Category Archives: EU

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Draft Proposal from EU Official Proposes ICO Regulations

Initial coin offerings (ICOs) could be receiving acknowledgment toward a legitimized future, according to a draft report on regulations from the European Parliament.

The European Parliament’s Committee on Economic and Monetary Affairs (ECON) has published a draft report that offers insights to new regulatory frameworks for crowdfunding; interestingly, ICOs received a notable mention.

Bullish backing

According to the draft, while the proposed amendments to crowdfunding regulations don’t entirely meet all the requirements to sufficiently regulate ICOs, the report positively writes that “it takes a much-needed step towards imposing standards and protections in place for what is an excellent funding stream for tech start”.

Ashley Fox, an MEP representing the UK who spearheaded the draft, has been somewhat bullish on blockchain since 2016. After a Blockchain Conference and Expo held at the European Parliament, ECON voted against “hasty regulatory steps” due to the lack of understanding what blockchain can do.

Fox was quoted saying, “There is a consensus in the Parliament, that policymakers should be careful not to regulate the technology out of existence.”

His proposals now indicate that a better understanding of the space has been achieved to some degree, and now appropriate inroads towards regulating token sales with a proper legal framework are underway.

Right direction

The proposal offers a solution to the notoriously fraudulent waters of the ICO markets, and also opens up the chance for ICOs to prove their worth. The paper writes, “At present initial coin offerings are operating in an unregulated space and consumers are at risk from fraudulent activity taking place in this market. This Regulation gives the opportunity to ICOs that want to prove their legitimacy to comply with the requirements of this regulation.”

The new rules proposed state that crowdfunding service providers “should be permitted to raise capital through their platforms using certain cryptocurrencies”. Furthermore, the report details that the newly proposed regulation applies only to public sales which raise less than EUR 8 million.

Positive proposal

There is an emphasis on the need for regulation in this space and once this regulation is implemented, it will generate a new level of protection for the crypto-community, which could generate positive world-views of the nascent industry and boost it as a whole.

The draft proposal, however, is not binding nor is it final. Fox acknowledges that there will need to be changes made should the proposal be put into an official motion.

 

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GDPR May Stifle Blockchain Innovation, Finds EU Report

The EU Blockchain Observatory and Forum has released a report warning that the General Data Protection Regulation (GDPR) laws instated by the European Union (EU) earlier this year may prevent effective blockchain innovation taking place.

The Blockchain Innovation in Europe report cites a lack of clarity in the legal framework regarding personal data and blockchain technology as a major issue for entrepreneurs and developers working in the EU. The report states that it “can put a brake on innovation”.

Friction between GDPR and blockchain

One of the crucial issues discussed is the incompatibility with a decentralized blockchain network to erase person data, with GDPR giving citizens the right to have their information erased upon their request. To enforce these right, GDPR requires a central authority to be held accountable, something lacking in the structural nature of a decentralized blockchain network.

Permissionless blockchains can also not be guaranteed to comply with GDPR restrictions that require data to only be transferred to third parties outside of the EU who offer equal data protection regulations.

Thus, applications built on a blockchain are being threatened by unclear laws regulating them.

A need to update GDPR?

The report claims that these conflicts are not addressed because during the time GDPR policies were being constructed, blockchain was not as popular with developers, nor nearly as well known and utilized as it is now. This means that the laws were written with an implicit assumption any database would operate with a centralized authority for processing data.

However, the investigatory review does claim that blockchain could in the future evolve to become key in promoting data sovereignty and the further goals of GDPR. With more research and development, blockchain could theoretically have compliance supported in the code of platforms and applications.

For now though, with hope, the report will influence EU lawmakers to clarify what is required from blockchain developers to prevent the industry from moving out of the union.

 

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Gibraltar Stock Exchange Subsidiary Seeks Regulated Blockchain Exchange

A subsidiary of the Gibraltar Stock Exchange (GSX) is aiming to become one of the first licensed and regulated crypto exchanges operated by an EU stock exchange.

The company, the Gibraltar Blockchain Exchange (GBX), has reportedly introduced 300 retail account holders to its platform as part of its launch. The company has suggested that in order to monitor and develop how to present the best user experience for its future customers, the invited retailers will be asked to offer feedback after the launch.

It plans to serve institutional cryptocurrency investors at start up, with CEO Nick Cowan suggesting that the platform will be “fair, transparent, efficient, and safe”.

