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Malta Pioneers the Future of Blockchain, Introduces First Ever Decentralized Bank Backed by Binance

The Mediterranean island of Malta is set to become a key component of blockchain and cryptocurrency innovation and evolution. There are plans for the world’s first decentralized bank to be built regulation-ready, in the future blockchain hub of the world.

A Decentralized Bank

In a Bloomberg report on July 12th, cryptocurrency exchange giant Binance and its CEO Changpeng Zhao were said to be backing the world’s first decentralized bank named the ‘Founders Bank’.

A unique characteristic of the bank will see that it owned in parts; Founders Bank will be issuing a “legally-binding equity token” offering through a blockchain-based equity fundraising platform called Neufund.

According to comments made by Binance on Bloomberg, Binance has taken a five percent stake alongside other anchor investors at a 133 million-euro ($155 million) pre-money valuation.

However, the Maltese prime minister Joseph Muscat remains sanguine in the face of these hurdles, saying in a recent speech describing the countries future, “The concept sounds confusing right now, but I have no doubt that it will form the base of a new economy in the future. Just as we attribute value to pieces of paper, so too will future generations attribute value to electronic storage systems.”

The equity-token sale would be a collaboration with a major European stock exchange and conducted under German regulations, though the exchange at present has not been named.

Motions in Malta

In March of this year, Binance announced plans to move its operations to Malta; this came after rigorous reviews of several other potential locations and conclusively, the European island proved itself worthy of the largest crypto exchange in the world.

On July 4th, Malta passed three bills into law that legalized cryptocurrency businesses, making it the first ‘legal certainty’ country for the industry. The island has been especially bullish on crypto for quite some time; proposals for new rules regarding cryptocurrency investments were made in late 2017 and by March 2018 the three recently passed bills were entered into debate.

Bullish Lawmakers

Cointelegraph spoke to Simon Chembri, (13th July), a partner at Ganado Advocates — a leading law firm in Malta which was a critical component during the drafting of the new legislation. He comments, “The purpose was to make Malta a blockchain hub, attracting a number of investments in the country.”

Which is simple enough, however he also gave bullish comments on the legitimization of distributed ledger technology (DLT), blockchains, ICOs, crypto assets etc. by the Malta Digital Innovation Authority, saying, “It gives the opportunity for DLT frameworks at the outset to come over to Malta and voluntary, — if they want — register, or have their DLT framework licensed or certified by this new authority…”

Later adding in regards to a national cryptocurrency, “At this stage, there is nothing set as an agenda by the Maltese government. But we are aware that other countries are considering this and have already taken steps. And we would not be surprised if that would be the next step.”

Ranked third most ‘crypto-friendly’ nation by a BlockShow Europe study earlier this year, it would be no surprise to see Malta reach and hold the top spot should the study be conducted again after the Founders Bank is launched.

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Binance Announces Plans to Create First Decentralized Tokenized Bank in Malta

Binance in Malta is backing plans to create a blockchain-based bank with tokenized ownership, according to Crowdfund Insider.

The world’s second largest crypto exchange had already announced its move to Malta in March and has set up a bank account on the island, thus demonstrating that Malta is moving ahead with industry-friendly regulations to facilitate its plans to become a major cryptocurrency hub.

The blockchain-based financial institution which will be known as the “Founders Bank” will become the world’s first decentralized, community-owned bank, and participants will be issued with “legally binding equity tokens” in return for their investment.

The blockchain-based equity fundraising platform Neufund will issue the tokens. The German-based company which has a base in Malta but retains its HQ in Germany, is said to have raised USD 11 million from well-known investors in 2017. Binance and Neufund are also reported to be partnering with one of Europe’s main stock exchanges later this year, although no names have been thrown into the hat as yet.

Binance Tweeted on its plans for the new bank:

“Founders Bank will become the first stable high-tech banking solution, not only focused on founders but also owned by them, bridging the gap between traditional financial world and innovative crypto companies.”

