Category Archives: Europe

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MEP Eva Kaili: ICOs Needed When Banks Overregulate

Member of the European Parliament (MEP) Eva Kaili has revealed that a report on initial coin offerings (ICOs) was being prepared for the European Parliament that would promote their use as a crowdfunding tool.

”We really need [ICOs] when banks are overregulated and projects need liquidity… we must try not to overregulate them and stop innovation,” she said. MEP Kaili made this statement during her keynote address at the ongoing Decentralized 2018 blockchain conference in Athens, Greece.

Following up with Bitcoin News at the conference, she reported that the Parliament had recently facilitated the release of EUR 700 million for startup projects that can show they provide ”great solutions” with blockchain.

However, she did acknowledge the number of scams that certainly exist within the ICO market but believes these can be avoided by properly analyzing the white paper: ”I have seen people buy for the hype but on the white paper, it states they own nothing… Fraud is fraud. We don’t need regulation to stop that.”

MEP Kaili also told Bitcoin News that she believes European countries like France and Malta have the most progressive and effective blockchain legislation, while others beyond Europe are emerging as strong contenders for leadership in the industry.

She said that through her travels, she has seen France impose itself as a significant leader in blockchain regulation, with the country ”trying to proceed very fast”. Malta is also producing progressive legislation, she added. Outside of Europe, both Barbados and Singapore are leading the way, as well as Switzerland which she described as ”a staple one; it has always been very fast in the financial sector to adapt to the changes”.

Discussing her recent legislative work, MEP Kaili that she has just finished the Blockchain Resolution – a work in progress since 2015 when she first became aware and interested in the technology. She pushed for the resolution in the European Parliment after becoming concerned with potential resistance to blockchain from ”the systems that failed us”, referencing the financial systems that contributed to the 2008 economic crisis and her home country of Greece’s own economic turbulence.

Now, Kaili’s efforts are focused on creating non-restrictive regulation for artificial intelligence (AI). She spoke about the potential of blockchain and AI synergy, to which she declared, ”I think will be very exciting.”

On blockchain, she noted that “It can solve problems but not all the problems, I would say it is more of a philosophy”, citing that there were still issues regarding scalability, energy efficiency, and the protection of data, although believes they will be “figured out quite soon”.

The Greek MEP was the keynote speaker at Decentralized 2018 hosted by the University of Nicosia. It ends tomorrow on 16 November 2018.

 

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UK Must Become Global Leader in Crypto Innovation

A UK expert has suggested that Britain must seize the opportunity and push cryptocurrency forward to become a global leader in digital assets. The comments were made by eToro UK managing director Iqbal V Gandham, who advised UK government backbencher Nicky Morgan on the Government’s Treasury Select Committee and its Digital Currencies inquiry.

Morgan served as Economic Secretary to the Treasury from October 2013 to April 2014 and as Financial Secretary to the Treasury from April to July 2014. In July 2017, Morgan was elected Chair of the Treasury Select Committee following the 2017 General Election. She later went on the become Secretary of State for Education.

Gandham claims that the UK must act now to get “ahead of the curve” to “foster innovation” in the cryptocurrency space and that as a global leader has the potential to have a major impact on the financial sector by pushing crypto innovation.

As the flagship cryptocurrency faces another unexpected drop in value with the Bitcoin market cap falling below USD 100 billion for first time since October 2017, the eToro boss suggests that a risk-based approach is needed to push mass adoption of the digital currency arguing, “If the UK is going to have any say in blockchain and crypto innovation and is going to lead the world, it needs to act in 2019“.

The latest drop in Bitcoin’s price can be laid firmly in the lap of the upcoming hard fork of Bitcoin Cash, according to CNBC’s Fast Money commentator Brian Kelly, which broke away from Bitcoin in August of 2017 in order to boost the number of transactions, suggesting, “When you do a software upgrade, everybody usually agrees. But in this particular case, everybody is not agreeing.”

A major sell-off in cryptocurrency markets on Wednesday has continued into this morning’s activity on Asian markets. The aggregate cryptocurrency market capitalization dropped by USD 15 billion over 24 hours Wednesday, according to CoinMarketCap.com.