Gibraltar aims to lure new and existing fintech companies to its shores, following in the footsteps of other European countries such as Malta and Switzerland, both of which have seen the arrival of major cryptocurrency players like Binance and Bitmain in recent months.

The 2nd Gibraltar International FinTech Forum held earlier this year, with another ‘Gibfin’ forum to follow in September 2018, demonstrates the country’s serious intent when it comes to encouraging fintech companies to do business there.

According to GBX, it has already enacted distributed ledger technology (DLT) legislation to provide a worldwide jurisdiction for crypto companies, suggesting it wants to lead the world in technology regulation. The new legislation states that any firm in Gibraltar using DLT to store and transmit value is regulated in the country by default. Cowan adds:

“The soft launch of the platform will mean that we can continue as effectively as possible toward providing an institutional-grade token sales springboard for utility tokens and top-quality digital asset exchange for the global blockchain and trading communities.”

The company’s aim to become the first licensed and regulated EU stock exchange cryptocurrency platform is in part thanks to recent changes in Gibraltar law earlier this year, as providers of DLT now come under the jurisdiction of the Financial Services Act, implemented by the Financial Services Commission of the British overseas territory.

 

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Norway’s New Online Gambling Monopoly Could Attract Crypto

Norway has presented new gambling regulations to the EU for approval which may affect how cryptocurrency is utilized in this part of the country’s entertainment sector, reports Norske Casino.

The new restrictions have been proposed by the Norwegian government essentially to inhibit other providers operating apart from the country’s two state-run casino chains. The two companies cover all gambling services throughout Norway.

In past years, there has been an influx of several internationally-licensed companies attracting gamblers online in Norway, despite the activity being illegal under the country’s gambling legislation. The new proposed rules will make it illegal for banks and financial institutions to process payments online and offending companies will be asked to report users details to regulatory authorities.

Cryptocurrency has now become a topical point of interest given that new legislation, if passed, requires conventional banking to support online casino services. It is feared by the government that players wanting to use the unlicensed providers can avoid the financial system and bypass their bank accounts by using cryptocurrency wallets for payments and receipt of winnings.

It appears that this is a loophole that will be pursued and utilized by bettors as there is little that authorities can do due to the cost and time consumed in order to find user identities.

Norway’s current regulations regarding cryptocurrency use in the country are fairly flexible, allowing many providers to accept cryptocurrency payments. At present, there is no specific law telling Scandinavian banks how to view cryptocurrency, although there is anti-money laundering legislation already in place.

An official document was recently released by Norway’s central bank (Norge bank) which announced its intent to launch its own cryptocurrency. This is very much in keeping with current trends, showing increasing numbers of central banks looking into the viability of creating national cryptocurrencies.

Norway has become an increasingly cashless society. As far back as 2016, it was reported that as few as 6% of Norwegians even used cash. One bank, DNB, has even stopped using cash as a result.

 

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Europe: Crypto and Blockchain News Roundup, 1st to 7th June 2018

Europe

Welcome to our weekly roundup of all important blockchain and cryptocurrency news from around the world. Follow the latest developments in the cryptocurrency space continent by continent, country by country.

Poland

Government rules crypto exchanges still legal: According to latest reports from Poland, the top financial authority in the country Polish Financial Supervision ‎Authority (KNF) has announced that cryptocurrency exchanges are still legal. 

The move comes after massive media coverage which stated that cryptocurrency trading is going to be banned by the government. The government itself is looking towards adding cryptocurrency regulation in the near future but is yet undecided on the matter.

Russia

Putin rejects possibility of Crypto Ruble: Russian President Vladimir Putin has shot down the possibility of issuing a Russian crypto Ruble according to latest reports.

The President was asked about the matter at the 15th annual Direct Line Speech in which Russian public asks the president questions. While he was supportive of the crypto community and blockchain, he was clear on the fact that Russia won’t be launching a cryptocurrency soon.

Farmers village using local crypto: Russian innovation in blockchain and cryptocurrency is to be noted as farmers in a small village have started their own cryptocurrency according to latest reports.

Mikhail Shlyapnikov, self-proclaimed ‘agro-anarchist’ gave the idea to start his own cryptocurrency the Kolion but was stopped by a court order in 2015. His initial coin offering was started in April 2017 and raised over BTC 401, more than USD 510,000 only at that time.

Kolion has a fixed supply of 1 million tokens and thus is protected from inflation.

