Category Archives: digital currency

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Low Pass Rate in Malta’s Crypto Exam Hinders Government’s Blockchain Aspirations

Malta’s Financial Services Authority’s (MFSA) cryptocurrency exam for financial practitioners has returned some unexpected results with a disappointing 39% pass rate.

The questions set by the MFSA were in accordance with Malta’s latest legislation, the Virtual Financial Assets Act (VFA), which requires financial practitioners wishing to move into cryptocurrency to gain agent certification through a pass in the new exam.

Clearly, the government hadn’t expected such poor results, particularly given late changes to questions to make them more manageable for examinees. This now means that 61% are unable to make the move from careers such as accountancy, auditing, and law. The 250 candidates sat a multiple-choice paper which was simplified towards the end when examiners noticed that the responses were going to result in a poor pass rate, but despite this, only 39% managed to get through the paper successfully with a pass-grade.

The new legislation is part of Malta’s drive to becoming Europe’s hub for cryptocurrency and blockchain. The exam was intended as a first move towards ensuring companies offering ICOs or portfolio management services in the future would have someone on staff who had a high degree of crypto competence with certified credentials.

Malta’s Digital Parliamentary Secretary Silvio Schembri would be dismayed by the outcome of this first set of accreditation examinees, particularly given the sentiments of a recent speech at this year’s Delta Summit 2018 Blockchain Conference:

“Malta will be the epicenter of the Blockchain industry. I invite stakeholders, operators within this space, investors, entrepreneurs, and innovators to be part of yet another exciting chapter for Malta and be part of the Blockchain Island.”

Having adequate skilled personnel will be an integral part of the country’s drive to raise its fintech profile. Schembri will hope that the recent EUR 300,000 blockchain scholarship partnership forged between the University of Malta and the Malta Information Technology Agency (MITA) will be a more successful training programme for young aspirants transitioning from ICT, law, finance, and engineering.

Split over three years and starting this academic year, students can apply for the scholarship and start blockchain and DLT-related Masters and Ph.D. research dissertations. Of the courses, Schembri, said, “These companies need technical resources both to build and to operate by use of this technology, as well as experts in financial services, law, and managerial roles.”

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Catalonia Independence-Fund Donations Now Exceed 80,000 Bitcoin

The support fund started after exiled Catalonia leader Carles Puigdemnot’s plea for financial support this year is reportedly gaining some ground.

According to Spanish news outlet El Confidencial, officials have now reportedly collected 80,000 BTC in support of exiled politicians. Current claims suggest donations of 81,000 BTC, although the exact number is difficult to confirm.

Catalan politicians who incited a break away from Spain last year and used public funds to organize an independence referendum which the Spanish courts had declared unconstitutional are either now in exile or in prison. The fund was organized by Carles Puigdemont who is currently living in exile in Belgium. Once the former Mayor of Girona, Puigdemont served as the President of the Government of Catalonia from January 2016 to October 2017.

The donated funds are to go towards legal support for those politicians who fled after the Spanish government decided to act against the renegade Catalonians last October.  Funds will also be used towards the security of some of the exiled politicians and activists involved in last year’s push for Catalonian independence.

The fundraising website was registered in the Caribbean state of Saint Kitts and Nevis by the co-founder of torrent tracker Piratebay, Peter Sunde. The Bitcoin wallet address for fund donations, posted on Reddit, shows transfers of more than 81,300 BTC, but as of October 19, the balance was 51.176 BTC. However, El Confidencial noted how “no report on the management of the funds has been presented” in over six months. It also said there has been no word about who is on the independent council.

Meanwhile, Spain has hit a wall in terms of its own crypto/blockchain aspirations following the ousting of Prime Minister Rajoy back in June and replacement by Socialist chief Pedro Sanchez as a result of a no-confidence vote following corruption charges aimed at the ex PM’s center-right People’s Party.

The Sanchez-led no-confidence vote may delay the current pro-crypto legislation, which had been scheduled to go to a vote by 7 July after public consultation on 7 June. New elections could delay legislation for more than six months.

