Category: Regulatory

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Germany offers special accounts to crypto firms

Categories Blockchain, Cryptocurrency, Regulatory, Bank, Technology, Tokens

Germany offers special accounts to crypto firms

Solarisbank, the Berlin-based BaaP institution has just announced the intention to launch a new banking service that will serve clients from the crypto and blockchain industry.

The soon-to-be-launched resource known as ‘Blockchain Factor’ will provide tailored financial management services to businesses that are directly, or indirectly dealing with cryptocurrency and blockchain related services.

The struggle to build banking relationships

Over the last couple of years, cryptocurrencies and related services have increased significantly in popularity yet many still struggle to build relationships with their banking providers. In some cases, many banks and other financial institutions have closed business accounts of companies such as exchanges and brokerages leaving these businesses stranded. But now, the German fintech company Solarisbank is planning to offer a solid banking solution complete with an account manager who fully understands the technology.

“The Blockchain Factory will be used by Solarisbank to offer banking services to companies whose business is directly or indirectly based on cryptocurrencies and blockchain technology — One example of these services is the ‘Blockchain Company Account’ for the banking business of blockchain companies,” Solarisbank explains.

“Furthermore, services for global cryptocurrency marketplaces will be made available to make it easier to buy and sell fiat currencies; such as the Solarisbank ‘Automated Trust Account’, an automated escrow account for cryptocurrency market places.” 

Since the bank’s inception back in 2016, they have done well to carve out a solid reputation in the fintech marketplace. After entering into a strategic partnership with MasterCard, they raised over $70 million in a Series B fundraising round with contributions from firms such as SBI Group, Visa, BBVA, Lakestar, and ABN Amro.

“There is high demand from the blockchain world for a licensed partner that forms the technological and regulatory bridge to traditional banking — as a technology company with a banking license, we are the natural partner,” Roland Folz, the CEO of Solarisbank said.

Establishing partnerships

The fintech bank has plans to establish partnerships with crypto companies that have banking and debit card requirements.

CTO of Sloraisbank, Peter Grosskopf explains: “The fiat world is not about to dissolve. We are moving towards a hybrid future, in which the blockchain world still has to prove itself.”

In June 2018, Binance announced that they had been able to successfully open a bank account in Malta, although the name of the bank has been kept strictly under wraps. Whether the Germans will lead by example and pave the way for not just crypto-friendly banking but fully fledged crypto departments within financial institutions remains to be seen.

 

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Contact us directly on +356 20103020 or by email at [email protected] to find out more.

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Lithuania announces guidelines for cases when ICOs qualify as securities

Categories Blockchain, Cryptocurrency, Regulatory, ICOs, Tokens, Securities

Lithuania announces guidelines for cases when ICOs qualify as securities

The Lithuanian Ministry of Finance has announced the issuance of guidelines regarding initial coin offerings (ICOs) as well as outlining when cryptographic tokens could be considered as securities and how each token sale can be regulated by various laws within the country.

In a document published on Friday, a definition was outlined that would “grant profits or governance rights” to any investor that obtains the tokens via means of ICOs.

Whilst the existing civil code, in theory, should apply to all of the projects with tokens that can be used as a payment tool, a variety of financial regulations should apply if a token grants profits or governance rights.

Guidance on tokens

The ministry of finance drills down further into ICOs and provides guidance on tokens that are issued, the entity that organises the sale, and whether it participates in a secondary market exchange. It will also consider whether the ICO is a crowdfunding activity.

The framework states that these aspects should be regulated by laws that are already in place in Lithuania, such as those that govern crowdfunding, securities, and financial instruments markets. Whilst the ministry has said that the framework is not a formal bit of legislation, it does aim to use it to bring transparency to the industry so that ICOs can grow in a more regulated environment.

“ICO market has not been regulated yet. It has huge potential but there are risks that we must manage. We should make our efforts for Lithuania to become the main headquarters for those ICO project promoters who are willing to operate in a transparent and orderly legal environment”, Vilius Šapoka, Minister of Finance said in a statement.

In addition to these financial regulations, the announced guidelines will also offer forth thoughts from the country’s taxation, auditing and financial crime investigation agencies in terms of how tax and (AML) Anti Money Laundering rules should be applied. For example, the guidelines put forward a suggestion that investors’ income that is received from an individual purchase and sales of cryptocurrencies should be taxed at the standard 15% income tax rate.

