Category: European Commission

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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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Decentralised technology is enjoying its first day at school

Categories Blockchain, Cryptocurrency, ICOs, European Commission, European Parliament, University, Technology, Ethereum

Decentralised technology is enjoying its first day at school

When we hear the word ‘blockchain’ most of us associate it with cryptocurrencies. Whilst this may be true to some extent, the real potential of blockchain far exceeds just transfers of value. Over the last 18 months, many more use cases for blockchain have been discovered and it seems to be gaining a foothold in a range of industries.

But when it comes to the education sector, blockchain has taken some time to find its feet and to even conceptualize, let alone become functional. Over the last couple of months, a handful of universities have started issuing degrees on the blockchain, but this is not even scratching the surface of its potential.

This could be for a couple of reasons – firstly, educational leaders and institutions have a reputation for being slow to adapt to new technology and secondly, learning is still a quintessentially human experience. But despite this, it seems that finally as we enter the last quarter of 2018, blockchain is enjoying its first day at school.

The sudden increase in interest of blockchain in education is due to the realization of some core issues.

Firstly, issuing transcripts and accessing records of academic achievement is an extremely labour intensive process and impossible to access any time and any place. Couple this with increased mobility and on-going and life-long learning and you find yourself in a situation where the necessity for having access to complete, multi-jurisdictional, and instantly accessible qualification records is a necessity. These needs are well served by blockchain technology and in the last couple of months, around 100 educational institutes have taken steps towards integrating such a system into their operations.

Now it seems that institutions within most EU states are looking at Ethereum-based blockchains to help them set up efficient and immutable record keeping systems that can be accessed on a permission-based basis. This system will be especially useful in countries where there are issues with certification and qualification fraud.

The promise for blockchain in the academic world is real and it is picking up some serious momentum as 2018 comes to a close – it is not a matter of its possibility to happen, but rather the timelines of its implementation.

 

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

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Need for common EU online currency rules

Categories Cryptocurrency, Regulatory, European Commission, Technology

Need for Common EU Online Currency Rules

Report prepared for EU finance ministers has stated that European Member States should adopt common rules on cryptocurrencies and DLT technology. These rules should also apply to the process of creation, allocation, distribution and trading of the virtual assets.

Bruegel, a Brussels-based think tank has made the case for much clearer and more standardized rules on ICOs in order to mitigate risks and the possibility of exploitation. The document that is yet to be made officially public, will be presented to ministers at the end of the week.

Due to the size of the sector and the low percentage of trade in cryptocurrencies, the EU has so far not introduced or considered any comprehensive regulation. Fears over money laundering, fraud, and high volatility have so far discouraged them from making an official stance on the viability of the sector in terms of widespread regulation.

A volatile market

Since January this year, the market capitalisation of cryptocurrencies has fallen from $800 billion to just $200 billion, and Bitcoin has seen a drop of around 60% against the value of the dollar. But the expansion of crypto-related businesses into EU Member States such as Malta, as well as increased attention from international business and media means that regulators are being forced to reconsider.

Binance, the world’s largest cryptocurrency exchange is set to move to Malta, dubbed the “blockchain island” following a crackdown from the Chinese authorities.

Potential must be harnessed

Austria, the current holders of the EU rotating presidency has also asked questions about the lack of regulation, stating that “potential risks posed by crypt assets” need to be addressed whilst also allowing for the harnessing of their full potential.

Bruegel has however pointed out that blockchain regulating  is tough because of their digital nature, but the businesses facilitating their sale, trade, and exchange should have tougher rules imposed on them.

Whilst the EU has updated its Anti-Money Laundering directive, this is unlikely to be implemented any time before 2020, meaning that the sector will remain at the regulatory mercy of each individual member state.

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What’s changed since GDPR?

Categories European Commission, GDPR, Technology, DLT, Privacy, Compliance

What’s changed since GDPR?