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Crypto Faces Global AML Regulations by June 2019, Says Watchdog

The international watchdog focused on anti-money laundering (AML) regulations has said it plans to institute a global framework for cryptocurrency beginning in June next year.

As Reuters reports, the Paris-based Financial Action Task Force (FATF) has taken a significant step forward in the process of regulating the famously unregulated market of digital currencies with its announcement this week.

FATF detailed plans to begin publishing rules that would set a standard for all cryptocurrency transactions, noting that global jurisdictions would be required to enforce certain licensing schemes or compliance checks on exchanges, financial service providers for initial coin offerings (ICO), and potentially digital currency wallet providers.

Marshall Billingslea, FATF’s president, was responsible for setting the early summer date for action next year following discussions this week between officials from 204 global jurisdictions.

The upcoming regulations come with a warning: any non-compliant countries will be put on FATF’s blacklist, meaning they will suffer from restricted access to the global financial system.

A statement released by the watchdog on Friday reads: “there is an urgent need for all countries to take coordinated action to prevent the use of virtual assets for crime and terrorism.”

A lack of global cooperation on cryptocurrency regulations until now has led to entirely different approaches being adopted by national governments, bringing uncertainty to crypto firms looking to expand their operations.

Countries have failed to agree on how best to manage the price volatility of the cryptocurrency market, and have been skeptical of wallets’ and exchanges’ inability to protect peoples’ investments on their platforms from hacks and ensuing theft.

During the G20 Summit earlier this year, leaders expressed a desire to expand existing international AML onto the cryptocurrency industry.

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Japanese Committee Fights to Simplify Crypto Tax

One Japanese political committee has taken it upon itself to fight for a simplified cryptocurrency tax plan.

The Government Taxation Investigation Committee (GTIC), which serves as an advisory body to the Prime Minister, began discussions on Wednesday to propose a simplified cryptocurrency tax payment plan, which they say is currently unnecessarily complex in Japan.

The committee argues that because there are many kinds of cryptocurrency profits that require taxation alongside capital gains. Taxpayers are failing to declare the correct total in their tax returns as the process is simply too complex.

The profit obtained by selling cryptocurrency is currently accounted for as miscellaneous income, with crypto earnings over JPY 200,000 (USD 1,783) subject to income tax.

However, cryptocurrency is taxed not only on the gains from the disparity between the acquisition price and the selling price but also on the profit obtained by its exchange with other virtual currency or conversion to fiat. Even if a product is purchased using the digital currency which then accrues an unexpected financial appreciation, it remains subject to taxation.

Another issue arises as the method of storing the transaction history data necessary for the profit calculation is different with each cryptocurrency exchange company, meaning it is particularly challenging for Japanese taxpayers to configure the correct totals.

Offering a solution

GTIC says that a whole new system is required that can accurately reflect the income and profit in an accessible way.

Local news outlet Sankei reports that officials from GTIC shared in a press conference: “Since it is necessary to take into consideration the framework other than the taxation system and business practices as well, we will hold a small expert meeting and outside opinions. I will deepen the discussion while listening. ”

The future system would be required to “grasp the asset price appropriately.”

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Gates Foundation Promotes Financial Inclusion With New Ripple Partnership

The Bill & Melinda Gates Foundation has announced a partnership with Ripple and Coil in an attempt to further financial inclusion amongst societies’ “poorest”

The Foundation’s partnership will help to further develop Mojaloop, an open source network for creating payment platforms, previously released a year ago in October 2017. The Gates Foundation’s “Financial Services for the Poor” programme prioritizes “aims to expand the availability of affordable and reliable financial services that serve the needs of all, including the poorest.” A foundation statement clarifies its aims as:

“…helping to drive the development of digital payment systems that can help spread use of digital financial services quickly, advancing gender equality to ensure women share in the benefits of financial inclusion and supporting the development of national and regional strategies that accelerate progress for the poor and provide exemplary models.”

We are partnering w/ @ripple and @coil to implement the #Interledger Protocol & explore ways #Mojaloop can support pro-poor payment systems. #githubuniverse

— Miller Abel (@MillerAbel_) October 17, 2018

Mojaloop was built in collaboration with Ripple and four other FinTech partners, Dwolla, Software Group, ModusBox, and Crosslake Technologies, and is designed to support different kinds of providers to link up their services and offer low-cost financial services in new markets.

