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HSBC Whistleblower Is Developing His Own Cryptocurrency

Hervé Falciani, the French-Italian whistleblower who helped track down tax evaders with 130,00 Swiss bank accounts in the 2008 Valencia Polytechnic University crash, is to launch a new cryptocurrency.

Falciani became renowned as the HSBC ex-employee turned whistleblower who provided several European countries classified information on thousands of Swiss bank clients who were evading taxes, most of which were managed by a subsidiary of his employers at the time, HSBC Private Bank.

He created what became known as the “Lagarde list” of HSBC account holders who allegedly used the financial institution’s services for money laundering and tax evasion, leaking the list to the current International Monetary Fund (IMF) head, Christine Lagarde, who was French finance minister at the time.

Continuing his anti-banking crusade, Falciani has now fallen back on crypto to clean up the financial space, by creating his own cryptocurrency – Tabu, which has been developed by ‘Tactical Whistleblowers’, a non-profit organization founded by Falciani.

To date, the Tabu token project has raised €1.3 million (appr. $1.47 million), however, an additional €2 million of capital is required in order to ensure adequate funding for the project’s ongoing development. Falciani’s mission is to cut corruption caused by what he sees as inefficiencies of the traditional banking documentation system, by also developing a blockchain powered registration system.

Tactical Whistleblowers, with its HQ in Valencia, is comprised of several academics with a strong background in Mathematics from the Valencia Polytechnic University.

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IMF Cautions Malta on “Significant” Terrorism, Laundering Risks Due to Blockchain Growth

IMF Inspection Reveals Malta Needs More Regulatory Oversight for Blockchain

The government of Malta has received cautionary notes from the International Monetary Fund (IMF) regarding its rate of blockchain and cryptocurrency adoption, warning that unchecked proliferation carries “significant risks” for money laundering and terrorism. during a recent financial assessment carried out on the island.

According to English daily The Times of Malta, IMF made this statement after a recent financial assessment carried out on the island. Reporting on the situational analysis put forward by the IMF, it said that the growth of blockchain in Malta has created significant risks of financial systems directed towards the likelihood of increased money laundering and financing terrorist activities.

Malta has in recent times been recognized as one of the leading countries in Europe and the world that has favorable policies towards the development of blockchain enterprises. The rate of development has set Malta on the map as one of the go-to places for anything blockchain and crypto-related businesses.

While efforts towards accelerating the development of the industry are being lauded, the IMF showed concerns about the supervisory system currently in place and suggested emphatically that the authorities should improve their understanding of the risks and employ adequate sanctions in case of breaches.

The IMF also thought there was a need for improvement in staffing and formulate a long-term guaranteed financial and operational independence supervisory system as according to it, Malta’s Financial Services Authority was experiencing strain in operation due to an increased number of fintech operators with extensive new products and evolving regulatory environment.

Malta’s declaration of being a blockchain island was underlined by its recently-enacted policies covering new technology and digital assets. This may have caused a positive development for the industry but also increased the risks involved that may result from a lack of proper oversight. The IMF assessment should enable the authorities to re-evaluate their current situation and ensure that the systems put in place are foolproof.

Perhaps, this development brought about by the IMF will also stir up other jurisdictions working towards harmony with the blockchain industry to further improve their policies and regulatory framework to ensure a healthy crypto ecosystem.

 

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French Regulator Tightens Controls on Unauthorized Crypto Firms

Autorité des marchés financiers (AMF), the body responsible for regulating financial markets in France has noted in its last update that four cryptocurrency websites have been blacklisted.

This follows the regulators blacklisting 20 new investment websites, mostly cryptocurrency-related ventures, back in September. At the time, AMF advised French citizens investing in these new projects that “no advertising materials should make you overlook the fact that high returns always involve high risk”.

Now, nine more websites have been listed as “proposing atypical investments without being authorized to do so,” on the AMF website on December 14th. The blacklisted websites contain four crypto websites which reportedly centre on unauthorized investment offerings.

According to the AMF, websites such as one of the blacklisted sites elos-patrimoine.com were accused of offering monthly returns to investors between 3% and 5% without the authorization to offer guarantees. The other cryptocurrency websites were live-crypto.com.net, iminage.com, and infoconso.info.