 

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Germany’s Only Regulated Crypto Exchange Acquires Major Trading Bank

Germany’s only regulated cryptocurrency exchange has announced the acquisition of Bank Tremmel Wertpapierhandelsbank GmbH.

The announcement by Bitcoin Group SE, the holding company behind Bitcoin.de, signals not only expanding its current trading services but also its potential to operate cryptocurrency ATMs in the country. Tremmel Bank is not only well connected with both domestic and foreign banks, but also insurance companies, asset managers and fund companies.

This places Bitcoin Group SE in an ideal position to begin offering crypto custodial services as part of an expanded service through its bank as well as expanding its cryptocurrency offerings. Tremmel’s competence in the trading of stocks, bonds, and other exchange products is sure to have been a driver in the acquisition.

The exact acquisition figure has not been revealed by Bitcoin Group SE although a press release put the amount “in the lower seven-digit euro range”. However, before the move can go ahead, Germany’s Federal Financial Supervisory Authority (BaFin) need to give final approval. As Bitcoin Group SE has acquired 100% of Tremmel, the accompanying banking license becomes another huge asset in terms of future plans to extend its crypto profile and associated services once the takeover is complete.

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.

Recently, Germany’s second-largest stock exchange, Boerse Stuttgart, took the step to host Crypto Trading and Coin Offerings. The intention for Boerse Stuttgart is to keep everything under one roof where hosted ICO coins can be traded alongside leading cryptocurrencies such as BTC and ETH.

 

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Shell, Equinor, BP to Use Blockchain for Energy Trading

Shell, Equinor and BP will be using the blockchain-based platform Vakt for energy trading, with operations on the platform to go live by the end of November 2018 in the North Sea oil fields. The purpose of using Vakt is to move energy trading from cumbersome paper contracts to digital smart contracts. Cryptocurrency will not be used for the trades but the deal recap, contract, confirmation, logistics, and invoicing will be recorded on the blockchain.

Shell is based in the Netherlands and has an annual revenue of USD 300 billion. Norway-based Equinor records annual revenues of USD 60 billion and BP USD 245 billion. Combined, these energy companies have assets of nearly USD 800 billion, approximately eight times the Bitcoin market cap.

Blockchain is known to shorten and strengthen supply chains, by providing a cryptographically secure, immutable, and transparent ledger. Inefficiencies and errors in the energy trading process will be easy to spot and correct, and fraud will be reduced due to the transparency. Overall, energy trading on the blockchain will be more reliable and efficient than with paper. It is expected that energy trading fees will drop 40% once the blockchain platform is implemented.

Vakt is a post-trade management platform that is meant to digitize the commodities trading industry. Aside from the major oil companies backing Vakt, the banks ING, Societe Generale, and ABN AMRO are on board, as well as the independent traders Koch, Mercuria, and Gunvor.

After the integration of energy trading in the North Sea oil fields in late 2018, Vakt will look to integrate barges, waterborne energy markets, and United States crude pipelines in 2019. Additionally, in 2019 Vakt expects its first licensees and shareholders, implicitly indicating the door is open for other energy trading firms to join Vakt.

 

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Cash Disappearing in Sweden, Native Crypto Needed

Cash is rapidly disappearing in Sweden, with the supply of the Swedish krona (SEK) declining to 1% of Sweden’s gross domestic product (GDP). Businesses are now allowed to refuse cash, since it is used so little in society, giving private payment apps like Swish a monopoly over the payment market in Sweden.

It has been speculated that to prevent the complete privatization of money in Sweden, a cryptocurrency is needed, which would probably be called the e-Krona.

According to data from 2010-2018, the circulating supply of cash in Sweden has declined from SEK 95 billion to SEK 55 billion. This suggests that the government has turned off the printing press and is burning physical cash out of circulation. Further, the legislator of Sweden has allowed banks and businesses to simply refuse cash, moving the entire society away from cash and towards digital currency.

If cash completely disappears in Sweden, then it would no longer be possible for people to buy goods or services without going through a third-party payment network. This subjects the citizens of Sweden to payment reverses, payment freezes, and fees for using their own money. Further, Swedish citizens will be forced to go through know your customer (KYC) policies, threatening privacy when paying in Sweden. Perhaps the most important downside is tat Swedish citizens will no longer have total control of their own money.

