Faithful
- by China Man
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The parliament of Malta has officially passed three bills into law establishing a ‘legal certainty’ for cryptocurrency businesses. The country’s policymakers approved their third and final reading on July 4.
‘FIRST TO PROVIDE LEGAL CERTAINTY’
A local media reported July 4 that the Parliament has approved three bills, essentially enacting them into laws. These are the Malta Digital Innovation Authority Act, the Innovative Technological Arrangement and Services Act, and the Virtual Financial Asset Act.
According to Silvio Schembri, Malta’s Junior Minister for Financial Services, the country is the first one to provide legal certainty to the cryptocurrency field.
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Silvio Schembri@SilvioSchembri
The 3 Bills that will regulate DLT have been approved by Parliament and enacted into law. Malta , the first world jurisdiction to provide legal certainty to this space. #blockchainisland @JosephMuscat_JM5:03 PM - Jul 4, 2018
Schembri also said that this move by the Maltese Parliament will facilitate investors as companies now have the necessary means to operate in a fully regulated environment. He also added that this will hopefully attract further investments in the country:I am optimistic that further companies will choose Malta to operate from with a system that offers stability and that will eventually result in further economic growth.
WHAT DO THE LAWS REGULATE?
Three bills have successfully passed the third and final reading in Parliament: The Virtual Financial Assets Act (VFA)Regulates Initial Coin Offerings (ICOs). It sets forth prerequisite steps that each project has to go through in order to be compliant. One of the interesting requirements is that each issuer needs to make his financial history public.
The Malta Digital Innovation Authority Act (MDIA)Stipulates the setup of an industry-specific body, governing the development as well as the implementation of certain guiding principles set forth in the Act. The newly formulated body will also have regulatory functions.
The body is to be known as the “Malta Digital Innovation Authority.”The Innovative Technology Arrangements and Services Act (ITASA)Defines blockchain-based enterprises and makes them recognizable in the eyes of the law. It is designated to serve as the basis for the operation of the previous two laws.STRENGTHENING ITS POSITIONS
Malta has successfully established itself as a country which advocates for widespread adoption of blockchain-based technology. Recently, a few cryptocurrency exchanges, including Binance, OKEx, and BitBay, set up operations on the island because of its progressive policymaking towards the field.
Part of the country’s overly positive sentiment towards the industry is represented by its Prime Minister. Joseph Muscat has been quite outspoken, stating that cryptocurrencies are the “inevitable future of money.”Once again, in what seems like an overly celebratory tweet following the recent legislative progress, Muscat has stated that the country aims to become a “global hub for market leaders in this new sector.”
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Joseph Muscat✔@JosephMuscat_JM#Malta officially the first country worldwide to have holistic legislative framework regulating #blockchain & #DLT technologies. We will be the #global hub for market leaders in this new sector. Now for the implementation of #BlockchainIsland -JM @SilvioSchembri5:15 PM - Jul 4, 2018
Do you think Malta is on the right way, regulating the cryptocurrency industry? Don’t hesitate to let us know in the comments below!-
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Francisco Gimeno - BC Analyst Malta is reinventing itself after the 2008 crisis which strongly affected it. Traditional financial institutions closed or were closed accused of fraud then. Now, Malta has strongly bet to be among the first if not the first administration to have a holistic legislative framework regulation blockchain and DLT. By sure other countries will study these laws and how everything evolves there. We expect a bright future for Malta comparing with Bank of Finland which stated this week that cryptos are just a mirage.- 10 1 vote
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Paul Brody is a principal and the global blockchain leader at EY. The following article is the second in a series. Read part one here.
One of the most compelling uses of blockchain technology is the ability to reliably record information and verify when and where it was added to the network.
This feature, combined with the ability to synchronize a ledger, means that all parties can get the same information at the same time and have confidence in the truthfulness of that information. The result has been a rush to treat blockchains like infallible digital notaries, recording truthful information and sharing it around.
Useful, definitely, but with significant limitations.
While knowing when and where a product was made is interesting and being able to trace its history is a powerful means to reduce fraud, it isn't an economic unit that I can buy or sell.
Digital tokens, on the other, are designed for economic activity. And blockchains are ideal for handling them.Rx for commerce
Take something complex and valuable like a package of medicine. Not only do I need to record when and how it was created and where, I would also like to sell this product to my distribution partners and then on to pharmacies.
