Cryptocurrencies: How different Countries regulate them

Cryptocurrencies: how different countries regulate them Abolarin Muhammad DigiLaw

 Cryptocurrencies  are digital assets designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets. Terms such as digital currency, and virtual currency are used in place of crypto currency.

As the numbers of persons involved in cryptocurrencies increase, the need for regulation increases. This is because it is prone to financial crimes. Connected to cryptocurrency are Blockchain Technology, Initial Coin Offering (ICO), and Distributed Ledger Technology (DLT).

While the laws of some countries are silent on cryptocurrency transactions, some have established legal and regulatory framework to monitor the crypto currency transactions or totally ban its use.

This article seeks to examine laws legalizing and regulating cryptocurrency transactions in different countries.

Canada: Cryptocurrencies are not Legal tender

Although cryptocurrencies are not considered legal tender in Canada, its use is permitted for the exchange of goods and services. The Currency Act defines “legal tender” as “bank notes issued by the Bank of Canada under the Bank of Canada Act” and “coins issued under the Royal Canadian Mint Act.”

For the purpose of taxation, digital currencies are categorised as commodity and are subject to the Income Tax Act (ITA). Whenever it is used for the purchase of goods and services, it is taxed under the seller’s income tax

China: Cryptocurrencies are virtual commodity

The government of China defines cryptocurrencies as virtual commodity but greatly discourages the use.

No law has been enacted to regulate the use of cryptocurrency and it is not recognized as legal tender or a tool for retail payments, and the Chinese banking system is not accepting any existing cryptocurrencies or providing relevant services.

In 2017, China completely banned Initial Coin Offerings (ICO) and the ICO Rules made stated that cryptocurrencies are not issued by the country’s monetary authority and therefore are not mandatorily-accepted legal tender. The rules also prohibit the primary business of cryptocurrency trading platforms from converting legal tender into cryptocurrencies, or vice versa; purchasing or selling cryptocurrencies, setting prices for cryptocurrencies, or providing other related agent services. Government authorities may shut down the websites and mobile applications of platforms that fail to comply with the directive

Switzerland: Cryptocurrencies are taxable

The operation of virtual currency trading platforms in Switzerlgand generally comes under the scope of the Anti-Money Laundering Act.

The Anti-Money Laundering Act (AMLA) generally applies to “financial intermediaries,” who are defined as natural and legal persons who accept or hold deposit assets for third parties or who assist in the investment or transfer of such assets on a professional basis. By the provisions of Articles 3 and 4 of AMLA, crypto currency trading platforms have the duty of verifying the identity of the contracting party and establishing the identity of the beneficial owner.

Cryptocurrencies are taxed as either wealth tax or income tax.


Japan: Cryptocurrencies are virtual currencies

In Japan, cryptocurrency transactions are regulated by The Payment Services Act.

By Art. 2(5) of The Payment Services Act “virtual currency” is defined as

  1. Property value that can be used as payment for the purchase or rental of goods or provision of services by unspecified persons, that can be purchased from or sold to unspecified persons, and that is transferable via an electronic data processing system; or
  2. Property value that can be mutually exchangeable for the above property value with unspecified persons and is transferable via an electronic data processing system.

Under the Payment Services Act, only business operators registered with a competent local Finance Bureau are allowed to operate cryptocurrency exchange business.

Cryptocurrency exchange businesses must keep accounting records of cryptocurrency transactions and submit annual reports on business to the Financial Services Agency (FSA).

Art. 2 of the amended Act on Prevention of Transfer of Criminal Proceeds added cryptocurrency exchange businesses to the list of entities subject to money laundering regulations. Cryptocurrency businesses are mandated to identify their customers, keep records of their transactions and report suspicious transactions to authorities.

Under the Income Tax Act, Profits from the sale of cryptocurrency is taxed as a miscellaneous profit which is to other taxable income.


Gibraltar: Maintain high standards

The government of Gibraltar introduced the Financial Services (Distributed Ledger Technology Providers) Regulations 2017 under the Financial Services (Investment and Fiduciary Services) Act. These regulations entered into force on January 1, 2018.

The regulatory framework covers firms that operate in or from Gibraltar and provide DLT services.

The regulation provides that;

A business must provide adequate information of the risk involved to customers

A company must take all reasonable precaution to protect customers’ asset in their custody from unseen threats and contingencies.

A DLT Provider must have effective corporate governance arrangements.

A DLT Provider must ensure that all of its systems and security access protocols are maintained to appropriate high standards.

A DLT firm must apply adequate anti-money laundering and counter terrorist financing protocols.


Mexico: Crypto is a virtual asset

In March 2018, the Mexican government enacted Ley para Regular las Instituciones de Tecnología Financiera [Law to Regulate Financial Technology Companies] which includes a chapter on operations with “virtual assets”. Art. 30 of the law defines Virtual Asset as representations of value electronically registered and utilized by the public as a means of payment for all types of legal transactions, which may only be transferred electronically.

Mexico’s central bank, Banco de México, is granted broad powers under the Law to regulate virtual assets.

By the provisions of Article 17(XVI) of Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita [Federal Law for the Prevention and Identification of Transactions with Resources of Illicit Origin], providing services involving virtual assets is an activity classified as vulnerable to money laundering. Thus, providers of such services have the duties to;

  1. Keep records of transactions.
  2. Identify their clients and verify their identity

Social Media Tax: Why Nigeria should not Follow the Ugandan Example

Social media tax why Nigeria should not follow the Ugandan example Favour Oyeleke DigiLaw

The Uganda Government introduced a social media tax targeted at the use of Over The Top services (OTT). OTT provides voice and messaging over the internet. The social media tax came into effect on major social media services including Facebook, Twitter, Skype, Tinder and WhatsApp. Every citizen is required to pay a tax charge of 200shillings ($0.05) per day for social media use, and an additional 1% levy on the total value of mobile money transactions.

