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Nothing better than ending 2018 with a retrospective gathering some of the main news published during the year, contextualizing its relevance and, when possible, updating the subjects.

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Unilateral closure of cryptoassets exchanges’ bank accounts – With the accelerated growth of the cryptoassets value until the end of 2017, in particular of Bitcoin (BTC), several new cryptoassets exchanges were created, which were added to those that already existed and dominated the market. The lack of specific regulation of this market provided both positive and negative aspects. One of these was the unilateral closure of exchanges’ bank accounts by the banks. . The leading case judged by the Brazilian Superior Court of Justice (STJ) was “Mercado Bitcoin” versus “Banco Itaú”. The banks’ argument for closing the accounts was “commercial disinterest” in maintaining it. On the other hand, the exchanges claimed that it would be a form of unfair competition. Prior to the STJ’s final decision, a judge of the 12th Civil Court of São Paulo granted an injunction for reactivating the bank account of the exchange Braziliex in Banco Bradesco. The decision was based on the time between the notification sent by the bank and the actual closure of the account, since it was closed within four days from the notification. The STJ, on the other hand, in judging the Mercado Bitcoin case, considered the closure of the account valid, even with the dissenting vote of Minister Nancy Andrighi. The STJ’s analysis was restricted to the elements discussed in the lawsuit, and did not consider the argument “that banks would be closing the accounts of exchanges in a systematic way.” For the STJ, the closures consist of a subjective right of the bank, as long as the notification is observed, which occurred in the case. A questão poderá ser novamente discutida no Judiciário, diante do direito de outras exchanges questionarem a conduta dos bancos. (Estas notícias foram publicadas nos Boletins dos dias: 06.08.2018, 17.09.2018, 16.10.2018 e 01.10.2018)

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Cade also discuss the unilateral closure of bank accounts – In parallel with the Mercado Bitcoin case in STJ, the Brazilian Association of Cryptocurrencies and Blockchain (Associação Brasileira de Criptomoedas e Blockchain – ABCB) filed a request to the Conselho Administrativo de Defesa Econômica (CADE) to prohibit banks from closing or denying the opening of bank accounts of entities involved with cryptoassets. ABCB emphasized that such attitude from the banks restrained free competition. One of the main arguments used by the banks was the absence of the exchanges in the National Classification Of Economic Activities (CNAE). The financial Institutions also pointed out that the lack of regulation would result in uncertainty about these companies’ practices, emphasizing the possibility of illegal transactions. CADE, on the other hand, declared that the lack of regulation was due to the fact that the cryptoassets market is relatively recent, which does not mean that the sector was illegal. In a new phase of the administrative process, companies involved with cryptocurrencies such as Braziliex, Profitfy and Mercado Bitcoin, among others, were notified to answer some questions to CADE, in order to assist the procedure about the anti-competitive practice. The exchanges reassured the necessity to maintain bank accounts in order to develop their activities. CADE has not issued a decision so far. (News published in the Newsletters: 21.08.2018, 16.10.2018 e 29.10.2018)

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Brazilian Federal Revenue (RFB) initiatives with the blockchain technology – Throughout 2018, several governmental institutions, national and foreign, had some contact with the blockchain technology, was it in order to regulate it or to use it. An institution that deserves to be pointed out is the Brazilian IRS (“Receita Federal do Brasil”). Among its projects, we can mention the opening of the Public Consultation RFB N. 06/2018, with the objective of collecting opinions and criticisms of the taxpayers on the draft of the Normative Ruling (IN) elaborated to regulate the provision of information to the Federal Revenue Office related to transactions performed with cryptoassets. Currently, the federal revenue is analyzing the contributions received and will publish a new version of the ruling. Another outstanding project of the Federal Revenue was the Blockchain Individual Taxpayers’ Register (bCPF), a solution G2G (government to government) that seeks to simplify the process of making available the CPF (taxpayer number) base, with secure, integrated and efficient mechanisms. Du to this initiative, the Brazilian Federal Revenue was one of the winners of the award “As 100+ Inovadoras no Uso de TI” (which evaluates projects of information technology that have brought impacts on the business of Brazilian companies), being in 3rd place in the “public sector” category and 82nd in the 100+ ranking. (News published in the Newsletters: 12.11.2018 e 27.11.2018)