The bank’s first step will be to seek a licence from Maltese regulators. Malta has already approved three DLT and crypto-related bills which pave the way for new businesses to the island. Silvio Schembri, Junior Minister for Financial Services, Digital Economy and Innovation within the Office of the Prime Minister of Malta, stated that the island “is honoured to be chosen as the location of the first global community-owned bank”. He added:

“We welcome Founders Bank with the utmost excitement and hope that their Fintech solutions will attract even more world-class companies to our Blockchain Island.”

Schembri is known for being the leading advocate on Malta for pursuing an innovation economy build on blockchain and Fintech development.

Binance also recently opened a new crypto-fiat trading platform in Uganda, which supports the Ugandan shilling, alongside major cryptocurrencies.

 

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Coinbase Maintains Optimism Despite Recent Popularity Slide

Crypto exchange giant Coinbase is reported to have recorded a decline in popularity over the past month, according to Ethereum World News.

The downturn in business correlates to a decline in app downloads since the recent fall in the global cryptocurrency market, where prices have suffered a 70% drop over the past six months.

The result is that short-term speculators are looking elsewhere for business and app downloaders have bypassed the Coinbase app, which at its peak was a go-to item in Apple and Google Play apps stores. According to Quartz, Coinbase app downloads have reached their lowest level in the US since last April when Bitcoin was selling at USD 1,250. At one point last year, Coinbase was one of Apple’s most downloaded apps.

Other statistics indicate that the Coinbase online platform has experienced a similar downturn with monthly visits to the site dropping from 126 million in January to 28 million in June with its other platform GDAX losing a further 5% than the parent company.

Despite Coinbase’s recent declining fortunes, the company is continuing its expansion, bringing new products to the market and recently opening an office in Portland, Oregon which has plans to hire over 100 employees.

Coinbase is an “open financial system that is not controlled by a central power”, maintains Coinbase CEO Brian Armstrong who clearly remains upbeat and optimistic. His recent Tweet explained that he sees such slides as simply part of the overall crypto landscape:

“The crypto industry is like no other I’ve seen – lots of up and down cycles (reaching a new plateau each time). There have been 3 or 4 of these now. It can be scary the first time you see it, but to us who have been in the industry for many years, it feels like old news.”

However, another exchange giant, Binance, has seen its fortunes turn out to be quite a different story, with its user base going from strength to strength, experiencing a massive five times expansion since the beginning of the year, and is predicted to bring in USD 1 billion by December.

 

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Binance Expects Profits Up To USD 1 Billion In 2018

Binance CEO Changpeng Zhao told Bloomberg that Binance has earned USD 300 million so far in 2018, and expects total profits of anywhere between USD 500 million and USD 1 billion by the end of this year. Additionally, he stated that Binance now has 10 million registered users, a statement which also implies that cryptocurrency trading continues to be extremely active and lucrative despite Bitcoin’s steep price decline during 2018.

Binance opened 1 year ago in July 2017, and since then its use has skyrocketed. It is consistently the top-ranked cryptocurrency exchange in the world with an average of USD 1.5 billion of trading volume per day. During the cryptocurrency craze that saw Bitcoin hit record values near USD 20,000, Binance recorded peak daily volume of USD 11 billion.

Binance has experienced quite a bit of legal trouble from governments and was forced to move out of China after the September 2017 cryptocurrency ban. Since then there have been additional legal problems from government authorities in Hong Kong and Japan. This has caused Binance to expand globally so that it can survive. In Malta, Binance received a warm welcome and was able to acquire a bank account, and now Binance is using this bank account to launch fiat to crypto exchanges across the world.

Binance Uganda is already launching and will be trading cryptocurrency for the UGX, and Changpeng Zhao says fiat to crypto exchanges based in Malta and Bermuda are coming soon. Changpeng Zhao thinks that opening more fiat to crypto channels will help increase cryptocurrency prices by providing new routes for fiat money to enter the market.

