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“Blockchain for Europe” Formed with Ripple as 1 of 4 Founders

“Blockchain for Europe” Formed with Ripple as 1 of 4 Founders

The formation of a “Blockchain for Europe” association has been revealed by a press release which names Ripple, NEM, EMURGO/Cardano and Fetch.AI as the founding members.

Representation

Published on UK-based technology and finance news website Finextra on 5 Dec, the press release describes that association as “the first credible attempt” to establish a “unified voice” for the European blockchain industry. It argues that policy debates are “fragmented – with inconsistent information from those outside the blockchain sector challenging consensus within it”.

As such, the four members of Blockchain for Europe are taking it upon themselves to educate EU and member-state institutions on the “true nature and potential of distributed ledger (DLT) and blockchain technology”. Like many of the associations before it, Blockchain for Europe echoes concerns with regards to regulations and desires to establish ones that promotes innovation in the region.

Associations in action

There are some merits to the existence of so-called associations as they can often be catalysts for positive change, which is done by pushing pro-blockchain agendas for multiple facets of the industry. They can also function as a means to signal how invested a particular part of the world is in the technology whilst providing direct support for startups and educating bureaucrats and lawmakers.

For example, Mexico recently established its first blockchain consortium that wishes to make uses of the technology safer, reduce crime-related uses of the tech, provide public education and so on. Additionally, the Korean Blockchain Association strives to bring the legalization of domestic initial coin offerings (ICOs) to fruition, a topic that is of great concern to industry heads and the government over fears of startups seeking ICO-friendly jurisdictions.

For Europe

The association is ambitiously setting out to “shape the global agenda on blockchain”. Having already hosted the Blockchain for Europe Summit in November, where international stakeholders discussed healthcare, transport, trade, tokens, cryptocurrencies and more, the association is prepping to make 2019 and formative one.

Commenting in the press release, Dan Morgan, Ripple’s European Head of Regulatory Relations said: “This is a critical time for policymakers in Europe as they seek to develop the right regulatory framework to capture the benefits of both digital assets and blockchain technology.”

Unlike some governing entities around the world, Blockchain for Europe may not be coming up against egregious skepticism. Generally speaking, the EU has positioned itself as a cautious yet optimistic advocate of blockchain technologies. An October meeting in Strasbourg, France, saw Members of the European Parliament (MEPs) debate on how to create “legal certainty” for blockchain, and furthermore, enthusiastically discuss the potential of blockchain.

Additionally, the vice president of the European Commission famously stated that “crypto-assets are here to stay”, offering a positive outlook to startups and enterprises that are venturing into the cryptocurrency and ICO sector of the blockchain industry.

Also offering his thoughts, Manmeet Singh, CIO at EMURGO said: “…we are very keen to work with the European institutions in crafting the rules and regulations which will enable blockchain technology to thrive globally.”

 

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Luxembourg University and VNX Exchange Collaborate On Crypto Security

Luxembourg-based VNX Exchange and the University of Luxembourg have combined efforts to improve the security of digital assets in a collaborative project.

VNX is a marketplace and trading platform for tokenized ventures, and a member of Luxembourg House of Financial Technology (LHoFT), Infrachain and APSI (L’Association des Professionnels de la Société de l’Information).

The university’s role in the project will be to develop greater security for digital assets and design new IT frameworks to improve exchange security. Researchers at the University’s Interdisciplinary Centre for Security, Reliability, and Trust (SnT) will be working on a solution to ensure that contracts that control individual transactions are vulnerability free.

Network Security expert at the University Dr. Radu State has noted that several issues need to be addressed regarding the current systems offering tokens. VNX founder and CEO Alexander Tkachenko has agreed that the exchange will need to adjust and improve in order to meet market standards by examining its investor protection facilities, commenting:

“In creating a secure and regulatory compliant marketplace for the transparent trading of tokens representing digital assets we aimed to introduce modern security mechanisms that could totally secure our platform and could impact the global cybersecurity market.”

Tkachenko said he was convinced that “blockchain technology is the next big step in the financial sector’s evolution.”