This can be solved in two ways. Firstly, the citizens of Sweden who still want to use cash can simply adopt USD or EUR, but this would not work well for going to restaurants or other local businesses. The more optimal solution is a native cryptocurrency of Sweden, the e-Krona. Any businesses that accept digital payments of SEK in Sweden can easily be equipped to accept e-Krona.

The difference between the e-Krona and a typical digital SEK payment is that citizens would have full control of their e-Krona via the private key, and do not have to worry about payment reversals, freezes, or fees. An e-Krona would be particularly useful for merchants in Sweden, since at this point, as cash disappears, they are at risk of receiving chargebacks on any sale they make.

 

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Study Suggests Private Blockchain Compatibility with GDPR

A newly-published research by Queen Mary University, London suggests that private blockchains could be compatible with European Union (EU) privacy laws, especially the General Data Protection Regulation (GDPR) passed this year.

While cryptocurrencies were heavily scrutinized in the study for privacy implications, various other applications of Distributed Ledger Technology (DLT) such as private blockchains were also put under a microscope.

In the extensive research, different aspects of blockchain networks, their nodes and other entities were studied with regards to the extensive GDPR legislation. According to the findings, DLT technologies could fall under its rules if they store private information of EU citizens publicly on the chain and allow third parties to operate it.

According to the research: “There is a risk that this legal uncertainty will have a chilling effect on innovation, at least in the EU and potentially more broadly. For example, if all nodes and miners of a platform were to be deemed joint controllers, they would have joint and several liability [sic], with potential penalties under the GDPR.”

However, to fall under the legal definition, blockchain operators could be treated like processors instead. The concept is borrowed from cloud storage companies who act on behalf of users rather than controlling their data themselves. But, most of the research is based on Blockchain-as-a-service model where the company provides a DLT-based infrastructure for the users.

The study quotes similar examples from centralized land registry forms and private inter-banking solutions that have a small number of nodes as part of the network. However, complying with the GDPR is overall cited as tricky for companies especially the ones involved with cryptocurrency mining and wallets.

At the end of the research, the study group urges the European Data Protection Board to issue clearer guidance on data protection in the future to make things easier to comply. The GDPR legislation is one of the most stringent privacy regulations passed in recent times and applies to all participating members of the European Union, as well as entities interacting with EU citizens.

 

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Islamic Certification for Swiss Firm Opens Middle East Market

A Swiss-based fintech firm has successfully been certified by Islamic scholars, enabling it to trade digital currency in the Middle East.

Sharia law prohibits Muslims from lending money to anybody with the expectation of receiving interest on this amount. It regards fractional reserve lending that the majority of fiat currencies operate with as usury. Cryptocurrencies differ in this respect as they are underpinned by logistics of scarcity, appreciated by those practicing Sharia as it acts similarly to commodity trading such as gold that they adhere to.

With the news earlier this year that cryptocurrencies wouldn’t, in most circumstances, conflict with Sharia Law, the number of fintech companies moving into Sharia-compliant finance has notably increased. The Middle East, with its large Muslim population, has also become a potential hotspot for blockchain development.

The Swiss company X8 AG claims that its Ethereum-based cryptocurrency will address concerns of some Islamic scholars who are often concerned about the religious validity of cryptocurrency’s price volatility and the types of assets behind them. X8 Director Francesca Greco maintains that the fact that their cryptocurrency is backed by a basket of eight fiat currencies and gold should be a convincing enough guarantee. Greco maintains, “The Gulf region is a really good place for financial technology companies because they all want to become hubs for fintech.”

The Zug-based company which has now gained its certification from the Shariyah Review Bureau (SRB), an Islamic advisory firm licensed by Bahrain’s central bank, hopes to launch a crypto-exchange that would include a Sharia-compliant component. It has recently had meetings with other exchanges in the region.

This follows an announcement last week that another Islamic financial center, Dubai, was about to get its first cryptocurrency exchange after local media Al Zarooni Group and the Crypto Bulls announced the launch of the Crypto Bulls Exchange. Chairman of the Al Zarooni Foundation, Suhail Al Zaroon, stated:

“This will be the milestone for getting global investments opportunity from all over the globe in UAE, as all financial techs and investors are looking forward in crypto and blockchain industry.”