By creating a digital token to represent that package of medicine, not only do we record all the history of that medicine, just like a digital notary solution, we can also buy and sell that item by moving the token between accounts.
Public blockchains like ethereum are largely based on the ability to handle both complex business logic with smart contracts and a nearly unlimited number and type of digital tokens.
Some tokens (like those representing money) are essentially fungible while others are unique. In either case, we believe the future of commerce is in contracts that involve the exchange of product and service tokens for money tokens.
Quite simply, the economy is going to be tokenized.
Using digital tokens, we can recreate all the sophistication of the existing financial and operational business world we live in, but with far less operational cost and complexity, and do it all within the same system. The future of business contracting is, we believe, the exchange of product and service tokens for digital payment tokens.
When combining tokenization with the complex business logic enabled by smart contracts, we can represent complex business interactions faithfully, and we can do so much more reliably than most companies can today. It's not atypical for companies to find that their ability to negotiate agreements far exceeds their ability to actually keep to those agreements.Bird's-eye view
Volume purchasing agreements are a good example: most companies beyond a certain size often have multiple enterprise resource planning (ERP) systems and subcontractors and subsidiaries, which makes doing even simple things like keeping track of volume purchased across the network difficult. And if you can't track volume, you can't get the discount.
With a smart contract and a blockchain for procurement, it's possible to both track total volume consumed across the business network and always calculate the correct price for each purchase order and validate each invoice.
As the token economy matures and companies put more and more assets, products, and services into public blockchains, expect the delivery of complex financial services to be digitized as well.
Everything from trade finance to receivables factoring will be a one-click activity, once participants have established a trustworthy track record of doing business on the blockchain – a record of granularity and precision that will far exceed the reliability of any traditional credit report.
To get there from here, however, the first step is for companies to embrace tokenization and move away from simply treating blockchains like fancy digital notaries.
Steam engine image via Shutterstock.
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.-
Francisco Gimeno - BC Analyst The first stage of the new digital economy is being displayed now. All around the economic and finance sector blockchain is being researched, accepted and used. The next step will be the start of the tokenisation of economy, the radical transformation of putting in blockchain products, services, information, etc to democratise the economy. This development will be done sooner than later in the fast technological change we are living now.
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Recommended: 7 hot cryptocurrency topics being discussed in South Africa right n... (businesstech.co.za)The Intergovernmental FinTech Working Group (IFWG) has released a report on its inaugural market outreach workshop.
Held in April, the workshop gave a platform for regulators and policymakers to engage with industry, and to identify key considerations, working toward developing a harmonised approach to FinTech-driven innovations for the benefit of all South Africans.
One of the key focuses of the report was cryptocurrencies and government’s role in regulating them.
While there seems to be no silver regulatory bullet, there are a few issues that should be considered when thinking about how to regulate cryptocurrencies in South Africa, the report said. Below are the seven key issues that were discussed. How cryptocurrencies and tokens should be classifiedDelegates put forward a view that regulation should consider the activity and purpose of an underlying token.
As tokens can perform a multitude of functions, the delegates are of the view that regulators would be ill-advised to regulate the blockchain technology.
Delegates discouraged new definitions and new regulation as the technology is evolving at pace and this could make any new piece of regulation obsolete quickly. Advocacy bodies are helping to coordinate the industry and campaign for an aligned view on regulation.Regulation should also be proportional to the risk.
Regulators were encouraged to review the possibility of introducing thresholds. “Key operational risks across the cryptocurrency value chain should be identified and solved, including ‘Know Your Customer’, anti-money laundering, and the governance and processes around the conversion between cryptocurrency and fiat currency,” the delegates said.
Consumer and investor protection is necessary
There was immense support for the protection and education of investors.As exchanges were the most common touch-points for public investors in cryptocurrencies and as such, the delegates believed they should be accredited and regulated.It was suggested that a centralised platform, where all ICOs eligible for the South African public could be listed would be a starting point and an opportunity to standardise information flows and create a set of minimum expectations in terms of white papers published, disclosure of key information and source code.
The idea of registering all ICOs with a central body was also put forward as a way to monitor the quality and creditability of issuers.Appropriate and purposive regulationDuring the workshop, the fintech firms present were calling for light-touch regulation that is clearly communicated.
