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Bank of Spain’s Governor Calls Crypto “Spurious Novelties” but Govt Sees Potential

Luis Maria Linde, Banco de Espana governor, said in a recent speech that cryptocurrencies presented more risk than they did benefits, although blockchain technology could improve efficiency and costs, according to Coindesk.

The comments made during a recent speech organized by multinational professional services firm Deloitte referred to cryptocurrency tokens as “those spurious novelties that do not provide significant improvements and that should be tackled as soon as possible”.

Spain’s stance on cryptocurrency is heavily nuanced towards regulation. A recent investigation implemented by the National Office of Fraud Investigation (ONIF) has passed data on the Spanish Treasury which will attempt to enforce new requirements regarding cryptocurrency payments, writes the Daily Express.

Under the plan, 16 financial institutions based in Spain will be required to pass on their information to the ONIF in relation to overseas accounts.

In his speech, Linde did concede that digitalization could offer interesting possibilities as could blockchain technology, providing that underlying technology is “well used and managed”. However, he signaled that:

“….the move to a more digital economy is accompanied by greater cyber threats and it is necessary to develop new measures to protect processes, assets and customer data.”

Like countless other countries at present, the Spanish government is continually referring back to the misuse of cryptocurrency such as organized crime and fraud and regulating in order to address the issues, often ignoring the underlying advantages. In Spain, this is very much the case and cryptocurrencies such as Bitcoin are not recognized as legal tender.

However, of late, despite the comments of Governor Linde regarding cryptocurrency, there have been attempts to create more flexibility in the space, including Prime Minister Mariano Rajoy’s consideration of possible tax breaks to attract blockchain investments. Registered funds can now theoretically invest in cryptocurrency under law 22/2014 passed by Spain’s National Securities Market Commission (CNMV – Comisión Nacional del Mercado de Valores).

According to lawmaker Teodoro Garcia Egea, it is in Spain’s national interest to attract blockchain companies to the country, as they can inject new life into areas such as health, finance, and education, writes UTB.

Rajoy’s Peoples Party is now considering government regulations which will enable businesses to use blockchain technology and carry out coin offerings in the light of its benefits to these areas.

 

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Deutsche Boerse Becomes Second German Stock Exchange Embracing Crypto

Deutsche Boerse, the owner of the Frankfurt Stock Exchange, is evaluating whether to offer cryptocurrency products, according to Bloomberg.

If this is the case, this will be the second German stock exchange to make announcements this year regarding a move towards the adoption of cryptocurrency related products, after Boerse Stuttgart Digital Adventures announced the release of its Bison app in April.

Jeffrey Tellsler, Deutsche Boerse’s head of clients products and core markets, spoke to an industry event in London organized by the Association for Financial Markets in Europe on Wednesday suggesting that the company was “deep at work with it”. Tellsler went on to comment:

“Before we move forward with anything like Bitcoin we want to make sure we understand the underlying transaction which isn’t the easiest thing to do.”

The company’s rivals in the US, Cboe Global Markets Inc and CME Group Inc, became involved in Bitcoin futures last November, and due to regional regulation, no European company had been able to follow suit until this latest move, although he did admit that as yet Boerse Deutsche wasn’t at the same level.

Germany, along with France who is more supportive of ICOs, has been vocal within the EU in supporting blockchain technology and has joined 21 other countries in supporting initiatives with the aim of reinforcing local innovation.

Last June, Deutsche Boerse revealed a plan to move the majority of its post-trade services to a blockchain, using Hyperledger’s open-source Fabric protocol to transfer securities and move commercial bank money.

The firm is clearly moving into the crypto space arena with some urgency, following its announcement in March of a securities lending platform using R3’s Corda blockchain technology. Tellsler explained that before they could proceed, the firm needed to ensure that they understood the volatility of the Bitcoin market, and made sure clients and regulators were in line before moving forward.

In a recent Sowa Labs survey of 1,019 German crypto traders, 16.9% owned a single cryptocurrency, while 18.2% confessed to owning several. Of the respondents, 81% were male, 19% were female, and 54% were 35 years old or younger. More than 80% of respondents opened their first trading account from 2017 onward.

