Category Archives: Europe

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

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

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

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

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

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

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

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

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

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

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

 

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“Krypto” Fights Back After Polish Government Attack on Crypto

The Polish crypto community has responded to a government-backed social media campaign against cryptocurrency with a video of their own.

On 6 May, crypto enthusiast Piotr Pacewicz screen wrote and directed ‘Krypto’, a short piece outlining the facts about cryptocurrency and blockchain. The video was produced by a small film company with the aim to “educate, educate and educate. Because [almost] no one knows the fundamentals about Bitcoin and blockchain,” explained Pacewicz.

The video was a direct response to a perceived campaign of casting fear, uncertainty, and doubt over the cryptocurrency in the country. It has been stepped up this month by the government’s latest plan to promote a social media campaign against digital currency, according to Cointelegraph.

The Polish Financial Supervision Authority (KNF) held a tender order on 10 May costing around USD 170,000 to disseminate the risks of cryptocurrency trading. This is the second of its kind recently; the last one in February of this year, this time commissioned by Poland’s Central Bank, in which anti-crypto video was produced for the sum of about USD 25,000 or PLZ 91,000 (Polish zloty).

The video, produced in partnership with Polish YouTube partner Gamellon, Google Ireland, and Facebook Ireland titled “I lost all the money” credited no endorsements to the government sponsorship or its co-sponsors. The film illustrated the rise and fall scenario of a Polish blogger who ends up fishing for fiat coins out of a public fountain after losing his newly-acquired wealth on crypto dealing.

Although Poland recognizes cryptocurrency trading, the trend is generally negative, including the recent dismissal of Anna Streżyńska, the former crypto-friendly minister of digital affairs.

The current situation seems to be, apply pressure on the crypto space until the public respond. Such was the case earlier this month when the government announced lifting income tax after an immediate public response through a Change.org petition, which gained over 5,000 signatures asking for tax exemption for crypto technology dealings.

Polish journalist and YouTube blogger Karol Paciorek, spoke out against the video release:

“There was a product placement deal between NBP and three large YouTube channels: Marcin Dubiel – 937,000 subscribers; Wiśnia – 818,000 subscribers; and Planeta Faktów – 1 mln subscribers. It’s an educational campaign paid from a government-based organization. Someone asked NBP how much they have paid for the campaign and got an answer.”

Jacek Walenski, the secretary of the Polish Bitcoin Association (PBA) branded the video as “unprofessional and stupid”, but doubts if it had the impact desired by the Central bank of Poland. Bitpay, Poland’s largest cryptocurrency platform, reported no loss of clientele after the video’s airing on YouTube.

Krypto‘s director says that the film is a “brick [for building] a better world, [one] with a financial system where everybody is equal”. At the time of publication, Krypto has just over 23,000 views on YouTube.

 

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James Rodriguez Launches JR10 Coin in Wave of Superstar Crypto Endorsements

James Rodriguez, an icon of Colombian football commonly known as James, has announced that he is partnering with SelfSell to launch his own crypto token called the JR10, reports USA Today.

The launch of the JR token, so named after his number 10 position in the Columbian squad, will elevate him to being the first active international player to move into crypto space through the launching of his own asset.

In next month’s World Cup in Russia, James, who also plays for German club Bayern München, will lead a Columbian squad competing against group members Japan, Senegal, and Poland.

Rodriguez is not the first footballer to embrace the blockchain space following Barcelona and Argentina star Lionel Messi’s recent affiliation with Sirin Labs who have marketed a blockchain smartphone with the superstar’s endorsement. Michael Owen, ex Liverpool and England International, also recently unveiled his merchandising, Owen Coin, supported by the Singapore-based Global Crypto Offering Exchange (GCOX).

The exchange scored another coup in March, this time signing a boxer to promote the exchange. Philippines Senator, Manny Pacquiao, better known for being the only eight-division world boxing champion, invested in the company which specializes in allowing celebrities to create their own digital currencies.