Ultimately Binance is looking to launch a completely decentralized exchange built on the blockchain, and this will allow for the trading of any cryptocurrency anywhere in the world regardless of government regulations. This is perhaps not surprising since Binance was forced out of its native country of China. Changpeng Zhao foresees that decentralization is the only way to 100% guarantee Binance’s survival. Huobi, which is a major cryptocurrency exchange that was also forced out of China, is also developing a decentralized blockchain-based exchange platform.

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Bermuda Prioritizes Blockchain Startups in Revised Banking Act

Bermudian officials led by premier and finance minister David Burt have voted to amend banking laws in favor of blockchain and fintech companies. These changes to the Banking Act follow closely the Digital Asset Business Act and an initial coin offering (ICO) bill recently passed by the Bermudian government.

A new class of banks

The changes to the Banking Act will create a new class of banks that will work specifically to cater to blockchain and fintech companies, combating the current dismissive nature of the banks.

The traditional financial sector in Bermuda has been unwilling to provide blockchain startups banking services, referring to legal and regulatory barriers as justification for this, prompting Burt to introduce these changes in support of economic growth.

He also noted that it is the lack of banking services for the industry that has presented the greatest challenge for growth in the sector globally, describing it as crucial for successful development.

Burt’s initiatives

Recent years have seen Burt firmly champion Bermuda as a blockchain friendly nation, earlier this year pushing for ICO regulations that would require the ministry of finance to approve each ICO before its launch.

Burt was last year responsible for creating a blockchain task force to ensure Bermuda was able to provide a hospitable environment for the sector to flourish, with regulatory and legal officials managing the force.

He was also responsible for the successful memorandum of understanding recently signed between Bermuda and the world’s largest cryptocurrency exchange, Binance.

The agreement saw the Binance Foundation offer to provide USD 10 million worth of university blockchain development and compliance training across the country, as well as the investment of USD 5 million in local blockchain companies.

 

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25-Cent Crypto Sold for $6M in Bitcoin on Binance, Prompting Suspension, Policy Changes

A single Syscoin, worth about USD 0.25, was inadvertently sold for BTC 96 (USD 6.3 million) on Binance on 3 July 2018. This unusual trading activity prompted a temporary suspension of the entire exchange. When trading resumed, new policies were announced by Binance, including a Secure Asset Fund for Users (SAFU) that will compensate customers in the event of extreme losses of cryptocurrency in the future.

Apparently, a number of application programming interface (API) users on Binance were conducting irregular trades, suggesting the API system had been compromised. API is used to program trading bots and, in general, to interact with Binance using a server. Binance revoked all API keys and asked users to make new keys. It suggests users take good care of their API keys by not trusting the keys with third parties, and by using the IP whitelist so no other computers can use their API key.

Irregular trades were rolled back, including that accidental BTC 96 trade. Since this appears to have been a hacking situation via the API, it is probable that the Bitcoins were withdrawn and Binance had to bear the loss. Binance is one of the world’s largest cryptocurrency exchanges and can likely handle a relatively small loss like this, but it is setting up the SAFU fund to cover future losses. Now, 10% of trading fees will be set aside to fund the SAFU, and this will be stored in a cold wallet.

Additionally, Binance will be giving the API users that encountered problems zero-fee trading until 14 July 2018. All other users will be given a 70% rebate on trading fees during the same period, paid with BNB, Binance’s native cryptocurrency.

The Binance team stated: “Binance has achieved explosive growth in the first year. With this growth, we also experience many problems. We must reflect upon these problems, learn from them, and improve ourselves. We know in the course of making history, we will be tested again and again. We believe every test makes us stronger. And only if we fight together, can we move the industry forward.”

 

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Malta Passes New Laws to Claim World’s First Nation with Crypto Certainty

Malta has officially passed three bills into law to legalize cryptocurrency businesses in the country, claiming to make it the world’s first nation to provide legal certainty to the cryptocurrency field, according to Bitcoinist.