President Yoweri Museveni Uganda social media tax DigiLaw
President Yoweri Museveni of Uganda

President Museveni had stated that the social media tax was to boost the revenue of the economy, stop ‘false’ news and online oppositions. However, it is evident that the tax has been more efficient at obstructing net neutrality, freedom of speech and suppressing resistance against a power-drunk president, who has been in this position for 32 years.
The net (network) neutrality institutes the principle of equal internet traffic and emphasized that internet service providers should not block online access in any way. Thus, Uganda has violated this principle, without a backing of legal protection. The Uganda government is obstructing net neutrality with ranked pricing and social media blocking. The social media tax has turned information and access to the internet a privilege, only available on luxury to those who can afford it.

Unsurprisingly, the use of social media has drastically reduced in Uganda after the imposition of the tax. The Uganda Communications Commission (UCC) evaluated a declining trend with a drop of 3 million internet users within three months in 2018. The supposed purpose for which the tax was established has not been met, as the number of tax payers and the figures for the OTT revenues keep dropping.

In July, the Uganda Government estimated Ush5.6billion ($1.5million) as revenue from the tax. In August, the figures fell to Ush4.1billion ($1.1m) and went down to Ush3.97billion ($1.1million) in September. Internet subscriptions also reduced from 15% to 0.39% within August to September. The value of mobile money transactions even dropped by almost a quarter, to 14.8trn Uganda shillings (£3.4bn) between July to September 2018.


The government seems to regard this tax as an innovative strategy, but it has not stimulated absolute compliance from the people or sky-rocketing figures for revenue. Some Ugandans are circumventing the enforced OTT tax, with the use of virtual private networks (VPN) – which the government is threatening to block. On the other hand, some have opted to pay the tax. But, how long will Ugandans be able to keep up with the inconveniences caused by this tax? It is only pragmatic to imply that this tax can negate the economic growth of Uganda, clampdown the ability for people to connect with each other or even voice out their opinion on issues concerning the country.


Social media has become the powerhouse for mobilization by the press, politicians, activists- and mostly, for public opinion. Most political and social issues would have been consciously ignored, without people bringing such issues to the limelight on social media. Therefore, if the internet is made less accessible, the Uganda government will be impeding dissenting voices. Besides, the introduction of a regressive tax in a country where majority of the population earns less than $1.25 is presumably not a positive step to increasing Uganda’s economic growth. The average monthly income of low-income earners in Uganda seems extremely incapable of allowing them to access the internet affordably. If the cost to access the internet by Uganda’s poorest jumps to a ridiculous rate of 10%, by reason of the tax for just of 1GB of data, that will cost them nearly or over 40% of their average monthly income. With the tax, there will be limit to consumption and financial stability for low-income earners. This would in turn, reduce broadband adoption.


In the business sector, telecoms and private companies are equally affected in terms of yielding profit. Today, businesses employ social media to attract customers and advertise their goods and services. In fact, social media has created a platform for commercial networking with other businesses around the world. But, the new tax could deter productivity at this rate. As a result, striving to expand businesses could take an adversarial toll. Taxation in this circumstance can reduce income and lead to thousands of people losing their jobs in the digital sector.
Meanwhile, telecoms has gained recognition for offering special packages that provide user’s access to only WhatsApp, Facebook and Twitter, at a lower rate compared to that of a full data plan. The package also offers some savings to users who use these specific applications. But with the new tax, the benefits that come with this package might become eliminated. Equivalently, the cost of the tax doubles and becomes more expensive to access. So, users with limited budgets can hardly depend on these sorts of special packages and may be cut off from these services totally.


Every attempt at fighting back through legal containment or protest has almost been to no avail. The more social media becomes ubiquitous, the stronger the government’s resilience grows. The most recent protest against the social media tax was vehemently back lashed by the police on orders from the government. The police fired up tear gas to break up what they referred to as an ‘illegal’ protest. Regardless, the government cannot keep silencing criticisms instead of addressing them. .
Moreover, if this alarming trend of taxing social media spreads across Africa, especially in countries like Nigeria, it will be tragic. The African economy will pay dire consequences if this trend continues, and could be driven to the ground. In 2016, Chad lost an estimation of $20.8million, after nearly 8-months internet shutdown. Cameroon has also suffered a loss of $723,000 within 30days out of its intended 90 days internet shutdown.


In the same vein, the introduction of social media tax in Nigeria will be the death of many startups in the technology sector. This is because social media is the primary marketing channel for these startups. Therefore, the maiming effect on businesses that rely on the internet will be devastating. To start with, there are so many problems surrounding Nigeria- from poor medical facilities to the questionable quality of education, the extreme high fuel prices, bad roads and every other infrastructure. Nigeria will be burying itself if people will be forced to pay to express themselves online or demand for accountability. The extent to which social media has created impact is remarkable. Social media has given people the power to voice out their mind, and created awareness about so many things in varying ways. Nigeria can only be poorer without a democracy-free and vibrant social media.


Taxing social media can cut off the instigation of violence and fake news to some point- but not permanently. The result of attempting to curtail social media perpetually is what we see in Uganda currently. Consequently, it is of no doubt that African countries would be better off reproving the idea of taxation on social media.

The Accounting Profession can be Improved by AI: How?


The Accounting Profession can be Improved by artificial intelligence AI

INTRODUCTION
In years much older than the one which I was born, the old natives of the Gulf of Guinea must have thought that their cross-country water body; River Niger, was never going to be intersected. It’d flow from their bosom down to the Atlantic, pure, no coalition. The same could be said about the Plateau natives, who might have thought their River Benue was going to flow free of disturbance. Well, as fate would have it, both independently existing water bodies have collided and now go down the same path, diffusing into each other daily. This is the 21st Century and the same metaphorical analysis can be used to describe the state of the Accounting Profession and Artificial Intelligence. Technology is eating deep into every sector. The world of numbers and checkbooks is not immune. Whether AI is the River Benue and Accounting the Niger, or I’m just being too metaphorical, one thing that’s definitely not a metaphor is that the confluence has occurred. AI has entered the Accounting sector; it’d keep going deeper and deeper.