Tiny landlocked Luxembourg has an important role in the EU as the seat of the European Court of Justice, the highest judicial authority in the European Community. Luxembourg is continuing to position itself as a blockchain hub in the region; surrounded by France, Germany, and Belgium. It is still in the throes of expanding its development in the sector. In comments made last year by Xavier Bettel, Luxembourg’s Prime Minister and Minister of Telecommunication stated:

“The state is fulfilling its role as a kickstarter and a coordinator while leaving technological and commercial choices to the industry,” whilst facilitating projects which create “meaningful projects in cutting-edge technology.”

 

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Italy Flexes Regulatory Muscle with Non-Compliant Crypto Exchanges

Italian regulators, the Commissione Nazionale per le Società e la Borsa (CONSOB), is tightening its grip on cryptocurrency firms who don’t comply with the commission’s regulations.

Three companies have been cited in a CONSOB statement as receiving suspensions from operating their services, two companies receiving three-month suspensions and one banned from operating for an indefinite period spanning months.

Richmond Investing was the first to come under the regulator’s microscope, principally for failing to meet Italian laws regarding the operation of cryptocurrency online trading platforms. Richmond failed to register to as a mediator offering finance-related services contravening the principal Consolidated Law on Finance (TUF).

Another company, Crypton Limited, was penalized for contravening another law applying to cryptocurrency trading, accused of making inappropriate promotions and advertisements. Crypton was hit with a 3-month operating suspension, as was Eagle Bit Trade for apparently offering wildcat trading packages to Italian investors.

Cease and desist actions are not uncommon as a global repositioning is underway regarding cryptocurrency regulation with most countries now re-examining how they plan to regulate the space for both the protection of the public. Also, there is a growing need to offer greater clarity to exchanges and fintech companies regarding operating protocols across jurisdictions.

Italy is also in this position as it continues to work towards establishing a formal framework for cryptocurrency exchanges to work within, including, like many other nations, addressing digital currency tax laws as they apply to the public.

Italy recently announced that it was about to enter the European Blockchain Partnership, an organization formed to promote blockchain technology between member states.

In doing so, Italy became the 27th nation to sign the agreement since its conception earlier this year in April. The partnership has grown from 22 nations since its launch. Initially, the EU had launched an EU Blockchain Observatory and Forum, subsequently investing more than EUR 80 million in blockchain projects. A further EUR 300 million has been allocated over the next four years.

 

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Estonia’s Own Private Bull Run Boasts 900 Crypto Firms in Less Than a Year

Bitcoin News has been following Estonia’s cryptocurrency march with some interest this year, and with over 900 licenses granted within the first year of the regulator’s initial registration ruling in that country, there seems to be no stopping its enthusiasm for the enterprise.

Estonia was one of the first jurisdictions in the EU to legislate cryptocurrencies and many companies are now doing business there. The Baltic region is fast becoming a northern crypto-paradise with Lithuania, Latvia, and Estonia all experiencing a recent economic boom. This has made Estonia a breeding ground for new startups.

Even its neighbor Latvia, though behind Estonia in cryptocurrency adoption, is beginning to make real inroads into developing a positive input to the industry. In March 2018, Latvia hosted an international discussion between industry experts on the future of fintech in the Baltics and the overall EU, which featured the vice-president of the European Commission Valdis Dombrovskis as keynote speaker.

But it’s Estonia breaking the records at present due to a progressive approach to cryptocurrency, despite the country abandoning its plans to introduce its own cryptocurrency after being warned by President of the European Central Bank Mario Draghi earlier this year.

500 licenses have been issued to date with over 400 wallet providers also being issued permission to operate. It appears that obtaining a license to operate a platform in Estonia is relatively simple according to Nikolay Demchuk from the law firm Njord which works in the sector. As Estonia operates under EU rules, the main emphasis on obtaining accreditation is complying with local and EU rules. Businesses applying also need to prove that they can operate with adequate KYC and AML protection.

