Factbox: EU proposes first bloc-wide ‘passport’ for crypto-assets

FILE PHOTO: Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, February 13, 2018. Picture is taken February 13, 2018. REUTERS/Dado Ruvic/Illustration September 24, 2020 LONDON (Reuters) – The European Commission on Thursday set out plans to create what its officials described as the world’s most comprehensive set of rules for crypto-assets and their underlying blockchain technology. EU policymakers have said that Facebook should not be allowed to launch its Libra stablecoin in the bloc until proper rules are in place. PASSPORTS The European Commission will propose new EU rules for crypto-asset issuers and service providers to apply for a “passport” or EU-wide single market access and safeguards for investors. Safeguards include capital requirements, custody of assets, a mandatory complaint holder procedure available to investors, and rights of the investor against the issuer. Issuers of significant asset-backed crypto-assets like global stablecoins would be subject to more stringent requirements in terms of capital, investor rights and supervision. The aim is to replace national rules introduced in some EU states and offer a “regulatory stamp” or legitimacy to crypto-asset and blockchain firms to help attract financial innovation and steal a march over other parts of the world. The EU will also consider updating capital rules for crypto-assets held by financial firms. It will also explore how blockchain could help smaller companies raise funds. EURO SANDBOX The EU will legislate to clarify how existing financial rules apply to crypto-assets. It will also introduce a pilot regime for crypto-assets covered by existing rules. Companies would be temporarily exempt from rules to experiment with new products in a controlled environment. Such a “sandbox” system has been used in Britain for several years. (Reporting by Huw Jones, Editing by William Maclean)

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Secretary Wilbur Ross Discusses Tech and Structural Confrontation with Beijing -WeChat and TikTok…

When Commerce Secretary Wilbur Ross appears… PAY ATTENTION.  In this interview Secretary Ross outlines an announcement today [LINK HERE] about the U.S. will block Chinese owned WeChat, and additional security measures against TikTok. COMMERCE – […] While the threats posed by WeChat and TikTok are not identical, they are similar. Each collects vast swaths of data from users, including network activity, location data, and browsing and search histories. Each is an active participant in China’s civil-military fusion and is subject to mandatory cooperation with the intelligence services of the CCP. This combination results in the use of WeChat and TikTok creating unacceptable risks to our national security. (more) [embedded content] Additionally, Secretary Ross discusses sector-specific relief for the airline industry and U.S. farmers. On the farmer side we should all remember any confrontation with Beijing could lead to China pulling back from purchase agreements. China cannot feed itself and is dependent on imported food products, so the scale of any pull-back is not known. DETAILS – In response to President Trump’s Executive Orders signed August 6, 2020, the Department of Commerce (Commerce) today announced prohibitions on transactions relating to mobile applications (apps) WeChat and TikTok to safeguard the national security of the United States. The Chinese Communist Party (CCP) has demonstrated the means and motives to use these apps to threaten the national security, foreign policy, and the economy of the U.S. Today’s announced prohibitions, when combined, protect users in the U.S. by eliminating access to these applications and significantly reducing their functionality. “Today’s actions prove once again that President Trump will do everything in his power to guarantee our national security and protect Americans from the threats of the Chinese Communist Party,” said U.S. Department of Commerce Secretary Wilbur Ross. “At the President’s direction, we have taken significant action to combat China’s malicious collection of American citizens’ personal data, while promoting our national values, democratic rules-based norms, and aggressive enforcement of U.S. laws and regulations.” While the threats posed by WeChat and TikTok are not identical, they are similar. Each collects vast swaths of data from users, including network activity, location data, and browsing and search histories. Each is an active participant in China’s civil-military fusion and is subject to mandatory cooperation with the intelligence services of the CCP.  This combination results in the use of WeChat and TikTok creating unacceptable risks to our national security. As of September 20, 2020, the following transactions are prohibited: Any provision of service to distribute or maintain the WeChat or TikTok mobile applications, constituent code, or application updates through an online mobile application store in the U.S.; Any provision of services through the WeChat mobile application for the purpose of transferring funds or processing payments within the U.S. As of September 20, 2020, for WeChat and as of November 12, 2020, for TikTok, the following transactions are prohibited: Any provision of internet hosting services enabling the functioning or optimization of the mobile application in the U.S.; Any provision of content delivery network services enabling the functioning or optimization of the mobile application in the U.S.; Any provision directly contracted or arranged internet transit or peering services enabling the function or optimization of the mobile application within the U.S.; Any utilization of the mobile application’s constituent code, functions, or services in the functioning of software or services developed and/or accessible within the U.S. Any other prohibitive transaction relating to WeChat or TikTok may be identified at a future date. Should the U.S. Government determine that WeChat’s or TikTok’s illicit behavior is being replicated by another app somehow outside the scope of these executive orders, the President has the authority to consider whether additional orders may be appropriate to address such activities. The President has provided until November 12 for the national security concerns posed by TikTok to be resolved. If they are, the prohibitions in this order may be lifted. The notices for these actions will be posted on the Federal Register at approximately 8:45AM EDT on Friday, September 18, 2020. Background: On August 6, 2020, President Trump signed Executive Orders (E.O.) 13942, Addressing the Threat Posed by TikTok, and E.O. 13943, Addressing the Threat Posed by WeChat. In the E.O.s, the President determined that the apps capture vast swaths of information from U.S. users, leaving the data vulnerable to CCP access for nefarious purposes. Commerce, at the Direction of the President, was required to identify transactions within 45 days to protect national security and the private data of millions of people across the country. Today’s announced prohibitions fulfill the President’s direction and mitigate national security risks. (link) Share this: Like this: Like Loading...