However, this has stirred up the water of fear in the heart of many accountants who see AI as a threat to their jobs. Well, I know one thing the sure, if the confluence of the two great Rivers did not wipe off the existence of the latter, or the former, then the confluence of AI with the Accounting profession is not doomsday.

AI IN THE WORLD OF ACCOUNTING

Big four 4 accounting firms Deloitte KPMG EY PwC

In 2015, research carried out by Oxford University and Deloitte stated that the Accounting profession would be among the first professions to face drastic automation with over 95% of its tasks being handled by robots. Big firms in the business of accounting, taxation and auditing have embraced the implementation of AI for the execution of some day to day number-crunching activities. Firms like PwC and Deloitte, amongst others, have done well in incorporating the use of AI into their daily practice. Many traditional booking keeping and office administration tasks are now being handled by AI.

HOW AI IS USED IN ACCOUNTING

The inception of Robotic Process Automation (RPA) has drastically helped accounting firms to save time as auditing and contractual processing which would normally last months in the hands of the most agile humans, have been completed in few weeks. Tasks including initiation of payments and matching of customer purchase orders are now being handled by Accounts Payable and Receivable AI.

It might surprise you how efficient accountants would work when tedious tasks like data entry and categorization become purely automated. The automation of both tasks have optimized the rate of data process, hence, data is processed faster and more accurately. This has helped accountants to do more in the analysis of current financial trends rather than spend all day trying to do what an AI would do in minutes, hours at worst.


Jon Raphael, the Audit Chief Innovation Officer of Deloitte, in a recent survey stated that the company has implemented the use of AI tools with “natural language processing capabilities to interpret thousands of contracts or deeds”. In their words, “the technology can extract key terms and compile and analyze that information to perform risk assessment or other functions.”


However, that’s not all. Experts have prophesied that tedious tasks like auditing, tax remittance and payroll would soon become totally automated. This is because of their remarkable blend of speed and accuracy. Forbes, commenting on the future of AI in the accounting profession, stated that AI is now being enhanced to look through highly complex and intricate contracts.

WHY AI IS NOT ‘DOOMSDAY

The impact of AI in the accounting profession cannot be swept under any rug, as its lump would still be mountain-sized! Bigger firms like Deloitte and PwC have topnotch efficiency and services. Definitely, it’s not because they have the best professionals and staffs, but because these professionals are performing real business management and client based tasks while their computers handle the basics. Some of the reasons why AI should be embraced in the accounting profession include:

  • TIME MANAGEMENT: Yes, AI saves time. Time span for tasks have been seen to drastically drop from months to weeks, weeks to days, and days to hours. If accountants would like to get more done in less time, the services of our metal-head friends cannot be evaded. Also, while machines handle time consuming tasks, this can allow professional focus on business management and building stronger client relationships.
  • REDUCES COSTS: Objectively, every company wants to get more for less. More profit, less expenditure. More clients, less staffs which means less costs. A machine can replace a whole department of workers, do their job faster, more accurately, without any need to take a wazz, take a break, or go on a vacation. Definitely, the cost of maintaining a machine can never match that of maintaining a human.
  • INCREASES PRODUCTIVITY: With machines handling the time-consuming tasks, the role of the accountant can take a new turn as professionals would have more time to focus on market productivity. Time can be invested in bringing and implementing new business ideas. The intellectual aspect of the job will blossom too. The accountants can also dedicate more time to their advisory roles. Clients have a higher tendency to receive better business enhancing advice from accountants who are not worried about a stack of papers on their office desk.
  • REDUCES BUREACRACY AND REDUNDANCY: The unnecessary time spent in awaiting a go-ahead from a superior, or a department head, which at the end delays getting the job done can be evaded with AI. Also, the collation of every psychological, emotional and physical factors that causes redundancy in humans are absent in robots.
  • ACCURACY: This is indeed one of the most relevant reasons why the accounting profession needs to incorporate the use of AI. Myriads of time, we see how a well-balanced sheet loses its balance because of the omission of a single digit. This can be quite frustrating. If such document had been made public, such mistake can be spotted and this can make a company lose its credibility and repute. Machines have a 99.999% mistake proof system. Hence, it seems to be less prone to making mistakes.

CONCLUSION

Professionals have a function of oversight. Practical tasks such as business management, client counselling, hiring and firing, business administration, market innovation and development are strictly human based. Machines might be doing our number counting for us now, but it’d take another 20 years, if not double before we see a Business tycoon or company C.E.O who would like to take business advice from a XR270 Robot. If by then, there’s any that can.

By TEMIDAYO V. Olalekan

Content Writer, DigiLaw

How Some Countries Tax Bitcoin

How some countries tax Bitcoin Jeje Yansola Content Writer DigiLaw


Introduction

“In this world nothing can be said to be certain, except death and taxes”

Benjamin Franklin


Cryptocurrency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units and verify the transfer of assets. The ‘coin’ carries value which can be transferred, although since that value is purely speculative and not supported by underlying assets or a central authority such as a bank, it can be very unstable. It is for this reason that it is often referred to as a digital or crypto asset rather than a currency.


In this season of cryptocurrency investment, the market can seem like a gold rush; offering promise, but at the expense of predictability. The taxation of cryptocurrencies has been the biggest change for Bitcoin traders. In almost all jurisdictions, there are no specific tax laws on the taxation of cryptocurrencies, therefore, tax treatment is based on general principles and guidance issued by Tax authorities. However, is cryptocurrency a digital currency or a taxable commodity? As a result of its unstable nature, most countries have failed to recognize cryptocurrency as a form of domestic legal tender. This might change in the nearest future.