 

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IBM Recruits in Preparation for $176 Billion Blockchain Future

IBM’s pursuit of 1,800 blockchain jobs in France is a signal of intent to expand research and development in several areas, primarily focusing on blockchain technology, AI (Artificial Intelligence) and IoT (Internet of Things), as detailed in an interview with chief executive Virginia Rometty on Wednesday.

IBM is one of the largest and most established research organizations in IT and computing alongside companies such as Microsoft and Google. The company currently holds the record for the most patents generated in a year as well as the last 25 consecutive years. IBM assigned 9,043 patents in comparison to Samsung Electronic which filed for 3,300 putting them in second place.

IBM has previously reported working with up to 63 blockchain clients on over 400 projects related to blockchain technology. The tech giant is confident that blockchain will streamline solutions and be a leading innovator in its field. Earlier this year CFO Jim Kavanaugh stated: “For us, blockchain is a set of technologies that allow our clients to simplify complex, end-to-end processes in a way that couldn’t have been done before.”

IBM securing the market

There have been regular headlines of IBM and collaborators looking to enter the blockchain space. IBM started a partnership with Maersk and Agility, a global logistics provider, announcing their plans to track shipping containers using blockchain technology back in February.

IBM has been pushing for the lead in the race for adopting blockchain technology working alongside various industries and supporting giants like VisaHSBC, and Walmart. Walmart’s vice president of food safety and health Frank Yiannas explained that:

“As a global advocate for enhanced food safety, Walmart looks forward to deepening our work with IBM, Tsinghua University, JD and others throughout the food supply chain. Through collaboration, standardization, and adoption of new and innovative technologies, we can effectively improve traceability and transparency and help ensure the global food system remains safe for all.”

Although cryptocurrencies have been met with some skepticism many industries are starting to understand the potential benefits of the underlying blockchain technology. Industry leaders and the European Union are pouring millions into research and exploration of blockchain projects. The EU announced plans in February to increase funding over the next two years from EUR 83 million to around EUR 340 million. IBM’s general manager of blockchain, Marie Wieck previously highlighted research predicting the value-add of the blockchain economy growing to more than USD 176 billion by 2025.

 

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Amex Looks to Blockchain for Customer, Merchant Security

Multinational financial services corporation American Express is exploring the potential of a blockchain solution to increase customer and merchant security.

Vice president of technology at American Express, Tereasa Kastel, spoke at the Oktane 18 conference in Las Vegas earlier this week, discussing the multiple uses for blockchain being explored by the corporation.

Protecting identities and information

As reported by TechRadar, identification security and protecting user information formed the basis of Kastel’s speech. She discussed the prospect of an immutable blockchain solution to American Express’s objective of providing the highest levels of user security and data protection.

“If you’re in this industry, you have to have a voracious appetite for all things identity… to be able to work in a world where there is constant change, you… have to always ensure you can stay ahead of the curve,” she noted.

“Being in the financial industry, we have to be somewhat conservative on what legal and regulatory requirements there are,”‘ she added, commenting on the disparity between government policy, or lack of, regarding blockchain.

Despite this, Kastel said: ”On the other hand, what empowers an individual user to do in terms of controlling their identity, and have that identity be immutable, is something you can’t pass by.”

A blockchain identity wallet

Kastel outlined that initial blockchain probes would be limited to financial transactions. Now, however, she reported American Express is looking into creating a blockchain identity wallet.

”We were starting to explore what would an identity wallet look like, and could blockchain be used to help serve as, both internal, but also external card members and merchants,” Kastel said, detailing a visit to the corporation’s research and development lab.

She added that “American Express is a very innovative company”, in an acknowledgement of blockchain as the next seminal development in the technology industry.

Hyperledger blockchain technology

While Kastel’s talk was predominantly focused on the significant role of blockchain in American Express’s future service development, it coincided with the announcement of the corporation’s utilization of hyperledger blockchain technology.

This is being offered to merchants as an opportunity to create tailormade rewards programmes for individual American Express cardholders.

 

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Russian Bear Poised to Pounce at Fintech Crossroads

Recent statistics published by the Russian Association of Cryptocurrencies and Blockchain (RACIB) shows that Russian investors appear to be at a crossroads in the fintech space.