Estonia

Wind-powered crypto mining farm started in Estonia: An Estonian government-owned cryptocurrency mining operation drawing energy from a wind farm has started operations off the coast of Estonia in the cold Baltic sea, thus highlighting the massive potential of the area for cryptocurrency mining.

The Salme Wind Farm, as it was named, will provide power worth 6 MWh for mining rigs in Estonia form mining cryptocurrency. While cryptocurrency mining has been an issue worldwide, renewable sources are generally more acceptable for mining purposes.

Switzerland

Bank open for crypto companies: Swiss Bank Hypothekarbank Lenzburg has become the world’s first bank to provide business accounts to cryptocurrency and blockchain companies in the country.

While other banks like Falcon Private Bank based in Zurich have also offered crypto management services, this is the first instance of a bank offering corporate accounts to crypto startups, thus giving a further boost to the country’s crypto space.

European Union

Crypto no greater threat than conventional sources according to EU study: According to latest reports from an EU funded study, cryptocurrencies don’t pose a bigger threat in case of terror financing than traditional fiat currency options do.

The parliamentary think tank gave these findings after months of research related to terror financing in the continent. The report was commissioned by the EU parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs.

Netherlands

Blockchain-based land registry in Netherlands: The Dutch government’s decision to test a blockchain-based land registry system in the country is gaining attention as a testbed for revolution in real estate data management.

The government, according to Coindesk reports, is going to test the system in the near future with complete integration possible within the next 2-3 years.

Belgium

Belgium state website warns against possible crypto scams: Top Belgian markets and finance authority the Belgian Federal Public Service Economy and Financial Services & Market Authority has created a website called ‘Too Good to be True’ to warn investors about possible cryptocurrency scams. 

The website gives sensible warnings on how hackers and scammers are using the popularity of cryptocurrencies to con people out of their life savings.

Germany

Banks offering ATMs capable of converting crypto to fiat: German financial watchdog German Federal Financial Supervisory Authority (BaFin) has given the green light for banks to facilitate cryptocurrency ATMs. Now banks can set up Bitcoin ATMs that will allow people to convert Ether and Bitcoin to Euros, according to Trustnodes.

While banks are interested in this endeavor, no bank is currently giving this option to its customers.

 

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Blockchain Compatibility with GDPR’s ‘Right to be Forgotten’

The EU’s new General Data Protection Regulation (GDPR) policies place an emphasis on the ”right to be forgotten”, meaning that at any time an organization should be able to delete users’ personal data at their request. With immutable, decentralized blockchain technology, the question arises as to how blockchain projects will be able to comply with these principles.

Who is in charge of regulating blockchain data?

Indeed, the foundations of trust in blockchain comes from its immutability, something perhaps inherently contradictory to the new GDPR policies. Public blockchain configurations are decentralized, relying on peer-to-peer (p2p) transactions without any control or authorization. This means that anybody participating can be seen as a controller in the eyes of the law because of the copy on their computer.

While private blockchains make it easier to identify the administrator, it is still far different than the classic scheme considered by GDPR that easily identifies a data controller. So, legal responsibilities are transferred to people orbiting around the blockchain, considered as third services, giving them the responsibility to uphold the regulations.

Each blockchain project must be considered on an individual basis to identify the obligations imposed in regards to respecting data subject’s rights. There is yet to be a consensus in the blockchain community, however, how third services can respect and comply with the right to be forgotten.

Exploring immutability solutions: alternative blockchains

Business and innovation blockchain developers BTL judged a hackathon at the Consensus Conference in New York last month, where developers were challenged to build various applications capable of permanently deleting data on the Interbit blockchain platform.

Interbit differs from public blockchains such as Ethereum and Bitcoin, as it has been purpose-built for business enterprises and meeting GDPR’s requirement of the “right to be forgotten”, hence enabling the permanent removal of information.

BTL even believes that the future of data protection lies in blockchain solutions, arguing “we would go as far as to say that you can only truly meet this (GDPR) requirement with … a blockchain solution…Interbit allows data to be segregated across multiple chains within single applications. Delete a chain, (and the) data is gone, for good.”

The separation of data across several private chains both facilitates GDPR compliance and implements total data privacy that lacks on public blockchains. While Interbit is one just solution now, the industry is sure to follow with many more innovations to come.

 

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EU Terrorist Funding Study: Crypto No Greater Threat Than Traditional Currency, Increased Regulations Required

In a study published Monday, the EU parliamentary think tank has concluded that cryptocurrencies present no more of a threat to terrorist financing than fiat currencies, while improved regulations, industry intelligence, and community relationship building offer the strongest policy actions to combat the threat.