Approval only takes about two weeks and are issued by the local regulator, the Estonian Financial Intelligence Unit (FIU), but companies must begin operating within six months of receiving their licenses under the pressure of losing them.

The biggest drawback in Estonia concerns banking as there is still a reluctance among the country’s banking community to provide services to cryptocurrency exchanges. However, the e-residency program, introduced in 2014, allows non-Estonians access to Estonian services such as company formation, banking, payment processing, and taxation. The program also allows anyone in the world to apply for a digital ID card and gain access to Estonian e-services when planning to start a company in the country.

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UK Exchange Jumps the Gun On German Crypto Regulator

The German Federal Financial Supervisory Authority (BaFin) has closed down the operations of UK cryptocurrency exchange Finatex Ltd.

It appears that the UK firm was ordered to “cease cross-border proprietary trading immediately,” for slipping under Germany’s regulatory wire, having not received the necessary authorization to operate cross-border exchange transactions from BaFin. The UK company which was launched in Leeds, Yorkshire in 2016 has announced it plans to dissolve the company this week as a result.

This is not the first time that BaFin has stepped in to flex its regulatory muscles in recent months over the question of cryptocurrency exchanges’ rights to operate. The last attempt to prosecute a company trading Bitcoin operating without a license was, however, unsuccessful after The Berlin Court of Appeal overturned the case.

Inconsistencies in the way cryptocurrency firms can operate cross-border transactions in Europe have caused some concern recently, and the German case once again brought these to the notice of European financial regulators. Although individual EU countries have clearly defined rules in their own jurisdictions for the trading of Bitcoin and other digital currencies, the EU as a whole has so far failed to come together with a Europe-wide regulatory framework. The EU passed a motion in 2016 enabling taxation of cryptocurrency holdings, investments, and profits.

Now that the Berlin Court of Appeals has classified Bitcoin as a “financial instrument” it now comes under the auspices of BaFin’s financial regulatory practices. Its CEO Felix Hufeld only last month told investors that they should avoid ICOs due to scamming concerns. He argued:

“We do not want to stifle innovation, but must avert dangers at the same time. For example, it is important for us to take action against money laundering and safeguard the privacy rights of investors. In addition, there should be certain minimum standards for the underlying terms of the contract.”

Earlier this year, the German Federal Government stated that cryptocurrencies do not pose a threat to financial stability. The government stated on 12 June that the volume of cryptocurrencies, when juxtaposed to the overall size of the German financial system, is comparatively low and, therefore, simply needs careful monitoring and regulatory measures put in place in order to control the space.

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UK Crypto to Flourish Despite Brexit Fears, Say Experts

Experts in the UK have indicated that Brexit augurs well for cryptocurrency regardless of concerns about the direction of Britain’s economy after March 2019.

UK Chancellor Philip Hammond’s August forecast that the UK could see an 87.7 percent hit to GDP and a £80 billion black hole in public finances in a no-deal scenario holds no concern for many cryptocurrency experts.

Mike Romanov, chief executive of Digital Securities Exchange (DSX) sees Brexit as a further way of the UK establishing its own rules for cryptocurrency trading which will push the sector forward, arguing that, “Britain is already looking at how it can maintain its dominance in financial services post Brexit, even as some major players abandon ship ahead of March next year.”

This is not only a positive outcome for conventional financial markets according to Romanov, but the UK taking back rulemaking could have a significant impact on the trading of digital currency. He suggests:

“As such, crypto could present a big opportunity. While the EU looks to apply regulation at an EU level, taking it out of the control of member states, Britain could be free to apply its own rules and shape itself to become a well-regulated and crypto friendly market that looks to nurture the future of this financial movement rather than eye it with an air of suspicion and cynicism.”

Cryptology’s chief commercial officer Herbert Sim also feels that bureaucracy will take a dent when Britain pulls out and that this has to be a good thing for crypto movement in the financial environment. He suggests that “…leaving the EU will give the UK decision-making capabilities on areas that the EU’s bureaucratic processes can be desperately slow to decide on.” The opening of foreign crypto markets outside of Europe will positively impact the status quo, Sim suggests. Another CEO, Iqbal Gandham from eToro, claims that any volatility from Brexit will be short-lived:

“We are already seeing crypto assets used as an alternative in less stable economies, and Brexit could spark a new wave of investment from people looking to diversify their portfolios and hedge against geopolitical risk.”