The European Union’s General Data Protection Regulation came into force on May the 25th and since then many things of changed. The regulations were designed to provide a much-needed update to the previous legislation that was designed for a time that did not include the internet as we know it today. But what has really changed in the last three months?

Fewer emails

The majority of email users noticed a dramatic increase in the number of emails they were receiving, prior to May 25th. This was due to the last ditched attempts of a number of businesses to receive the permission they required from the user to continue emailing them after the GDPR was introduced. Most people ignored these emails and on the morning of the 25th of May, they awoke to empty inboxes, much to the delight of many.

Less snail mail

There has also been a significant drop in the number of letters being sent via traditional mail. The Royal Mail in the UK noticed an 8% immediate drop in revenue from “snail mail”, due to the fact that companies are no longer allowed to send marketing materials and others to recipients on their mailing lists.

Longer privacy policies

Have you ever read a privacy policy? Whilst most people don’t take the time to read the privacy policy of a website they visit, if they were to read it, the chances are that it will have increased in length by up to 25%. This is due to having to cover more stringent requirements and standards than before.

Higher levels of compliance

Lack of infrastructure or a solid knowledge of how to become compliant resulted in a situation where many companies did not know how to go about adhering to the new rules. Fortunately, it seems that businesses are starting to work on this with a recent TrustArc survey showing that 53% of businesses are in the implementation stage and 20% consider that they are compliant. Full compliance with the GDPR is expected by 93% of all businesses by the end of 2019.

You are not sure if your business is adhering to the rules? Failure to comply with the GDPR can result in crippling fines and restrictions. E&S Group can help you to ensure that all of your processes are in order and that your business practices and operations are in full compliance with EU and local privacy laws. Send us an email on [email protected]

 

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What is the 5th Anti Money Laundering Directive?

Categories Blockchain, Cryptocurrency, Regulatory, European Commission, European Parliament, Regulation

What is the 5th Anti Money Laundering Directive?

On the 19th of June 2018, the European Commission published the 5th Anti Money Laundering Directive (5AMLD) in the Official Journal of the European Union. This directive not only provides important updates and improvements to the 4AMLD but it also makes provisions for businesses that are operating within the cryptocurrency sphere.

When the previous Directive was announced in 2015, Bitcoin and some other currencies existed but no one could yet predict how much they, and the blockchain technology that underpins them, would go on to change the world we lived in. Now, in 2018, even if you are not using cryptocurrencies yourself, the chances are that you are, or are about to come into contact with blockchain. With everyone from shipping lines to central banks has begun to adopt this technology. Significant changes were needed to ensure companies operating both within the sector, and the EU is in full compliance with AML requirements.

The 5AMLD is not a ‘free-standing’ law, but rather it provides amendments to the previous 4AMLD, and it was being created at a time that most member states were still implementing the previous one. This was due to the fact that the industry moved at an incredible rate and the EU found itself in a situation where within a few months, the previous legislation had become outdated.

The most important elements of the 5AMLD pertain to the regulation of virtual currencies, information on beneficial owners, the use of prepaid cards, the powers of financial intelligence units, and due diligence for high-risk jurisdictions.

Virtual Currencies

The 5AMLD increases the scope of the EU regulatory perimeter in terms of AML/CFT controls and it makes specific reference to cryptocurrency exchanges as well as those that provide custodian wallet services. Under the new rules, both service providers are now “obliged entities” and are therefore subject to the requirements of the AMLD legislation.

The 5AMLD also requires all Member States to enforce mandatory registration of such providers and to report any suspicious activity that occurs on their platforms. This is designed to stop organised criminal activity from exploiting the anonymous nature of cryptocurrency and blockchain technology.

Beneficial Owners

The 5AMLD makes some very important changes to the EU regulations on both recording and disclosing the beneficial ownership of entities such as trusts and companies. Now, member states will be expected to impose sanctions and restrictions on any company that breaches the basic obligation of holding adequate and up-to-date information who is the beneficial owner.