The report was commissioned by the European Parliament’s Policy Department for Citizens’ Rights and Constitutional Affairs, conducted to asses the risks imposed by the rapidly changing, decentralized space of virtual currencies.

Crypto risks no greater than traditional methods

The paper acknowledges that the cryptocurrency space does not represent a more significant threat than the ‘traditional’ forms of terrorist financing. ”In their current form and at current levels of adoption, [virtual currencies] may not present terrorist actors with substantial advantages over other methods of funding and financing they already utilize,” it reads.

In addition to this, the research notes that there are very few publicly-documented, confirmed cases of virtual currencies being used in regards to terrorist funding. With the recently imposed EU GDPR and AML (anti-money laundering) regulations, these risks posed by cryptocurrency usage are only decreased further.

The threat of crypto-funded terrorism

However, the study highlights the borderless, peer-to-peer (p2p) nature of cryptocurrency trading as offering prospective terrorist actors a platform to transfer funds out of the regulated sector, and beyond the purview of counter-terrorist financing authorities. Dependent on the virtual currency being traded, various levels of anonymity and pseudonymity are offered, making it appealing for those looking to conduct illicit activities.

Several incidents are pointed to, demonstrating that both politically and religiously inspired extremist actors have utilized virtual currencies in the past, although in a ”relatively low-volume and unsystematic fashion.” The research suggests that the nature and scale of the threat are difficult to predict, although potential terrorists may be looking to expand the use of cryptocurrencies in their illicit activities.

Potential illegal activities that these actors could utilize are detailed, notably including soliciting donations in crowdfunding campaigns conducted on social media, as well as transmitting funds internationally among members of terrorist networks using P2P value transfers.

Increased regulation required

To target these threats, the study offers a list of EU policy recommendations, including ensuring comprehensive directives are applied. Particularly emphasized is a need to implement regulations that are relevant and adaptable to the rapidly-evolving technologies behind cryptocurrencies in a way that does not stifle their innovation.

A need to address both established cryptocurrencies such as Bitcoin and altcoins differently is noted: ”Regulators should also draft guidance that takes a nuanced approach to characterizing the risks [virtual currencies] pose in different contexts and for different purposes. For example, the illicit finance risks the traceable cryptocurrencies such as Bitcoin present is generally not as significant as that presented by privacy-focused alt-coins.”

Community-driven industry intelligence

Developing law enforcement knowledge and capacity is also focused on as a key point to countering the usage of cryptocurrencies in terrorist financing. Interestingly, the paper places a significance on the positive potential outcomes of reaching out to the established cryptocurrency community in order to better their industry intelligence.

”The public sector cannot develop effective regulation, enhance knowledge and improve intelligence acting alone. Cooperation and interaction with businesses in the VC-industry is essential… Member States should develop dedicated fora for sharing information with local VC industry participants, including sharing of intelligence for operational purposes,” the research notes.

A lack of industry intelligence has been the source of many issues relating to implementing cryptocurrency and blockchain regulations, so an approach such as this suggested may well prove invaluable in assisting authorities to make better-informed decisions.

Reaching out to the cryptocurrency community for their support rather than marginalize their innovations would be hugely beneficial, alongside helping improve what many see as an undeserved bad reputation when it comes to cryptocurrencies and criminal activities.

 

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Small Business Boost from EU Blockchain Committee

Members of a European Parliament committee voted on Wednesday to recommend that small businesses look into blockchain payment systems. The positive news was reported recently by one of the leading crypto news sites.

The EU Commission’s Industry, Research, and Energy Committee specifically suggested non-monetary uses for the technology, specifying data controls and supply chain management in order for a more cost-effective way of making payments in order to democratize the energy market. The commission believes that small businesses could benefit from integrating blockchain technology into small business.

Eval Kaili, committee member believes that DLT is “cutting edge” commenting:

“Today the Industry Committee voted univocally in favor of a forward-looking technology that we expect to change the quality of our life, empower SMEs and improve business models in most industrial sectors … and we aspire to make EU the global leader in the era of the Fourth Industrial Revolution.”

The proposed model covers blockchain use in many areas:

Monitoring

Monitoring the origin of goods, offering greater certainty that, e.g., diamonds are ethically sourced, clothes are not made in sweatshops and a bottle of champagne comes from Champagne,

Democratizing

Enabling households that produce energy to exchange and consume it without the need to pay an intermediary agency, and

Recording

Creating records such as land registries, birth certificates, and business licenses, with less dependence upon lawyers, notaries and government officials.

