Category: Blockchain

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Jurisdictions with a different legal outlook towards Coin Offerings

Categories Blockchain, Cryptocurrency, ICOs, Malta, Law, DLT Regulation, Regulation

Jurisdictions with a different legal outlook towards Coin Offerings

The year 2018 was marked with technology advancements and new trends. The DLT industry started to get widely recognised in many jurisdictions around the world, making way to a new digital economy. Most financial service providers are using technology to their advantage, utilising blockchain wisely to store in data, or creating complex mathematical algorithms to create an easy way to digitally facilitate, verify, or enforce agreements by means of smart contracts. Moreover, the FinTech industry is also growing substantially, with many financial institutions opting to become part of this industry.

Countries implementing different ICO Laws

This year has marked a record-high for new ICO ventures launching their crowdfunding platforms. Many companies are now opting to design tokens to be exchanged for services offered to their clients. Various countries have taken different regulatory approaches towards this growing industry, with some regulating the space and others opting for non-regulation. Certain countries decided to implement strict legislation by banning people from owning cryptocurrencies or investing in ICOs altogether, while others have built well-structured progressive legal frameworks that provide legal certainty.

Stringent laws taken by the SEC in the US towards ICOs

Meanwhile in the US, ICOs are not formally regulated across the country, however, various administrative agencies, such as the Commodities Futures Trading Commission (CFTC), the Financial Crimes Task Force (FinCen), the Department of Justice (DOJ) and the Securities Exchange Commission (SEC) have taken measures to regulate this market. The most notable administrative agency overseeing ICOs is the SEC. The SEC’s purpose is to investigate and regulate all securities issued by companies, while “protecting investors, maintaining fair, orderly and efficient markets, and facilitating capital formation.

Although no concrete legislation regarding ICOs is in place, the SEC has jurisdiction over any securities related matter from the power granted to it by the Securities Act of 1933 and 1934. Guidance is also given regarding to what constitutes a security by the 1946 Supreme Court Case commonly known as Howey. Howey set forth a test used to determine whether an asset being offered constitutes the sale of a security. This test is applicable to all ICO issuances implicating the United States. The Howey Test is a financial instrument test which states that, if the asset meets all the elements, then it will be treated as a security. The elements of the test are as follows: 1) an investment in a common enterprise, 2) with the expectation of profits, 3) primarily derived from the entrepreneurial efforts of others.

Companies in the US launching their ICO have been commonly identifying their tokens as utility tokens in hope of circumventing registration with the SEC. However, utility tokens are not a legally recognised concept in the US and instead, the SEC looks at the economic realities of the transaction.

Although the US has stringent ICO Laws, companies are still risking to set up and open their ICO venture, due to the United States entities receiving the highest amount of crowdfunding.

In the past year, a number of celebrities and other public figures have endorsed ICOs, encouraging their fans to invest their money. However, recently, the SEC issued a warning to investors in various tokens stating that they are subject to have violated anti-touting laws along with anti-fraud provisions. In this case however, the SEC failed to clarify how these endorsements were paid, either directly or by indirect payment. Moreover, the SEC stated that celebrities marketing such ICOs “…may be unlawful if they do not disclose the nature, source, and amount of any compensation paid, directly or indirectly, by the company in exchange for the endorsement. The SEC’s Enforcement Division and Office of Compliance Inspections and Examinations encourage investors to be wary of investment opportunities that sound too good to be true.  We encourage investors to research potential investments rather than rely on paid endorsements from artists, sports figures, or other icons.”  Hence, these promoters might be held liable on the basis of ‘acting as unregistered brokers’ as well as taking part in transactions of securities which have not yet registered by the SEC.

What about the Asian market?

Asian countries have taken various stances with regards to ICOs; some have imposed strict laws banning ICOs altogether, while others take a lenient and progressive approach towards ICO tokens and treat them on a case by case basis. For example, the Monitory Authority of Singapore (MAS) does not regulate the issuance of utility or payment tokens, but only security tokens. With this positive approach many ICOs – who typically issue utility tokens -have launched their ICO in Singapore, making it one of the most popular jurisdictions in Asia.