The Directive also expands on the ability to access information pertaining to beneficial ownership- in the case of a corporate entity, for example, any member of the public is now entitled to the unrestricted information. In the case of trusts, regulators, FIUs and regular entities, as well as any natural or legal person with a demonstrable and legitimate interest, is able to access such information upon request. The EU stipulates that this access should not be limited to cases of pending litigation, but rather to those who facilitate preventative work in AML/CFT, as well as NGOs and investigative journalists.

All information on beneficial ownership is to be held on a central registry and should be available both locally and on a cross-border basis within the EU. All member state registers will be connected via the ‘European Central Platform’ which will be established under the Company Law Directive.

Financial Intelligence Units

Under the new Directive, FIUs will have total access to information provided by any obliged entity including exchanges and wallet providers. Furthermore, the 5AMLD also provides for a situation where information can be obtained by the FIU without any prior report needing to have been made.

Enhanced Due Diligence for High-Risk Countries

The 5AMLD imposes much tougher due diligence criteria on business relationships and transactions that involve high-risk jurisdictions. These requirements include acquiring additional information on the customer as well as the beneficial owner, the sources of funds and wealth, reasons for executing the transaction, and the necessity to have senior management approval to continue the relationship. The Directive also suggests that member states should impose restrictions on transactions or relationships with institutions from high-risk jurisdictions and it may require EU Banks to terminate correspondent banking relationships with institutions that are deemed as operating in a high-risk jurisdiction.

 

To learn more about ICO Legal Services in Malta please follow this link.

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

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How the EU 5th AML Directive will impact the world of digital currencies

Categories Blockchain, Cryptocurrency, Regulatory, European Commission, E&S Group, Technology, Regulation, Tokens, Wallet

How the EU 5th AML Directive will impact the world of digital currencies

On the 26th of April 2018, the European Parliament announced the Fifth Anti-Money Laundering Directive (5AMLD) which would provide significant amendments and updates to the 4AMLD as well as tackling the growing virtual currency sector. Member States of the European Union have until 2020 to transpose the directive into national law and to make sure that all businesses operating within their jurisdictions are in full compliance.

Providing much-needed clarity

As well as bringing European AML regulations in line with developments in the cryptocurrency sector, the Directive seeks to provide clarity to virtual currency businesses on the AML and CTF obligations that they are required to adhere to.

Bolstering the industry’s reputation

There is no doubt that these regulations are much needed. Many cryptocurrency cynics state the fact that crypto can be and is used for illicit activities as a reason why they do not wish to get involved with them. Many investors and companies are cautious to associate their brand with something that has ties to drugs, money laundering and financing terrorism. Whilst in a reality, the actual number of illicit transactions is much lower and less than people think, regulations like 5AMLD provide a much-needed confidence boost.

The 5AMLD fills a regulatory void that has previously allowed certain rogue entities allow users to exchange crypto for fiat without undertaking any, or little KYC or due diligence. These platforms then became a paradise for virtual currencies gained from dark market places, fraud, ransomware, and other illegal activities.

Two types of crypto-business

The new Directive pertains to two types of cryptocurrency business; providers that are engaged in exchange services between virtual currencies and virtual currencies (exchanges) and those that provide custodian wallet services where clients private keys are stored as a part of the service.

Under the new rules, both of these entities become ‘obliged entities’ and are therefore obliged to comply with the AML/CTF legislation, much in the same way that banks and other financial institutions are. They will also be required to implement stringent issues to counter money laundering and terrorist financing included KYC and strict due diligence as well as transaction monitoring. All entities will also be obliged to keep and maintain extensive records and to report all suspicious transactions immediately to the competent authority.

Pan-European standardisation

Most cryptocurrency businesses that operate within the EU have already implemented such procedures but the 5AMLD seeks to standardise it and ensure that it becomes law within each jurisdiction so that bad actors are prevented from continuing their operations. It is also hoped that the introduction of the 5AMLD will seek to create a European ecosystem that other states can use as a guide when it comes to implementing their own AML procedures.

