Australia’s News Media Bargaining Code the right model to enable content payment?

There is no doubt that introducing a “level playing field” as Mr Frydenberg has indicated or promoting fair payment for original news content does have merits. Even more so if we accept the underlying notion that there should be no free-rides on other’s news writer work, copyright, or production of news – a more relevant question is then to ascertain if the Australian model is the right solution for content payment and / or is there really a need to enact legislation to achieve economic benefits to all parties?

We know that models for content payment already exist. Decades ago, similar disruptions were faced by the music industry when they lost control of distribution through the advent of radio and recording. Bespoke regimes have been developed which are currently helping account for content payment across other industries such as IP database rights, broadcast EPG positioning, cable TV re-transmission and others. The point is that other models like perhaps performing rights organisation models (PROs) or collecting society have evolved out of the need to have an organised body for the licensing and managing copyrighted works.

Take Spotify for example, according to 2018 listing documents, since 2006 Spotify has paid around US$9.76 billion in royalties to artists, music labels and publishers. In fact, if you are interested in starting a new career as a singer or song writer, you may be happy to know that you can expect to make between $3 and $5 per 1,000 streams on Spotify per month.

It is of absolute significance to understand that the Australian news code has been developed around a “negotiate-arbitrate” model to help regulate the imbalance of bargaining power where issues of concern are resolved either through negotiation or through arbitration. What this means is that an independent arbiter will be used to determine the final payment if the two parties are unable to reach an agreement. This independent arbitrator would need to factor in a “two-way value exchange” before reaching their final decision. The regime is meant to be an effecting legislative framework model, governed by principles of economic benefit and applicable to a range of circumstances where market power is exercised. But situations of uneven bargaining power are also applicable here and there should be concern for those market participants who may not be able to access negotiate-arbitrate regulation due to costly processes, large transaction costs or high threshold criteria. Under a negotiate-arbitrate scenario, competition in the market could impact say smaller players – who in the medium to long term – may be forced out of business, triggering an unintended outcome to the new ACCC proposed legislation code.

Note also that the Code only applies to news media companies with annual revenues greater than AU$150,000, that is in either the most recent financial year or in three out of the five most recent financial years. Once registered for the code, all eligible news media organisations can then engage in negotiations, either individually or collectively. This threshold is a requirement to become a registered media business. This level also indicates that businesses under the threshold cannot be registered and cannot collectively bargain. Let us remind ourselves that one of the greater befits of the internet is that is has democratised news access and news creation – as with Spotify now you can become a song writer at any time, the internet allows us to express opinions and potentially also grants the ability to become a journalist, be this through freelance or otherwise. This new breed of journalists likewise may not have revenues significant enough to participate in the Code, and so are potentially also left out. Furthermore, through a brief assessment of previous Australian experiences in the use of negotiate-arbitrate regulation across other industries, i.e., aviation and telecommunications, it shows that such process may potentially lock parties into endless cycles of negotiation and arbitration – diminishing its effectiveness. It is evident then that some companies could miss out just at a time when they may need protection the most, oblivious perhaps they could have been better protected under a say a different model, i.e., collecting society. A new question should then be asked – what small news media outlet would in the right mind want to arbitrate with several internet giants?

These concerns are factual and they are already making noise through the current legislation lobbying process. During a second day of public hearing received on 1 February 2021, Mr Adam Portelli, Director of the Media Entertainment and Arts Alliance (MEAA) warned of the danger on the two-way value principle – here is brief summary of the hearing – page 6:

Senator McALLISTER: Thanks very much, Mr Portelli. Could you explain to me MEAA’s concerns about the two-way value exchange principle and your view that it will diminish the code’s effective operation?

Mr Portelli: Yes. From our perspective, it seems it has the potential, we say, to weaken the system and overly complicate the way in which value is determined. We’re not aware of a practical way that the tech companies would be able to quantify that revenue. It appears to us like another step in the digital giants’ dragging this process out and minimising their financial obligations. We saw the first iteration of this system, the first draft, whereby it’s a one-way model, as being simpler, fairer and likely to give newsrooms and the Australian public what they needed, which was fair compensation for news content as carried by big tech.

Senator McALLISTER: So your essential concern is that it is too amorphous and risks undermining satisfactory conclusion of arrangements.

Mr Portelli: That’s correct

And, on the AU$150,000 threshold, Senator McAllister asked:

Senator McALLISTER: I have a final question. You’ve indicated that you think some sort of tithe or multilateral levy in support of regional news and public interest journalism is necessary. You’ve also indicated that you think the revenue threshold is too high at $150,000 per annum. What is your preferred threshold as an alternative to the $150,000?