The future of Russian cryptocurrency adoption is very much dependent on what lies ahead, particularly with regard to the Kremlin’s past stance which has never been favorable towards allowing the public to become active participants, despite government murmurings suggesting the adoption of CBDC or ‘cryptoruble’.

RACIB statistics indicate the degree to which the cryptocurrency space has been affected by scandals and corruption and a lack of clear government leadership. The resulting status quo sees half of the ICO funds raised in 2017, which amounted to USD 300 million, going to pyramid schemes, according to Bitcoin News.

While the West is predominantly concerned with finding the right balance as it discusses cryptocurrency regulation on an almost daily basis, the major eastern powers such as China and Russia look towards prohibition, over-regulation or limiting digital currencies for government use only, despite blockchain’s rise and rise in commercial enterprises.

In the US, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) continue to debate the securities versus utility issue in order make final decisions over adoption, whereas in blockchain-friendly Europe, General Data Protection Regulation (GDPR) has become a point of focus as more companies line up for conducting business using everything that fintech may have to offer.

As Bitcoin News reportedly recently, Russia is in no way short of fintech expertise and blockchain technical know-how with a major CEO presence now working in Moscow, but the cryptocurrency industry been apprehensive due to the government’s lack of direction regarding digital currency.

This could change if the Russian State Duma’s Committee for Legislative Work supports the first reading of an initiative that will add the basic norms of digital economy to the Russian Federation Civil Code. Such a move though would not automatically allow digital currency to become a legitimate means of payment, as this would require a separate law, although the initiative plans examine smart contract application.

A change in direction may be on the way after President Vladimir Putin’s recent push for blockchain technology to be part of his new “digital economy” program, saying that the country can’t be “late in the race” for blockchain dominance.

A recent Moscow cryptocurrency summit was attended by 200 speakers and over 3,000 participants, showing that the impetus for change is there in the new technology race. It remains to be seen how the Kremlin progresses and contributes towards Russia ’s technological advancement.

 

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Tim Draper Envisions Blockchain Solution to Government Efficiency Woes

Bitcoin bull and renowned financial investor Tim Draper laid out his vision for a blockchain-based solution to government efficiency problems at the GovTech Pioneers conference in Vienna, Austria on Wednesday.

As reported by Cointelegraph, Draper’s opening speech presented a plan for future political governance, consisting of a shift to the use of blockchain technology that would employ smart contracts and artificial intelligence (AI). He predicted that this combination would be capable of providing ”the perfect bureaucracy”.

Blockchain, AI, and healthcare

“The services provided by the insurance, healthcare, and real estate industries are very bad and require a lot of money. The government that burned a lot of money for the worst service first felt this,” Draper said, outlining the reasoning behind the need for a change in governmental operations.

He emphasized his points with a specific focus on healthcare, outlining the future as decentralized, with patient’s data accessible to them on blockchain. An automated system would utilize AI technology to consistently review the data, sending warnings and advice to individuals at risk.

Draper is not the only person who sees blockchain as a superior solution; several blockchain-backed healthcare projects do already exist, praised for the immutable patient records they can provide.

Hashed Health is a project that works to solve healthcare business problems, while IRIS is a start-up company looking to provide people with a decentralized healthcare record.

Of course, setting up a blockchain project in a country to cover every citizen would be a much larger feat than any of these companies have achieved so far. The cases do prove, however, Draper’s vision is not as unattainable as some may initially think.

Blockchain and voting

As recently reported by Forbes, voting is another area of government inefficiency that could benefit from a blockchain alternative. As demonstrated in previous US elections, the current voting procedure leaves much to be desired.

To illustrate this point, in one case in the state of Virginia, an apparent electoral tie led to the decision of a candidate being chosen by drawing a name from a hat. Another instance is the inefficiency of voting in person, leading to low voter turnout. In the 2016 US presidential election, an estimated 55.7% of eligible voters cast a ballot.

Blockchain voting would mean it would be virtually impossible to hack and could potentially be done at home while verifying the identity of the voter, reducing electoral fraud.

Draper did not illustrate the issue of blockchain voting in his GovTech Pioneers talk, but by highlighting the point of blockchain efficiency in regards to government operations, his speech was invaluable in the technology being recognized further in the field.

