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France Will Push EU to Adopt New Crypto Regulatory Framework

France Will Push EU to Adopt New Crypto Regulatory Framework

France is keen for her European Union neighbors to adopt a similar framework for cryptocurrency to its own newly- formed financial sector legislation.

Its new laws have been structured to keep the Finance Ministry, exchanges, and traders satisfied that there is a little bit of harmony for all, and a relief for many traders who have been expecting a tightening of cryptocurrency guidelines this year.

French Finance Minister Bruno Le Maire clearly wants to share the joy with the rest of Europe, although at this stage it seems unlikely that the UK would come on board with Brexit and European elections looming. France has jumped to head of the Euro queue in adopting a national regulatory framework and sees this as a solution for the other 26, or possibly 27. Le Maire commented:

“I will propose to my European partners that we set up a single regulatory framework on crypto-assets inspired by the French experience.”

Le Maire is clearly confident, adding that “our model is the right one”, although it remains to be seen how this suggestion will be greeted by other EU members.

The French government’s new cryptocurrency bill will now give the opportunity for startups and platforms that want to issue new cryptocurrencies or trade existing ones to apply for a certification giving companies official state recognition. This means that the rest of Europe will now be playing catchup. The certification will be granted by French market regulator and issuers, traders, custodians, and investors will have to pay taxes on their profits.

Transparency is seen as key by the French Finance Ministry and those applying for certification under the new rules will need to be thorough in furnishing business plans, AML, KYC, and be clear about exactly who is conducting and overseeing the business. Those not choosing to seek registration could be left in a vulnerable position.

 

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Lithuania to Announce Tough New Crypto Laws

Lithuania To Announce Tough New Crypto Laws

Lithuania is reported to be working on cryptocurrency regulations which surpass Europe’s Anti-Money Laundering Directives for their prohibitive impact.

The new changes are likely to put pressure on the cryptocurrency space as the government in Vilnius attempts to tighten its control.

Lithuania’s central bank has also been canvassing commercial banks and exchanges to get a clear picture of cryptocurrency and the role it may have in the future of the country’s financial sector, which is seen as encouraging for entrepreneurship in the space. However, the Bank of Lithuania recently declared that financial market participants should not get involved in crypto-related activities and should refrain from providing any crypto related services.

The country has recently become a growing center for ICOs and crypto projects. Latest figures show that Lithuania is now attracting an impressive 10% of all global ICO investments, with cryptocurrency bringing in half a billion euros from such activities. This in part to the government’s liberal stance on regulation, which is clearly about to change.

The new rules will require a far more rigorous registration process requiring that companies applying to operate in Lithuania adheres to comprehensive know your customer (KYC) and anti-money laundering procedures. Also, large transfer will now need to be reported to the country’s Financial Crime Investigation Service (FCIS).

The rules will cover both crypto-to-crypto transactions as well as fiat-based business, and all companies acting as intermediaries in any such deals will need to check client identity under Lithuania’s laws on the Prevention of Money Laundering and Terrorist Financing. Sigitas Mitkus, Director of Lithuania’s Finance Ministry’s Financial Market Policy Department explained:

“We want to create a transparent legal environment for virtual currency exchanges, depository wallet operators and ICO initiators. We also want to contribute to ensuring better consumer protection.”

 

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Winklevoss Twins Hit Back at Critics of NYC ‘Crypto Needs Rules’ Advertising

The co-founders of Gemini Trust Company, Tyler and Cameron Winklevoss have been responding to criticism of their ‘Crypto Needs Rules’ advertising campaign, launched for their New York-based digital asset exchange.

The concept of new rules surrounding cryptocurrencies, for many, is proving difficult to tolerate in the industry. The “crypto needs rules” placards can now be seen on the New York Subway and on the back of Yellow Cabs, promoting Gemini along with other slogans such as “money has a future” and “crypto without chaos.”