On the other hand, the People’s Republic of China (PRC) took a firm stance against all ICOs, banning citizens from launching them altogether. In addition, any coin offering including exchanges used to trade virtual coins have also been banned. This approach was set in motion when China stated that all ICOs are bound to hurt the market since they are prone to deception and fraud. For this reason, the PRC is encouraging ICOs issuing their currency to follow laws which protect investors rights while trading on a platform.

European Diversity

In Europe, many countries have enacted favourable ICO Laws, attracting Asian companies to shift their operations to Europe, which in turn resulted in a healthy growth for the sector. Three proactive and progressive jurisdictions in Europe that have received praise from many fronts are Estonia, Switzerland and Malta. Many large crypto-exchanges set up shop on the territory of these three countries, especially in Malta.

Estonia with its already set and business-friendly laws is attracting many ICOs and crypto companies to register their operations on its territory.

In the “crypto-valley” of Switzerland and the technological city of Zug, there are many ICOs operating. The Swiss Financial Market Supervisory Authority (FINMA), has implemented forward-looking ICO Laws, and many investors and issuers see Switzerland as a “go to” country due to its favourable taxation laws.

Meanwhile the Maltese Parliament has provided a firm progressive stance with regards to Blockchain, ICOs and crypto exchanges. This has motivated many big companies such as OKEx and Binance to move their operations to the island. On the 1st of November, three regulating acts came into force, which will enable more businesses working in this industry to benefit from these innovative laws. The Malta Financial Services Authority (MFSA), will be the primary institution regulating this sector. Moreover, Malta’s tax rate to foreign companies is that of 35%, but by implementing effective tax planning it can go down to as low as 5%.

Malta is gaining a lot of traction within the tech industry, with many companies opting to set up shop on the Island. Malta will continue to strive and compete with other countries who are looking to follow the “Blockchain island” regulating framework of this industry.

Many legal companies sought out the opportunity to delve into this industry. One of the companies to stand out in the industry is surely E&S Group, a legal and corporate firm based in Malta, offering tailor made services to ICOs, crypto exchanges and Tokenomics to clients. So far E&S Group has successfully advised over 90 ICOs. E&S Group is being sought after by several ICOs wishing to launch their ICO project in Malta. Apart from that, said ICOs would also need to incorporate their company in Malta before getting started with their crowdfunding their project.

If you would like to know more about what we offer, send us an email on [email protected]. Our professional team of lawyers and accountants are there to make sure that your ICO will happen.

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Maltese Prime Minister Welcomes Switzerland as a Competing Blockchain Hub

Categories Blockchain, Cryptocurrency, Malta, European Commission, The Blockchain Island, DLT Regulation, Blockchain Leadership Summit

Maltese Prime Minister Welcomes Switzerland as a Competing Blockchain Hub

“Regulation gives certainty to investors, give certainty to consumers and it provides the level playing field that the industry needs”, – words spoken by the Prime Minister of Malta Joseph Muscat during his interview with CNN Money during the Blockchain Leadership Summit in Switzerland, in which E&S Group team members participated at.

The Maltese Prime Minister welcomes Switzerland as a competing crypto hub and encourages other jurisdiction to step into the industry in order to create a EU Blockchain framework. Among the roadblocks for mass blockchain adoption he mentions the misunderstanding of the blockchain concept, initial scalability, environmental problems along with other topics such as; e-learning, AML European rules, KYC procedure and the virtual euro as a currency of the future.

“We are moving slowly but steady”, – the Prime Minister comments’ when questioned about the legislation development in Malta.

Watch the full interview via link – https://www.cnnmoney.ch/shows/blockchain/videos/malta-pm-joseph-muscat-european-union-blockchain-framework 

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Moontec2018 – Cold but Friendly

Categories Blockchain, Cryptocurrency, Conference, Event, Estonia, Moontec18

Moontec2018 – Cold but Friendly

The Nordic Blockchain Conference Moontec 2018 took place in the Estonian capital on 26-27th of November. This year the Tallinn Creative Hub (Kultuurikatel) hosted the event, which attracted about 400 participants from the Baltic States, Russia, Central Europe and the US.