 

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UN Partners with IOTA for ‘Tangle’ Tech to Boost Field Efficiency

The United Nations Office for Project Services (UNOPS) has announced a collaboration with the IOTA Foundation to examine the feasibility of DLT streamlining its operations, according to Coindesk.

The new partnership announced on Tuesday stated that the two organizations plan to utilize IOTA’s tangle technology which is easily compatible with Internet of Things devices, due to its minimal computing requirements.

IOTA uses a different blockchain system from that of Bitcoin and Ethereum networks, which is one reason that the UN division has chosen to work with the foundation. UNOPS special advisor on blockchain tech, Yoshiyuki Yamamoto claims that the ledger “can be operated on battery power or alternative connectivity networks” in areas with “sporadic access to high-speed internet connections or even electricity”, essential for UN field operations.

Yamamoto points out that an important factor of the collaborative project is that UN will able to apply the technology to real-world use cases. The UN is increasingly using blockchain in numerous projects around the world. Thomson Reuters Foundation reports that the United Nations Development Program (UNDP) is launching a crypto-funded university solar energy project this year in Moldova in partnership with the South African solar power marketplace Sun Exchange, and many such projects are either underway or planned for the future.

UN aid efforts have a historic problem of fraud, mismanagement, and bureaucratic red tape, but with the ability to circumnavigate governments and banking institutions, transferring aid via blockchain can be far more efficient.

“We don’t do blockchain for blockchain’s sake. We have limited resources and personnel, so we have to focus our efforts on solving real-world challenges. Our priorities stem from our mission as an organization, not from the fads of the crypto space,” Yamamoto concluded.

Yamamoto could not predict how long it might take to move from a pilot phase to fully implementing IOTA’s technology due to the current educational nature of the collaboration.

 

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Singapore Central Bank to Revamp Regulations for Blockchain Industries

A recent consultation paper from the Monetary Authority of Singapore (MAS) makes proposals for existing regulations to be changed; this comes in light of emerging blockchain-related business practices on the city-state island.

The report comes shortly after the Singapore government and MAS made preparations to launch a pilot blockchain proof-of-concept project to conduct inter-bank payments utilizing blockchain technology.

Revamping old regulations

MAS, the central bank of Singapore has had regulations for recognized market operators (RMOs) in place since 2002, and it finds that’s the “single tier” regulatory framework fails to meet the demands of the “changing landscapes.”

“A multi-tier RMO regime with gradated requirements can better accommodate the emergence of new business models such as blockchain-based or peer-to-peer trading facilities, and lower the cost of entry for start-up operators,” writes MAS.

The proposition is to now expand the single tier into three separate tiers that cater to the needs of smaller-sized exchanges entering the market.

MAS has introduced the tiers within the RMO framework in the belief that it would allow for market operators to choose a regulatory tier that better matches “their risk profile and business model”.

Flexible regulations

Tier 1 addresses the requirements of “market operators that wish to target retail investors, but which are smaller in scope and have far less retail investor participation than traditional stock and derivatives exchanges”.  This tier is for operators that don’t pose systemic risks and will be allowed to serve retails investors should they meet additional retail investor protection requirements.

Tier 2 is aimed at market operators who already qualify under the present RMO regime but don’t pose system-wide risks and serve only non-retail investors.

Tier 3 applies to significantly smaller market operators in comparison to established exchanges; operators in this tier will be subject to more flexible capital requirements, technology risk management, and outsourcing.

The MSA explains, “This new tier is designed to facilitate new entrants that develop solutions for wholesale market participants or market operators that have reached the end of their sandbox tenure and are commercially viable, but whose businesses are not able to meet the requirements of the existing RMO regime.”

Earlier this year the MAS chief fintech officer Sopnendu Mohanty revealed his concerns regarding the speculative cryptocurrency investors. He is of the belief that it is negatively impacting on experimentation with blockchain technology.

In an interview with CNBC, Sopnendu said: “But the speculators and the people who are making money out of this speculation of the cryptocurrency (market) are perhaps negatively impacting the whole experimentation of cryptocurrency.”