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Trump reviews ByteDance’s plan to keep majority stake in TikTok: sources

September 15, 2020 NEW YORK (Reuters) – President Donald Trump and top U.S. officials were to meet at the White House on Tuesday afternoon to consider a proposal by China’s ByteDance to keep majority ownership of its popular TikTok video app, people familiar with the matter said. Trump has ordered ByteDance to divest TikTok amid U.S. concerns that user data could be passed on to China’s Communist Party government. He has threatened to ban TikTok in the United States as early as Sept. 20 if ByteDance does not comply. Under ByteDance’s proposal, however, the Beijing-based company would keep a majority stake in TikTok’s global business and move its headquarters to the United States, the sources said. Oracle Corp would become ByteDance’s technology partner responsible for the management of TikTok’s data and take a minority stake in TikTok, the sources added. The ByteDance proposal also calls for the Committee on Foreign Investment in the United States, the U.S. government panel that is overseeing the deal talks, to supervise how TikTok will be operated, one of the sources said. It is unclear whether Trump will approve ByteDance’s proposal, the sources said, requesting anonymity because the deliberations are confidential. The White House, ByteDance and Oracle did not immediately respond to requests for comment. (Reporting by David Shepardson and Alexandra Alper in Washington, D.C. and Echo Wang in New York; Editing by Dan Grebler)

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South Korea government, Samsung team up for self-sufficiency after Japan export curbs on chip material