It feels here a need to highlight a potential use case of PROs or collecting society models that could be used for licensing or managing copyrighted works and through which remuneration can flow back to owners without a need of heavily structured, costly, or recurring negotiations.

In our ever-increasing digital world, we know that there is fundamental transformation and change underway and everyone has a unique opportunity to shape the way how this change can be helpful, inclusive and human-centered. Through this lens legislators can also be better guided in their understanding of how digital distribution platforms are impacting the way society exchanges and consumes value and information.

[1]https://treasury.gov.au/publication/p2019-41708

Whale Alert on Twitter

A Satoshi Owned Wallet Move?

The popular Twitter “bot” account transfer tracker for on-chain transactions on multiple blockchains – the “Whale Alert” just triggered a burst of speculation after reporting a large Bitcoin (BTC) transfer from a wallet that has been inactive for more than 11 years. Coins were minted in 2009, and have been inactive until Wednesday 20 May 2020 – around 40 BTCs were transferred from what it is believed be Satoshi owned wallet.

Whale Alert Transaction Details Here

US Congress And a Case for a Digital Dollar

Triggering the Creation of a New Government-run Platform

On the back of the pandemic-fueled crisis, governments worldwide have pledged more than US$10T in fiscal support, with total virus-relief spending in the US alone standing in excess of $2T. Eligible Americans are now receiving cash handouts of up to $1,200 in their bank account using existing methods such as direct bank account deposits and postal delivery paper cheques – unproductively distributing these funds via a slow and expensive traditional banking ecosystem, being supported by a manual process network.

Global discussions on the prospects of introducing a central bank digital currency (CBDC) have generally remained high level and have also lacked any practical application, but on the outset of the CV-19 crisis, it may just end up being the important turning point required to reinvigorate the discussion.  American policymakers now seem to seriously be considering the idea that the Federal Reserve should issue “digital dollars”.

Soon after the US fiscal support announcement was made in March this year, powerful Democrat policymakers proposed a new Bill seeking the creation of a new, government-run payment platform that would run a digital version of the US dollar and would be included in the CV-19 driven stimulus package. Another House Bill called “Banking for All Act“, sponsored by US Senator Sherrod Brown calls on the government for the bill to be included as part of the the coronavirus economic stimulus package.

Senator’s Brown recent press announcement clearly sets out the intentions of his “Banking for All Act” Bill:

‘At the height of this pandemic we must do more to protect the financial wellbeing of hardworking Americans and consumers. They are on the front lines of this crisis and are already feeling the effects of the economic fallout. My legislation would allow every American to set up a free bank account so they don’t have to rely on expensive check cashers to access their hard-earned money.’
The Bills can be found here:

The bills provide definitions for digital dollars, digital wallets, digital ledger entries and it offers the provision for a “pass-through digital dollar wallet” where the intend is to mandate for all member banks to open and maintain digital dollar wallets on behalf of all citizens, including those eligible to receive the stimulus. The pass-through digital wallet Bill section also promotes and embeds consumer protection statements by describing that digital wallets ‘shall not be subject to any account fees, minimum balances, or maximum balances and shall pay interest at a rate not below the greater of the rate of interest on required reserves and the rate of interest on excess reserves‘.

Unfortunately, the proposed platform didn’t make the final release for the coronavirus response bill. Nonetheless, the digital dollar journey move just got closer than ever to becoming a reality, and Covid-19-fueled crisis may be an important turning point in helping the move.It is worth noting that China has been preparing the roll out its own version of a digitised domestic currency during this year. Under their Digital Currency Electronic Payment (DCEP) initiative, the new digital currency will stimulate daily banking transactions including deposits, payments, and withdrawals from a digital wallet. The DCEP project will also be powered partially by blockchain technology (distributed ledger). In April 2020 China announced that it has implemented the first mobile wallets and now have them enabled to work with DCEP. The project is currently in advanced testing phase across 4 Chinese cities – Shenzhen, Xiong’an, Chengdu and Suzhou.

It is indeed very encouraging to see new developments and the use of efficient technology improving costs, enhancing efficiency and the overall well-being of citizens across the world. It is true also that a new system can always improve the way baking and financial services is delivered now and into the future, but any such a changes could also cause significant disruption to the current banking system if these developments are not controlled and done in accordance with all required prudential regulation and multi-party collaboration.