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Articles 11 and 13 Ringing the Changes: What These Numbers Mean for Crypto in Europe

copyright, blockchain

Strasbourg’s latest copyright laws could change the face of the internet by 2021, but what do articles 11 and 13 have in store for the cryptocurrency space moving forward?

The two new copyright laws originated from the UK, where activists rebelled against the copyright status quo claiming that current freedoms were damaging not only the music industry, for years now a hot topic, particularly amongst performers themselves, but also other areas where artists’ work was largely up grabs, such as in publishing and media in general.

What do they mean?

The fight against internet giants such as Google and YouTube’s snatch and grab policy on other’s work, not to mention a few others, principally social media giants Facebook and Twitter, created the move towards tighter controls of media material. MEP’s took their stance and in September of 2018, the European Union Directive on Copyright in the Digital Single Market was born.

 Article 11

This is one concern for cryptocurrency aggregator services although the new article is not yet ratified as law. Dubbed rather inaccurately as the “link tax,” due to many perceiving that anyone using sections of an originators work will be paying for it, this has been adjusted since the original MEP’s vote on the new copyright directives. Hyperlinks will not be penalized under the current rules and nor will websites pay fees for using words from parts of sentences from other websites.

Article 13

Article 13 would force sites and online platforms to use automatic tracking technology to detect when users uploaded content to make sure they weren’t sharing copyrighted material, taking the responsibility from user to site/platform owner for adhering to copyright law, and adding cost in the process.

The big concern here for many is memes- virally-transmitted photographs that are embellished with text that make fun of a cultural symbol or social idea. They are everywhere, in fact, it is hard to envisage social media without them. The aims of article 13, were made in good faith due to its aim which was to encourage companies to take more control of the content on their sites-certainly an issue that both Facebook and Twitter struggle with on a daily basis.

But will it kill freedom of expression? Almost certainly, that is if the law actually operated in this way. It does not.  Article 13 clarifies that content shared “for purposes of quotation, criticism, review, caricature, parody, and pastiche,” including GIFS, will be excluded from the article.

Blockchain

The problem here is clear. Companies running censorship resistant blockchain networks could hit a wall when it comes to compliance once the new regulations are ratified and enforced in 2021. The decentralization of crypto networks is key to the industry and many in the space will be waiting to see just how resistant blockchains’ censor content is to article 13.

An indication of the problems ahead might be just how blockchain companies have dealt with the GDPR as it stood before the new amendments in September 2018. Under last year’s new legislation, consumers were now able to request that personal data held by a company be deleted or erased; an issue which drove some blockchain companies out of business.

Public blockchains which support cryptocurrencies like bitcoin and ether are open to all comers, and more significantly information stored cannot be altered or erased due to its decentralized nature. This could become a turning point of conflict as the new articles become law in 2021. Legislators could now examine what has become known as ‘privacy poisoning’ with article 13 behind them. ‘Poisoning’ is jargon for the act of loading private data, such as names, addresses, and credit card numbers, or any illegal material on to an otherwise quite healthy blockchain, thereby making the chain inoperable.

This could become an issue which hits article 13 head on and requires some serious tweaking from within the cryptocurrency space moving forward.

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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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European Parliamentarian Says DLT ”Provides More Security”

Member of the European Parliament (MEP) and Maltese government official Roberta Metsola, has stated that decentralization via distributed ledger technology (DLT) is a more secure option than centralized models.

Speaking at the Malta Blockchain Summit on 2 November 2018, Metsola stated that European officials should make it their duty to inform citizens of this fact, saying that blockchain’s primary focus regards ”increasing trust” between parties, as reported by Cointelegraph. According to Metsola, its use can bring ”peace of mind” because of the trusting decentralized quality.

Metsola also took the opportunity to share her positive outlook on the European Parliament’s handling of the cryptocurrency and blockchain industries, saying that these subjects remain firmly on the agenda, with MEPs currently being encouraged to turn adoption from a ”vision to reality.”

However, she included that the parliament had to be sure to encourage the ”right type of regulation,” which for her means to avoid stifling innovation.

In Malta

Malta’s newest blockchain and cryptocurrency legislation passed in July was brought up by Metsola as a ”good step forward” and an example of the type of regulation that can be implemented in the European Parliment’s jurisdiction. Europe’s open, non-restrictive regulatory system was said to allow other countries to follow in Malta’s wake.

Despite this praise, she said it was still important for the government to remain alert for any changes or issues within the industry that requires its support.

Malta has managed to firmly establish itself as a country at the forefront of progressive blockchain regulations. As reported by Bitcoin News, Prime Minister of Malta Joseph Muscat, gave a speech to United Nation’s General Assembly (UNGA) in September where he declared cryptocurrencies to be the ”inevitable future of money.”

He also shared the promise he sees in blockchain technology as an answer to pressing issues such as healthcare records and verifying humanitarian aid.

 

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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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What Lies Ahead for Blockchain and Cryptocurrencies, Post-Brexit?

A Britain-based CEO has suggested that post-Brexit, cryptocurrencies will benefit the UK as they have key advantages over fiat currencies.

Danial Daychopan of Crypto company Plutus, suggests that due to the pound and euro’s interdependence and the fact that they are both based on other currencies,  allows decentralized cryptocurrencies to offer a “variable and stable alternative” for both consumers and businesses in the post-Brexit UK.

The current lack of direction in Brexit negotiations has led some people to believe that a period of instability is a possibility as both Europe and the UK race towards next year’s deadline. Daychopan sees instability and lack of trust in governments and the global financial system as key to the success of digital currencies. He claims:

“…in economies that aren’t stable, we’re already seeing digital economies developing and thriving. We’re approaching a period of instability and people need to understand that cryptocurrencies are going to be a force for good, not just tokens to be speculated upon.”

In terms of where cryptocurrencies sit once Britain’s departure from the EU becomes a reality, it is still unclear how Brexit will affect the future of blockchain and cryptocurrencies in both zones. The EU including the UK, with the exception of only 6 states, has signed up to the EU Blockchain Partnership which will promote the future exchange of expertise in order to launch EU wide blockchain-based applications across the single digital market.

The EU has called for cryptocurrency regulation at both European and G20 level and would clearly like to regulate the industry from Brussels, a further possible complication for the UK. As current members of the “EU Blockchain Observatory Forum” the UK has already benefited from membership with the EU’s fintech market, now valued at $6 billion.

Kay Swinburne, Member of the European Parliament (MEP), argues that bodies such as the EU Blockchain Observatory Forum are not essential to the UK advancing its fintech impact after Brexit. The UK, with its new crypto haven Gibraltar, having advanced significantly down the cryptocurrency and blockchain route, may be well placed to withstand significant damage to its fintech markets on withdrawal.

As the UK prepares to leave the EU it is also reportedly planning to create its own crypto regulations before 2019. The EU has already passed its own blockchain resolution for a post-Brexit Europe in order to remain a global fintech hub.

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