Category Archives: European Union

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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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European Commission Vice President Believes Crypto Has Place in Future

The vice president of the European Commission has said that “crypto-assets are here to stay” at the second informal Economic and Financial Affairs Council (ECOFIN) press conference.

Progressive

At the ECOFIN press conference in Vienna, vice president Vladis Dombrovskis spoke of the discussion between himself and other ministers, describing it as a “good exchange” with regards to the future of cryptocurrencies and initial coin offerings (ICOs).

In his speech, Dombrovskis said, “We also had a good exchange of views on crypto-assets. We see that crypto-assets are here to stay. Despite the recent turbulence, this market continues to grow.”

He continues, “In particular initial coin offerings, or ICOs, we see they have the potential to emerge as a viable form of alternative financing. Already last year, ICOs helped raise over 6 billion dollars in funding and this year this figure will be substantially bigger.”

These positive remarks are however underpinned by a somewhat cautious attitude; he highlighted risks such as investment protection, market integrity, as well as money laundering among other nefarious activities that regulators, governments and industries are trying to stamp out or protect themselves against.

Dombrovskis asserted that there is a “need to continue monitoring developments in this area”, calling upon international partners such as the Financial Stability Board or G20 to cooperate.

Describing the challenges imposed by digital currencies, he cited a common issue that has plagued the progress of legislation and regulation which is the classification and categorization of digital assets. This would determine “whether and how to apply existing EU financial rules to these new assets or if we need new EU rules”.

Crypto-competence

Australia has been tackling this issue head on, while developing a means to tax cryptocurrencies. Several steps were been taken to define digital assets in a taxable context as accurately as possible.

The US has been wrestling the issue in a similar manner. The Supreme Court of the United States ruled on 21 June that Bitcoin could be used as a currency; this came as a result of a hearing that debated whether stock options can be taxed the same way that cash earnings are.

Earlier in June, the US Securities and Exchange Commission (SEC) declared that Bitcoin and Ethereum would not be regulated as securities; the subject digital assets being classified as securities in the states has been an ongoing matter for some time.

At the tail end of the speech, the vice president said that there is an ongoing effort between ECOFIN and the European Supervisory Authorities that he called “regulatory mapping of crypto assets”. Member states are in support of the mapping effort and Dombrovskis is expecting the assessment to be concluded this year.

The European Parliament recently held an all-party meeting that examined proposals for ICO rules. No formal statements have emerged from this discussion as of yet, but the speech given by Dombrovskis appears to echo the progressions made across departments of the EU.

 

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Biggest LSD Raid in European Union History Seizes EUR 4.5 Million in Cryptocurrency

The Austrian Federal Police and the Spanish Guardia Civil, under the guidance of the European Union Agency for Law Enforcement Cooperation (Europol), have conducted the biggest lysergic acid diethylamide (LSD) raid in European Union history. The criminal organizations responsible were operating on the darknet and laundering their profits with cryptocurrency, resulting in EUR 4.5 million of cryptocurrency including Bitcoin, IOTA, and XLM being seized during the raid.

Two laboratories in the provinces of Granada and Valencia in Spain were raided and dismantled, resulting in the confiscation of 800,000 doses of LSD, a new record for the European Union. LSD is a popular but illegal drug which gives powerful psychedelic experiences. In total, drugs with a market value of EUR 12 million were seized. Additionally, EUR 700,000 of cash was seized, EUR 1.6 million was seized from an Austrian bank account, 3 properties were confiscated with a total value of EUR 1 million, ten luxury vehicles were impounded, and 8 were arrested and accused of drug trafficking and money laundering.

Apparently, the crime group responsible for the two darknet drug laboratories had been operating in Spain since 2012 and had been sending drugs to over 100 countries through the mail. The drugs from the laboratories were sold exclusively on the darknet, and they were supplying two websites that had become the most popular darknet drug markets in the world. However, the names of the darknet markets associated with this raid were not disclosed.

This raid and announcement comes on the heels of the biggest undercover darknet sting in United States history, suggesting there is an ongoing international crackdown on darknet drug markets and the use of cryptocurrency for drug trafficking. In the United States 2,000 Bitcoins were seized, while this Europol raid took in 510 Bitcoins.

Fortunately, Bitcoin’s price is no longer tied to darknet criminal activity, so this raid will not impact the market. A study by blockchain analytics firm Elliptic shows that only 1% of all Bitcoin transactions are related to crime. Fiat cash is used far more than Bitcoin for illegal activity.

That being said, darknet markets will continue to favor cryptocurrency as a means of money transfer due to cryptocurrency’s relative anonymity and cryptographic security. Considering how easy it is to set up a darknet market, the destruction of darknet markets in recent raids across the globe will only lead to new ones popping up, and the war between police and drug traffickers will continue across the darknet.

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IBM Recruits in Preparation for $176 Billion Blockchain Future

IBM’s pursuit of 1,800 blockchain jobs in France is a signal of intent to expand research and development in several areas, primarily focusing on blockchain technology, AI (Artificial Intelligence) and IoT (Internet of Things), as detailed in an interview with chief executive Virginia Rometty on Wednesday.

IBM is one of the largest and most established research organizations in IT and computing alongside companies such as Microsoft and Google. The company currently holds the record for the most patents generated in a year as well as the last 25 consecutive years. IBM assigned 9,043 patents in comparison to Samsung Electronic which filed for 3,300 putting them in second place.

IBM has previously reported working with up to 63 blockchain clients on over 400 projects related to blockchain technology. The tech giant is confident that blockchain will streamline solutions and be a leading innovator in its field. Earlier this year CFO Jim Kavanaugh stated: “For us, blockchain is a set of technologies that allow our clients to simplify complex, end-to-end processes in a way that couldn’t have been done before.”

IBM securing the market

There have been regular headlines of IBM and collaborators looking to enter the blockchain space. IBM started a partnership with Maersk and Agility, a global logistics provider, announcing their plans to track shipping containers using blockchain technology back in February.

IBM has been pushing for the lead in the race for adopting blockchain technology working alongside various industries and supporting giants like VisaHSBC, and Walmart. Walmart’s vice president of food safety and health Frank Yiannas explained that:

“As a global advocate for enhanced food safety, Walmart looks forward to deepening our work with IBM, Tsinghua University, JD and others throughout the food supply chain. Through collaboration, standardization, and adoption of new and innovative technologies, we can effectively improve traceability and transparency and help ensure the global food system remains safe for all.”

Although cryptocurrencies have been met with some skepticism many industries are starting to understand the potential benefits of the underlying blockchain technology. Industry leaders and the European Union are pouring millions into research and exploration of blockchain projects. The EU announced plans in February to increase funding over the next two years from EUR 83 million to around EUR 340 million. IBM’s general manager of blockchain, Marie Wieck previously highlighted research predicting the value-add of the blockchain economy growing to more than USD 176 billion by 2025.

 

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