Coil came on board very quickly giving their support to the foundation’s latest project.

Proud to confirm that we are working on https://t.co/tbV0COdx3T with the @gatesfoundation – Technologies like @Interledger and #micropayments aren’t just for media. They also increase #financialaccess and we want to do our part. https://t.co/LUjJo57OgY

— Coil (@Coil) October 18, 2018

According to the foundation, such “pro-poor payment systems” need clear attributes as they need to be able to reach the poorest neighbourhoods and be easily understood. Also, users’ money needs to be safe from cybercrime and readily available. Another important factor is that delivery needs to be free and there must be evident advantages over using cash. Mojaloops documentation regarding the Ripple invented Interledger Protocol (ILP) states that it is:

“…a suite of protocol definitions and reference implementations that define a standard way to connect any number of disparate payment systems together into one interconnected network”

In simple terms, such a system can lower costs of financial services and open up payment infrastructures to companies outside of traditional banking, hence advancing the inclusion of those who are on the fringes of banking due to financial insecurity.

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Bermuda Launches First ICO as Premier Leads From the Front

Bermuda is increasing its cryptocurrency profile, having approved certification for the island’s first Initial Coin Offering (ICO).

Minister of National Security Wayne Gaines announced that fintech company Uulala was to be the island’s first, under the government’s new legislation designed to regulate cryptocurrency and blockchain ventures.

The new legislation put into effect by the Premier and Minister of Finance of Bermuda David Burt now requires companies issuing ICOs to register details regarding all participants, the project itself, target audience and proposed funds targeted for ensuring its success, along with further technical details.

Also, recent 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 with banking services, referring to legal and regulatory barriers as justification for this, prompting Premier Burt to introduce these changes in support of economic growth.

Bermuda’s Minister of National Security, Wayne Caines believes that the industry needed well-rounded regulation before it could flourish. He maintained that the BMA had 20 companies in London waiting to do business, commenting that “it’s actually phenomenal”.

Caribbean governments and businesses are showing increasing interest in currencies like Bitcoin. In recent years, due to slow growth and high debt rates, major US banks have become more reticent about doing business in the region, frequently withdrawing capital from Caribbean markets. This has created a deficit of banking services inciting local banks to engage in illegal activities such as facilitating money laundering.

The sluggish economy and the tourist industry on which it mostly survives needs a boost, and Bitcoin is proposed by some as a way of energizing it. The Caribbean Tourism Organization plans to introduce cryptocurrency payments for tourist services and integrate Caribbean economies in the region through the use of virtual currencies.

“Tourism is the largest single contributor to the Caribbean economy. It is absolutely critical to every single Caribbean nation’s well-being and development. We see this as a very natural and necessary association,” said Rawdon Adams, CEO of blockchain payment startup Bitt.

The Bermuda Royal Gazette suggests that Uulala is targeting unbanked and underbanked Bermudans, and in doing so aims to provide far more financial inclusion in the banking sector. CEO Oscar Garcia has a $50 million target for its ICO, with $10 million already raised privately, although the firm had to wait four months for its operating licence. He commented:

“Bermuda is known as a financial hub and it is very forward thinking on blockchain and fintech… They have a reputation of being excellent regulatory stewards and we thought that would be a better fit for us than a jurisdiction where we could say we’re good, they’d believe us and give us approval in three weeks.”

In order to promote a blockchain friendly environment, the premier has also signed a memorandum of understanding (MoUs) with blockchain and industry players on the island in a push for creating related employment.

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Hardware Wallet Sales Booming as Nano S Tops 1.3 Million Units

French crypto hardware manufacturer Ledger has now sold over 1.3 million units of its Nano S wallets, according to a recent blog on their website.

The peak sales come at a time when the demand for such devices is on an all-time high. The changing trend is quite evident by the sales numbers of Ledger Nano S as well as its rival Trezor’s recently launched Model T which has interested buyers in a long waitlist. Also, the Nano S is now available over the counter as a dutyfree item at Amsterdam’s Schiphol International Airport, such is its popularity, particularly amongst travellers.

