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There's a new party interested in initial coin offerings (ICOs): global governments.This time, though, they aren’t just out to warn citizens or regulate the new mechanism. Instead, at least one progressive government is considering whether it can take advantage of the technology.

The Baltic nation of Estonia made a splash last month proposing a government-supported token – the "estcoin" – as an extension of its e-Residency program.

As detailed in a blog post that quickly vent viral, the proceeds would be used to create a type of public-private sovereign wealth fund that would invest in Estonian digital infrastructure projects and technology startups.

The idea won equal praise and derision, getting lambasted by European Central Bank president Mario Draghi.During his regular press conference, Draghi commented on Estonia's bid:

"No member state can introduce its own currency; the currency of the euro zone is the euro."

It's a notable comment in that it underscores a strange disconnect: are these new cryptocurrency tokens actually currencies?

The token tiff

While governments around the world are still in the process of deciding whether or not cryptocurrencies meet the definition of a currency – and many times that depends on just when and how they're used – Draghi's comments indicate some are lumping ICO tokens into the currency bucket already.

But tokens have key differences from cryptocurrencies that might make them look even less like a currency. In Estonia, for example, the wealth fund seems more about giving Estonia's 22,000 "e-residents" – foreigners who are allowed access to certain services and benefits normally enjoyed by Estonian citizens – a new way to engage with the country, than giving them a new method for transacting that could rival the the euro.

According to the August 22 blog post, authored by e-Residency scheme managing director Kaspar Korjus:

“A government-supported ICO would give more people a bigger stake in the future of our country and provide not just investment, but also more expertise and ideas to help us grow exponentially.”

In this way, the token – which earned the endorsement of ethereum founder Vitalik Buterin – would function as a vehicle for raising proceeds that's more nuanced and targeted than traditional means: namely, governments issuing bonds in international capital markets.  

But there were a couple paragraphs in the blog post that likely raised red flags with Draghi, and will raise flags with other Eurozone regulators.

Those paragraphs have Estonia envisioning a future where the estcoins could potentially be used as a medium of exchange for goods and services both in and outside the country.

The one currency

Either way, it seems Estonia might be putting the cart before the horse.Because not only did Estonia forfeit its right to issue its own currency and control its monetary policy in 2011 when it joined the Eurozone, but with that it also relinquished its ability to raise money in anything other than the euro.

"If you sign up to the Eurozone, you sign up to the euro. Your financing is in euros," said Daniel Heller, a research fellow at the Peterson Institute for International Economics and a former executive at the Swiss National Bank and the Bank of International Settlements.

In an email exchange with CoinDesk, sentiments from the ECB spokesman Peter Ehrlich align:

"Within the legal framework of the European Union, in all member states that, like Estonia, have introduced the single currency, only the euro is the legal tender and the monetary policy lies exclusively with the European Central Bank."

These statements are what make Estonia's public ideation that much more confounding, especially since the project sounds similar to Italy and Greece's efforts to create so-called "parallel" fiat currencies that could be used domestically alongside the euro.

Both proposals have been met with red lights from European authorities."There are no exceptions to this rule," a European Commission spokesperson, referencing the euro-only mandate, told Reuters in August after it slammed the door on Italy's parallel currency proposal.

The crypto utopia

While many government regulators have made recommendations, if not formal decrees, for how cryptocurrency should be regulated in certain situations, there isn't a more homogenous way of categorizing them as you typically see in more traditional markets.

While many have argued this diversity of opinion inserts roadblocks to the global tool's use, that hasn't stopped cryptocurrency's upward trend in price (arguably one of the main mechanisms used to determine cryptocurrency's success).

Similarly governments have begun forming mixed opinions on ICOs – everything from all out bans in China to accommodation in Quebec. But one thing seems certain: some of these tokens will be labeled as securities.

While some worry about the impact of these regulatory declarations, the industry, for the most part, has continued with business as usual. Business as usual, that is, except with companies and developers trying to position their tokens so as not to be classified as a security by saying instead that they're utility or app tokens – though those definitions remain a structural and legal gray area, as well.

It's unclear, at this point in its ideation phase, how the estcoins project plans on defining its token, but it's currently soliciting feedback from stakeholders and potential participants.

Arnaud Castaignet, head of the e-Residency scheme’s public relations, told CoinDesk that initial responses from Estonia's startup and blockchain community have been supportive, and that the current goal is to lay out all of the pros and cons before mapping out any formal next steps:

"We are ready to move forward, nevertheless a national conversation is necessary first. If there is support for this proposal, then the next stage before the ICO would be to provide a white paper that outlines the value of estcoins and how the investment will be used to develop our digital nation."

In his blog post proposing the estcoins idea, Korjus did not discuss how the token might co-exist vis-a-vis Estonia's obligations to the euro, an omission that caught the attention of several observers. And Castaignet did not respond to follow-up questions about the topic.

A possible out?

While Draghi's remarks left no room for ambiguity about estcoin's viability as a state-backed digital currency, the ECB's Ehrlich didn't rule out the proposal entirely.

Instead, he suggested that, because the project would be undertaken via a public-private partnership, it would be outside of the ECB's jurisdiction."[M]y understanding is that it's a private idea and no official position.

The ECB will not comment on ideas brought forward by the private sector," he told CoinDesk.Therefore, with the right combination of messaging and legal sleight of hand, the project might just pass muster with European technocrats.

Heller reckoned that for the project to have a chance, it would need to as a bond-like financial instrument that is neither an official currency nor a traditional bond.Further, the tokens would need to

Earlier this week, JPMorgan Chase CEO Jamie Dimon made a controversial statement at a banking industry conference organized by Barclays, condemning bitcoin and threatening to fire portfolio managers within JPMorgan who have been trading bitcoin.