United States of America

United States of America Bitcoin DigiLaw

In the United States, IRS Notice 2014-21 defines virtual currencies as property. What this means is that anything purchased using a digital currency is liable to be taxed as a capital gain whether short or long term, depending on how long the asset was held. To illustrate this, if you buy a cup of coffee with Bitcoin that you purchased when it was worth $1,000, you must also account for the price of Bitcoin at the time of the coffee purchase. If Bitcoin is trading at $1,200 when you buy the coffee, you have purchased a dollar-denominated good with another asset that is now worth more in dollars than it used to be. That means the amount of Bitcoin you spent on the coffee will be taxed according to capital gains rules.

It is noteworthy to state that buying and holding cryptocurrency is not a taxable event but if you use digital coins to buy anything, even just a cup of coffee, after your holdings have increased in value, you have experienced a gain and that is taxable. Thus, for every purchase, you must report the amount you spent and the difference between the currency’s value when you spent it and the value when you first got it.
To the keen eye, these principles expose some gray areas. As the cofounder of CoinTracker, Chandan Lodha observed:

“the more devoted a cryptocurrency user you are, the more complicated it is to track everything the IRS needs”


What this implies is that you have to do a bunch of work in accounting and record keeping in order to have any real hope in getting your taxes right.

Furthermore, some traders have successfully managed to avoid paying taxes on cryptocurrency-for-cryptocurrency trades by appealing to something called the ‘like-kind exception’ which allows people defer tax payments when trading one property for another similar property. To illustrate, if you trade your house for another one, which then gains in value, you don’t have to pay taxes on that gain until you have the cash for it since the increase in value or gain is in fact tied up in the house itself. However, section of the 2017 tax bill limits this exception to real estate, meaning cryptocurrency traders must pay taxes on crypto-for-crypto trades made after December 31, 2017. What about trades before that? That’s a bit foggy.

Germany

Germany DigiLaw Bitcoin

In Germany, Bitcoin sales do not incur capital gains tax. That is, Germany won’t tax you for buying coffee with Bitcoin. However, if the investment is held for less than one-year, German Income Taxes apply. That is if you are selling your Bitcoins after a period of 12 months/ a year or more, then those capital gains are totally exempt. To illustrate, let’s say you bought 1 Bitcoin on the 1st of August 2016 and bought another 1 Bitcoin on the 1st of September 2018. On the 2nd of September 2018, you sold your 1 Bitcoin you bought on the 1st of August 2016. In such a case, you aren’t required to pay any capital tax gains after you cash out your 1st Bitcoin in Fiat. It is for this reason most tax experts believe Germany is a tax-free haven for mid-term and long term crypto holders. Income taxes in Germany are more progressive and can be up to 45%. So far, no country has taken such an open and ambitious step towards accepting cryptocurrencies in their tax laws.

Australia

Australia Bitcoin DigiLaw

However, in Australia, the Australian Taxation Office (ATO) has certain guidelines about cryptocurrency taxation on their official website and it is available to the public. In Australia, Bitcoin is neither considered money nor Australian currency or any other foreign currency which makes things a bit more twisted. It is considered an asset and is subject to Capital Gains Tax (CGT) except when used as a personal asset (cryptocurrency is not a personal asset if it is acquired, kept or used as an investment, in profit making scheme, or in the course of carrying on a business). This applies to all other cryptocurrencies like Bitcoin.

According to the Australian Taxation Office, a CGT is applicable when you sell your cryptocurrency. However, all your holdings must be mentioned in tax filing to avoid any issues. In essence, you pay tax only when you sell and not just buy and hold.


As earlier alluded above, crypto-to-crypto transactions is one of the biggest questions in taxation space. In Australia, such transaction is taxable. The Australian Taxation Office has specifically mentioned that while exchanging one cryptocurrency to earn another one, it means that you are selling first cryptocurrency and buying a second one.

Canada

Canada Bitcoin DigiLaw

In 2013, the Canada Revenue Agency (CRA) took the position that Bitcoin and other cryptocurrencies are not currencies and should instead be viewed as commodities. In essence, 50% of the gains are taxable and added to your income for that year. To illustrate this, if you bought a cryptocurrency for $1,000 and subsequently sold it for $3,000, you would have to report a capital gain of $1,000 (50% of $2,000) which would be added to your income and taxed at your marginal tax rate. However, let’s say you bought 1 Bitcoin for $100 but it has a current market value of $15,000 and you decide to renovate your home and the contractor agrees to trade his services which are normally worth $15,000 for 1 Bitcoin. What would be the tax treatment? In such a case both parties are liable for taxes. The original owner would pay capital gains on $7,450 (50% of $14,900) while the contractor would still need to report business income of $15,000.These kinds of transactions are known as bartered transactions which has been adequately provided for in sections 3, 6 and 69 of the Income Tax Act of Canada.
In all honesty, to say this tax treatment is a bit harsh would be an understatement.

South Africa

South Africa Bitcoin DigiLaw

The South African Revenue Service, being the main tax watchdog in South Africa, released a draft cryptocurrency tax legislation on April 2018. According to the legislation, digital currencies like Bitcoin will be classified as intangible assets subject to income tax. Thus, if this draft is legislated, South Africans would be mandated by law to declare income accrued from crypto transactions. However, the draft legislation also stipulates that cryptocurrency transactions are exempted from Value-Added Tax (VAT). This decision is premised on the fact that SARS views such transactions as being separate from financial services transactions. Thus, purchasing, selling, transfer, ownership, issuing and holding of digital tokens will not attract VAT under the proposed cryptocurrency taxation paradigm.

Conclusion
As with everything crypto, the rabbit hole goes deep, and some people are trying all kinds of tricks to cut their tax bills.