Such wallets, promoted as being unhackable and therefore the safer way of storing coins and conducting transactions, gained some critics earlier this year when Bitfi, with a new wallet on the market, challenged anyone to hack the device.  15-year-old Saleem Rashid took on the task successfully, which resulted in BitFi withdrawing its guarantee.

CEO Eric Larchevêque claims that Ledger is planning updates to tighten the security of the hot-selling nano with “a chip designed specifically to resist highly skilled attackers and a custom OS designed specifically to protect crypto assets.”

Ledger has a clear run in the market with Trezor the only other major competitor in the sector to date. Trezor had reputed sales of 800,000 units some months ago, but this wasn’t confirmed by the company. There are others on the market, but as yet they have presented no challenge to the top two hard-wallet leaders.

Although advertised as a reliable storage option, these wallets have incurred problems in the past and Ledger has had its own issues, resulting in a temporary shut down of its Ethereum (ETH) and Ethereum Classic (ETC) infrastructures in August. The resulting outcome was that Ledger announced that there had been no hack, but a glitch that occurred due to a “side effect when [it] pushed an update to invite users to use the Ledger Live instead of the Chrome app.” A refund of any funds lost was offered to users.

The market is booming despite the occasional unit glitch, due to investors’ needs for a portable, safe way of storing their crypto with an easy recovery option, should units be lost or damaged; attributes which most of these units on the market provide.

Ledger also announced recently that it will be expanding its business into cryptocurrency custodianship, and is planning another major investment round that has already sparked interest from Google, Siemens, and Samsung, which may bring their valuation up to USD 1 billion.

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LocalBitcoins Takes off in Argentina and Venezuela as Inflation Rockets

October 2018 has seen record Bitcoin trading volumes on peer-to-peer platform LocalBitcoins in Argentina and Venezuela.

Given the economic crisis in both of these South American countries, BTC has fast become a financial refuge for many nationals, with the governments of both Mauricio Macri and Nicolás Maduro struggling to save their economies from going under from highly unsustainable inflationary situations.

Such is Bitcoin’s current impact on both of these nations at present, blockchain voting project Democracy Earth developer Santiago Siri, has suggested that the Argentinian Central Bank should place up to one percent of its national reserves in Bitcoin.  BTC has become a veritable safe haven with ATMs now becoming widespread to cater for demand, and significantly more merchants across the country accepting Bitcoin as payment

Argentina, which is now on the IMF help list of struggling economies needing financial aid, has seen LocalBitcoins recently post a record trading volume of almost $9 million BTC on its platform as the peso continues its nosedive against the US dollar.  Since April, the number of bitcoins transacted using LocalBitcoins increased from 13 to 33, 153% in just a few months.

The inflation rate in Venezuela under Maduro is almost impossible to keep up with, such is its persistent decline. The Petro, brought in as a panacea to trade embargoes and sanctions and a plummeting bolivar, is still heralded by Maduro’s government, but referred to by many others as simply non-existent, despite shop fronts sporting “we accept Petro” signs.

The IMF is now predicting an inflation rate of 10 million percent by 2019, which would put the country in the same league as Germany in 1923 before the rise of Nation Socialism and Hitler’s rise to power in the 1930s. Germans at this time shopped with wheelbarrows filled with Deutschmarks. Maduro’s citizens have been making their own shopping bags out of bolivars in order to transport larger denominations of the same currency.

In this climate, Bitcoin has become the only safe currency, albeit secured largely underground with overseas dollars, and has seen accelerated activity in past weeks due to the government’s switch from the Bolivar Fuerte (VEF) to the Sovereign Bolivar (VES). P2P trading on LocalBitcoins has skyrocketed as a result, with total BTC trading volume for October 2018 standing at almost 900 million bolivars (approximately $14.4 million).

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Alumni College Donations in Crypto Have Their Own Problems

Colleges and Universities around the world have experienced an increase in the amount of alumni donations being made in cryptocurrency.