French investors were warned that many new cryptocurrency projects are still awaiting AMF’s approval to offer services, and unfamiliar websites should be treated with caution by the public, particularly given the current wave of new crypto websites coming online.

The move by the AMF is part of an increased focus in ensuring that new ICO’s are fulfilling regulator’s legal registration and operating requirements. In September, the French Parliament passed the Autorité des marchés financiers framework drafted early in the year, designed to protect those investing in ICOs.

Earlier this year, French finance minister Bruno Le Maire described cryptocurrency as a “revolution”. Another prominent national, former French finance minister Christine Lagarde, now IMF head, described future international digital currency regulation as “inevitable”.

In September, France’s Minister for the Economy and Finance announced that the government had accepted an article of the Business Growth and Transformation bill (PACTE) dedicated to Initial Coin Offerings (ICO) which stipulates that prior to any ICO, a firm must apply for a license from the AMF providing detailed information on the offer and issuer.

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IMF Urges Consideration of National Crypto: Harness Benefits, Manage Risks

Reaffirming an open stance to the versatile application of blockchain technologies and digital currencies, International Monetary Fund (IMF) Managing Director Christine Lagarde has furthered the discussion surrounding the prospect of central bank digital currencies (CBDCs). She said that they should be considered and urged further discussion about the potential roles of central banks.

Speaking at the Singapore Fintech Festival on  14 November 2018, Lagarde opened up to the audience about the disruptive nature of technological change and said: “The key to is to harness the benefits while managing the risks”.

Crypto-race

In her speech, she noted three areas for her address: the evolving nature of money and fintech development, central bank roles in the new financial landscape, especially regarding CBDC, and an examination of downsides and steps toward mitigation.

Noting the larger names in the space such as Bitcoin, Ethereum and Ripple, Lagarde believes that cryptocurrencies are seeking a firm position in the “cashless world” and are “constantly reinventing themselves” as they hope to seek more legitimate grounds through stable values, as well as cheaper and faster transaction settlements.

CBDCs

According to Lagarde, e-money providers consider themselves to be less risky than banks due to the fact that they do not lend money and that cryptocurrencies are seeking to “anchor trust in technology”. However, she remains skeptical and retains the belief that “proper regulations of these entities will remain a pillar of trust”.

Lagarde published an article earlier this month (November 2018) that established the case for regulations that don’t stifle innovations, offering a balanced argument for and against cryptocurrencies.

After revealing the latest IMF paper named Casting Light on Central Bank Digital Currencies, one that covers the pros and cons of the concept, Lagarde said, “We should consider the possibility to issue digital currency. There may be a role for the state to supply money to the digital economy.”

Key points

Firstly, she argued that CBDCs may offer “great promise” in the area of financial inclusion; at their core, cryptocurrencies are capable of reaching any corner of the globe with a computer and an internet connection, thus providing rural areas populated with individuals and businesses with a robust financial tool. Efforts to connect unbanked rural areas to the national financial network are already underway in the Philippines.

Secondly, she discusses digital currency in the context of security and consumer protections; suggesting that just as the introduction and subsequent dominance of cash (paper and coins) provided a low-cost and widely available solution, digital currencies can also do so.

She said: “Regulation may not be able to fully redress these downsides. A digital currency could offer advantages, as a backup means of payment. And it could boost competition by offering a low-cost and efficient alternative — as did its grandfather, the old reliable paper note.”

Lagarde sees digital currencies as having a third potential benefit which is privacy, though she also argues that banks would not be ready to offer a fully anonymous digital currency due to it creating a “bonanza for criminals”.

Lastly, she lists three downsides to CBDCs: Financial integrity risks, financial stability, and risks to innovation, areas that have also been questioned by other institutions around the world including the Bank of England.

Conclusively, Lagarde looks optimistically toward the future and “more fundamentally”, retaining an open mind to change. She said, “In the world of fintech, we need to harness change so it is fair, safe, efficient, and dynamic.”

