IBM Applies for Blockchain Patent to Ensure Transaction Compliance via Nodes Data

Tech giant IBM has applied for a blockchain patent for the development of transaction data identifiers based on nodes, according to a patent document published by the U.S. Patent and Trademarks Office (USPTO) Aug. 16.

The system described in the patent, entitled “Node Characterization in Blockchain,” intends to introduce a method of data extraction from nodes on a blockchain network in order to identify different types of transactions. Specifically, any operation on blockchain may possess a node or a number of nodes that can carry useful information about the character of transactions.

According to the document, the described specification would extract a range of characterization types such as “entity extraction, text mining, information analysis and discovery, compliance, semantic extraction, and ontology based entity discovery.” Such a manner of data extraction would allegedly empower regulatory authorities with a due level of monitoring the security of data on blockchain.

For example, the system proposes an anti-money laundering (AML) method by detecting whether a node performs a suspicious activity on blockchain while proceeding a crypto transaction, such as violation of daily transfer limits or involvement of a tracked entity.

The described system is deployed with modules that can be implemented as programmable hardware devices such as gate arrays, array logic, or graphic processing units, as well as hardware circuits.

Earlier today, Cointelegraph reported that the U.S. bank holding company Capital One has applied for a patent for blockchain-powered user authentication to assist the regulatory process of major security requirements, such as Know Your Customer (KYC).

On Aug. 14, a patent application by major U.S. crypto trading and wallet platform Coinbase for boosting the security of Bitcoin (BTC) payments was released, particularly addressing issues associated with the theft of users’ private keys from their wallets.

Thai SEC Clears Seven Cryptocurrency Operators to Serve Clients, Reviews Two More

Thai regulators announced Thursday, August 16, that they have so far approved seven business entities to conduct cryptocurrency operations as part of the formalization of the country’s domestic market.

In a statement, Thailand’s Securities and Exchange Commission (Thai SEC) confirmed Bitcoin Co. Ltd. (BX), Bitkub Online Co. Ltd., Cash2coins Co. Ltd., Group Co. Ltd. (TDAX), and Coin Asset Co. Ltd. were able to operate as legal cryptocurrency exchanges.

In addition, the regulator approved two cryptocurrency dealers: Coins TH Co. Ltd. and Digital Coin Co. Ltd. (ThaiWM).

The move forms part of a package of “transitional” rules governing crypto businesses operating in Thailand prior to the first tranche of regulations that came into force May 14.

As Cointelegraph reported, those entities continue serving customers while applying and waiting for a full license by notifying the Thai SEC within 90 days of the May deadline.

“In addition, the SEC is currently reviewing the data of two other digital asset operators that have filed an application under the Transitional Provisions,” the statement continues.

Last week, the SEC had also revealed heavy interest from prospective Initial Coin Offering (ICO) issuers in applying for regulated status in Thailand.

Over 50 projects had come forward, the regulator having previously outlined prerequisites needed to be fulfilled in order to be considered for approval. As of June, however, only five applicants had met those prerequisites.

Hungary Does Not Consider Cryptocurrency Legal Tender Yet

Hungary is reportedly working on a regulatory framework for cryptocurrencies but doesn’t consider them a legal tender yet. The country’s current legislation imposes steep taxes, making it a fairly unwelcoming territory for cryptocurrency investors.

Not Legal Tender

Citing a written statement of the country’s Finance Ministry, local Hungarian media Portfolio reports that Bitcoin and other cryptocurrencies do not qualify as legal tender.

However, the country is purportedly working actively on a regulatory framework to address all aspects of cryptocurrencies. The statement reads:

Hungary is currently looking into regulating crypto instruments, and the central bank, the tax authority, the finance ministry and other authorities have set up a joint workgroup to evaluate legal, economic, law enforcement, money laundering and other aspects of cryptocurrencies with an eye to introducing more detailed regulation.

Unfavorable Taxation

Hungary’s taxation is infamously hostile towards the retail cryptocurrency investor. According to local tax experts, the country’s Personal Income Tax law considers proceedings from Bitcoin and other cryptocurrencies to be “other income.” As such, it is subjected to 15 percent Personal Income Tax as well as with 22 percent Health Contribution.

However, if the activity is carried out by a business and not by a private individual, the tax burden would be essentially smaller – 9 percent corporate income tax as well as another 2 percent local business tax which is not always applicable.

A recent report by Deloitte Private outlines that the heavy tax burden is forcing people into investment schemes which entail even more risks:

Many people try to escape the infamous Hungarian taxes and additional administrative obligations (i.e. tax advance assessment, or preparation of tax returns and continuous keeping of tax records) through the increasing number of investment schemes. However, the level of reliability and sophistication of these is quite low in most cases, which often entails further taxation and legal risks.

What is more, as it currently stands, the legislation of Hungary considers selling or exchanging cryptocurrency to be a taxable event.

However, one potential loophole for holders of cryptocurrency may be to use it as collateral for a loan. Doing so is not considered a taxable event in Hungary, therefore it could be a better option compared to simply selling and paying the given tax.

“According to current law in Hungary, as a consequence of selling or exchanging cryptocurrencies is considered a taxable event,” Csaba Csabai, CEO of INLOCK explained. “However using these digital assets as collateral for a loan to finance a temporary liquidity problem is not. The platform we are building is working towards this concept enabling cryptocurrency holders to access the purchasing power of their holdings without being punished by the extremely high tax rates.”

What do you think of Hungary’s position on cryptocurrencies? Don’t hesitate to let us know in the comments below!

Images courtesy of Shutterstock