The South African Revenue Service (SARS) guidance note on the taxation of cryptocurrency earnings was cited as a positive and effective example of communicating a regulatory position.
Guidance notes defining what is considered acceptable and not acceptable in terms of ICOs were discussed as a favoured approach going forward.
Alignment and leverage of current legal frameworks versus new regulation
South Africa has a well-established legal framework that governs the financial services industry.
The role and impact of cryptocurrencies was discussed in reference to the SARB Act; the National Payment Systems Act; the Banks Act; the Financial Markets Act; the Financial Adivisory and Intermediary Services Act; the Financial Intelligence Act ; tax laws; the Collective Investment Schemes Control Act; and the Companies Act.
As such, regulators have two options at their disposal: to either amend existing legislation by changing current definitions to cater for emerging innovation or to create new regulations, the delegates said.
Pursuing the former option requires significant coordination among regulators and there is a risk that changes to legal definitions could have material knock-on effects on existing financial instruments, products or services.
While the crypto-industry is still budding, defining crypto-activities may risk limiting the extent of the regulation as the technology evolves.Creating an altogether new piece of regulation aimed at start-ups or fintechs also risks creating a potential un-level regulatory playing field where existing or incumbent players involved in similar financial activities (perhaps using different instruments) are subject to more onerous regulation.
Some delegates at the workshop were of the view that the existing regulatory framework could sufficiently meet the needs of the cryptocurrency industry.
Regulators did, however, clarify that they needed to understand what they were trying to regulate, whether and how a fintech activity was covered in existing regulation, and where any regulatory adjustments were needed.
Delegates also noted that these needs could be clarified through position papers or guidance notes on particular subjects. Beyond crypto-assetsThe application of blockchain technology in the wider financial services market and the impact of incumbent banks was also discussed.
The South African Financial Blockchain Consortium (SAFBC) articulated some of the benefits of developing a blockchain ecosystem. These include improved convenience and efficiency, a decrease in the cost of transfers, and safety and privacy protection. The importance of perspective and balance – is this time different?
Cryptocurrencies are often promoted as a way to transform financial services as it is known, as a way to improve inclusion and provide access to finance to the millions that are excluded.However, an important question debated at the workshop included whether cryptocurrencies were an answer to financial inclusion?
In providing some perspective to this question, workshop delegates were reminded that throughout history, whenever regulation is decreased or is not present, novel institutions and instruments emerge.
A speaker noted that following the 2008 financial crisis, Basel III imposed additional costs on banks and possibly led to lowered intermediation activities.
Fintech firms positioned themselves as a competing force to address underserved markets. As an example, ICOs have emerged as new financial instruments leveraging gaps in regulation, in the same way that credit default swaps emerged in the 1970s-
Francisco Gimeno - BC Analyst South Africa has been always the mirror where other African countries look. These discussions here will be also considered, no doubt, by other African governments and fintech sector. Very nice to see the soft approach to blockchain and crypto regulations, stating that regulations must exist only to protect the investors and people, but the rest should be covered or regulated through the already existent regulation. Africa is awakening.
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Coinbase launches cryptocurrency cold-storage and custodial service for business... (siliconangle.com)Coinbase Inc., the largest cryptocurrency exchange in the U.S., announced today the launch of its cold-storage and custodial service for digital currencies aimed at allowing institutional investors greater opportunity to enter the market safely.
This service, to be provided through Coinbase subsidiary Coinbase Custody, already accepted its first deposit last week. Cryptocurrency will be kept by Coinbase in what is called cold-storage, or a high-security digital currency vault that would require multiple parties to use private keys to unlock and move the currency or through other controls to prevent unauthorized access.
“Coinbase Custody is a combination of Coinbase’s battle-tested cold storage for crypto assets,” said Sam McIngvale, product lead at Coinbase Custody, who called it “an institutional-grade broker-dealer and its reporting services, and a comprehensive client coverage program.
”The service is designed to act as a safe cold storage for cryptocurrency to be used by business interests such as investors, hedge funds, exchange and startups launching their own tokens with initial coin offerings.
As a “custodial service,” Coinbase Custody will also offer dedicated account support, strict financial controls and other regulated services designed to increase the safety and security of trade transactions. This will include audit trails, segregation of duties and guaranteed response times for fund transfer requests.