 

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IMF Big Guns Uphold Pro-Blockchain Views, Commit Long-Term Research

Key figures at International Monetary Fund (IMF) have recently espoused pro-blockchain views with the IMF Managing Director believing in the public benefits of cryptocurrencies, and the Deputy Counsel discussing blockchain technology as part of ongoing future policy research.

Risk and reward

Earlier on in November, the Official Monetary and Financial Institutions Forum (OMFIF) published a bulletin in which IMF Managing Director Christine Lagarde authored an article titled ‘A Regulatory Approach to Fintech: Guarding Against Emerging Risks Without Stifling Innovation’. Highlighting the challenges facing cryptocurrencies, what opportunities they offer, as well as their downsides, she acknowledges the polarizing camps in which many position themselves with regards to the crypto-industry.

According to Lagarde, there are crypto-evangelicals who see the tech innovation as a “similar breakthrough” to the invention of the telephone, and its initial dismissal by the dominant market forces. She also acknowledges the opposing side who believe cryptocurrencies to be “a fad or a fraud”, and says that the new technology should not be dismissed “so lightly”.

Echoing the balanced statements she had made earlier this year, she continues to argue that in the wake of these new technologies, regulators will be challenged to protect consumers and investors from fraud, tackle tax evasion as well as money laundering and terrorism financing, while maintaining the “integrity and stability on the financial system”. But this must also be done carefully as not to stifle innovations that will benefit the public.

Conclusively, she wrote: “Above all, we must keep an open mind about crypto-assets and fintech, not only because of the risks they pose but also because of their potential to improve our lives. When in doubt, think of Bell and his telephone.”

“Anchored” by Blockchain

At the Singapore Fintech Festival on 12 November, IMF General Counsel Ross Leckow said during a discussion with Ripple CEO Brad Garlinghouse: “The IMF is devoting a lot of attention to fintech and blockchain.”

Giving focus to the demand for absolute regulatory certainty, Leckow described the global blockchain regulatory discussions as “early stage”, adding “a lot more work needs to be done”.

Leckow’s views fall in line with those of his colleague Lagarde; when questioned by Garlinghouse on the IMF’s views of digital assets, Leckow said:

“The IMF takes a balanced view. Each country has to decide for themselves what type of regulatory framework is best. But generally speaking, they should be cognizant of risk but also the potential to make the global system more efficient, more inclusive with this new technology.”

Marshall Islands

These open-minded statements may run somewhat in contrary to an ongoing issue regarding the Marshall Islands and their intentions to launch a national cryptocurrency.

It was reported on 12 September that the IMF had published a 58-page report warning against the plan to adopt a digital currency named Sovereign, citing international banking relations and the potential disruption to foreign aid as areas of concern.

 

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Argentinian Economy Nosedive Attracts Crypto Investors as Peso Falls

Argentina is not quite undergoing the pain of Venezuela but it’s beginning to feel the economic pressure, driving numerous investors to Bitcoin as a safe haven for their pesos.

The Argentinian economy has shrunk by 4% during the second quarter, with President Mauricio Macri’s government announcing that it expects the economy to shrink further by 2.4% this year. One of the causes of the slump has been attributed to a drought that occurred early in 2018 which severely damaged soybean and corn production.

Fausto Spotorno, Director of the Buenos Aires-based Center for Economic Studies observed that the downturn was due to crop failure, saying: “That really hurt growth in the quarter… The second quarter is when we harvest soybeans and corn, so there was a big drop in agricultural production.”

As a result, peso’s value has fallen. This has affected the morale of both investors and savers, consequently opening them up to the Bitcoin market. Economist and mathematician D.H. Taylor writes:

“Argentinians are moving in large numbers out of their peso and into a more stable currency, BTC. The numbers being witnessed by the markets in BTC are surging from Argentina,” adding that “The stability being offered by the digital currency is far greater than the peso and Argentinians are moving in quickly.”

The Argentinian government is now looking at Bitcoin with real intent as the economy begins to falter and efforts by the Central Bank have made absolutely no impact. As a result, it’s been reported that the Central bank may even be considering investing their currency reserves into Bitcoin and US dollars to gain some stability in case of a further need to devaluate the peso.

In May of this year, a massive peso selloff forced the government to seek support from the International Monetary Fund (IMF), receiving a $50 billion bailout and contributions towards a public works fund as inflation continues to rise.