September 14, 2020 By Joyce Lee and Hyunjoo Jin DAEJEON, South Korea (Reuters) – When the South Korea government unveiled an expanded semiconductor material testing facility last month, the centrepiece was a towering white machine given by Samsung Electronics at a fraction of its market price. The facility, aimed at motivating local suppliers to make and test sophisticated chipmaking materials like photoresist, comes as South Korea pushes for self-sufficiency after Japan last year imposed export curbs on high-tech chip materials. https://www.reuters.com/article/us-southkorea-japan-laborers-chip-analys/south-korean-chip-giants-face-strangling-from-japanese-export-curbs-idUSKCN1UR3LZ While industry sources warn Korea has a long way to go to achieve this, the need for self-reliance in chip technology has become more critical with the outbreak of the coronavirus pandemic and U.S.-China tensions threatening to accelerate supply chain shifts. Large chip-making companies like Samsung would previously source the best components at the cheapest price “no matter where the material was from”, said Lee Jo-won, president of the National Nanofab Center, home to the testing facility. “But due to Japan’s export curbs and COVID-19, they have begun to … foster local suppliers and to create a system where they can be supplied without disruptions,” Lee told Reuters at the centre in Daejeon city, 150 km (93.21 miles) south of Seoul. The equipment that Samsung sold to the lab, the ArF immersion lithography machine made by ASML , will help local suppliers test chip material. The machine, which the world’s top memory-chip maker had been using in its production line, costs up to 100 billion won ($84 million) when new, experts said. A National Nanofab Center official said about 20 billion won had been budgeted to buy and refurbish the machine, without giving details on the final price. “This would never have been imaginable in the past, to provide such an expensive device to a public lab,” said Lee Jong-ho, a professor at Seoul National University. “It took a decision from pretty high up.” SHORING UP BUSINESSES Samsung has decided to invest in firms that need cooperation to develop next-generation chip technologies, a company spokesman told Reuters in an email. It recently invested a total of about $113 billion won in two local makers of chip components and testing equipment, S&S Tech Corp and YIK Corp , its first such investments in three years. S&S makes mask blanks, a chipmaking component that is currently more than 90% sourced from Japanese firms like Hoya but not included in export curbs. “Samsung seems to be securing various options so they’re not too dependent on any one source”, said an official at a Samsung-backed chip material supplier. With no sign of a thaw in South Korea-Japan tensions, rooted in wartime history https://www.reuters.com/article/us-southkorea-japan-history-explainer/explainer-history-islets-and-rulings-behind-tension-between-s-korea-and-japan-idUSKBN1XW19K, Seoul is pushing to diversify supply sources of 100 items it still mainly gets from Japan and has pledged to invest 5 trillion won by 2022 to that end. South Korea has already diversified sourcing for the three materials targeted by Japan in the curbs last year https://www.reuters.com/article/us-southkorea-japan-laborers-factbox/factbox-the-high-tech-materials-at-the-heart-of-a-japan-south-korea-row-idUSKCN1TX12I and now gets supplies locally and from Belgium, Taiwan and China. SCEPTICISM But there is scepticism about whether it makes economic sense for Korea’s small domestic chip material market to pour money into developing sophisticated technology in which Japan has a competitive edge, industry experts said. Also, Seoul wants big corporations to use local suppliers, “but this is not an easy option unless quality is guaranteed”, said Kwon Hyeok-min, leader of an industrial policy team at Korean business lobby group, Federation of Korean Industries. Samsung, SK Hynix and LG Display supply chips and displays to tech giants like Apple , Qualcomm and Huawei [HWT.UL]. The chip sector accounts for 20% of exports for South Korea, Asia’s fourth-largest economy. It will take time to localise high-tech materials like EUV photoresist, former Hynix engineer Kim Sang-yong said. Japan accounts for 90% of the global photoresist production. Photoresists, which Japan targeted in its curbs that it later partially reversed https://www.reuters.com/article/uk-southkorea-japan/japan-reversed-export-curbs-for-chip-material-to-south-korea-trade-ministry-official-idUSKBN1YO11L, are thin layers of material used to transfer circuit patterns onto semiconductor wafers. Kim, now a professor at Korea Polytechnics University, also cautioned South Korea could be hit hard should Japan expand curbs to chipmaking equipment. Out of South Korea’s 100 import items heavily dependent on Japan, 14 are semiconductor-making equipment that are not subject to any restrictions, according to the Seoul-based Institute for International Trade. If Japan extends curbs to these 14, South Korea’s “chip production will stop”, Kim said. “What is more vulnerable than materials are the equipment and parts that manufacture semiconductors.” (Reporting by Joyce Lee and Hyunjoo Jin; Additional reporting by Makiko Yamazaki in Tokyo; Editing by Himani Sarkar)

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Facebook removes posts linking Oregon wildfires to activist groups

September 13, 2020 (Reuters) – Facebook has started removing false claims that the deadly wildfires in Oregon were started by various left-wing and right-wing groups, a spokesman for the social media company said on Saturday, after the rumors left state officials inundated with queries for information. Since early this week, state officials have been attempting to debunk misinformation on social media that has blamed both left-wing and right-wing groups for the fires that have killed at least six people in Oregon this week. Facebook, which earlier was attaching warning labels to such posts, decided to move to the stricter approach after “confirmation from law enforcement that these rumors are forcing local fire and police agencies to divert resources from fighting the fires and protecting the public,” the spokesman, Andy Stone, said in a statement on Twitter. Stone called the decision “consistent with (Facebook’s) past efforts to remove content that could lead to imminent harm given the possible risk to human life as the fires rage on.” Flames have destroyed thousands homes in days, making Oregon the latest epicenter in a larger summer outbreak of fires sweeping the western United States. One of Facebook’s third-party fact-checking partners, PolitiFact, wrote on Thursday on its website that dozens of posts blaming antifa – a largely unstructured, far-left movement – for the wildfires had been flagged by Facebook’s systems, and that collectively the posts had been shared thousands of times. The FBI on Friday said in a statement that after investigating several reports that extremists were responsible for setting wildfires in Oregon, it found them to be untrue. Earlier this week, police in Medford, Oregon, debunked a false post using the police department’s logo and name suggesting that five members of the Proud Boys, a men-only, far-right group, had been arrested for arson. (Reporting by Ismail Shakil in Bengaluru; Editing by Leslie Adler)

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