“Citizens could use blockchains to gain full control of their own data and decide what to share, and small firms and innovative start-ups could use them to cut intermediation costs and ensure that transactions are executed efficiently the committee,” a European Sting report says.

The press release suggests that the committee called on the  EU commission to start a regulatory process for various blockchain scenarios which could be deemed “ innovation-friendly and technology neutral,” and request more funding for projects from the EU.

Kaili attended the NY Blockchain Week Consensus Conference last week and commented there that the EU was in favor of Blockchain, but that education was a major issue regarding the new technology, joking that, “we don’t have too many scientists within the European Parliament”

She calls for “harmonization, sandboxes, and regulation,” over the next few years to progress the technology towards mainstream recognition.

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New KYC Regulations in EU Validate Crypto Trading

In an effort to prevent financial transgressions, the European Union now requires cryptocurrency exchanges to apply know-your-customer (KYC) policies, similar to that required by traditional banks in a move beneficial to the legitimacy of cryptocurrency trading.

Crypto crime prevention

The anonymity surrounding cryptocurrency trading is viewed by many as an enabler of fraudulent activities, money laundering, and terrorist financing. As reported by Reuters, increasing the transparency required by exchange platforms is valuable in countering any negative perceptions around the usage of cryptocurrencies.

With all investors in the industry now required to provide proof of identity when joining exchange platforms in the EU, this will make it significantly easier for law enforcement to trace any cryptocurrency users involved with illicit activities. It also increases the difficulty for potential hackers to access online wallets or exchanges.

The regulation from EU legislators should not be interpreted as a condemnation of cryptocurrencies; on the contrary, it is a move to legitimize and regulate the market for the benefit of investors, and the economy.

Not all those in the crypto sphere are a fan of KYC barriers though, as it goes against the concept of anonymity, the philosophical foundation behind blockchain technology. With incognito transactions being conducted, however, there always runs the risk of fraudulent activity, despite less than 1% of Bitcoin transactions to exchanges found to be guilty of this.

Pursuing blockchain

The EU signed a Declaration on the Establishment of a European Blockchain Partnership on April 10, with the aim of establishing the continent as an international leader in blockchain technology. As reported by Bitcoinist, the partnership claims to be a ”vehicle for cooperation amongst Member States to exchange experience and expertise in technical and regulatory fields”.

The regulatory move from the EU follows the continued pursuit of anti-money laundering and terrorist financing policies targetting many areas of finance and traditional banking, not merely restricted to cryptocurrencies.

 

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European Commission to Use Blockchain to Curtail Fake News

According to a recently published press release by the European Commission (EC) on 26 April, the European Union (EU) executive plans to employ distributed ledger technology (DLT) to fight so-called “fake news”, the transmission of false information online.

The EC’s first step will be to introduce a plan as part of what will become the “Code of Practice on Disinformation”, an EU-wide program scheduled for publication by July 2018.

The commission says blockchain applications can help provide transparency, reliability, and traceability of news on the internet. It also added that DLT can be combined with other identification processes:

“Innovative technologies, such as blockchain, can help preserve the integrity of content, validate the reliability of information and/or its sources, enable transparency and traceability, and promote trust in news displayed on the Internet.”

The press release is a response the commission’s recent High-Level Expert report which revealed a need for more transparency online in order to fight the current surge of internet disinformation.

Earlier this year the EC announced the signing of a declaration to create a European Blockchain Partnership Initiative made of up 22 countries including Germany, France, and the UK.

A significant project is also underway is in the field of healthcare. The EU’s My Health My Data (MHMD) project “aims to use blockchain technology to enable medical data to be stored and transmitted safely and effectively”.

The latest plan to embrace blockchain technology to combat fake news can be seen as part of a larger plan to integrate fintech into the inner workings of EU administration. Vice president of the EC Andrus Ansip made a speech earlier this month urging EU governments to invest in blockchain technology both “politically and financially” as it emerges “out of the lab” and goes mainstream.

Blockchain development forms part of the EU’s research funding body Horizon 2020 Work Programme, and is considered by the EC as “the biggest EU research and innovation funding programme ever”. It is investing nearly EUR 80 billion of funding over seven years and promises “breakthroughs, discoveries, and world-firsts, by taking great ideas from the lab to the market”.

image source: https://pixabay.com/en/fake-fake-news-media-laptop-1903774/ – pixel 203

 

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