Sportsmen joining other crypto-crazy celebrities dipping their toes into fintech water include Jamie Foxx, Paris Hilton, football superstar Luis Suarez, rapper The Game, and stand-up comedian Kevin Hart and Canadian two-time speed skating world record holder Ted-Jan Bloemen who became the first cryptocurrency-sponsored athlete, according to Cryptovest.

The most notable event this year was American Boxer Floyd Mayweather’s endorsement of blockchain firm Stox to 16 million Instagram followers raising USD 33 million in 34 hours. This resulted in charges being made against the company by the US Securities and Exchange Commission (SEC) over allegations that the (ICO) was a fraudulent activity.

Rodriguez claimed that he will be involved in a range of activities following the launch including interacting with his fans, suggesting that the coin can be used to “become a new engine to grow the global football market”.

 

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Europe: Crypto and Blockchain News Roundup, 18th to 24th May 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.

European Union

EU privacy laws shut down PICOPs amid radical changes adopted by other companies: The new stringent Global Data Protection Regulation (GDPR) by the EU is causing problems to many blockchain startups operating in the 28-member economic union with the Parity ICO Passport Services (PICOPS) startup shut down following its failure to comply with the new rules. GDPR’s right to delete data was cited as the breaking point for PICOPS as the conflict arose with blockchain’s immutability.

PICOPS in a statement said: “Because of this, the significant resources required to make PICOPS GDPR-compliant, and the fact that PICOPS is not part of our core technology stack, we have decided to discontinue the service despite overwhelming market needs and demand.”

Other blockchain companies are also rapidly making changes to their platform with LocalBitcoins’s latest changes in terms of services to come into effect after 25 May 2018.

Small business focus by EU blockchain committee: EU parliament members voted to recommend blockchain payment systems to small businesses throughout the continent, according to Coindesk.

While the committee fell short of recommending cryptocurrencies, it did suggest non-monetary uses including specifying data controls, and supply chain management, that will make small businesses operations cost-effective.

Eva Kaili, a committee member said: “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.”

England

London mosque starts accepting ETH donations: A London mosque belonging to Turkish Cypriot Muslims have announced the acceptance of donations in ETH, according to London’s Hackney Gazette. The leaders made the decision to accept cryptocurrency for Zakat, a mandatory part of Muslim faith that requires 2.5% of followers’ wealth to be donated to charity.

The mosque is expecting more than EUR 10,000 in donations throughout the current Ramazan month.

Cryptoassets task force makes positive start: The UK government’s task force on cryptocurrencies met for the very first time on 21 May as part of the country’s efforts to regulate cryptocurrencies. The task force includes members from the national bank, financial watchdog Financial Conduct Authority (FCA) and UK Treasury.

The task force’s overall initial attitude seems tolerant as the members acknowledged the use of cryptocurrencies and their utility while at the same time focusing on the issues they bring. UK is currently a sizeable force in the blockchain community.

Spain

Government opens legal doors for crypto investment: The Spanish National Securities Market Commission or Comisión Nacional del Mercado de Valores (CNMV) has recently announced that investment funds could now invest and trade in Bitcoin in the country. The move opens more Blockchain companies to move to Spain and the statement was within the Q&A document for fintech companies previously and the CNMV said:

“This type of funds would have a legal place in Law 22/2014, which regulates, in addition to venture capital entities, other collective investment entities of closed type and their management entities.”

But, the CNMV will have to comply with European standards and since there are none, the investment companies can have a benefit in the country as they will have legal cover.

Poland

Government suspends crypto tax collection following popular demand: The Polish government has softened its stance on cryptocurrencies by suspending tax collection on cryptocurrencies, according to Cointelegraph.

The Eastern European nation had just recently heavily taxed the cryptocurrency earnings in the country but following public outcry, the government was forced to make changes to the cryptocurrency regulation.

Switzerland

Switzerland ranked as most crypto-friendly European nation: Switzerland has once again come on top of the rankings in the most crypto-friendly countries in Europe, according to a recent study based on Europe. Gibraltar and Malta also ranked favorably.