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Banco Nacional de Desenvolvimento Econômico e Social (BNDES) creates solutions using blockchain – Public company of great prominence in the Blockchain field, BNDES reported, during 2018, several initiatives to use blockchain technology in its projects. The first initiative was the partnership with KfW, the German development bank, to promote cooperation between the two institutions in enhancing TruBudget software, a workflow tool that uses a private blockchain. The goal is to improve transparency and efficiency in the use of public resources, with great impact on society. Another initiative is the BNDESToken “a solution designed to track the application of public resources in credit operations with public entities and non-reimbursable operations, providing society in a transparent way with information on how these resources are promoting the country’s development”. BNDES has also opened a public consultation to identify projects for the management of accounts and follow-up of the transactions BNDESToken will trace. Last but not least, during the “Fórum BlockchainGov – Contribuições da blockchain para a transformação digital dos governos”, event held on 12.04.2018, BNDES presented the Blockchain Initiatives Map, the pioneering work of mapping agents and the ongoing initiatives in Brazil. (News published in the Newsletters: 03.09.2018 e 27.11.2018)

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The relationship of Brazilian Central Bank and cryptoassets – In April 2018, Brazilian Central Bank implemented the Pier (Information Integration Platform of Regulatory Entities). Such system is a blockchain project of the Central Bank in order to encourage its communication with other governmental entities such as the Brazilian Securities Commission (CVM) and the Superintendence of Private Insurance (Susep). The Central Bank affirmed the importance of this data and information exchange among the organs for documents and requisitions approval. The Pier will improve this communication, promoting the reduction of bureaucracy. Also in 2018, a statement was published informing the creation, by the Central Bank, in partnership with Fenasbac, of the Laboratory of Financial and Technological Innovations (LIFT). The project seeks to insert the Central Bank in the global discussion of incentive and search for solutions that involve technologies and innovations of financial products and services. It will run on a virtual platform and will work in the development prototypes that will be used by the database units and universities. (News published in the Newsletters: 09.07.2018)

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The Brazilian Securities Commission (CVM) authorized indirect investment in cryptoassets abroad by Brazilian Investment Funds – In September 2018, the Brazilian Securities and Exchange Commission (CVM) published the Directive Release No. 11/2018, which allowed indirect investment in cryptoassets abroad. It was pointed out through this Directive, that the CVM concluded that IN 555 “authorizes indirect investment in Cryptoassets by means, for example, of the acquisition of shares and derivatives, among other assets traded in third Jurisdictions, provided that they are admitted and regulated in those markets” In the Directive Release, the agency lists some cautions that must be adopted by the managers and administrators of the funds in such operations, and that the fund managers must carry out audits and adopt the usual compliance checks. (News published in the Newsletter 01.10.2018)

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Social impact and Blockchain – Although the first thoughts associated with “cryptoassets” or “blockchain” are “wealth” or “investment”, several people saw in the blockchain technology a chance to create opportunity for the underprivileged. There are numerous initiatives and we decided to list a few. A great example is the BanQu, the blockchain platform that generates economic identity for the poor and refugees, eliminating the use of cryptoassets. Through it, thousands of people who would normally never get a loan for their business or would never be able to drain their production – due to the lack of a financial history and, consequently, no credibility -, succeeded in developing their business. Aiming a little higher, it was released the “Akoin”. Created by singer and philanthropist Akon, Akoin is a cryptoasset which, at first, aims to be an (easy) form of payment, focused on African countries. However, the idea does not stop at this point. Known for invest in social projects in the African continent – the main example being “Akon Lighting Africa” (project that intends to provide electricity via solar energy for all of Africa) -, Akon believes that blockchain technology, by allowing individuals to advance without the interference of the government, can be a “salvation” to the continent. Therefore, he seeks to create a city entirely based on cryptoassets (a real life “Wakanda “, in the words of the philanthropist), in which Akoin would be the currency. In Brazil, we have WIBX, created by the startup WiBOO. With it, companies can offer “credits”, in the form of cryptoassets, to their users in exchange for sharing their content, products, offers and campaigns on social networks. If not spent within the stipulated time limit, these cryptoassets will be converted to fiat currency and their value will be destined to a fund to assist social causes for needy communities. Currently, WIBX is still with its ICO open and, in 2019, the token will be launched on Exchanges. (News published in the Newsletters: 09.07.2018, 16.10.2018 e 12.11.2018)

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Global initiatives on technology regulation – The growing popularity of cryptoassets not only caught the attention of enthusiasts and revolutionaries. Both the international community and the market itself have turned their eyes to the development of this sector, with great concern for its regulation and possible use for illicit purposes. The G20 countries have made it clear that they intend to establish a worldwide standard for combating money laundering by means of cryptoassets. In this sense, the Financial Action Task Force (FATF) already announced that it would enact international standards to be followed by exchanges of cryptoassets until June 2019. In parallel, the New York State Attorney General’s Office issued the “Virtual Markets – Integrity Initiative”, that analyzed the data provided by the major cryptoassets exchanges, which were sent in response to letters and questionnaires from the Attorney General’s Office. The exchanges also realized that they should stipulate certain parameters and guidelines to be followed by themselves, in order to bring greater security to the market and to its clients. The Virtual Commodity Association (VCA) and Association for the Digital Asset Market (ADAM), for example, were born from this perception and came up with the purpose of self-regulating the associated entities. In Brazil, the most recent example was the creation of ABCripto, which aims to bring together market agents, promote self-regulation and foster the development of crypto-economics. Initiatives in this direction are diverse and are multiplying around the world, especially in the face of the advance of state regulation on the subject. (News published in the Newsletters: 06.08.2018, 03.09.2018, 29.10.2018, 11.12.2018)