Many industry players feel that rules such as AML and KYC security measures go against the grain of Bitcoin’s purpose, conflicting with the original idea of a decentralized crypto economy. Messari co-founder Dan McArdle was so incensed by the advertising material that he closed his Gemini account in objection to the ads. Chris Roan head of Gemini marketing was quick to defend the advertising, telling the Wall Street Journal:

“We believe that investors coming into cryptocurrency deserve the exact same protections as investors in more traditional markets, adhering to the same standards, practices, regulations and compliance protocols.”

The Winklevoss twins have argued that their advertising is aimed at “…regulation oversight on how people use the technology and how people build the technology and how companies, like Gemini for example, custody assets and what kind of oversight.” The Gemini CEOs deny that financial regulations have a “big brother” element, but can effectively prevent crime, arguing that most people are fine with having their transactions monitored. They commented:

“Terrorist financing is a real thing. Being a New Yorker and living in New York, you know, September 11, is a real thing and that’s really, that’s the overarching goal of [the Bank Secrecy Act and anti-money laundering laws].”

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UAE Banking Federation Mulls Blockchain Potential with KYC Focus

UAE Banking Federation

Members of the United Arab Emirates Banks Federation (UBF) discussed the potential adoption of blockchain into their banking systems to upgrade know-your-customer (KYC) processing.

Blockchain Enhancements

According to a report made by Dubai-based media outlet Gulf News, the meeting of the CEOs Advisory Council of the UBF met to discuss other topics, though blockchain managed to come to the table. Abdul Aziz Al Ghurair, Chairman of UBF said: “As part of our efforts aimed at creating and sustaining a thriving banking ecosystem, we have undertaken a number of initiatives and new endeavors, such as the adoption of blockchain into KYC process” – something of which Abu Dhabi based institutions have already begun working on.

At this meeting, a Digital Banking Committee study on blockchain was presented by Aref Al Ramli, chairperson of UBF’s Digital Banking Committee. In it, the report explores the role of blockchain as a standardizing technology for the digitization of various banking processes. Additionally, it discusses the “potential functions”, which include but are not limited to “client onboarding, cross-border transfers, payments, and compliance reporting”.

The UBF Chairman adds: “With advancements in technologies continuing to shape customer needs and expectations, it has become all-important for the banking industry to be at the forefront of innovation. The emerging technologies also present new opportunities for banks to create new revenue streams, which will in turn drive sustained business growth.”

Charging ahead

Blockchain- and cryptocurrency-related developments in the UAE have been speeding up as the year’s end approaches. Saudi Arabia will be launching a “state-managed” cryptocurrency in association with the UAE as an international payment solution. Furthermore, Abu Dhabi’s proposed guidelines to regulate initial coin offerings (ICOs) as securities have been given the go-ahead by the UAE securities market watchdog, who will be looking to put “regulation on the ground” before Q3 of 2019.

The collaboration between the UAE and Saudi Arabia has progressed and now both parties are working well together to develop a cross-border cryptocurrency, which as mentioned earlier is an international payment solution. The partnership is one that signals a strong fintech future for two areas of the world who had previously either scrutinized the technology or banned cryptocurrencies altogether.

 

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Bitcoin-Powered Stock Trading: A Future Without Fiat?

Bitcoin-Powered Stock Trading: A Future Without Fiat?

Quantitative financier Amatsu Soyonobu, with co-worker Tagawa Hayashida, has come up with their own use case for Bitcoin, after the new CEO left his Silicon Valley job in search of achieving his goal to find a value case for Bitcoin outside its store value.

Soyonobu, an ex-Apple software manager, decided to take things into his own hands as an act of frustration against what he felt was a lack of real use applications for Bitcoin.

The two Japanese text experts have created WCX, a trading platform allowing for access to global financial markets simply using Bitcoin. Users can choose to go long or short on more than 100 markets, with all profits and losses paid out in Bitcoin. The idea of removing the need to use fiat on such trading markets has really excited the Japanese entrepreneur, particularly in the savings that can be offered to customers:

“There’s obviously something here. People love how easy and fast it is to trade using Bitcoin rather than non-programmable money like the dollar. We can offer 0% fees on deposits, withdrawals, and trades because we said no to fiat. We consider Bitcoin our competitive advantage.”