If you operate or are planning to operate a cryptocurrency business then E&S Group can assist you in being compliant with all current, and imminent regulations. We can provide legal, fiscal, and compliance related advice to help you ensure that you are in adherence to all applicable regulations both locally, and at EU level. For enquires call on +356 2010 3020 or by email on [email protected]

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EU warns that the GDPR could cause a headache for DLT innovation

Categories Blockchain, Cryptocurrency, ICOs, European Commission, GDPR, Smart Contracts, Technology

EU warns that the GDPR could cause a headache for DLT innovation

An EU body – the Blockchain Observatory and Forum has issued a warning that the recently introduced GDPR could cause a significant delay in blockchain innovation.

Due to the lack of legal clarity surrounding blockchain technology as well as exactly how the GDPR will impact its underlying ethos, it has not yet been established how blockchain can exist in compliance with the new laws.

Blockchain in Europe

The report, entitled “Blockchain Innovation in Europe” states that: “As long as the legal framework around personal data and blockchain remains unclear, entrepreneurs and those designing and building blockchain-based platforms and applications in Europe face massive uncertainty. That can put a brake on innovation.”

One of the main issues highlighted in the report arises from the fact that the very essence of the GDPR is the empowerment of individuals to have control over who has their data and to amend it as they wish. Under some circumstances, the GDPR even allows individuals to have their information deleted as and when they choose- this goes completely against the grain when you consider blockchains immutability.

Protection of rights

Another key point of the GDRP is that individual’s data rights are protected and that one single central body can be held accountable when things go wrong. But, when it comes to an open and permissionless blockchain, information is processed across all nodes of the network, therefore there is no centralised data controller.

Lastly, the GDPR states that data is only allowed to be transmitted out of the EEA, if the data protection rules in the jurisdiction it is being transferred to are of the same or a higher level. With open, permissionless blockchains it is not possible to choose where data ends up as the database is replicated on all nodes, regardless of where they are located.

The report states: “The law was conceived and written before blockchain technology was widely known, and so was fashioned with an implicit assumption that a database is a centralized mechanism for collecting, storing and processing data.”

Encouragingly, however, the report does note that blockchain technology is still in its early stages of development and it could yet evolve to help GDPR attain its ultimate goal of data sovereignty.

“Blockchain could, in theory, make it easier for platforms and applications to have this compliance ‘baked in’ to the code, supporting data protection by design.”

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

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Malta announces a delay in the introduction of new gambling regulations

Categories iGaming, Blockchain, Cryptocurrency, Malta, European Commission, The Blockchain Island, E&S Group, European Parliament, Technology, Regulation, Anti Money Laundering, Malta Gaming Authority

Malta announces a delay in the introduction of new gambling regulations

Malta is awaiting the introduction of its new gambling regulations, but news broke on the 28th that these would come a bit later than planned.

The reason for the delay is being cited as comments made by the European Commission and another EU Member State, pushing forward the implementation date to July 16th, and the start date back to August 1st.

The Malta Gaming Authority (MGA) said in a statement:

“Government and the MGA shall be reviewing and taking into account the recommendations made by the European Commission and the Member States.”

According to reports, detailed opinions were forthcoming from Finland, Poland, and the European Lotteries Association- all of which must be duly considered by the Maltese government and the MGA.

The changes to the existing law were proposed back in May 2017 and the new legislation was drafted after an extensive public consultation period with key local and international stakeholders. The new Gaming Act will replace the current rules and it is particularly focussed on licensing and the provision of gambling services. Once it comes into force, it will drastically simplify the licensing system by using just two categories of license- a B2B one and B2C one.

This new act is the first revision of the nations gaming laws since 2004 and as well as simplifying certain areas, it also aims to implement stricter controls and regulations to ensure that the industry is immune from money laundering, terrorist financing and other various financial crimes that are associated with gaming and sports betting.