However, all these positivity comes with a warning according to Romanov who comments that Britain needs to maintain its competitive edge, “What can’t happen is for Britain to become scared of its own financial shadow and water down the investment it’s made into new technologies, all in a bid to placate the traditional financial services world.”

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EU Watchdog Looks to ICOs to Formulate Appropriate Regulation

The European Union’s securities watchdog has a new initiative to develop suitable regulations for initial coin offerings (ICOs) and it requires investigating every single ICO.

The European Securities and Markets Authority (ESMA) looks to be following the lead of the US on this front, which has notably tight restrictions on the industry that saw the Securities and Exchange Commision (SEC) shutting down a number of ICOs this year, including that from Dallas-based AriseBank and Centra Tech.

Chair of ESMA Steven Maijoor told the European Parliament’s economic affairs committee that he is interested in finding out how ICOs fit into existing financial regulation, and what the implication will be for the general capital raising sector.

As he says, however, this task has been particularly challenging as each initial token sale can differ in nature, and not all of them fall under the category of a ”financial instrument”. Those that do, fall under the current regulatory framework but those that don’t, raise the question ”what do we do with those ICOs that are outside the regulatory world’,’ as Maijoor puts it.

His colleague Andrea Enria, chair of the European Banking Authority, previously told officials that he thinks the correct path for action is to avoid stifling innovation, proposing that ICOs should be allowed to prevail without any influence from the EU.

However, he now says that the outcome is not as he hoped, predominantly because the warnings that the EU issued to retail investors regarding cryptocurrency assets have not been sufficient to raise awareness. Regulators across Europe have tried to inform potential crypto customers that there is no safety net should their investment not go as they expect, but apparently, this message has been largely lost.

US SEC chairman Jay Clayton thinks that the way to combat this is to regulate the sale of new tokens as securities are, but admits that not all will fall into this category. Bitcoin and Etherum have been decided as not falling into the category of securities.

 

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EU Financial Regulator Carves Out €1.1 Million Fund to Monitor Crypto Assets

Crypto assets and fintech industries are the focus points of an EUR 1.1 million fund set out by the European Union’s financial regulator to monitor these innovations.

Objectives

The 2019 Annual Work Programme document was published by the European Securities and Markets Authority (ESMA) on 27 September 2018. Within it, the ESMA establishes the need for regulatory and supervisory treatment of fintech and cryptocurrencies.

ESMA is an entity within the EU that produces standardized rulebooks for EU financial markets and market supervision. It also works within securities legislation and regulation.

As stated in the key objectives outlined in the paper, the ESMA writes, “Achieve a coordinated approach to the  regulation and supervisory treatment of new or innovative financial activities and provide advice to present to the EU institutions, market participants or consumers.”

Secondly, it adds, “Implement the framework for the use of the product intervention powers provided by the MiFIR [Markets in Financial Instruments Directive]”.

In this, the ESMA wishes to monitor retail investor trends and financial activities and play a “proactive role in market intelligence gathering” where it can provide advice, propose relevant action, as well as “coordinate NCA’s initiatives on market monitoring and facilitating exchanges of best practices”.

European progressions

It was reported by Fortune in early September that the EU is taking its time with regards to regulating the crypto market. At a meeting in Vienna, finance ministers had agreed that regulating the space can wait until the European authorities have completed a “thorough analysis”.

Talks in Vienna appeared buoyantly positive about cryptocurrencies as the European Commission vice president Vladis Dombrovskis declared that “crypto-assets are here to stay” during a press conference.

While being bullish on initial coin offerings (ICOs) as a viable financing method, he also pointed out that numerous risks often affiliated with the issuing of digital tokens and the cryptocurrency markets as a whole.