Since the company’s October launch, WCX has pulled in 125,000 traders for 189 countries with a notional trading volume in excess of USD 1 billion. Soyonobu offers almost instantaneous depositing and withdrawals but there are drawbacks which WCX are trying to overcome; the principal problem being the security of client funds. Soyonobu comments:

“Security is our top priority. We use the most tested and secure wallet architecture, which includes cold/hot wallet segregation. We keep 98% of customer funds in cold offline wallets, out of reach from attackers. Hot wallets are used to process withdrawals quickly. They’re protected with state of the art security and insured against theft.”

WCX is Swiss registered, hinting at its credibility due to Switzerland’s demanding screening process and adherence to the latest KYC laws.

 

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Estonia’s Own Private Bull Run Boasts 900 Crypto Firms in Less Than a Year

Bitcoin News has been following Estonia’s cryptocurrency march with some interest this year, and with over 900 licenses granted within the first year of the regulator’s initial registration ruling in that country, there seems to be no stopping its enthusiasm for the enterprise.

Estonia was one of the first jurisdictions in the EU to legislate cryptocurrencies and many companies are now doing business there. The Baltic region is fast becoming a northern crypto-paradise with Lithuania, Latvia, and Estonia all experiencing a recent economic boom. This has made Estonia a breeding ground for new startups.

Even its neighbor Latvia, though behind Estonia in cryptocurrency adoption, is beginning to make real inroads into developing a positive input to the industry. In March 2018, Latvia hosted an international discussion between industry experts on the future of fintech in the Baltics and the overall EU, which featured the vice-president of the European Commission Valdis Dombrovskis as keynote speaker.

But it’s Estonia breaking the records at present due to a progressive approach to cryptocurrency, despite the country abandoning its plans to introduce its own cryptocurrency after being warned by President of the European Central Bank Mario Draghi earlier this year.

500 licenses have been issued to date with over 400 wallet providers also being issued permission to operate. It appears that obtaining a license to operate a platform in Estonia is relatively simple according to Nikolay Demchuk from the law firm Njord which works in the sector. As Estonia operates under EU rules, the main emphasis on obtaining accreditation is complying with local and EU rules. Businesses applying also need to prove that they can operate with adequate KYC and AML protection.

Approval only takes about two weeks and are issued by the local regulator, the Estonian Financial Intelligence Unit (FIU), but companies must begin operating within six months of receiving their licenses under the pressure of losing them.

The biggest drawback in Estonia concerns banking as there is still a reluctance among the country’s banking community to provide services to cryptocurrency exchanges. However, the e-residency program, introduced in 2014, allows non-Estonians access to Estonian services such as company formation, banking, payment processing, and taxation. The program also allows anyone in the world to apply for a digital ID card and gain access to Estonian e-services when planning to start a company in the country.

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Russian Industrialist Union Launches Arbitration Body for Crypto Disputes

A Russian lobby group has run out of patience waiting for cryptocurrency regulation and has decided to formulate its own regulatory group to deal with disputes.

The Russian Union of Industrialists and Entrepreneurs (RUIE) normally lobbies for the cryptocurrency sector regarding regulation and fintech infrastructure but has now taken another step further by forming an arbitration group.

The group will extend the breadth of its usual scope and attempt to handle disputes arising from cryptocurrency transactions, smart contracts and token sales. In order to deliver an efficient and informative service, the RUIE has called on expert advice from with the sector.

The main problem appears to be the volume of cryptocurrency queries and disputes jamming Russian courts. A recent example involved a church in Irkutsk, Siberia’s largest state, which was taken to court for draining too much power from the local grid through crypto mining. In another major case, the St Petersburg City Court lifted a block on crypto media website Bitcoininfo.ru, after the District Court shut down its site in July 2016.