Meanwhile, the demand for BTC is rising with 12 ATMs scheduled for the capital Buenos Aries and plans to saturate the country with more machines, and more merchants are now accepting payments in Bitcoin.

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IMF Puts Pressure on Marshall Islands Plan for National Crypto

The Marshall Islands plans for a national cryptocurrency has encountered a setback after the International Monetary Fund (IMF) warned against the idea.

In a 58-page report, the IMF suggests that banks will refuse to work with the island’s businesses should the government go ahead with its plans for adopting the Sovereign (SOV).

Politically, the Marshall Islands is a presidential republic in free association with the United States, with the US providing defense, subsidies, and access to US-based agencies such as the Federal Communications Commission and the United States Postal Service.

Although the new cryptocurrency, the Sovereign (SOV), was set to displace the US dollar as the official currency, it was likely that the country’s 53,066 population would continue to use the dollar until banks and credit companies put in place a framework for the currency’s use. The new report by the IMF could put the future plan in jeopardy; the IMF has used provocative language urging the island republic to cease its activities, with this warning:

“The potential benefits from [digital currency] revenue gains appear considerably smaller than the potential costs arising from economic, reputational, AML/CFT, and governance risks. In the absence of adequate measures to mitigate them, the authorities should seriously reconsider the issuance of the digital currency as legal tender.”

There is a critical view held by economists in some countries whose governments may be considering similar moves to adopt a national cryptocurrency, that a mass decentralization of financial power may result in the diminishing of IMF’s authority. A warning by IMF’s deputy director Dong He earlier this year clearly suggests that the organization may be secretly worried at the movement towards global digital currency adoption.

He argued that “crypto assets may one day reduce demand for central bank money”, suggesting central banks should “forestall the competitive pressure crypto assets may exert on fiat currencies”.

David Gerard, author of ‘Attack of the 50-foot Blockchain’, asserts that the IMF is not so heavy-handed as they might appear, suggesting that, “The IMF is not strong-arming the Marshalls, what they’re doing is describing what will obviously happen if they proceed.”

As yet there has been no comment from the Marshall Islands authorities over the IMF suggestion they should “seriously consider” their great crypto-leap forward. Other countries considering similar plans to integrate cryptocurrency into their banking systems at this level will be interested to see how this situation develops in the weeks to come.

 

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Blockchain Eases the Way in World of Islamic Finance

Islamic banking which carries with it higher administrative costs than conventional banking could be benefited with the implementation of blockchain technology.

The two basic principles behind Islamic banking are the sharing of profit and loss and, significantly, the prohibition of the collection and payment of interest.

Blockchain-based banking is considered the next frontier in banking that will usher in a new era of decentralization and disrupt the centralized banking system. Islamic banking is a USD 3 trillion industry worldwide particularly popular in North African, South Asian and Middle Eastern countries. Its principles involve zero interest rates and focus on more control of one’s finances than the conventional banking system.

Financial Institutions such as Hada DBank, a promising new startup, will help increase transparency and bring back control to the average Islamic Bank user. For this purpose, Hada DBank is involved in various corporate partnerships that are cementing the bank’s status as the premier blockchain Islamic bank.

However, fees are an issue in traditional Islamic banking, the main reason being that the system requires higher transactional costs which cover some legal and administrative processes not required in conventional banking.

Blockchain banking in automating some of these processes due to encoding terms and including them in its smart contract system can alleviate some of the associated legal and administrative processes, reducing both cost and the risk of fraud.

In Islamic banking, all financial transactions must comply with Sharia Law, where debt cannot be created unless backed with underlying assets. Mining is acceptable as there is no aspect of either debt or lending involved in the process.  According to Islamic law, items falling under the ribawi category (such as gold or silver) must be exchanged in equal measure and with immediate transfer of possession, otherwise, transactions may involve riba or usury, a major prohibition in Islam.

UAE-based startup Adab Solutions has launched the world’s first cryptocurrency exchange that operates with full Sharia law compliance. The exchange will be overseen by an in-house Sharia Advisory Board (SAB) comprised of independent experts that will ensure the operations unfailingly remain within the jurisdiction of Islamic law.