 

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Bitmora, a crypto exchange company is moving to Malta.

Categories Blockchain, Cryptocurrency, Regulatory, Malta, The Blockchain Island, Cryptocurrency Exchange

Bitmora, a crypto exchange company is moving to Malta.

For every company, the launch of a product is an exciting time to be in, however, state governments are bringing many problems for cryptocurrency exchange companies. Bitmora, a crypto exchange company announced its intention to expand their offices to Malta, hence postponing its US official launch.

Recently problems on cryptocurrencies started to arise in the United States. Moreover, the SEC is treating all ICO companies as securities, thus moving away from becoming a crypto friendly country. Bitmora stated that while dealing with US banks, problems with regulations started to arise. Due to problematic encounters, Bitmora is moving away from the US jurisdiction.

Turning problems into success.

Bitmora has announced that it will shift its operations to the small nation-state of Malta. By far two prominent crypto exchange companies, Binance and OKEx have also stated their intentions to move their offices on the island. It is said that Bitmora’s decision to move to Malta was made when US regulations made it impossible for the organisation to function. For Malta, this is important news which can help the growing economy. More work opportunities are set to be created in the blockchain industry thus becoming the now dubbed “blockchain island.”

Since Bitmora is changing their launch date, it is thought that the US rigorous regulations have to blame, however, this is not the case. Developers are set to be working to improve Bitmora’s blockchain, developing a better platform for their customers.

In addition, the platform is set to become finalised and published on May 26th, 2018.

To know more about ICO legislation in Malta please follow this link.

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Maltese Gaming companies can follow specific GDPR guidelines presented by MGA.

Categories iGaming, Regulatory, Malta, GDPR

Maltese Gaming companies can follow specific GDPR guidelines presented by MGA.

Last Friday 4th May, the MGA released a document with specific guidelines on the new General Data Protection Regulation (GDPR) directive which will come to effect on May 25th, 2018 by the European Data Protection Board.

The EU Commission will enforce the GDPR directive for all EU states to follow. In effect, GDPR will be the catalyst to protect EU citizens from data privacy, thus guiding organisations across the region to observe data protection laws more seriously.

What will GDPR protect?

Previously, the EU has already passed a law on the data protection act across all EU countries. However, with the advancement of technology and scandals on big corporations stealing clients’ data from social media websites, the EU has come up with better and strict laws to protect its citizens.

The GDPR law has continued to build more specific laws on to the previous legislation which holds organisations accountable for the use and retention of personal data, enhancing individual’s rights to data privacy.

MGA guidance to GDPR

As an authority, the MGA acknowledges the Gaming industry concern about GDPR – compliance and how it can impact the industry. The MGA has presented a document to the gaming industry guiding them how to proceed. Before publishing the report, MGA has consulted with the Office of the Information and Data Protection Commissioner (IDPC), the supervisory authority responsible for regulating the application of data protection legislation. However, the MGA licensees are highly accountable to ensure all gaming companies are compliant with the GDPR and the gaming regulatory framework.

The authority expects that gaming companies will use these guidelines in par with the GDPR law. These guidelines will continuously be updated through a time when practical issues might arise. Gaming companies need to also take into consideration the legal requirements required to observe by the Maltese gaming laws without bypassing the current regulation. Also, the MGA guidelines and interpretations will not harm the Commissioner decision regarding complaints and other specific data protection issue.

The MGA has concluded the interpretations which are without prejudice for other guidelines or opinions which might be subjected by the Article 29 Data Protection Working Party.

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Malta has the largest cryptocurrency by trading volume.

Categories Blockchain, Cryptocurrency, Regulatory, ICOs, Malta, The Blockchain Island

Malta has the largest cryptocurrency by trading volume.

An analyst from Morgan Stanley, Sheena Shah, published a report about cryptocurrency exchange. This research measured the trading volumes of cryptocurrencies found on all legal exchanges around the world.

A team conducted by Morgan Stanley, (an American investment banking company), were surprised to find out that Malta is leading in virtual currency trading volume. This study found astonishing conclusions, stating that the most cryptocurrency exchanges are done in the UK and are processed through exchange companies registered in Malta. In contrast, the UK accounts for 1% of global trade volume.

The crypto exchange industry is growing each day. Around the world, many people are opting to trade their fiat money to bitcoins or other altcoins found in the crypto market.