A total of 48 European countries and territories were examined in the study for the regulations in place for ICOs, cryptocurrencies as payment services and crypto taxation approach. Switzerland came out on top in all countries. Gibraltar came in second followed by Malta.

Government mulling over e-Franc crypto: Swiss government is following up on its pro-blockchain status by considering the establishment of a cryptocurrency named e-franc, according to a report by the Reuters. A study has been requested by the government and the currency will just use blockchain technology for transparency and record-keeping.

Norway

Norway joins central bank queue on crypto: The Norwegian government is looking to launch its own state cryptocurrency, according to latest reports by CoinTelegraph. An official document has been released by the government and shows that the Norwegian government is keeping up with the current trends of central banks looking into state-backed national cryptocurrencies.

 

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Deutsche Boerse Becomes Second German Stock Exchange Embracing Crypto

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

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

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

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

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

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

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

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

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

 

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Over $1 Billion in Crypto Stolen Since 2017

Recent reports from the Anti-Phishing Working Group (APWG) show that USD 1.2 billion in cryptocurrencies has been stolen since the beginning of 2017. Less than 20% of the stolen funds have been recovered.

Bitcoin received a massive influx of popularity in 2017 due to price increases up to USD 20,000, which has brought attention to this sector. Over 1,500 alternative cryptocurrencies have emerged as well, with some of the biggest thefts coming from altcoins.

“One problem that we’re seeing in addition to the criminal activity like drug trafficking and money laundering using cryptocurrencies is the theft of these tokens by bad guys,” Dave Jevans, CEO of cryptocurrency security firm CipherTrace, told Reuters in an interview.

Ethereum alone has seen millions lost in hacks. The Ether stolen from the DAO hack would now be worth USD 2 billion but was an event in 2016. Even so, the Ethereum community went through many hardships in 2017 due to Parity hacks.

Also Read: New EU Privacy Laws Brings Parity’s PICOPs to a Halt

Despite the massive losses, Bitcoin has taken quite a beating as well. Last year saw Nicehash being hacked and many users are still experiencing the aftermath of Bitfinex and Mt Gox.

But NEM takes the cake with the Coincheck hack earlier this year, which saw USD 500 million worth of the tokens being stolen from a Japanese exchange.

The EU’s new GDPR will make it harder for Bitcoin companies to function in the future, and will also enable further thefts and hackings in the future Jevans said.

“GDPR will negatively impact the overall security of the internet and will also inadvertently aid cybercriminals,” said Mr Jevans. “By restricting access to critical information, the new law will significantly hinder investigations into cybercrime, cryptocurrency theft, phishing, ransomware, malware, fraud and crypto-jacking,” he added.

The chairman for APWG predicts more cybercriminals will move to Europe and exploit GDPR. Many cryptocurrency projects are based in Europe, due to the United States’ strict and sometimes ambiguous regulations regarding crypto. This makes them easy targets for hackers, due to proximity to servers.

 

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IBM to Bring 1,800 Blockchain Jobs to France

International Business Machines (IBM) recently announced initiatives and investments which will create 1,800 jobs in France.

News of IBM’s intentions broke after the Tech for Good summit in Paris hosted by the president of France. Over 50 tech CEOs were present, including Mark Zuckerberg, Satya Nadella, and Biran Krzanich.

The openings require “new collar” skills, a term coined by president and CEO Ginni Rometty. New collar skills involve knowledge in data science, cloud computing, internet of things (IoT), artificial intelligence (AI), and blockchain. New graduates and experienced technical professionals alike will be hired to fill these opportunities.

The new positions will be created within the next two years. They include 400 IBM hired in March for research at the French AI for Humanity summit. IBM has been steadily reducing its presence in France since 2012, but new hirings will help IBM return to previous numbers.

IBM has also announced a partnership with the French government regarding its Pathways to Technology Early College High School (P-TECH) education system. P-TECH gives disadvantaged people the ability to obtain skilled labor.

It is to no surprise that Rometty spearheaded discussions about education during the summit, and will use insight gathered to better French education. The company is also introducing IBM France Academy supplemented with online courses. This will train IBM France employees, partners, and clients in skills that will prepare them for the AI-era.