The same St Petersburg court annulled a trial court decision to ban 40 other Bitcoin-related websites, previously accused of spreading information about digital currency that “is not backed by any real asset and does not provide information about its owners”.

The Russian government is reviewing cryptocurrency regulation under the Digital Assets Regulation Bill filed on 25 January. The bill defines cryptocurrencies and tokens as digital financial assets. If the bill passes in its current form, it would allow trading on cryptocurrency exchange operators with authorized Know-Your-Customer (KYC) standards. This would also apply to initial coin offerings (ICOs) established in Russia.

Until then, bodies such as RUIE can certainly plug the gap left by regulators’ standoff approach to dealing with disputes needing some kind of arbitration. However, appeals do continue to find favor with the courts. The new body claims that it will have a broader remit settling disputes across the whole crypto sector although will have no recourse to changing current laws pertaining to cryptocurrencies.

The body will convene for the first time early next year.

 

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Norway Introduces New Rules for Crypto Service Providers

Norway’s financial regulator has announced new regulations specifically aimed at cryptocurrency providers which will take effect on October 15.

The Norwegian Financial Supervisory Authority (FSA) is enforcing the regulations as part of a government push to ensure that Norwegian cryptocurrency exchanges and those overseas operating in the country observe domestic money laundering rules.

The laws won’t affect individuals trading in cryptocurrencies in Norway as the FSA has specifically stated that the new legislation will only affect, “Norwegian providers of virtual currency exchange and storage services.”

Thus, those storing private keys on behalf of customers are considered to be involved in “the transfer, storage or purchase of virtual currency” and come under the new guidelines. However, “Storage solutions that do not store private cryptographic keys (often referred to as non-custodial wallets) are not covered by the regulations,” such as “Individuals who buy or sell their own virtual currencies for private purposes” and those who “assist friends and acquaintances with the purchase and sale of virtual currencies” won’t be subject to the FSA’s new reporting requirements.

Norway is one of a growing number of nations exploring the viability of a central bank cryptocurrency. There is no specific law telling Scandinavian banks how to view cryptocurrency, there is, however, anti-money laundering legislation already in place. These laws demand that those offering financial services must follow KYC practices. Another Scandinavian central bank, Sweden’s Riksbank, has considered its own cryptocurrency e-krona, with the same motivations as its Norwegian neighbor, having observed cash use on the decline across the country.

The focus has fallen on Norway recently with more cryptocurrency miners reportedly looking to move their operations to Norway and its Swedish neighbor. Hydroelectricity and other renewables from more developed European countries allow for cheaper electricity tariff’s beneficial to profits, as electricity is the main overhead in the crypto mining process.

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1Broker to Launch ”Read-Only” Version of Bitcoin Futures After SEC Charges

After the US Securities and Exchange Commission (SEC) filed charges against Bitcoin futures firm 1Broker last week, the website now has plans to re-launch on a ”read-only” basis.

At the time of the SEC filing charges, the US Federal Bureau of Investigation (FBI) seized the website, with customers left without access to their funds. A slight relief came Tuesday in the way of 1Broker’s lawyers recommending that the brokerage website can go back online in a read-only format, meaning that customers can view balances and transaction history but cannot pursue any active trades or retrieve funds.

1Broker has been adamant that customers funds remain safe despite the legal action taken against them, saying that its top priority is allowing customers to withdraw from their accounts.

A post on parent company 1Pool’s website outlining the current situation of the company details its priority to protect customers and retrieving their funds: ”The company holds enough funds to cover all withdrawal requests, of course. Before we can take the required steps to do that, we have to seek permission from the authorities.” Balances will have to be paid out via an alternative domain also, its message reads.

CEO of 1Broker Patrick Brunner spoke to CoinDesk on the subject, saying that the company is asking for patience while the process transpires. “Unfortunately, such matters take some time – from our point of view, we are ready to process withdrawals right now,” Brunner told CoinDesk.

The read-only version of the website is expected to go live today on Wednesday.

The charges

The SEC claims that 1Broker violated federal law by allowing US traders to exchange on its platform.