How did Malta obtain the highest trading volume of cryptocurrency exchange?

Last March, Binance, one of the world’s leader in crypto exchange, has expressed its plans to move its head offices to Malta. In their research, Ms Shah’s team stated that if Binance did not choose to move to Malta, the island would be “much further down the list.”

In a statement, “Binance said that it was moving away from Asia (currently registered in Hong Kong) due to more stringent regulation, especially from Japan. The third-largest exchange, OKEx, also recently announced that it was opening an office in Malta as the government markets itself as “The Blockchain Island”.”

In the report presented by Ms Shah, it states that:

“The blockchain and cryptocurrency industry is growing rapidly and can have economic benefits for a particular country through the creation of start-ups…, research and development and financial transactions.” Due to this, the “Governments are having to consider their regulatory stance quickly.”

Many blockchain companies are looking for countries that offer attractive regulations such as Malta. It is a known fact that crypto companies are looking to operate in countries offering a “regulatory certainty” with low tax rates to operate their business. In fact, Malta is offering crypto regulation certainty through its legislation and offering foreign companies low tax rates, encouraging them to work in Malta.

Last week the Maltese government presented three bills to parliament on blockchain and cryptocurrency regulation. Through these set rules, the Maltese government is hoping to attract more blockchain based companies to open up or transfer their offices on the island. With these leading blockchain companies, Malta’s dream to become the Blockchain island will become a reality.

Interested in Learning More about ICOs Legislation in Malta? Contact us directly on +356 20103020 or by mail at [email protected] to find out more.

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Blockchain – can it help our environment?

Categories Blockchain, Cryptocurrency, Regulatory

Blockchain – can it help our environment?

Shortly after the dawn of the internet, it became revered and known as a bit of technology that held the key to solving the problems of humanity. It was hailed as a miracle that would shine a light across every inch of the world, bringing knowledge to those that needed it and allowing the free exchange of ideas. Whilst it has achieved some of those things, it has also created many problems- fake news, surveillance, cybercrime, social media addiction, and the monopolisation of power have all reared their ugly heads to tarnish its shine. Whilst the internet has brought many positives into our lives, the negatives that have appeared are there to remind us that there is no such thing as a technology-driven utopia. Humans and good governance will always be there to shape the impact and use of any technology, and rightly so.

Blockchain and its applications

Advocates of blockchain technology and cryptocurrencies have been describing the possibility of more private, transparent, accountable, efficient, and competitive ways of doing business. We are told that blockchain has the answer to many problems that are present in the sectors of commerce, finance, and bureaucracy, and some even see blockchain overseeing democracy itself from elections to budgeting. Whilst some of these claims may seem a little far-fetched, there are already some incredibly interesting applications in the fields of inventory, supply chain, and logistics management.

Whilst these advances are nothing but positive, there are still negative reactions from opinion leaders and makers, as the apparent drawbacks of the technology come to light. For example, did you know that Bitcoin alone uses around 0.25% of the world’s electricity? Other blockchain platforms such as Ethereum use similar approaches that also require an immense amount of electrical power to help them to work. What about the number of hacks, scams, and accidents that are now possible in this new space? Or perhaps you have heard about the crime and terror networks that could be using these technologies to transfer their funds? These new technologies are most definitely exciting but they are also posing some very important questions to both their advocates and their regulators.

Blockchain and self-regulation

Industry pioneers are however alert to such concerns and some are even attempting methods of self-regulation. The Brooklyn Project launched in November 2017 and it is an industry-wide initiative that was created to provide support to investors as well as protection to consumers.

Joseph Lubin, co-founder of Ethereum stated, “By acting responsibly today, we can help make sure we are collectively able to reap the benefits of this powerful technology tomorrow.”

Blockchain, the environment, and society

Whilst these types of initiatives are welcome, no one is doing much to address such issues on how this technology impacts the environment and wider society. If this sector is really going to disrupt our incumbent institutions and organisations, then the general public need to know what the upsides really are.

We must ask ourselves, is it appropriate for those seeking economic justice and equal opportunities to use a blockchain that works by heavily invested actors receiving new tokens with a monetary value? Is it appropriate for speculators to hoard tokens? And is it appropriate for a project that is trying to low carbon emissions, to use a blockchain that emits as much CO2 as a small country? These examples are not hypothetical and we must strive to find blockchain solutions that do not juxtapose the positive uses of the technology, through the methods used to run them.