Despite the skepticism and scrutiny that these branches of blockchain technology often come under, Members of the European Parliament (MEPs) appear to be bullish on blockchain.

A recent meeting in Strasbourg, France, saw MEPs discuss the uses of blockchain technology, with many MEPs pushing for legislation sooner than later to avoid “losing control” of new technologies. Furthermore, East European MEPs were looking to establish themselves as blockchain hubs.

Blockchain discourse in Europe is presently revolving around regulation, innovation, and relations with financial institutions; follow these events and more in the Bitcoin News weekly roundups.

 

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EU Commission “Pleased” with Blockchain Enthusiasm from European Parliament

Members of the European Parliament (MEPs) gathered today in Strasbourg, France for plenary meetings are currently debating the use of blockchain technology, with Digital Single Market Commissioner Andrus Ansip saying minutes ago that he was “pleased” to see MEPs on the same page as the EU Commission in its enthusiasm for blockchain potential.

Sandwiched between a session on human rights violations in Chechnya and economic support for remote regions, the debate on blockchain sought to discuss how the EU Commission would provide “legal certainty” for the use of the technology.

Earlier, MEP Dario Tamburrano from Italy urged the European Parliament members to move towards legislation to avoid “losing control” of new technologies, echoing French MEP Christelle Lechavalier’s statement that regulators should give blockchain adequate time to provide evidence and maturity for use across multiple sectors.

Both Italy and France have been making fervent moves towards cryptocurrency especially in recent months. The former last week became the 27th nation to enter the European Blockchain Partnership, which seeks to foster blockchain cooperation between member nations. France this year axed income tax on cryptocurrency and has a pro-crypto finance minister in the shape of Bruno Le Maire, who maintained that blockchain was “a revolution”.

MEPs from Eastern European nations – themselves keen to establish blockchain hubs in the region – were also vocal in the debate, with Lithuanian centre-right MEP Antanas Guoga asking fellow Parliament members to accept that blockchain is “here to stay”. He warned that laggards would have to “live with” not being able to have “much say” over the technology, pointing out that decentralized systems would be highly resistant to external attempts for control.

Romania’s Cristian-Silviu Busoi cautioned the EU against “rushing prematurely” into regulation or face stifled innovation.

Ansip closed the session, saying that blockchain should not be seen as a “panacea” but stressed that it was an opportunity that “cannot be overlooked”. The assembly is expected to vote tomorrow on 2 October on a non-binding motion which will mandate the Commission to conduct an impact study of a “wider update” of blockchain in the EU.

 

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Luxembourg Aims to Provide Legal Certainty for Blockchain

The government of Luxembourg is hoping to pass a bill through their legislature which will enable blockchain technology to be backed by an extra layer of legal security.

Tiny landlocked Luxembourg has an important role in the EU as the seat of the European Court of Justice, the highest judicial authority in the European Community. The bill which is being tabled by the government has been drafted in order to ensure that all blockchain-based transactions have the same level of security and legal stature as of those made without the technology behind them.

The country’s finance minister Pierre Gramegna has suggested that such measures are being introduced as a step to guarantee investor security and confidence in blockchain as a technological tool, suggesting that:

”This was in the best interests of the financial sector, as there have already been transactions done using blockchain, such as distributing parts of investment funds, for example.”

Luxembourg, is continuing to position itself as a blockchain hub in the region; surrounded by France, Germany, and Belgium. It is still in the throws of expanding its development in the sector. In comments made last year by Xavier Bettel, Luxembourg’s Prime Minister and minister of Telecommunication stated:

“The state is fulfilling its role as a kickstarter and a coordinator while leaving technological and commercial choices to the industry”, whilst facilitating projects which create “meaningful projects in cutting-edge technology.”

The new bill which is expected to pass into legislation is primarily aimed at blockchain and will make no reference to cryptocurrency or ICOs, but will focus on the new technology’s target of promoting new financial goods and services. Luxembourg’s financial regulator the CSSF has not particularly warmed to cryptocurrency in the same way as its neighbours, warning earlier this year that as yet the ICO model is as yet unproven.

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