Most of IBM’s clients within France utilize Watson, IBM’s supercomputer, to accelerate their business operations. Introduction of blockchain technology could potentially make Watson more potent.

IBM has won deals in multi-line insurance, bank guarantees, the automobile industry, and global food-supplying industry, among others, thanks to its strides in blockchain technology.

According to a report by MarketandMarkets, blockchain tech is expected to be worth USD 2.3 billion by 2021, growing at a CAGR of 61.5%. IBM has been slowly gaining ground within the blockchain space and its investments in France are just their latest efforts.

 

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China Arrests 98, Recovers Record $266M from OneCoin Ponzi

The Zhuzhou County Procuratorate in Hunan Province, China has arrested and prosecuted 98 people associated with the OneCoin cryptocurrency pyramid scheme, and has recovered CNY 1.7 billion (approximately USD 266 million at time of writing) in the process. This is the largest number of people involved in an investigation and the largest amount of economic loss recovered by the agency.

OneCoin is a global pyramid scheme based out of Copenhagen, Denmark. In China it is called Weika Coin. OneCoin generated huge outflows of capital from 20 different Chinese provinces, with 2 million registered accounts in China. Investors in China collectively put over CNY 15 billion into the scheme. Most of this money exited China and went to people in foreign countries at the top of the pyramid scheme, seriously endangering national financial security and stability.

The OneCoin organization claimed that it was a second generation of cryptocurrency after Bitcoin and already had a huge following, and promised tremendous returns for investors. It was impossible to view the inner-workings of OneCoin without buying a non-refundable starter package, the least expensive of which cost EUR 130 and the most expensive a whopping EUR 36,330.

When purchasing OneCoin a user receives tokens that have no value, and they can submit these tokens for “mining” where the tokens eventually become OneCoins. This isn’t true cryptocurrency mining where a user is rewarded for putting their computing power towards maintaining and securing the network. There is no evidence that OneCoin ever had a blockchain to maintain and secure, and the inner-workings of the “mining” process were secretive.

If a user received OneCoin from “mining” – itself no guarantee – these could be traded for EUR on a private exchange on the website up until January 2017 when the exchange shut down without notice. Once the exchange shut down, there was no way to recover any money since it was exchanged nowhere else, unravelling the scam.

OneCoin was a classic pyramid scheme where users would get other people to invest and receive EUR referral rewards for doing so. These rewards were paid from other investments, so OneCoin did not have enough money to cover all of its balances. There were also strict selling limits for OneCoin preventing people from cashing out too much at once. Eventually, withdraw requests exceeded the amount of money OneCoin had in its bank and the pyramid collapsed.

Numerous countries besides China have opened investigations and taken legal action against the founders of OneCoin, as well as the people who helped the OneCoin Ponzi scheme proliferate by getting other people to invest. The OneCoin website has remained offline. Its founder, Ruja Ignatova, is facing criminal charges in multiple countries but has disappeared.

 

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Bank of England on Crypto: Not If, but When

The Bank of England (BoE) has published recent findings for central bank digital currencies (CBDCs) that indicate such a government-issued currency is no longer a possibility, but an inevitability.

The BoE’s recent findings suggest that a CBDC is entirely feasible and can be introduced with a minimum of risk, although it is unclear exactly what form it will finally take, once commercial banks are forced to adopt a new system.

In line with several countries around the world, the BoE is beginning to examine the credentials of a CBDC in order to streamline its banking procedures, enabling funds to be expedited quickly and efficiency, updating outmoded banking systems.

The possibility of a government-issued cryptocurrency being not too distant is not that surprising, given the current mood at top levels of government in the UK. A ‘Cryptoassets Task Force’ is currently underway to examine the space to see if it can become a feature of the UK financial environment. British Chancellor Philip Hammond recently launched a task force to help safeguard consumers which include representatives from the Treasury, the BoE and financial watchdog FCA. He said the taskforce would help the UK “manage the risks around crypto-assets”.