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DLT and Cryptocurrency laws were presented in the Maltese Parliament.

Categories Blockchain, Cryptocurrency, Regulatory, The Blockchain Island, DLT Regulation

DLT and Cryptocurrency laws were presented in the Maltese Parliament.

Yesterday Tuesday 24th April, the Maltese Parliament has presented and passed three bills associated with the distributed ledger technology and cryptocurrency. Parliamentary Secretary Silvio Schembri presented the first reading of the following laws in parliament; The Malta Digital Innovation Authority Bill, the Technology Arrangements and Services Bill and the Virtual Financial Assets Bill.

How does Distributed Ledger Technology (DLT) work?

DLT technology is a new storage system which distributes data information in a decentralised blockchain. Every block within the blockchain are directly linked and processing information to each other. In addition, each block is secured by a complex encryption known as ‘cryptography’, which it is difficult to tamper with. Whenever a transaction is processed a timestamp is issued ensuring that the data is approved. Moreover, DLT technology cannot alter data and every processed data cannot be modified. Moreover, information stored in the blockchain is there to stay.

Why are these three bills on DLT and cryptocurrency important?

The first bill presented was the role of Malta Digital Innovation Authority (MDIA). The role of the MDIA is to certify DLT platforms, enabling a legal certainty to companies or persons willing to use these platforms.

This government agency will accredit DLT platforms such as blockchain, verifying and accept information processed on the platform. MDIA has the responsibility to detect foul play, making sure that the information is genuine. Through the MDIA, persons using the DLT platform will be assured that these certified services are genuine, trustworthy and efficient.

The second bill, the Technology Arrangements and Services Bill, focuses on recording Technology Service Providers and the certification of Technology Arrangements. This system will work via administrators and auditors making sure that the platform is lawful.

While the third bill deals with virtual currencies. In fact, the Virtual Financial Assets Bill is set to regulate the provision of virtual currencies set by ICO’s (Initial Coin Offering).

In a press conference, Mr Schembri stated that DLT companies and international regulators are showing interest in working with the Maltese government thanks to these progressive regulations.

E&S Group is a leading law firm offering various services with regards to ICOs. Feel free to contact us directly on +356 20103020 or by email at [email protected] to find out how E&S can help you in ‘making things happen’.

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ESMA announce changes to capital requirements.

Categories Cryptocurrency, Regulatory

ESMA announce changes to capital requirements.

Recently, measures were announced that would limit the availability of leverage that would be on offer to retail traders as well as introducing a mandatory negative balance protection. Regulators in Europe have informed licensed retail brokers that they will need to review the permits that they hold.

In a letter that was sent out to brokerages, they are instructed to pay special attention to reassessing their business models. The regulatory changes that are being rolled out are expected to have a marked impact on the future revenues across the industry with a range of requirements pertaining to the revision of the capital and liquidity of several brokers.

The new rules state that firms will have to reflect any of their business expectations in their ongoing Internal Capacity Adequacy Assessment Process (ICAPP), elaborating on their liquidity and capital requirements.

One of the main points in the new regulatory framework relates to protecting clients from negative market moves. All companies trading as principal will need to give careful consideration to how the providing of negative balance protection will impact the risks that they are vulnerable to, as well as the appropriate capital and liquidity that they need to hold.

Any company with an IFPRU 125K matched principal license will need to give consideration as to whether their offer of negative balance protection is compatible with their Part 4A Permission. The regulators have stated that their ability to take on any market risk is limited by their Matched Principal Limitation and the IFPRU 1.1.12R.

In January 2018, Finance Magnates reported that such companies and firms will need to vary their permissions so that they are able to continue offering their services to retail customers.

EMSA issued some clarifications to regulated firms and stated that the leverage restrictions will only apply to positions opened from the implementation date and that they would not be applied retrospectively. Any existing open positions can, therefore, be maintained under the previous leverage arrangement. Regulators are now insisting that brokers should give careful consideration to how they manage the transaction period to ensure that their clients are happy and that their best interests are being maintained.

Additional clarifications from national regulators are expected in the next few weeks with various IFPRU 125k firms due to send a response to the UK FCA on their plans to either upgrade their licenses or increase their capital to meet the needs and requirements of the negative balance protection.