Given the still rocky Wild West nature of the cryptocurrency industry and markets, such a high-security service may be necessary before institutional investors enter into it.
Over the past few months, a company named Taylor lost $1.35 million worth of Ethereum to a hack and South Korean exchange Bithumb had $32 million in bitcoin and other cryptocurrencies stolen.
According to a report from cybersecurity firm Carbon Black Inc., theft and fraud have led to more than $1.1 billion in cryptocurrency lost in the first half of 2018 alone.
“This new cold-storage system has undergone rigorous penetration testing and cryptographic design review,” McIngvale said, “and we plan further, regular third-party examinations to ensure the platform’s ongoing security.
”At launch, Coinbase Custody will support bitcoin, Ethereum, Litecoin and Bitcoin Cash. The company plans to add support for more tokens and other assets with regular updates. McIngvale also commented that the company currently serves institutions in the U.S. and Europe and intends to expand into Asia before the end of the year.
This service grows out of the acquisition of three companies Coinbase announced last month: Keystone Capital Inc., a California-based Financial Industry Regulatory Authority Inc. registered broker; Venovate Marketplace Inc., another California-based company with financial licenses; and Digital Wealth LLC, a financial planning and investment management firm.
Coinbase Custody will benefit from the systems of the company’s partner Electronic Transaction Clearing, which is a registered broker with the United States Securities and Exchange Commission and a Financial Industry Regulatory Authority member subject to regulated financial reporting and independent audits.
The addition of more cryptocurrency tokens and assets by Coinbase to its custodial service will depend on additional regulatory licenses.
“Over 100 hedge funds have been created in the past year exclusively to trade digital currency.
An even greater number of traditional institutional investors are starting to look at trading digital assets,” Brian Armstrong, chief executive of Coinbase, said about Coinbase Custody. ”By some estimates, there is $10 billion of institutional money waiting on the sidelines to invest in digital currency today.
”Getting on board with Coinbase Custody will be expensive, with an initial setup fee of $100,000 and the service is only available to institutional investors with a minimum of $10 million in deposits.Image: Pixabay, Coinbase logo
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Francisco Gimeno - BC Analyst Crypto exchanges are evolving and while waiting for more regulations, are already wooing the big investors, business and institutions. The idea of Coinbase to start a custodial service for the very rich is interesting as make the market a better place for these big businesses.
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Cryptocurrency Mining – Why Iceland Is The Ideal Place
Blockchain, FinTech, ICO News, Investing, Regulation | July 3, 2018
By: Hermann Finnbjörnsson, CEO And Founder, Svandis
The advantages to using cryptocurrency are abundant, but some experts remain concerned over the impact mining will have on global economies. Crypto-mining serves two main purposes: Adding transactions to the blockchain and releasing new forms of cryptocurrency.
The process can be taxing on computer generator systems because it requires a certain amount of energy and power. The question of where to go in order to better serve the financial ecosystem is what troubles financial leaders, but those looking into Iceland should pay even closer attention.
Crypto-miners are constantly searching for ideal circumstances to maximize their profits – and Iceland is the number one choice based on environmental factors, new regulation amendments and economic sustainability.
As a founding Board Member of The Icelandic Blockchain Foundation, creator of the only Icelandic crypto-exchange, and founding team member of two successful crypto-startups (e.g., Svandis, Auroracoin), I see all types of miners. The largest of all data centers operating in this space is Advania Data Centers.
However, we see varying sizes of companies and individuals operating rigs. I have witnessed some of the most impressive setups being done just by individuals, somewhere in an apartment downtown Reykjavik, for instance. Iceland is welcoming to foreign entities doing as such. However, with a small population, there are only one or two central power utility companies and, thus, they are keen on ensuring they know who is requiring such high energy use.
The days of sending a shipping container to Iceland with a mining operation inside, hooking it up to a strong power supply, and just letting it run are over – but we believe that’s a good thing.
Location, Location, Location
Much like real estate, crypto mining is all about “location, location, location!” Iceland is located at the northernmost tip of the Mid-Atlantic Ridge, which means not only a cooler environment, but also one that serves as a cost-benefit for miners.
Less money needs to go into the high-powered units used to cool down the servers generating these cryptocurrencies. Moreover, data centers operating mining equipment experience major cost burdens in climates of variability, e.g., regions with very cold winters, but hot summers.