Moontec 2018 was made remarkable thanks to the high-quality speeches delivered by the representatives of large institutions, big companies and international agencies such as Maersk, Lloyd’s Register, DataDash, OKEx, Blockchain Innovation Hub at RMIT University, Microsoft, e-Residency, IBM, and Interpol amongst others. The speakers attracted attendees’ attention by providing informative data and real use-cases on two parallel-running stages covering topics such as the Next Generation of Intelligent Systems, the future of National States in the 21st Century, how cryptocurrencies are disrupting and liberating emerging markets, how Maersk + IBM are digitising global trade with blockchain technology, cryptocurrency related crimes and investigation challenges, Blockchain for Food: Hype or Hope, and many more.

Estonia is perceived as a crypto friendly country for both ICO and digital start-ups among the crypto community due to a relatively simple procedure with regards to company registration and obtaining crypto licenses. Nevertheless, entrepreneurs consistently face issues when opening bank accounts, hiring qualified employees and being fully secure when conducting an STO in this northern country. The Estonian legal framework is designed according to a sand-box model and ideally suits the needs of the operational ICO with the utility tokens.

It was also noted that several blockchain-based companies are looking for the opportunity to relocate their headquarters to Malta and incorporate the company on the Island. The E&S team took part in the event and witnessed a huge interest in Malta. We also had an opportunity to discuss the legal peculiarities of Estonian framework with Estonian colleges, visit the Ülemiste City technology campus and find new partners.

New jurisdictions are arising, regulation is getting more sustainable and the digital industry itself is maturing in 2018! Contact us today by sending an email on [email protected] to find out more about the ICO-related services we provide.

 

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Signing of the MED7 Declaration on Blockchain

Categories Blockchain, Europe

 Signing of the MED7 Declaration on Blockchain

It was Malta who initiated the signing of the MED7 declaration on Blockchain and Technology this morning in Brussels, during the Council on Transport, Telecommunications and Energy.  Silvio Schembri together with Southern European member states, France, Portugal, Cyprus, Italy, Greece and Spain have taken the first progressive step, committing to a collaboration between the countries in technological projects based on DLT and Blockchain.

It goes to show that Malta although one of the smallest countries in the EU is taking a ‘leading role’ within this sector.

 

 

 

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Blockchain Leadership Summit – Made for Industry Leaders

Categories Blockchain, Regulatory, DLT, Blockchain Leadership Summit, Event

Blockchain Leadership Summit – Made for Industry Leaders

 

The Blockchain Leadership Summit, organised by InnMind took place in the Congress Centre Basel, Switzerland on 23-24 November 2018. This large-scale event traditionally focuses on bringing the brightest minds within developing industries together with politicians, businessmen and large institutions.

The most promising projects are selected beforehand by the organising committee, and are offered the opportunity to meet and communicate directly with the investors and professional advisors, as well as to pitch their business models in front of a jury and a broad audience. The best startup team was selected by a professional panel of judges as well as summit participants, and won a roadshow experience around Switzerland. Voting was carried out on the blockchain in the real-time mode during the second day of the event.

Much attention was paid to academic programs regarding digital economy implementation and the keeping and verification of the academic records and personal documentation. One of the use-cases from the University of Basel was applied to the issuing of the attendance certificates on blockchain on the spot.

The attendees had a chance to learn from the actual cases of digital technology implementation currently in operation within large corporations, such as PwC, IBM, Bosch, Novartis and others. The representative of top enterprises shared their experiences regarding the increase of business process efficiency, money flow improvement and security costs reduction.

One of the distinctive features of the Leadership Summit was the presence of the state authorities at the event. This Summit edition was marked by the participation of the politicians from Malta, Liechtenstein, Finland, Switzerland, Russia, Armenia, and Kazakhstan in the discussions.

The Prime Minister of Malta, Joseph Muscat, was speaking at the panel discussion “Blockchain Adoption at Government Level”, as well as H.E. the Prince Michael of Liechtenstein, Chairman of Industrie-und Finanzkontor Ets. Vaduz, and Geo-political Intelligence Services; Esko Aho, former Prime Minister of Finland, visiting professor at Sciences Po, Paris; Sergey Gorkov, Deputy Minister of Economic Development of the Russian Federation; and Eric Jakob, Ambassador, Board Member, Federal Department of Economic Affairs, Education and Research EAER in Switzerland.