The bills passed their fourth and final reading on 4 July and as Bitcoin News reported recently, the bills are aimed at further regulation of cryptocurrencies. The three bills fall into three categories as follows:

-ICOs will now need to publish a white paper with fully transparent financial history details of the issuer for each new project needing funding through the Virtual Financial Assets Act.

-An industry-specific body will be sent up in order to support the deployment of the Malta Digital Innovation Authority Act which will promote the development of visions, skills, and other qualities relating to technology innovation.

– The Innovative Technology Arrangements and Services Act will facilitate blockchain-based enterprises being recognized as such under the law, and as such will be the basis for the previous two bills to operate.

New exchanges now know exactly what government requirements are before setting up a cryptocurrency business or exchange in Malta. Silvio Schembri, Malta’s Junior Minister for Financial Services, commented that companies can now operate in a fully regulated environment, which should attract more investment to the country’s already burgeoning cryptocurrency space.

Poland’s largest cryptocurrency exchange Bitpay announced this year that it was suspending its activities there. Due to lack of cooperation from Polish banks, the exchange announced that its BitBay operations were moving to Malta. Another coup for the country was the announcement that Binance had successfully opened a bank account there and would be operating from September 2018.

Malta has become increasingly appealing to Bitcoin companies conducting business there due to the island’s positive spin on blockchain technology and its open-minded approach to regulation, linked to a strong economy. It also boasts the largest cryptocurrency trading volume in the world, according to Morgan Stanley. With this new legal-certainty status for cryptocurrencies, the country’s claim as another European “crypto haven” to rival Switzerland may be well founded.

 

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Binance CEO Accuses Crypto Exchanges of Inflating Volume Statistics

In an interview with Cointelegraph, Binance CEO Changpeng Zhao discussed how some cryptocurrency exchanges are engaging in manipulation of their volume statistics to give traders the impression they have more liquidity and are more popular than they really are.

This question was asked to Changpeng Zhao in response to a recent study that found evidence through slippage analysis that OKEx was inflating its volume statistics. Cryptocurrency trader Sylvain Ribes sold USD 50,000 of cryptocurrency on Bitfinex, Kraken, GDAX, and OKEx, and found that the order book became unstable on OKEx even from this relatively small sell. Prices declined on OKEx by over 4%, proving low liquidity and lack of support in the order book.

Zhao says that some cryptocurrency exchanges report volumes twice: if someone buys crypto, an exchange might count that as both a buy and a sell order, effectively doubling the volume of the trade, even though only half the volume was transacted. Binance would only report the transaction value as volume, according to Zhao.

A more fraudulent method of manipulating volume statistics is wash trading. This can be detected when price is moving significantly at low volumes, but stable at high volumes. Essentially, two accounts are set up to buy and sell with each other just to generate volume.

A common reason for wash trading is that some exchanges require a cryptocurrency’s team to guarantee a certain amount of volume to stay listed, so some cryptocurrency teams hire a ‘market maker’ that generates fake volume by trading with themselves. Zhao says Binance does not ask cryptocurrency teams to guarantee trading volume, to avoid wash trading.

According to Zhao, a method to detect if an exchange is being truthful about volume is by comparing the trading volume to website traffic. He says that many of the top 10 cryptocurrency exchanges have similar or higher volume than Binance, but only 10% of website traffic, indicating the possibility of volume manipulation.

 

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Chinese Bitcoin Tycoons’ Battle of Words Over BTC 30,000

Chinese entrepreneur Chen Weixing has got himself in hot water after accusing a fellow national “Bitcoin tycoon” of misrepresenting the truth over raising Bitcoin funds, writes Coindesk.

Chen, CEO of an app-development firm called Fun City, is a known blockchain enthusiast, having invested in a long list of Chinese blockchain projects, including Qtum and Tron, and exchange operators such as Binance and Huobi, according to Quartz. He made news in 2015 when he announced a ride-sharing project with Yang Jun, co-founder of Chinese group deals app Meituan.