Most, if not all, donations appear to be made by alumni wanting to share their good fortune in their digital currency investments. Last year was a fantastic year for crypto, as investors either seasoned or totally new to the concept of digital currencies and Bitcoin, made their fortunes very quickly.

It appears that many of these educational institutions were reluctant to take these, not so hard-earned, donations and some needed convincing.  Nicolas Cary, the co-founder of wallet creation website Blockchain, says his donation of 14.5 Bitcoin to his old alma mater, the University of Puget Sound in Washington State, was hard fought:

“I had to do a little bit of convincing for them to accept it. They wanted to dig in about how it works and what the process would be. We had a lot of conversations.’’

The problem appears to be that many colleges in the US simply don’t have a process for receiving such donations. This is particularly baffling as the cryptocurrency industry is young in both its own existence and the average age of its adherents, which in turn increases the likelihood of the alumni making donations using alternatives to the dollar.

Even Ivy League colleges such as Yale and Harvard who have recently announced crypto investment funds claim it becomes much more challenging in terms of creating a process for alumni donations. Harvard as yet hasn’t received a crypto donation, although Yale would like to do but hasn’t yet established a method of implementation.

Harvard University, the Massachusetts Institute of Technology (MIT), Stanford University, Dartmouth College, and the University of North Carolina (UNC), have all made investments from their endowments into at least one crypto fund.

Some of the reasons for the reticence up to this point can be put down to media hype; being associated with some of the bad press that occasionally sticks to crypto and other factors such as some of these currencies’ past volatility. Add to this, dealing with the IRS, and the donations can seem less attractive than those made in hard cash. However, with the recent crypto fund adoptions by some of America’s most respected educational institutions, this is likely to change.

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Blockchain for Fair Distribution of Housing, Kenya’s Promise in the Aftermath of Large-scale Corruption

Turning to blockchain in attempts to fight corruption, Kenya has stated that it has faith in emerging technologies to tackle the issues of theft and misuse of public funds.

The Kenyan government’s new housing project, in which it has plans to publicly fund the building of 500,000 living units raises sceptical eyebrows amongst the population, with good reason.

The figures that illustrate the degree of corruption at governmental level make sorry reading, with public departments taking bribes at an alarming rate. A recent Ethics and Anti-Corruption Commission (EACC) report published this month, indicated that the numbers of those paying bribes to receive a range of government services have risen to 62% from 46% over a period of two years.

The recipients of bribes from the public include local elders with 17% of respondents to a recent survey saying that they have been forced to pay bribes to community heads. The police were high on the list at 16%, and other services and departments taking bribes included the Registrar of Persons, the County Health Department and the National Ministry of Land.

The new housing sector comes with its own set of problems though, and also a history of corruption following a National Youth Service scandal, in which 40 civil servants and 14 private sector officials were arrested for the theft of $78 million from the project’s funds. However, the Government is now planning to put a halt to the rising figures of corruption and misappropriation of funds lost to such projects by employing blockchain in its latest move.

The Kenyan Distributed Ledgers and Artificial Intelligence Task Force was established earlier this year to focus on blockchain and how the technology could be utilized to improve outcomes in the public sector. The group included local blockchain startups, experts, researchers and members of Kenyan regulatory bodies.

Speaking at a recent meeting on affordable housing with the World Bank in Nairobi, Housing and Urban Development Principal Secretary, Charles Hinga, said, “Kenya will use blockchain technology to ensure the rightful owners live in government-funded housing projects.”

The National Housing Fund under the Finance Act of 2018, to which Kenyans contribute 1.5 percent of their salary, will be responsible for the new blockchain-backed building project, with further financial support from employers.

In June, decentralized liquidity network Bancor, in partnership with the non-profit foundation, Grassroots Economics, launched a network of blockchain-based community currencies in Kenya aimed at combating poverty. The project seeks to stimulate local and regional commerce and peer-to-peer activity by enabling Kenyan communities to create and manage their own digital tokens.

Recently, Kenyan Distributed Ledgers and Artificial Intelligence task force chairman Bitange Ndemo said that the government should consider tokenizing the economy to deal with “increasing” rates of corruption and uncertainties.

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