This news comes alongside the announcement that the Maltese Parliament has approved three acts designed to regulate the cryptocurrency, blockchain, and ICO industries. The Virtual Financial Assets Act, the Malta Digital Innovation Authority Act, and the Innovative Technology Arrangement Act will seek to provide much sought after regulatory clarity, as well as providing support and encouragement for the burgeoning sector.

This is a world first and has put Malta on the map in the world of crypto and blockchain with the small EU state even being dubbed as the “Blockchain Island”.

With these new pieces of legislation for both the iGaming industry and the blockchain and cryptocurrency industry, it places Malta at the forefront of these disruptive and progressive global industries.

E&S Group can help operators within both industries set up their operations in Malta. We can assist with opening a company, applying for applicable licenses, adhering to regulations, and providing tax planning and associated services. To find out more, contact us on +356 2010 3020 or by email on [email protected]

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European Parliament says that crypto is not likely to challenge central banks

Categories Blockchain, Cryptocurrency, European Commission, Bank, European Parliament, Technology

European Parliament says that crypto is not likely to challenge central banks

In a report released by the European Parliament, they have stated that they do not believe that cryptocurrency has the power to challenge the dominance of central banks.

The most recent Monetary Dialogue report was issued on June 26th and the European Parliaments Committee on Economic and Monetary Affairs said that whilst cryptocurrencies have significantly improved the safety, speed, and transparency of financial transactions, it is unlikely that they pose a threat to fiat currencies.

Positive attributes

This analysis was carried out by the Centre for Social and Economic Research, a not-for-profit research institution that is based in Poland. Early on, they noted the positive changes that cryptocurrencies could bring to transactions and also stated that they are used globally with no limitations on borders or geographical constraints.

Real market demand

The report states that cryptocurrencies respond to “real market demand” and that there is every chance they have the potential to become a fully-fledged private money as well as an integral part of the global economy. The report then goes on to state that whilst this is all positive, it remains unlikely that cryptocurrencies will pose a threat to central banks and traditional fiat currencies, especially in countries where sovereign currencies are very popular.

Despite the widespread popularity of fiat currencies, there are a few exceptions. Countries such as Venezuela is a small jurisdiction but the sovereign currency is incredibly volatile. In a case such as this, cryptocurrencies could offer a valid alternative to unstable fiat currencies.

 

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European banks complete the very first live, blockchain financial trades

Categories Blockchain, Cryptocurrency, European Commission, Bank, Trading, Regulation

European banks complete the very first live, blockchain financial trades

A group of European banks have announced that they have completed the very first, live blockchain-based trans-border transactions. The trades in question were made via a jointly developed we.trade blockchain platform.

These real-life trades were executed over the previous five days amongst 10 companies and were facilitated by four leading banks that utilised the blockchain-based platform. HSBC, one of the institutions that are using the platform, has claimed that three of its clients have been able to complete an open account transaction via we.trade, in Europe.

We.trade is build on the IBM Blockchain Platform using its Hyperledger Fabric technology. It was created and developed by Deutsche Bank, HSBC, KBC, Natixis, Nordea, Rabobank, Santander, Societe Generale, and UniCredit, with the purpose of boosting the efficiency of cross-border transactions in the financial sphere.

As reported back in April, we.trade was supposed to start testing the platform in May with an expected commercial implementation due in the summer. Back then, Societe Generale told the press that the reason for the quick development of the platform was due to the fact that it was designed to be used by SME’s trading within Europe.

IBM’s blockchain lead in Europe, Parm Sangha stated:

“As we.trade has moved from pilot applications to conducting live transactions across borders, it has demonstrated the power of blockchain technology in an enterprise setting.”

The platforms Chief Operating Officer has announced that the next step will be to encourage buy-in from other EU banks and clients further afield.

 

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

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