The speech of the Prime Minister of Malta regarding the sustainable regulatory framework of the country towards DLT technology was welcomed with lots of enthusiasm. Crypto world influencers call Malta one of the best jurisdictions for serious long-term projects, leaving Estonia and Switzerland behind.

The E&S team experienced 2 days full of active networking and valuable experience sharing. The market is entering the period of stabilisation and Malta is securing its place in the industry. To find out more about launching an ICO in Malta, please contact E&S Group by sending us an email on [email protected].

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European Blockchain Convention to be hosted in Spain

Categories Blockchain, Cryptocurrency, ICOs, Malta, E&S Group, Technology

European Blockchain Convention to be hosted in Spain

Blockchain technology has formed a trend among many companies, many of which Fintech and ICOs aspiring to implement such innovative technology within their respective economic sectors. Many jurisdictions, however, have a different take to this disruptive technology – some are interested in regulating it such as Malta for instance, whilst others, such as China, are banning it.

In 2018, Malta has become a trailblazer to this new industry, passing 3 crypto-friendly bills which came to force in November. The aim the Maltese government was to keep this space competitive, regulated and thriving, attracting many foreign companies to set up shop within the widely dubbed “Blockchain Island”. Financial institutions established in Malta are providing legal advice and corporate services to prospective ICOs and STOs willing to conduct their crowdfunding campaigns from Malta. E&S Group is one of the most advanced legal and corporate firm to provide these tailor-made services to its clients, and the first legal company to tokenize its services back in March.

In a study obtained by ICO Bazaar, it has been concluded that in 2018 alone, the average crowdfunding reached was that of $200,000 – $1,250,000, this total sum includes preparation costs, together with the one-month token sale. Over this period, E&S Group has advised over 90 ICOs.

The topics of the digital economy, growth, and the emerging number of ICO conducted within different legislations will be discussed during the European Blockchain Convention held in Barcelona, Spain, on the 29th November. The theme of this year’s conference is “Building the foundation of Blockchain and the Digital Economy”.

Karl Shranz, co-founder of Malta’s leading ICO and Crypto Advisory firm, E&S Group, will be participating in a panel discussion titled: “Overcoming Barriers to Institutional Acceptance of Digital Assets.” Karl will share his expertise on the Maltese legal framework experience and future prospectives. Besides Karl, the panel consists of two other people contributing to the discussion, namely Stephanie Ramezan, Co-Founder of Quince Capital, and Eneko Knorr, Founder of Pheiden Capital moderated by Pernille Enggaard, Finance and Business Journalist at Radio24syv.

The conference will host 50 speakers and is expected to host over 500 industry leaders, regulators, politicians, investors, developers, CTOs, lawyers and entrepreneurs building the foundation of the Blockchain and the Digital Economy who will attend this convention.

This convention will also discuss various topics in relation to regulations, economic impacts caused by Blockchain and the industries’ changes under the influence if this phenomenon. If you would like to know more about this convention, or would like to set a meeting in Barcelona, kindly contact E&S Group on  [email protected].

 

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Nordics Blockchain Summit returns to Estonia

Categories iGaming, Blockchain, Cryptocurrency, E&S Group, Regulation, Conference, Moontec18

Nordics Blockchain Summit returns to Estonia

Moontec is an internationally recognised Nordic event, devoted to blockchain technology and its implementation in various industries and is proudly hosted in Tallinn every year.

When Estonia started building its information society about two decades ago, there was no digital data being collected about its citizens. The general population did not have internet access or even devices with which to use it. For this reason, it took great courage to invest in IT solutions and take the information technology route within that scenario.

Since this decision was taken in 1997, the best step-by-step implemented e-solutions have made Estonia one of the world’s most developed digital societies. With the application of e-Governance, e-Tax, X-Road, Digital ID, I-Voting and e-Residence this Nordic country is moving towards real-time economy and industry 4.0.

At the end of October, ‘WePower’ the Estonia based energy company announced the successful delivery of a landmark; a nationwide pilot project in conjunction with transmission system operator, TSO Elering.