The systems emit a tremendous amount of heat to run at full capacity and Iceland’s environment is ideal for running these units as efficiently as possible, especially when concerning the renewable energy sources afforded to the country – namely, volcanic activity.
The Powers to Regulate
Thus far, the Icelandic government has only passed a KYC/AML bill requiring companies that hold wallets on behalf of customers, exchanges, ATMs, etc., to register with FME (the Icelandic SEC). The Ministry of Justice proposed a new amendment to the current anti-money laundering regulation that involves the first definition of cryptocurrencies into the Icelandic law.
It is not clear if the bill will pass before the summer break, but if it does, all businesses that offer exchange services will have to register with the FME (The Financial Supervisory Authority) within one month of the law passing. It is essential to pass legislation that impedes illegal activity, and we have to make sure that the regulation is fair and not a burden to people and businesses innovating in this space.
The Myth of Crypto-Economic Turmoil
Overall, cryptocurrencies have a way of creating a more sustainable economy because of their accessibility and relatively low transaction fees. Crypto-mining is part of the blockchain process and should be looked at as a positive as well.
When it comes to new ideas, especially in the form of a digital currency, experts are cautious on their ability to instigate growth – especially when not vetted properly. Iceland puts itself at one of the greatest advantages because of its friendliness toward cashless societies and advancements in technology.
Final Thoughts
Coming up with new crypto units involves using computing power on an industrial scale to solve complex algorithms. Recent news claims the crypto boom could crash Iceland’s economy, but their stability is a leading example of how important crypto mining is to the tech community. Iceland is not only the ideal place for data centers, but one that should serve as an example to the benefits of having a positive attitude toward digital assets – and digital access!-
Francisco Gimeno - BC Analyst Many countries are trying to get the money and the development from the blockchain and crypto economy. Iceland is well located for crypto mining (climate and energy wise) and is starting to make some soft regulations which will support the new ecosystem. Everything is location, location, as the old wise people knew.
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Token: Rewards App Powered by Blockchain Technology to be Introduced in Ithaca |... (cornellsun.com)Rewardzzz, a rewards app that identifies itself as the “first universal points exchange” and is known for its reliance on blockchain technology and the crytocurrency Stellar, will be introduced in Ithaca this fall.
Hunter Friedland ’19, CEO and founder of the tech startup, elaborated on how blockchain technology and cryptocurrencies function to explain how the app is meant to work.“Blockchain is the technology that powers all cryptocurrencies.
Bitcoin, Ethereum, Ripple, et cetera. Each cryptocurrency is its own blockchain. That’s one misconception a lot of people don’t understand,” he said.Friedland, who is a student in the School of Hotel Administration, explained further that cryptocurrencies are virtual assets that use blockchain technology as a distributive ledger.
Rewardzzz is built to be fairly straightforward to use — keeping the user away from the backend involvement with the blockchain, according to Friedland.Once users have the app, they can start getting rewards by going to any linked business. The user can get rewards at one business and use them at another — locally as well as internationally.
In Ithaca, Collegetown Bagels, Ithaca Bakery and Agava have already agreed to be a part of the Rewardzzz platform, with more businesses expected to join in the following weeks and months.
“How it works is when you go to a business, you have your linked cards. You swipe one of those card. The point of sale knows that card and automatically sends you the points,” Friedland said.According to Friedland, using blockchain for the app increases efficiency and reduces costs drastically.
“It cheaper for us to use the blockchain as opposed to, say, Amazon web service to power this,” he said.The transparency associated with blockchain also makes it a better prospect for the businesses which Rewardzzz is working with.
We are working with a bunch of independent businesses that don’t want to share their data and want to remain anonymous with each other; using a blockchain allows us to do that,” Friedland explained.
Over the summer and into the fall semester, Friedland is expecting the app to grow and to bring on more businesses as the app gathers attention, with the goal of having 20-25 businesses on the platform by the end of the summer.
http://cornellsun.com/2018/06/18/rewards-app-powered-by-blockchain-technology-to-debut-in-ithaca-are...
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Francisco Gimeno - BC Analyst One new Dapp blockchain based to reward use of services in Ithaca, USA, with less costs than normal apps. These particular uses of Dapps are increasing and building the big picture of the Blockchain and tokenisation system, step by step. Tokenisation, transparency, democratisation is the key.
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