However, while many questions still remain unanswered as regards the general principles of taxing cryptocurrencies in various countries, we can only hope for more clarity in the nearest future. This lack of clarity does not tilt or shake the importance of taxation in a country’s economy. Taxation to a country’s economy is just like hinges to a door as Olukayode Ehimosan, an associate attorney at SPA Ajibade poignantly quipped in his article titled, “Improving the Nigerian Tax-titude”


“Taxation is the most viable hope for maintaining economic equilibrium and properly diversifying the economy. Its potentials are too much to quantify…”


Cryptocurrencies have entered the collective consciousness and adoption has grown worldwide. Governments are still trying to figure out a way to tax them. While some have been successful, some have encountered difficulties. Perhaps, in the nearest future, we can find more creative methods to effectively tax cryptocurrencies.

IP Theft: A Tale of Two Countries

IP Theft: A Tale of Two Countries by Sharomi Ridwan, DigiLaw

The heavyweights are at it again as usual. This time, the Trump of White House and the Jinping of the Presidential Office Building, China, are the ones at each other’s throat. Billions of US dollars have so far been lost by companies and corporations on both sides of the protracted US-China trade war. One of the crux of the matter, is IP theft. In the ongoing trade war that is at its 226th day, the total US tariffs applied exclusively to China equalled US$250 billion while total Chinese tariffs applied exclusively to US stands at US$110 billion, with industries like Auto, Technology and Agriculture, taking the worst hit.


What is Intellectual Property (IP)?

Intellectual Property DigiLaw

Let’s examine what IP really is. In the simplest of terms, Intellectual property (IP) refers to creations of the mind, including inventions; literary and artistic works, designs, symbols, names and images used in commerce, so says the World Intellectual Property Organization’s website. The legal recognition of IP and IP rights is hinged on the necessity of enabling innovators to earn recognition or financial benefit on their innovations, to further boost creativity and innovation.

The American Angle

In a 53-page detailed report released by the U.S. Trade Representative Office (USTRO) manned by Robert Lighthizer, the USA levelled state-backed IP theft allegations against the Chinese government. The 2018 Special 301 Report published in April identified trade partners “that do not adequately or effectively protect and enforce” IP rights or otherwise “deny market access to US innovators and creators that rely on protection of their IP rights”. The allegations range from counterfeiting famous brands and stealing trade secrets, to pressuring companies to share technology with local companies before grants of access to the vast Chinese market. The US has since levied top-of-the-roof tariffs on Chinese imports but even at that, the USTRO believes China still indulges in this unfair practice.


Some of the ways through which the U.S alleges that its companies lose huge revenue due to China’s unhealthy practice are missouts on possible or projected sales, high incidence of counterfeited goods, usage of stolen foreign know-how by Chinese manufacturers, forced lowering of goods’ prices due to competition and budgeting of billions of dollars to address IP rights infringements.


The US believes all of these unfair and unhealthy policies and practices are geared towards hastily achieving the “Made in China 2025” projection, in whatever way and manner possible. No wonder the Federal Reserve Bank of Minneapolis concluded in a 2015 paper, that more than half of all technology owned by Chinese firms was obtained from foreign companies.


The Chinese Angle
A spokesman for China’s foreign ministry while responding to questions about the USTRO report, attempted to deny these claims by referring U.S. officials to a white paper published by the Chinese government in September 2018 which supposedly claims that China ‘firmly protects’ Intellectual Property rights. But conversely in 2017, President Xi Jinping in a speech, highlighted the urgency of speeding up IP protections in China by repeated calls for stricter enforcement of penal regulations on IP right violators. In December 2018 too, China announced its most serious measures since the US-China trade war started, including sanctions that could restrict local companies’ access to credit facilities and state-funding support, if found guilty of IP theft.

Additionally, the government said in January 2019 that it would accelerate the passage of a new foreign-investment regulation that encompasses measures to protect the IP of foreign companies, and relax the burden of transferring technology to them (China has foreign ownership restrictions that compel foreign companies to switch technology to local firms). By these, it can safely be concluded that China admits to most of these allegations

The State of Things

Despite all these propositions however, Chinese law enforcers are still hindered by insufficient punitive measures. So says Xu Xinming, a researcher at the Center for Intellectual Property Studies at China University of Political Science and Law. Xu believes the proposed regulations still allow IP violators to reap the fruits of their unholy labour.

Critics maintain that the proposed measures are weak as they still fall short of being able to adequately address the countless issues related to the regulation of IP rights in China due to the non-inclusion of criminal penalties like jail time. In fact, a China expert at the Center for Strategic and International Studies in Washington, Scott Kennedy, has noted that despite the increased attention paid to the issue, IP violations have only since been on the rise in the Chinese Peninsula.

Are there HealthTech Companies in Nigeria?

Are there health tech companies in Nigeria Olalekan Temidayo


“Being the 8th child in a family of 12 siblings and 2 parents, Mr. K.Y from his childhood has long harbored the intention of having a “large” family for himself; than his father’s even. Doomsday fell as he found out that his wife is webbed up in a condition that is most likely to end up in infertility. Suddenly, the thought of the latter being greater than the former seems unattainable in his case.”If this scenario occurred few decades ago, it might be an irreversible case of infertility. However, in the 21st century, with the advent of more sophisticated and novel methods of health care administration, more health conditions are losing their place under the description “impossible”.

The emerging nexus of medicine and technology has birthed trending coinages like MedTech, HealthTech, TeleHealth, etc. MedTech simply covers technologies used to improve the quality of healthcare. It generally covers medical devices, IT, biotech and other healthcare services and methodologies. Such methods include in-vitro fertilization (IVF) which provides a chance for barren couples to have children. The process, however, is quite expensive and almost inaccessible to every and any average man.

In-Vitro Fertilization is simply the medical process of fertilization where an egg and a sperm is co-joined outside the body. The developing embryo is then injected into the uterus of the woman for child bearing. IVF is a form of assisted reproductive technology used for infertility treatment and gestational surrogacy. In a report released on the 18th of October, 2018 on the Crunchbase News website, the IVF procedure, at its first round costs up to $20,000 (#7,290,000m). It is without doubt that the process, although ameliorative, is also similarly expensive. In response to this, HealthTech companies are beginning to step into the picture to play Messiah via the release of subsidies and loans for the rather costly processes; prime of them is Claire Tomkins’ FUTURE FAMILY.