Furthermore, the MAS is interestingly working on its own blockchain initiative called Project Ubin. which was announced in late 2016 and will contribute to Singapore’s overall advances toward understanding how to regulate cryptocurrencies and blockchain technologies.

 

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Argentinian Bank Utilizes Bitcoin for International Payments

Banco Masventas, a bank based in Argentina, has launched a new service as of 22 May 2018 which will utilize Bitcoin to facilitate international money transfers. This is a major milestone for Bitcoin, since it is likely the first time it has been used by a financial institution as an international payments standard.

The bank is partnering with Bitex, a Latin America-based Bitcoin exchange, to facilitate the international payments. In an interview with Coindesk, Bitex chief marketing officer Manuel Beaudroit said that customers won’t actually be touching any Bitcoin when using this new international payment service offered by Banco Masventas. The customer simply asks the bank to send an international payment from their account, and the bank in coordination with Bitex will handle converting their fiat funds to Bitcoin and back again when it reaches its international destination.

This service offered through Bitex will allow Banco Masventas customers to significantly reduce costs associated with international transfers since there will be no international banks as intermediaries. Also, international transfers will be faster than other systems, occurring in less than 24 hours. It only takes 10 minutes for a Bitcoin transaction to confirm on average, but it will take some time to convert fiat to Bitcoin and back to fiat.

International transfers will be available to over 50 countries, and Banco Masventas will be charging a 3% commission.

Of course, Bitex’s process of converting fiat to Bitcoin and back to fiat when the money reaches its international destination is inherently centralized and possibly not entirely cryptographically secure. Customers will have to trust Banco Masventas and Bitex when using this new international transfer service.

Sending Bitcoin by itself with no other service involved actually makes more sense if control of your money and security is the priority. Of course, using purely Bitcoin is less convenient since ultimately it usually needs to be converted into fiat before it can be used to buy goods and services. Bitex streamlines the process of converting Bitcoin payments to fiat, which can be quite an arduous process if someone had to do it themselves. Also, using the service offered through Bitex removes the risk of market volatility.

It is a big deal that any bank is using Bitcoin to transfer money across international borders, and this may be the beginning of banks recognizing and utilizing Bitcoin as a trustworthy payment method in the future. Bitcoin’s ability to transfer money anywhere in the world instantly and securely is gaining recognition.

 

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Blockchain Gains US Momentum as Ohio Examines New Bill

The US state of Ohio is currently proposing a change to state law through a bill which will legally recognize smart contracts and storage of records on a blockchain, according to Coindesk.

There are several states in the US that have adopted blockchain-associated laws. Vermont, Arizona, Delaware, Illinois, Nevada, and Tennessee are among these states. Indiana, Iowa, and Texas have taken a somewhat negative approach against cryptocurrencies or flagged them as potentially risky.

Some states have examined the governmental use of blockchain, either as isolated applications in specific or integrated government functions. Vermont, for example, recognizes data stored on a blockchain as admissible in the court system, according to Brookings.

Washington and New Hampshire have succeeded in passing some legislation and Arizona has introduced or passed regulations ranging from making signatures, transactions, and contracts on a blockchain legally valid, to allowing residents to pay their income tax in cryptocurrencies.

If Ohio becomes another blockchain state and the ‘Revise Electronic Transactions Act/blockchain/smart contracts’ bill signs into law, it will significantly pass ownership rights to those needing to store electronic information on the blockchain. Bill 300 states:

“Notwithstanding any other law, a person that, in or affecting interstate or foreign commerce, uses blockchain technology to secure information that the person owns or has the right to use retains the same rights of ownership or use with respect to that information as before the person secured the information using blockchain technology.”

Changes to the existing bill have notable inclusions in the amendment relating specifically to blockchain, making it clear that smart contracts will legally usable for legal documents.

Brookings research shows that in the past two years, a wave of states has started to shift attention to blockchain technology and explore the potential roles of the technology in public and private services.

Recently, Arizona passed a bill that allows residents of the state to use cryptocurrencies in making tax payments. Also, Wyoming passed its own bill through both legislatures early this year which exempts cryptocurrency from state property tax, potentially making it the friendliest state in the US to investors of crypto assets.

 

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