Despite the warning, according to sources, JPMorgan Securities Ltd. purchased massive amounts of bitcoin through Swedish Bitcoin exchanges when the price dipped to the US$3,000 level.

Dimon’s baseless comments toward bitcoin and his threats to traders led to criticism from bitcoin experts, bankers and former JPMorgan executives including former JPMorgan head of global macro Alex Gurevich.

More to the point, Dimon demonstrated a complete lack of knowledge of the structure of bitcoin and blockchain technology in general when he stated that bitcoin should be closed down by the government in the near future.

CNBC analyst Brian Kelly criticized Dimon’s statement, explaining that bitcoin was specifically designed to circumvent governments and authorities by creating a decentralized financial system.
Despite Dimon’s strong condemnation of bitcoin and his threats toward JPMorgan traders, many trusted sources including bitcoin developer Andrew DeSantis and bitcoin trader I am Nomad revealed that JPMorgan Securities Ltd. had purchased massive amounts of Bitcoin XBT, an instrument tracking the price of bitcoin, through a Swedish exchange.
Similar to Digital Currency Group’s Bitcoin Investment Trust (GBTC), Bitcoin XBT is an investment vehicle allowing institutional and retail traders to invest in bitcoin through strictly regulated channels in the public stock market.

Both DeSantis and Iam Nomad revealed that many accounts under JPMorgan Securities Ltd. purchased bitcoin as its price dipped below $3,000.


On the World Crypto Network, a YouTube news channel and cryptocurrency podcast hosted by Vortex, bitcoin consultant and derivatives trader Tone Vays noted that it is not possible any trader at JPMorgan directly invested in a bitcoin investment vehicle.

He suggested that a more likely scenario was that JPMorgan processed bank transfers to Nasdaq Nordic’s stock exchange, in which Bitcoin XBT is supported, on behalf of their customers.For his part, IamNomad noted that a department at JPMorgan could have invested in Bitcoin XBT since its traders are not allowed to invest in bitcoin directly.

However, a more reasonable explanation of JPMorgan’s bank transfers to Nasdaq Nordic was that JPMorgan clients were purchasing bitcoin exchange traded notes in Bitcoin XBT.
Whether JPMorgan itself purchased shares in Bitcoin XBT is of minimal importance. It is crucial for investors and traders to take away the fact that an increasing number of JPMorgan traders are willing to purchase bitcoin and demonstrate enthusiasm even after the harsh criticism toward bitcoin issued by the company’s CEO.

As mainstream adoption of bitcoin as a digital currency, a long-term investment and a safe haven asset continues to increase at an exponential rate, demand for the crypto from public markets as well as professional and institutional traders will increase rapidly.

Regardless of the recent closure of Chinese bitcoin exchanges, international markets and leading regional bitcoin exchange markets are strengthening with efficient regulations and the emergence of major conglomerates within the global bitcoin industry....
Discover more articles like this from the Merkle here: https://themerkle.com/jpmorgan-clients-purchase-bitcoin-in-stock-market-despite-ceos-warnings/

Anthony Jenkins, the former chief executive officer of Barclays, said banks could become irrelevant if they fail to keep up with new fintech technologies, according to CNBC. He said digital ledger technologies offer efficiency savings between $80 billion and $100 billion.

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Jenkins, who was ousted from Barclays in 2015, created 10X Future Technologies in 2016.He said financial services will experience a 50% decline in branches and staff in the next 10 years. He said we are “at the end of the beginning” of a revolution in financial services where fintech is too narrow a characterization of what is happening.

A ‘Kodak Moment’ Arrives

It is possible that a “Kodak moment” is occurring in which banks become irrelevant to customers, Jenkins said. He said banks must act quickly to avoid this. He said they have to think about doing things that are radically different.Jenkins in 2015 warned that banks faced an “Uber moment” on account of new technologies.

Cryptocurrencies like bitcoin and artificial intelligence are just the beginning of a new transformation in banking, he said. The banking system, using blockchain, will be transformed in a way that they will no longer really exist.

Fintech Must Be Disruptive

In a 2015 speech at Chatham House, the Royal Institute of International Affairs in London, an independent policy institute, Jenkins said the fintech sector must be disruptive, meaning it needs to dramatically improve the customer experience. He said fintech would need to see a “ten-fold” increase of the customer experience currently provided by the traditional banking system.

Secondly, technology must power the service and be at its core, he said. And thirdly, there must be a ubiquity to it.The current fintech climate resembled the first iteration of the industry or, as he calls it, fintech version 1.0. “There is really not that much tech in many fintech companies,” he said, citing that most payments still ride with the traditional banking system, among other examples.

Also read: Ex Barclays Chief: fintech will significantly disrupt banking sector

Former UBS Officer Weighs In

Oliver Bussmann, former chief information officer of UBS, said echoed Jenkins’ recent remarks in saying blockchain is transforming finance by eliminating the need for middle men. He said a new business model is evolving that is decentralized.

This change, he said, has been introduced as an equity. One sign is that startups are using cryptocurrency to secure funding and use it as a currency to provide and get paid for services. Bussmann said there is a different incentive being established today that did not previously exist.

Jenkins and Bussmann both recommended open banking platforms that allow third parties to manage finances, blockchain technologies like cryptocurrencies and artificial intelligence, and recruiting for experts in these areas.New European Union regulations will...continue reading: https://www.cryptocoinsnews.com/banks-will-disappear-unless-harness-fintech-former-barclays-ceo/