Claire Tompkins Future Family


To help close the gap of affordability, research shows that the San Francisco based company, has raised a $10million Series A Funding to heave patients off a reasonable portion of their financial commitments. Having being supported by like-passion companies such as iNovia, Launch Capital and others, the company was able to raise about $14.2million.

According to the report of the Center for Health Statistics, USA, 12.1% of women in the US within the age of 15-44 have impaired fecundity, 6.7% married women within the same age bracket are infertile and up to 7.3 million women have used infertility services. This makes the contribution of the Future Family company a rather commendable one.

DO WE HAVE HEALTHTECH COMPANIES IN NIGERIA?


YES! A whole lot to be candid. I’d list some:

  • Safermom: It is a maternal and infant mortality based system.
  • Interswitch Health: Provides digital infrastructure for the facilitation of record keeping, claims processes, administration services and much more. Basically provides relief for time-consuming hospital tasks.
  • Omomi: A system that perform quasi-parental monitoring function. Helps parents keep tab on their children’s health for as low as N600.
  • Find-a-med: A directional guide to any health facility.
  • Curacel Health: A secure web and mobile based system for health providers to manage their operations with less effort and make efficient decisions about patients and their practice
Curacel Health logo
Curacel Health

Others include APMIS, Medenhanz, Doklink, Medical Device As A Service (MDAAS), and Drugstore.ng

One reoccurring similarity between these healthtech startup companies is the implementation of technology for quick access to medical advice, proper collation and documentation of files.

None of these startup companies have actually followed the path of providing finance to expand access to medical services for the average Nigerian patient.

There is thus room for an HealthTech startup to specialize in this field for maximum gains.


In Tanzania, there are healthtech startups like Jamii which is a micro-health insurance. It uses low-end mobile technology to launch insurance policies which are is as low as US$1 per month for the low-income earners. This has in no small way facilitated the access of every class of the society to good and quality healthcare. There are other great healthcare startups in Africa, such as iMoSyS Health (Malawi), Mama-Ope (Uganda), and SnooCODE RED (Ghana), amongst others.

Africa is no longer lagging in the world of medical innovation and technological explosion. However, for our dear country Nigeria, it would be quite resourceful if more attention is paid towards creating finance-related HealthTech systems. This way, we would not just have knowledge of what made us ill, we’d also have the finance to make us healed.

By Olalekan Temidayo Victor, Content Writer at DigiLaw

Online Dispute Resolution (ODR) in Nigeria: Intricacies, Challenges and Prospects

Oreniyi Adesewa online Dispute Resolution in Nigeria woman with alarmed expression on her face with laptop

Online Dispute Resolution (ODR) is a fast rising class of alternative dispute resolution that is taking advantage of the escalation of internet usage and its availability. It is a form of dispute resolution process that caters for dispute resolution via the internet or some virtual form of communication that allows dispute resolution without the presence of both parties in a dispute in the same location.

Almost all ODR processes are in form of written submissions but there are other forms of ODR which range from online arbitration, negotiation and mediation; which may be video or chat based. ODR formats may sometimes depend on the dispute or the parties involved in the dispute.

ODR has been gaining a wide acceptance in conflict resolution especially in e-commerce disputes, no surprise there, as the use of internet for e-commerce transactions increases, new forms of disputes relating to that space/ e-commerce will also be on the rise.

Giant e-commerce companies like eBay, Alibaba and Amazon have adopted ODR as a tool to settle their consumer-to-consumer disputes (vendors and buyers on their platforms).

Logo of Alibaba

Alibaba’s form of resolving disputes in its market place goes thus:

The buyer can open a dispute after making payment and before confirming delivery of its order in two cases:

(i) the goods are not received before the shipping deadline or

(ii) the goods are not received with fulfillment of the conditions predicted. If the parties cannot resolve a complaint within 10 days, a panel of Alibaba’s ODR team settles it by imposing penalties on the defaulting party.

Logo of eBay

EBay also has a similar form of resolving disputes. How does it work? EBay’s preferred dispute resolution provider is SquareTrade.

Logo of SquareTrade

SquareTrade offers two services: a web based forum which allows users to attempt to resolve their differences on their own or if necessary through the help of a professional mediator or an ODR practitioner.

Sellers/vendors on eBay must refer their buyers to its ODR platform. It’s free to file a complaint. Buyers when filing a complaint, have to do it by following these two steps: creating a SquareTrader User ID and password, then entering complaint details. After this, SquareTrade will encourage the other party to respond to the case by sending a notification email to the other party (the vendor) so it??? can respond.

Consumers/users of eBay can request the assistance of a professional mediator for $15 (eBay will subsidize the rest of the cost). The whole process takes generally 10 days.

ODR with its many benefits is yet to be utilized in many countries and the countries in which it is being utilized are under-utilizing it. Nigeria is one of the many countries that is yet to adopt this easy, cheap, accessible and fast mode of dispute resolution. A lot of Nigerian brands will speedilyexpand and gain more recognition if they adopt the ODR technique. A major part of the problem lies in the fact that:

  • Lots of people are ignorant of this dispute resolution technique and the use of information technology and computer literacy is still limited.
  • Lots of legal practitioners are unaware too and seeing as arbitration and mediation are just starting to get the recognition they deserve, it is not so shocking that only a handful of people are aware that there is a dispute resolution technique that solely operates virtually.
  • When using the ODR technique, people have to source for legal contents themselves most times; sometimes not really having an in-depth understanding of the claims they are making because they can choose to hire or not hire a lawyer.
  • There is also the internet problem, not all parts of Nigeria have good internet reception and access.
  • There is also a fear of invasion of privacy.
  • Lack of physical communication can also lead to misunderstanding of what the other party is trying to project.