Representing a significant step forward in the digital energy sector, the initiate will convert energy consumption and production data onto the blockchain on a national scale. This is the first research and development project that aims to eventually enable consumers to purchase green energy directly from producers, with all relevant information stored on the blockchain.

Estonia benefits from 100% countrywide smart meter coverage and a data sharing platform called Estfeed, which allows customers to download and share their data with whoever they choose. This made the country the ideal location for such a pilot, as it already had much of the required infrastructure in place and fully functioning.

The interest towards blockchain in Estonia has never been higher. The momentum is shifting from a focus on learning and exploring the potential of the technology, to identifying and building practical business applications. Today, many tech companies started investing in blockchain Research and Development, yet they have no clear guidelines on its effectiveness.

This year’s Moontec, held between the 26th and 27th November, is dedicated to finding answers to the biggest challenges faced by blockchain nowadays, such as regulation, application in real-world practice and market adoption.

E&S Group team is attending the event to talk about the use of blockchain technology in the legal, iGaming and logistics industries. In order to make the system work on a European scale, the representatives of the Blockchain Island community should connect with the specialists from the Digital Nation, allowing the blocks to build an effective network.

Meet us in Tallinn on between the 26th and the 28th November. Please send an email to [email protected] to arrange an appointment or contact our team members directly: Yuliya Khrenova and Rick Goddard.

 

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UK Port Operator Improves Shipping Logistics via Blockchain

Categories Blockchain, Shipping, Technology

UK Port Operator Improves Shipping Logistics via Blockchain

Associated British Ports (ABP), the UK’s leading port operator has announced a collaboration with the digital logistics provider, Marine Transport International. Under the terms of the agreement, Marine Transport International will develop blockchain use for port logistics in around 21 ports that will handle 25% of all cargo shipments in the UK.

The two companies will carry out pilot shipment using blockchain technology because at the moment, each party in the ABP supply chain has no connection with others such as port operators, carriers, and shippers, all use different and unrelated systems. The proposed blockchain solution for port logistics will reduce the time spent on the manual processing of data according to Jody Cleworth, the founder and CEO of Marine Transport international.

“With blockchain, we can connect all those systems to ensure data is accurately and quickly shared, helping speed-up and simplify the flow of trade in and out of the UK.”

Back in June, Denmark announced its intentions to implement blockchain technology to aid in the registration of vessels on the register of the national ships. In addition to this, a subsidiary of Abu Dhabi Ports has also created its own blockchain-based solution for logistics.

In September, global logistics firm FedEx joined “Hyperledger”, an open-source project that was established to improve relations between cross-industry blockchain technologies. Hosted by the Linux Foundation, “Hyperledger” allows businesses to build blockchain-based applications, hardware, and platforms that facilitate their own individual type of business transactions.

FedEx Services stated that blockchain has “big implications” for supply chains, logistics, and transportation.

Executive Director of Hyperledger, Brian Behlendorf added:

“We are gaining traction around the world in market segments from finance to healthcare and government to logistics. This growth and diversity is a signal of the increasing recognition of the strategic value of enterprise blockchain and commitment to the adoption and development of open source frameworks to drive new business models.”

Blockchain has emerged over the last two years with an increasing amount of use cases. By far the most interesting and widespread is that of shipping and logistics where it has the power to significantly streamline the industry, saving billions and creating a wealth of new opportunities.

If you have any questions in relation to ICOs, OTC, or Tokenomics please contact us on [email protected]

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Crypto-friendly banks expected to open in Malta in the next 12 months

Categories Blockchain, Cryptocurrency, ICOs, Bank, DLT Regulation, E&S Group, Cryptocurrency Exchange, Tokens, Wallet, Delta Summit

Crypto-friendly banks expected to open in Malta in the next 12 months

Roderick Psaila, a Malta-based banking expert spoke about the future of crypto-banking at the Delta summit in Malta held between the 3rd and 5th of October. The three-day event was the world’s first official and government approved blockchain event of its type, and it attracted over 1500 delegates from all over the world.

Speaking as a part of a discussion panel, he was responding to criticism of traditional banks hesitancy to embrace blockchain, DLT, and cryptocurrencies despite the fact that the Maltese government has approved the DLT legislation in November.