 

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World’s Most Efficient Bitcoin Farm Operates Underground in Norway

Some 350 meters under the ground, Northern Bitcoin has set up a mining farm inside of the Lefdal mine in Norway, which it claims has the highest mining efficiency in the world. According to the company, it costs USD 2,700 to mine 1 Bitcoin, as compared to the average of USD 7,700 in Norway, USD 10,000 in Australia, USD 4,000 in Canada, and USD 3,100 in China and Saudi Arabia.

The mine is located next to a deep and cold fjord, which provides all the cooling the mining operation needs, as opposed to typical mining operations which require expensive air conditioning. Further, there is ample hydroelectric power and wind power being generated throughout the fjord.

The Lefdal mine used to extract olivine, a beautiful green gemstone but was closed ten years ago. It has now been transformed into a sprawling underground computer center. Northern Bitcoin plans on increasing its capacity until it can mine 100 Bitcoins per day, which would necessitate the control of more than 5% of the Bitcoin network hash rate, or nearly 3 Exahash/s.

The USD 2,700 cost for mining a Bitcoin means that in a scenario where the price of Bitcoin collapsed below USD 3,000 and mining operations worldwide were forced to close, Northern Bitcoin would continue to profitably mine. Previously, the most profitable and prolific mining operations were in China near massive hydroelectric dams, where there is an abundance of cheap energy.

This Northern Bitcoin mining farm highlights how Bitcoin mining is not necessarily damaging to the environment. The hydroelectric and wind energy consumed by the mine is 100% carbon neutral, contradicting theories that Bitcoin mining will be a primary cause of catastrophic global warming.

 

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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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Belarus Turns up the Heat on Crypto as Business on Fire in Minsk

Belarus is alive and well in the world of cryptocurrency as high tech and crypto companies choose the former Soviet Republic as the new place to do business in the region.

The Belarus Hi-Tech park in Minsk is fast becoming a fintech center with 388 companies now registered as conducting business there. Much of the new interest in fintech in the country has been put down to Belarus President Lukashenko’s Decree №8 signed in December of 2017 called “On the Development of the Digital Economy” which has attracted new business to Belarus firmly set as its main aim.

Now that Belarus has legalized cryptocurrency trading for residents, many related businesses have been attracted to the park despite the majority of companies working in the IT and software sectors. Blockchain company Aetsoft, which provided services to ICOs and exchanges since 2014, is one of such businesses dealing with clients in the US, Germany, and Denmark. Another company, Biggico, whose international team has built an advertising platform for crypto projects, was established by Belarusian and Latvian entrepreneurs.

Other companies now operating out of Belarus, currently developing cloud-based crypto mining facilities include Pm Pool and Smartpool. Another company, Aiscom offers cryptocurrency payment solutions to exchanges, wallet providers and ICO projects.

The country has no intention of being left behind in the region. As reported by local news outlet Korea JoongAng Daily, the deputy foreign minister and ambassador of Belarus Andrei Dapkiunas told reporters that the European nation is open to investment into Fourth Industrial Revolution (4IR) technologies; this includes blockchain, Artificial Intelligence (AI), Robotics and the Internet of Things (IoT).

Belarus recently expressed interest in strengthening economic and business ties during a recent working visit to Seoul, particularity in the fields of fintech and blockchain technology. Diplomats from Belarus are keen to extend the cooperation between the two counties to promote new projects in the country.

Although the Hi-Tech park currently lacks cryptocurrency exchanges, what has been called “the first Belarusian cryptocurrency exchange” launched by crypto platform Crexby, is ironically based in New York City rather than its natural home of Minsk. The platform was started by Belarusian immigrants living in the US.

The main reason behind a lack of exchanges operating out of Belarus has been put down to the government’s lukewarm attitude toward digital currency, combined with local financial institutions’ reluctance to support cryptocurrency transactions and work with exchanges. More government clarity regarding cryptocurrency has been called for by both cryptocurrency exchanges and companies selling related products.

 

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