Interested in Learning More about ICOs Legislation in Malta? Contact us directly on +356 20103020 or by mail at [email protected] to find out more.

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UK regulators should evaluate Ripple’s suggestions.

Categories Blockchain, Cryptocurrency, Regulatory

UK regulators should evaluate Ripple’s suggestions.

Regulators in the UK have not yet decided as to how to regulate cryptocurrencies. The third largest cryptocurrency, Ripple is hoping that the UK will move fast in regulating cryptocurrencies, ending this long battle.

Ryan Zagone, Ripple’s head of regulatory regulations argued that UK regulators should find a balance between “capturing risk and enabling innovation”. Also, Mr Zagone compared today’s crypto industry as when the internet began gaining popularity. In a statement he added:

“We’re at that time now where we need more clarity and rules, and we need more certainty. It’s a good time to start revisiting that ‘wait and see’ approach taken by regulators.”

Mr Zagone emphasised that the UK should follow in Japan’s footsteps by creating workable regulatory structures able to encourage safe and legal investments into digital currencies. Considering Japan is one of the leading technology advanced nations which cryptocurrency regulations quickly. In effect, Japan became a leader in digital asset trading and investment in the world.

What is holding UK regulators from taking action?

It is being speculated that since the UK voted to opt out from the European Union, Brexit dominating the counties agenda. Meanwhile, other countries such as Malta is focusing on passing Distributed ledger Technology (DLT) regulations attracting blockchain based companies to operate on the island.

In recent months, the Bank of England governor Mark Carney performed a clampdown on cryptocurrencies, saying that they are ‘the hallmarks of a bubble.’ Moreover, due to the decentralised nature of cryptocurrencies, banks are entirely against such currencies to be introduced, In fact, UK banks are fearing a direct threat cryptocurrencies can present to their business model.

In contrast, Barclays bank has responded differently to cryptocurrencies. Only last month, Coinbase partnered with Barclays to help UK users to exchange cryptocurrencies easily. Through this partnership, UK crypto users can trade FIAT money to any digital currencies and vice versa using both services.

UK regulators need to address this opportunity at hand so that the crypto market will grow, create competition within the sector. Furthermore, Mr Zargone added that: “Regulation creates the guardrails on the highway that allows new entrants to come in, particularly institutional investors.”

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Malta amongst 22 nations to sign The European Blockchain Partnership.

Categories Blockchain, Cryptocurrency, Regulatory, European Commission

Malta amongst 22 nations to sign The European Blockchain Partnership.

The European Commission has taken a positive stance with regards to Blockchain and FinTech technologies. It was only last February, since the EU Commission launched the EU Blockchain Observatory and Forum, helping European actors to engage in Blockchain.  Moreover, the Commission is structuring European crowdfunding for businesses through FinTech (Financial Technology). Europe’s vision is to provide a single market through a blockchain platform among European nations. Earlier this week, 22 European countries, including Malta, signed The European Blockchain Partnership in the hope to cooperate through a developed blockchain system.

In a press release, the Commission stated that through this Partnership it would generate more cooperation among EU states.  Also, Blockchain and distributed ledger technology will provide an “exchange and expertise in technical and regulatory fields and prepare for the launch of EU-wide blockchain applications across the Digital Single Market.”

Where is the EU heading?

In recent months, the European Commission released its vision in blockchain technology. The member states will be helping the Commission to remain in the forefront in blockchain development.

They continued by stating that:

“Europe is well placed to take a global leadership position in the development and application of blockchain and distributed ledger technologies.”

Moreover a “better control of data by citizens and organisations interacting with public administrations, reducing fraud, improving recordkeeping, access, transparency and auditability, within and across borders,” signatories continued explaining.

The European Commission declared that it wishes “to launch the first crossborder actions by the end of 2019.

What will Malta benefit from this Partnership?

As mentioned above, Malta signed the European Blockchain Partnership. In this agreement, Malta will obtain better blockchain connections with other EU states. Malta is positioning itself attracting established blockchain crypto exchange companies to open up their offices on the island. The Maltese government wants the island to become a leader jurisdiction in blockchain technology.

E&S Group is a leading law firm offering various services with regards to ICOs. Feel free to contact us directly on +356 20103020 or by email at [email protected] to find out how E&S can help you in ‘making things happen’.

For more information click the link.

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