“We are already seeing new, smaller banks show a willingness to adopt blockchain technology, but legacy banks will take longer to come round, because of their systems in place and because they tend to expect higher standards,” he said.

He also stated that he believes that two to three crypto friendly banks will open in Malta within the next year that will be amenable to blockchain and crypto, as well as being conducive to the industry’s growth.

This could be due to the fact that it is unlikely for the banking industry to fully adopt and embrace blockchain technology until matters around its compliance with anti-money laundering framework were finalised. Until this framework has been deemed acceptable to banks, it doesn’t matter how acceptable it is to operators, ultimately the banks have the final say.

Also on the panel was Michael Matthias who is the CEO of digital currency Dascoin and he stated the need for banks to catch up with modern technology instead of shying away from it.

“And yet, as blockchain technology becomes more mainstream, it is not farfetched to imagine a near future in which cryptocurrency is used as the coin of choice in everyday payments and transactions,” he said.

The Delta Summit, the first of its kind has been called a resounding success by all that attended. Dr Christian Ellul, Director of E&S Group also spoke on a panel discussing Malta’s bright future as the “blockchain island”. Other speakers at the event included the Prime Minister of Malta Joseph Muscat, Changpeng Zhao the CEO and Founder of Binance, and other global stakeholders in the blockchain, crypto, DLT, and ICO sectors. If you have any questions in relation to ICOs, and Malta’s legislation regarding ICOs and blockchain please contact us on [email protected]

 

 

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5 ways to tell if your business needs blockchain

Categories Business, Blockchain, Technology, Cryptocurrency Exchange

5 ways to tell if your business needs blockchain

There is no doubt that blockchain is a buzzword in the world of business right now, but should you consider it for your needs? To help you make that decision, here are 5 things you need to ask yourself beforehand.

Are we ready to trailblaze in the world of technology?

Blockchains offer businesses a shared, secure, and totally immutable record of transactions across either a public or private network. By embarking on a blockchain project, your business will need to “go big”, something that requires commitment from you. A good example would be that of businesses operating in global supply chains. Blockchain can be used to simplify documentation processing between carriers, customs, and logistics providers (resulting in a 60% reduction in timeframes) but it requires entities working together over and on the same network.

Does our organisation want to join an extended business network to improve processes?

For many the answer will be “yes, of course”, but making a move of this type requires the willingness to change the way you have always done things, as well as allowing others to both verify and produce business results. For example, after signing up preferred vendors and other industry stakeholders onto a blockchain-based energy consortium, a solar design business was able to speed up the work process by sharing one set of specs over the entire platform. This way, all stakeholders including the customer had full visibility of the entire process from start to finish and changes and approvals could be communicated to everyone, instantly.

Do we need to authenticate or verify digital or physical assets as a part of our business model?

One of the best ways of using blockchain technology is for the tracking and authentication of digital assets such as music, digital wallets, education certificates, movies, and mortgage contracts, with each one having a digital transaction lodged against it. The blockchain can also be used to keep tabs on things such as diamonds, gold, organic foot, artwork, even though they require being checked “off-chain”. In cases such as these where authenticity and the history of a product need to be verified, it is up to trusted sources in the supply chain to audit each asset, which can prove tricky.

Do our business processes involve specific contract terms that could benefit from faster automated processes or payments?

If your business model involves contracts or sign-offs from multiple individuals, then you can benefit from blockchain. Law firms, real estate agencies, supply chains- all of these can benefit from trusted parties involved being able to see a log of all transactions that have occurred. The blockchain is particularly suited to automating smart contracts between two or more parties.

Do we trust our blockchain participants to act in good faith or do we need to incentivise them?

For example, two food distributors in France are building a blockchain ecosystem of over 500 organic suppliers to authenticate and certify where the organic foods have come from. In this case, the authentication of products relies on other individuals involved in the process meaning there is always a margin for error. In cases such as this, incentivising these individuals with tokens for their accurate participation can help to maintain the integrity of the network.

E&S Group are experienced in all matters related to blockchain, cryptocurrency and tokenomics. Our team of experts can help you decide whether you want to create your own blockchain project or implement such technology into your existing business. Send us an email at [email protected] and we will ‘make things happen’!

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