Nigerian brands are yet to adopt this dispute resolution technique. Before this can be achieved:

  • Consumers have to have a good grasp of what ODR is and how it can help them resolve disputes quickly and inexpensively.
  • Lawyers getting training in the art of online mediation
  • Mediators resorting to the internet more when mediating disputes; training themselves in online mediation simulations in as many languages as possible – e.g. Hausa, Igbo, Yoruba – and for different kind of cases; persuading their clients to use the internet when resolving disputes too would increase ODR awareness and also encourage people to use them when proposed by Nigerian brands.
  • The eBay and amazon technique can be adopted too but it would be in the business to consumer (B2C) method because eBay’s technique is for consumer to consumer disputes (C2C) and we don’t have Nigerian brands which operate that way.
  • Courts preaching ODR; insisting that there should be an ODR clause like there is for ADR, parties to a dispute will have no choice but to resort to ODR when disputes arise.
  • Nigerian brands should also include ODR clauses in the terms of their contracts.

There is an ocean of opportunities for improvement of dispute resolution through technology that we need to embrace. Nevertheless, if you cannot believe that digitalization of justice is a relentless reality for the near future, do not feel guilty. Due to the cognitive bias of human reasoning known as the availability heuristic, we tend to doubt something until we have experienced it since our switch to reality is what we have available at the time.

I really do hope we start preaching the gospel of ODR after reading this.

By Oreniyi Adesewa, Research Associate at DGL Research

Why Bitcoin Price is Crashing


Bitcoin Cryptocurrencies
Bitcoin

    Flashback to 2009 when the Bitcoin was launched by an individual or a group known under the pseudonym “Satoshi Nakamoto”. It was the first cryptocurrency to capture the public imagination. As at May 2018, there were over 17 million bitcoins in circulation with a total market value of $140 billion. Today, the total value of all the world’s Bitcoin currently stands at $110 billion according to CoinMarketcap.com. It seems ‘all of a sudden’, bitcoins and cryptocurrencies began to fall.

    On the morning of September 5, the price of bitcoin went into a freefall. According to CoinDesk, it fell by $500 or 5%, thereby drowning the bitcoin price under the psychological $7000 mark. Yesterday, the value of Bitcoin dropped to $3,800 (roughly N1.4 million) fueling fears that the cryptocurrency market is slowly crumbling. According to CoinMarketCap, the current total value of all cryptocurrencies has fallen from $830bn as at January 2018 to about $200bn. Its market capitalization has now fallen to $82 billion, down from more than $110 billion just two weeks ago. One then begins to wonder why cryptocurrencies, “the currency of the future” are falling. More importantly why now?

   

The market cap of the World’s top cryptocurrencies has fallen from around $620 billion to $379.3 billion in less than two months. This is majorly as a result of Bitcoin, the market leader. In other words, bitcoin may be in a freefall because demand for the cryptocurrency as a usable form of payment is slipping if not crumbling. More than four companies have given up the use of Bitcoin for transactions. Steam, a software developer geared toward gamer technologies stopped accepting Bitcoin December, 2016 citing transaction costs. The same goes for Microsoft and Stripe which ended Bitcoin transactions on the 23rd of April.

    Furthermore, there is the issue of transaction speed. According to Ruslan Tugushev, CEO of Storiqa, a blockchain company for E-commerce with its own token, STQ

“The network is currently overloaded due to the arbitrage (among Asian Bitcoin traders) and the rush to trade Bitcoin.  The blockchain gets heated like a frying pan when Bitcoin is used for payment purposes too instead of as a digital commodity.  I think faster transaction speeds will require higher commissions for (Bitcoin) miners”

Bitcoin processes under 10 transactions per second. By comparison amazon processes hundreds of transactions per second using credit cards. According to a report made on January 10 by Business Insider, the North American Bitcoin Conference stopped accepting Bitcoin payments for tickets due to transaction fees and slow processing for payment

    According to Xiahong Lin, founder of Bodhi, a china based decentralized prediction market platform, “Bitcoin’s problem is how it works as a payment from both a reliability standpoint and from a cost standpoint”. In essence, the futures market is experiencing difficulty in nailing a price on Bitcoin. Basically, a future market is an auction market in which participants buy and sell commodity and futures contracts for delivery on a specified future date. This means that normal state of the futures market is backwardation. The opposite of this is called contango, meaning nearby futures price is higher than the spot price. Contango is usually seen in markets of scarcity and since Bitcoins are finite, demand for them as a transaction currency is eroding.

    The bottom line is that when a currency becomes less useful, it naturally weakens. Bitcoin has its flaws, not the least being transaction speeds and fees. Stripe said the company was still “optimistic about cryptocurrencies” and further stated that;

“There are a lot of efforts that we view as promising and that we can certainly imagine enabling support for in the future. In essence, Bitcoin may be viable for payments again in the future”

The founder of Bretton Woods research, Vladimir Signorelli opines that the utility [Bitcoin] as a medium of exchange of confronting bigger challenges than expected. That These huge headwinds for bitcoin. Whenever the Bitcoin universe shrinks, you see the price drop. There is almost a panic about it. He further added that “China regulations and bans couldn’t stop bitcoin, but maybe markets shutting it out as a form of payment will”.

The fortunes of most cryptocurrencies have been hinged upon the market value of bitcoin this year. when bitcoin started falling, Ethereum, ripple and EOS also fell hard by at least 10%. However, what seems to be interesting is how new solutions to these problems would improve the cryptocurrency market. For now, and for many, Bitcoin is not (yet) money.