As the fastest growing religion in the world, with Muslims now representing 23% of the world’s population, Bitcoin has become an important issue for financial authorities. Last year, the International Monetary Fund (IMF) held its first formal discussion about Islamic banking needs in the Muslim community for the first time.

 

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Crypto to Come Under Microscope at Vienna EU Talks

The EU is ready for its next round of talks with the 28 member states ready to discuss digital assets and whether further legislation is needed.

The next round is scheduled to be held in the Austrian capital Vienna on 7 September and is said to include certain issues surrounding cryptocurrencies such as money laundering, tax evasion and terrorist financing, all subjects which have been of concern to EU legislators over recent years.

It’s thought that the focus on money laundering, tax evasion and terrorist financing planned for Vienna has been motivated in part by concerns that EU laws don’t provide enough protection to investors, particularly in light of Asian moves to tighten regulation following hacking incidents this year. Also, the fact that unregulated exchanges fall outside of global financial regulations has caused some extra concern.

It should be acknowledged that while these concerns continue to dominate EU discussions, it has been noted by the both the European Commission and the International Monetary Fund (IMF) that both digital currencies and blockchain technology can bring great benefits to capital markets and commerce in general.

Regulators in Europe are also keen on harnessing the new technologies unleashed by digital currencies, according to the updated document. Initial coin offerings “have established an effective and efficient way to raise capital”, it said, adding that this development could also help integrate capital markets in the bloc.

French finance minister Bruno Le Maire recently described cryptocurrency as a “revolution”. Income tax on crypto has been axed by the French government and former French finance minister Christine Lagarde, now IMF head, described future international digital currency regulation as “inevitable”.

Lagarde said that not only could Bitcoin enable fast and inexpensive transactions but that the underlying technology behind cryptocurrencies, blockchain, could make financial markets safer.

Other states have made positive comments with the German federal government stating that cryptocurrencies don’t pose any threat to financial stability and the UK’s Financial Conduct Authority (FCA) announcing the launch of a collaborative entity, the Global Financial Innovation Network (GFIN).

An EU document obtained by Bloomberg says that ICOs “have established an effective and efficient way to raise capital”. The document reportedly also states that ICOs could help integrate capital markets in the EU.

 

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Venezuela Central Crypto Bank Next as IMF Predicts Million Percent Hyperinflation

It has been reported that there are new plans afoot for a Venezuelan central bank cryptocurrency along with a “superior court to the Supreme Court of Justice”.

According to Venezuela National Constituent Assembly member Hermann Escarra, the government is preparing to change the constitution to allow for the new crypto bank.

Venezuela’s crisis has steadily worsened as a result of lower oil prices, corruption, and a mismanaged socialist system, experiencing all but a total collapse of the economy, public services, security, and healthcare. In February, Venezuela launched its own Petro cryptocurrency backed by the country’s oil reserves.

Shopping bags made of the national currency the bolivar (VEF) are now being made in order to transport the notes, and a cup of coffee costs around VEF 2.2 million (around USD 0.50 at black market rates). For the same price, you can fill a small SUV with petrol almost 9,000 times.

The government continues to print money at an alarming rate with a current inflation rate of over 25,000%. The IMF predicts hyperinflation in Venezuela will reach a staggering one million per cent by the end of this year at the current rate, although this has been refuted as ludicrous by some economists. Economic meltdown and a recent assassination attempt on President Maduro just this weekend continue to paint a grim future for the South American oil-rich giant.

It is uncertain if a cryptocurrency-based central bank can do anything to help to at least alleviate some of the country’s extreme financial problems, particularly as the Petro has so far made little impact. It looks very much as though Venezuela has reached the “try anything” stage. Nonetheless, Escarra divulged the latest plan on Thursday:

“The National Constituent Assembly of Venezuela… is preparing a reform to the Constitution that would include a central bank for crypto-assets and a superior court to the Supreme Court of Justice… the draft changes to the Constitution will be presented in 35 days to the board of the Constituent Assembly.”

Maduro’s new “Bolivar Soberano” which is linked to the Petro is also ready for release on 20 August.

 

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