Such calls for regulation were also made recently by the Governor of the BoE, Mark Carney, when he discussed the impact of cryptocurrencies’ core technology indicating that he was not against innovation provided by cryptocurrencies, stating that regulation could potentially “serve the public better”. This following his comments that cryptocurrency “had pretty much failed” as a source of money.

Three models suggested

The Financial Institution Model (Model F1) is a system where only financial institutions will be able to access the CBDC. The report suggests this is a safe approach offering a stable approach to banking, reports Finder.

The Economy-Wide Model (Model EW) where financial institutions can directly access CBDC, and businesses and households can access CBDC through financial institutions. Under this model, all banks, non-bank financial institutions (NBFIs), CBDC exchanges, households and businesses can have a CBDC account at the central bank itself. But only banks, NBFIs and CBDC exchanges can trade CBDC directly with the central bank. Households and firms can go through the exchanges, which might be standalone entities or banks/NBFIs, to convert deposits between CBDC and pounds.

The Narrow Bank Model (Model FI+). A system where financial institutions can access CBDC, and then use a spin-off “indirect CBDC” (iCBDC) for its business and household customers. This system is designed to include CBDC as the actual central bank money, and iCBDC as the connected digital currency that people interact with on a day-to-day basis.

The main question being asked now that the bank has made these significant moves towards a CBDC is what kind of currency will emerge. Will it be a digital currency for all to streamline the population’s everyday banking needs or will it simply be an instrument with which banks can save costs?

 

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London Mosque Takes Crypto Stance, Accepts Ethereum for Donations

The first mosque for Turkish Cypriots in the UK, the Masjid Ramadan, has decided to accept Ethereum in order to carry out essential repairs, reports London’s Hackney Gazette.

Leaders at the mosque have made the decision to accept the cryptocurrency as part of Muslim observance of Zakah, the annual donation made by all of that faith, requiring that adherents donate 2.5% of their current wealth.

The Hackney mosque hopes to raise at least GBP 10,000 in Ether donations over Ramadan. Erik Guney, the board of trustees’ chairman, said that he hopes that the project can bring attention to the Muslim world that the community needs support:

“I’ve grown up around here and I have watched the community grow and the challenges it’s faced with – it’s a struggle, with housing, food, the cost of funerals and government changes, he said, going on to point out that the wealthy can make a significant contribution.

“We are trying to appeal to a wider audience with the new money. It’s big in the Islamic world, and we have set up a platform for wealthier Muslims outside our community to support and donate to our mosque,” he added.

Founder of blockchain startup Combo Innovation Gurmit Singh has become the mosque’s crypto advisor, outlining how best the funds can be received, stored and sold.

Until recently, there had been concerns among Muslims whether the selling of cryptocurrency was permissible under Sharia Law and if it was possible for Islamic financial firms to invest in cryptocurrencies alongside the rest of the world. At a recent conference in Bahrain, leading Islamic scholars decided that Bitcoin and other digital currencies fell into the category of ribawa. This means that cryptocurrency must be exchanged in equal measure, and with immediate transfer of possession, to avoid breaking Sharia Law.

This argument is key to any decision that might be taken in the future regarding the permissibility of virtual currencies in the Muslim world, as the buying and selling of Bitcoin could be viewed as a type of usury due to its huge profit and loss margins.

It appears that this law is being observed by the mosque, as donations will be transferred straight from the mosque website to the bank’s cryptocurrency hard wallet, which will be visible for all to see. The donation will then be traded for sterling through a currency exchange like LocalBitcoins UK.

“If Muslims, who make up a quarter of the world’s population, hold just 1% of Bitcoins – or GBP 1.04bn – then GBP 26 million in Zakat contributions is due,” said Singh.

Zayd al Khair, a religious advisor at Masjid Ramadan, has been monitoring discussions and debates by Muslim scholars from all over the world:

“Bitcoin is a new phenomenon so scholars are divided,” he said. “Some have taken a practical approach and others have embraced it fully, and we have decided to take their position.”

 

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