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The Coinbase fight to get its license in the SEC – Coinbase, the American cryptoassets exchange, announced in July 2018 that it would become the first exchange to have SEC approval to enable transactions of tokens that are considered as securities. In addition, it announce the approval of SEC and FINRA of the acquisition of Keystone Capital Corp., Venovate Marketplace, Inc. and Digital Wealth LLC, which would grant Coinbase a license to operate as a broker and an alternative trading system. However, as of the end of the same month, the exchange said through a new statement that it had not received approval from SEC to trade securities, as SEC and FINRA did not approve the acquisition of Keystone. In October, the exchange received the license to operate as a depository qualified by the New York Department of Financial Services (NYDFS), through Coinbase Custody, which has custody services for bitcoin, bitcoin cash, ethereum, ethereum classic, litecoin and since November, XRP. This approval represents more than just a license, as it will allow it to add new features to the platform as well as new assets. (News published in the Newsletters: 23.07.2018; and 29.10.2018)

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SEC Decision on ETFs – The year of 2018 had ups and downs for the Exchange Traded Fund – ETFs of cryptoassets in the United States. ETFs are also called “index funds” because they replicate the performance of indexes or assets. Traditionally, they are funds traded on stock exchanges, which allow diversification of investment in a single vehicle. Several exchanges of cryptoassets filed with the SEC to receive authorization to set up such funds, backed by cryptoassets. The first request was made by Startup SolidX, together with VacEck. However, there have been several postponements of judgments and there has been a rejection of Winklevoss brothers’ ETF, becoming uncertain how and when the SEC will judge the cryptoassets ETFs. At the “CoinDesk’s Consensus: Invest Conference” convention in late November, SEC Chairman Jay Clayton said that the approval of cryptoassets ETFs depends on the end of market manipulation. Unfortunately, it seems that the end of this story is still far from a positive outcome, according to what commissioners have reported to the market. (News published in the Newsletter: 21.08.2018 and 11.12.2018)

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Practice of citizenship via blockchain – In 2018, blockchain technology was responsible for assisting and enabling the exercise of citizenship through its use in important decision-making processes around the world. In August, for example, it was announced that soldiers coming from the state of West Virginia, who were serving in another country, could use the blockchain technology to vote in the November elections, through the Voatz application. The voting process consisted of sending the identification document and a video of the voter, which would be analyzed and certified by the software and, subsequently, would be recorded in the Blockchain network. Another important moment was the announcement by South Korea that it would develop a blockchain-based voting system. Despite using online voting methods, they still have security risks and are open to frauds. The voting via blockchain would seek to establish a simpler and safer voting via Internet. In addition, in April, Decred Brazil announced the use of the “blockchain decred” by the Votolegal app. The app, which is already working since the elections of 2016, seeks to ensure transparency in elections. There was also the use of blockchain in other branches of the relations between citizens and the government. The U.S. state of Ohio, for example, now accepts the payment of tax via cryptoassets. The service is still intended only for legal entities, but in the future will be extended to individuals. The transactions will be intermediated by BitPay. (News published in the Newsletter: 23.07.2018, 21.08.2018, 27.11.2018 and 11.12.2018)

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“Race” between Exodus and Finney for the launch of the first cellphone with blockchain – Those who believed that blockchain technology would take time to be used in everyday life may be wrong. In 2018, two companies in the telephone technology business embarked on the race for the launch of the first cellphone with blockchain technology. In July, Sirin Labs expected to launch “Finney”. Such telephone would allow its users to carry a significant number of cryptoassets on their cellphone and would offer a token conversion service as a sort of “in-house exchange.” However, Sirin Labs has given up the launch of the phone, but is still working on the software itself HTC came out ahead in the race with the mobile “Exodus1”, released in October. The main feature of the cellphone is the ability to securely store the cryptoassets of its users with a recovery mechanism in case of theft. The device costs around three thousand five hundred Brazilian Reais and it can only be bought with bitcoin (BTC) or ether (ETH). Unfortunately, the cellphone is still not available for purchase in Brazil. (News published in the Newsletter: 23.07.2018; and 29.10.2018)

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Blockchain Desk.