His recent WeChat accusations against Li Xiaolai, a successful Chinese cryptocurrency investor and early Bitcoin mover, have suggested that Li raised BTC 30,000 bitcoins (USD 200 million) in 2013 that was to mature in September 2017, but then changed the deadline to a year later.

Chen alleged that Li had spent the raised funds on a Bitcoin gambling site called Just-Dice, suggesting, “Everyone who’s been in blockchain industry long enough knows this. I’m not lying.”

The crypto community in China has now become embroiled in what is fast becoming a feud between the two Chinese entrepreneurs. Li refused to respond saying that Chen needed to prove his claims.

The latest development in the crypto-feud saw Chen making further allegations that Li lured investors during the bull market in order to liquidate his profits. These accusations lured Li out of hiding, writing an article denying all of the claims:

“Once again, it’s not true. The fund was a private equity ‘equivalent to 20 million yuan (USD 3 million).’ And I never promised to guarantee the fund’s value using Bitcoin. My quote was ‘We hope (this fund) can outrun the Bitcoin market.’ As for the ‘due in September’ part, the fund was set up in a ‘4+1’ model, so it ought to due in September this year. Chen is just muddying the water.”

According to Coindesk, Chen has made a reputation of making inflammatory remarks about other investors. Earlier this year, Zhu Xiaohu, a notable Chinese investor and managing director at GSR Ventures Management shunned WeChat group discussions, because he wanted to “maintain his integrity”.

Chen responded:

“Zhu just wants to die in the old world but I want to live in the new world to come… He doesn’t even care to keep learning. He’s also killing the innovation of a group of passionate young people while pretending to maintain that integrity of his.”

The latest on this crypto ‘Gunfight at the OK Corral’ is that Li is now considering taking legal action against Chen Weixing for defamation of character.

 

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Digital Jersey and Binance to Establish Crypto Exchange

Digital Jersey, the economic development agency representing Jersey’s digital industries, is to corporate with giant blockchain exchange Binance, signing a memorandum of understanding (MoU) with a view to the two firms developing a compliance base and cryptocurrency exchange on the island.

The world’s largest cryptocurrency exchange is planning to set up the first Sterling to crypto exchange in Jersey – potentially bringing millions of dollars into the island’s economy, writes The Jersey Evening Post.

The aim is for to Digital Jersey to cooperate with Binance to deliver training to promote the Jersey’s young blockchain industry and to support the blockchain ecosystem with AML compliance issues and establish licensing and banking relations.

Tony Moretta, chief executive of Digital Jersey, said:

“It’s a sign of cryptocurrencies growing up in a way because they are scaling up and want to appeal to a wider selection of consumers and businesses by demonstrating they are well regulated and they know Jersey’s reputation is strong.”

Moretta said the collaboration will develop exchange and compliance functions in Jersey while delivering blockchain training to support startup growth. This hopes to bring 40 new jobs and Binance will seek to invest in the island’s fintech space and local startups through its venture capital subsidiary Binance Labs.

There are no official figures for Binance’s value, but its founder Changpen Zhao is estimated to have accrued a personal fortune in excess of over USD 2 billion. Ths company itself manages over USD 6 billion in trades in just 24 hours, it has been reported. On the Jersey deal, Zhao commented:

“With its local economy based on a major currency (GBP) and its close proximity to the UK and Western Europe, we are confident the cooperation with Jersey will not only benefit the local economy but also form a strong operational foundation for our expansion into the rest of Europe.”

Jersey is not the only island community of interest to the exchange giant. Binance has now set up in Malta, followed by similar plans from rival exchange OKEx and German blockchain firm Neufundand.

External relations minister Senator Ian Gorst, is positive about the new development for the island, commenting:

“This is absolutely the space where Jersey’s future is. I want to create hope for the Island’s future by a bringing together of its technological future and strength in financial services.”

 

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