By Jeje Yansola, Content Writer at DigiLaw

Crypto Enthusiasts: KubitX to the Rescue

 

 

“Gee, what’s up? I have 0.4 bitcoin ready for market. Got any interested clients? ”

“Eeyahh! I just outsourced same request from a client to another friend since I couldn’t meet up with the demand. So far you agree to my 5% commission, I’ll get you a buyer within a week”

 

That’s the typical conversation on the lips of millenials in the country with the 6th largest crypto-currency transactions globally- Nigeria! Evidently, PayPal and other global payment platforms have failed us, justifying the great reliance on cryptocurrencies for transnational trade. But, lots of difficulties are faced in disposing off cryptos, ranging from high middle-men commissions, delays in getting buyers, high incidence of fraudsters who pose as buyers (the middle-man up there was once defrauded of 70k), amongst other difficulties.

KubitX

 

Lucky us, the much awaited respite/succor is here: KuBitX! It is a digital currency trading platform focused primarily on creating a virtual ‘Stock Exchange Market’ where buyers and sellers of crypto-currencies trade can meet. To outshine its competitors-LocalCoinSwap, LightBitAtom, BINKD- the platform aims to obliterate language barriers with a support for 5 languages.

KubitX

Encouragingly, it seeks to spear-head massive cryptocurrency awareness in Africa by providing grass root education through country ambassadors.

Picture of KubitX CEO

Pioneered by 17 professionals drawn from across top Fortune 500 companies and the “Big Four” consulting firms, it is registered in Malta and offers its services exclusively to Nigerians and Kenyans at present, with an aim to expand to other flagship African countries including South Africa, Zimbabwe, Ghana, Angola and Uganda.

KubitX

Trading takes place on the platform primarily through the use of KubitX tokens -KBX, with options to convert popular cryptocurrencies to tokens, or purchase them straight up. KBX public sale round starts by 20th November and ends 19th December, 2018 with tokens to be sold for 8,909.09 per Ethereum, with a bonus of 10% on token purchases. Users are obligated to remit 0.05% as trading fees – 8 times cheaper than the average charge of 0.2% by existing ICO’s- with all other cryptocurrencies, while trading fees payment in KBX attracts a discount of 25% on original trading charges. The juiciest part is that the platform offers crypto-to- fiat currency exchanges. This way, users in need of hard cash get to withdraw directly from their bank account with a charge of 2.5% as processing fee.

KuBitX will among other things, regulate trading activities on the exchange to clip the wings of “whales” that manipulate trading prices against the interests of minions, prioritize provision of responsive customer support, provide trainings for users to guarantee seamless integration with the overall framework of the exchange. For security, all user data is encrypted before being inserted into the database, third-party code verification and penetration testing functionality amongst other layers of protection.

Call it a mobile bureau-de-change and you’ve hit the bull’s eye! But don’t miss your chance on this once-a-lifetime opportunity, the KubitX team is eagerly waiting to see you as a project’s part!

By Sharomi Ridwan, Content Writer at DigiLaw

Cryptocurrencies: Why Nigeria could adopt them

Bitcoin Cryptocurrencies
Bitcoin

According to a 2018 publication by Bloomberg, Nigeria is currently ranked the most likely nation in the whole of Africa to adopt cryptocurrencies. In addition to the fact that the country is a hot bet for cryptocurrency, it ranks first on Google trends in bitcoin-related searches. Despite this, the country has refused to adopt the digital currency as a result of the continuous warnings from its Central Bank against cryptocurrency’s volatile nature.

For many, the adoption of cryptocurrency is the ultimate revolution that would put an end to the government and banks while for others it is just another financial puzzle which makes it easier for criminals to hide away their money from the police.

Cryptocurrencies are built on a decentralized payment system, which  lets people send currency to each other, over the web without the need for a trusted third party such as a bank or any other financial institution.  It is an alternative currency that uses decentralized control as opposed to centralized digital currency and central banking systems. There are over a thousand different types of cryptocurrencies in which Bitcoin, Ripple,  Litecoin, Ethereum, Zcash, Monero and Dash top the list as the most important.

Types of Cryptocurrencies
Types of Cryptocurrencies

Many Nigerians have been very quick to brand cryptocurrency as a crime-aiding mechanism and yet, we do not realize that there are advantages to blockchain. The transactions on cryptocurrency are cheap and in some cases, free. Another upside of cryptocurrency is that it uses public-key cryptography, a high grade military technology in which whoever must make a change to the blockchain must have the important credentials. The parties to the transaction need to have a pass phrase or a private key which enhances privacy.

A notable downside however is that the centralized digital currency system stores data in a single record which makes the security of transactions to be debilitated. This is as opposed to the decentralized blockchain system where data is stored in a chain of blocks and as a result, where a block is hacked and its contents are changed, it becomes different from several other blocks.

The major reason Nigeria has been described as a hot bet for cryptocurrency is that smart phone penetration is increasing and 94% of the country’s population own at least one smart phone and there is an estimate of 150 million active subscriber lines in the country. In addition, over 94 million people use the internet in the country as estimated in 2016. In recent years, Nigeria has had some downturn and this blockchain system could be a means to revive the country’s economy. The country needs to appreciate and recognize cryptocurrency as a means of exchange.

However, the country has been putting into consideration a number of factors that could harm its economy including volatility. From the regulatory and operative perspective, there are a number of countries including Japan, Singapore, Switzerland, and Netherlands that could serve as case studies for Nigeria in the process of adopting and regulating cryptocurrencies.

The Marshall Islands, a sovereign state in free association with the U.S is an example of a developing nation like Nigeria that she should emulate. The very small nation has adopted its own digital currency called, “sovereign” in February to raise funds and support its economy. Although the International Monetary Fund (IMF) is of the opinion that the potential benefits of the digital currency are much smaller than its potential costs of economic and reputational risks in the small country, the country has responded by saying that the effects of its digital currency will be different because it will be recognized in law as a legal tender, effectively backed up by the government and the funds generated from this initiative will be used for nation building.

Although many people have the opinion that cryptocurrency enhances criminal activities, the very many promising advantages to this new decentralized digital currency outweigh.

By Precious Adeleke, Content Writer at DigiLaw