An FBI agent created an account on 1Broker and made a purchase of what they claim are classified as securities, for which the company does not hold the correct licenses from the SEC. The FBI cited an additional grievance in that 1Broker only required an email address and username to open an account – a lack of any know-your-customer compliance.

 

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Deloitte: 5 Hurdles for Blockchain to Enter Mainstream

Blockchain adoption barriers can be lowered significantly if five “key issues” can be addressed, according to an article published by Deloitte.

Barriers

Published on 28 September, the article titled “Blockchain and the five vectors of progress” takes a deep dive into the many issues that are stifling mass adoption of the technology. In order for progress to be made, the article recommends three areas that will “enhance technical feasibility” and two others which call for greater regulatory support and an increase of organizations formed by blockchain enterprises.

Other reports and studies from the global auditing and consulting firm have appeared rather bullish on blockchain, suggesting that businesses that do not adopt and implement the technology will be at risk of falling behind.

Furthermore, a survey that was recently conducted by Deloitte highlighted positive sentiments held by industries across the globe; it found that a vast majority of participants believed that mainstream adoption will come to fruition in the not-so-distant future.

The article somewhat counters these findings by referencing a 2018 Gartner CIO survey which found that 1% of respondent CIOs had managed to “indicate any kind of blockchain adoption”, with another 8% working on either a pilot or were in short-term planning phases.

Speed

It goes on to argue that blockchain-based systems as a transaction medium are still too slow with the number one network, Bitcoin, only able to manage up to seven transactions per second and the second largest, Ethereum, around 15.

However, massive improvements have been made, with IBM managing to run 3,500 transactions per second on the Hyperledger Fabric blockchain platform. Furthermore, the article highlights the push to evolve consensus mechanisms as a sign of distinct progress.

Standards

Next up is standardization; for any business without blockchain coders and developers on staff, adopting the technology is expensive and time-consuming. This is due to the overflowing number of blockchain projects that are utilizing multiple coding languages, mechanisms and protocols.

Should there be a standard in place, the field will somewhat be leveled and an increase in industry-level participants will be further made possible. The report makes note of the Enterprise Ethereum Alliance (EEA), who are currently working to create a standard Ethereum network software for business.

As the number of participants in the blockchain race grows, it is thought that standardization will prove valuable to collaborations, sharing of blockchain solutions, smoother integration with existing blockchains and cross-blockchain transactions among many others.

Low-cost ease of access

Blockchain solutions are complex and costly, not only to create but also to implement.

Naturally, unintuitive new technologies can ward off even the most open-minded of skeptics, though this is also changing rapidly in the face of industrial giants such as Amazon and IBM launching affordable cloud-based technology as-a-service solutions.

These new services enable companies to dramatically reduce the barriers with blockchain templates, which allow for the simple setup of a “basic blockchain infrastructure”. Ease of development is also on the list of issues presently being conquered with new tools being created by companies such as Google.

Legally sound

Regulation has been one of the hottest topics surrounding the nascent technology in 2018. Countries such as Malta, South Korea, and Switzerland are tipped as the jurisdictions that are leading the regulatory race, with Malta miles ahead of the closest competitor.

Deloitte agrees that regulation is absolutely vital to the future success of blockchain, creating appropriate classifications for cryptocurrencies, defining smart contracts as well as Anti-Money Laundering (AML) and Know-Your-Customer (KYC) policies being high on the order list.

The formation of “blockchain consortia” is the final vector listed as part of the Deloitte’s five critical issue areas; groups of collaborating companies who band together to promote the advancement of the technology can be a powerful catalyst for its adoption.

Like the EEA, they can establish new standards for the tech, lobby governments, develop infrastructure, educate, advise and do much more to speed up progressions with the aforementioned vectors listed.

Conclusively, the article writes:

“It’’s understandable why, despite promising pilots and experiments, executives might wonder when — and even whether — blockchain will be ready for mass adoption. But progress along these vectors is bringing the technology closer to its breakout moment every day.”

 

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