Category: Law

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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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Lithuania is looking to regulate Token Generating Events

Categories ICOs, Law, Technology, Trading, Cryptocurrency Exchange, Bitcoin, Regulation

Lithuania is looking to regulate Token Generating Events

Last October Lithuanian authorities were invited to attend a seminar that was seeking to examine the threats and potential benefits of the ICO sector, particularly with regards to the country’s economy. Whilst reports from BitMEX last week found that ICOs had so far managed to break even in terms of profit and loss in 2018, trends have shown a bit of a slump in the popularity of the market. Alongside the falling value of Ether and Bitcoin, it seems that fewer ICO projects were launched in 2018 when compared to the first half of the year.

All things considered, it does seem that it is good news and a positive sign that the market managed to break even, despite poor conditions.

Fraught with bad press

This does not mean that ICOs are not without their lack of other issues. Their issuance is fraught with lack of regulation and bad press, and research conducted at the beginning of the year found that almost 80% of ICO projects that were launched in 2017 could be classified as “scams”.

As a result, Lithuanian authorities have come together to voice their concerns over the ICO market, something that is becoming commonplace in a number of jurisdictions. Politicians in the country, as well as a representative from the central bank, came to the conclusion that cryptocurrency and digital assets have created a substantial market in the country that yields a huge turnover.

“Virtual currency has huge cash flows, but (there are) worries about converting them into dollars and euros as quickly as possible, (and) leaving virtual currencies as quickly as possible.”

Creation of a regulatory body

Whilst there is a concern over the cryptocurrency cash flow and the lawless style of the ICO market, Lithuania has vowed to create its own regulatory body that will oversee the developing industry. The newly created body will be responsible for supervision and enforcement, but it will also be on the lookout for possible benefits that could emerge from blockchain and crypto.

This development will see the country follow in the footsteps of Malta which introduced its own blockchain, cryptocurrency and ICO legislation on the 1st of November 2018. 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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The Pharma Counterfeit Problem on a Global Scale

Categories Blockchain, Cryptocurrency, Regulatory, ICOs, Malta, Law, E&S Group, Conference, Blockchain Leadership Summit

The Pharma Counterfeit Problem on a Global Scale

The investments into blockchain technology in the healthcare industry are growing rapidly, reaching $200M according to a recent report of the major consortium R3. The implementation of the DLT technology in the healthcare industry is caused by the emerging problem of pharma counterfeit and ineffective supply chains.

Anything that makes money will be counterfeited. This affects patented medications as well as generics. Expensive, prescription drugs, such as those used in AIDS or cancer therapy, are especially lucrative for dubious businesses. Antibiotics are the most commonly counterfeited drugs, particularly in low-income nations where medicines are prohibitively expensive for many people. In high-income countries, there is a growing trend toward fake “lifestyle” medications.

Illegal trade takes place around the world. The World Health Organization (WHO) estimates that counterfeit medicines worth 73 billion euros are traded annually. Dubious online pharmacies that conceal their true location deliver globally – reaching countries such as Germany, UK, Italy, Spain etc. or the USA. Supplies from illegal internet pharmacies – those without appropriate certification – are up to 50% counterfeits.

The extent of the problem varies greatly between regions and individual countries, and also depends largely on temporary supplies. The problem is highly dependent on how tight legal controls are. The WHO estimates that in some areas in Africa, Asia, and South America, more than 30% of medicines in circulation are fake. In some countries in Eastern Europe, the proportion of fake medicines can be more than 20%.

The current state of healthcare and pharma records is incoherent and irrational due to a lack of common architectures and standards that would allow the safe transfer of sensitive information among stakeholders in the system. Blockchain application in the healthcare industry, while still at the early stage of development, it presents various opportunities such as:- keeping track of patients’ health, new insights on population health; and supports the direction toward value-based care.

There are already several use-cases in the pharma industry: blockchain can help with verifying the authenticity of returned drugs and compliance in the pharma supply chain. Merck in partnership with SAP has developed the SAP Pharma Blockchain POC app for the use-case. Blockchain protocols in clinical trials can provide transparency and traceability of consent.

Another groundbreaking use-case in pharma is the prevention of counterfeit drugs and medical devices. One of the largest pharmaceutical companies in the world based in Basel, Switzerland, Novartis AG, has made a tremendous progress in this direction. They have been experimenting with blockchain since 2016 and have run various proofs of concept (PoCs). Today, their primary tech development is aimed to identify counterfeit medicines and track temperature with real-time visibility for all participants in the supply chain, using Blockchain and IoT.

They are also working on a public-private partnership between the European pharmaceutical industry and the EU – the IMI Blockchain Enabled Healthcare program. The program aims to partner the pharma industry with a consortia made up of SME blockchain companies, universities, clinical labs, hospitals, patient representatives and others. It’s a wide-ranging project that includes counterfeit drug detection, supply chain, patient data, and clinical trials.

The potential of the blockchain implementation in the healthcare industry will be discussed on Blockchain Leadership Summit in Basel. If you would like to attend one of the most significant events of the year with us, E&S Group will be happy to give you an exclusive 50% discount for any ticket. All you have to do is to use the promo code: BLS2018_exclusiveE&SGROUP. If you would like to get further information on this event please send us an email on [email protected].

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Secrets of a successful ICO Whitepaper

Categories ICOs, Malta, Law, Technology, White Paper, Funds

Secrets of a successful ICO Whitepaper

Whilst Initial Coin Offerings have been around since 2013, it wasn’t until 2017 that their potential was realised and their popularity skyrocketed. In the most basic of terms, an ICO is an alternative way of crowdfunding except that investors receive crypto tokens in return for their investment. The concept of an ICO has allowed any kind of investor, anywhere in the world, to have the opportunity of investing in new projects, that was once reserved for professional and institutional investors.

By the end of 2017, the amount of funds raised by ICOs exceeded $4.9 billion with some projects raking in around $700 million each. Then as 2018 started, the number of ICOs increased dramatically. Knowledge of this new type of fundraising became mainstream and by the end of Q2, the amount of money raised via ICO was already double what had been raised in the entirety of 2017.

Whilst the growth of the market is a positive thing, more ICOs means much more competition for start-ups looking to fund themselves in this way. Couple this with increased regulatory scrutiny and bad actors causing doubt in the market, the need to make your ICO stand out has increased significantly.

This is where the white paper comes in.

What is an ICO White Paper?

Every ICO needs a white paper to be legally compliant in a growing number of jurisdictions.

A white paper is a document that seeks to provide potential investors with all of the information that they need to know about the ICO and the product or service that is ultimately being offered. It should describe in detail the problem that the product is solving, the solution, its architecture, and the interaction with its users.

This is not a document that can be created in a week, but it rather requires in-depth market research and highly detailed reporting, combined with savvy copy that will interest, intrigue, and motivate investors. Care must be taken to remain factual throughout because the whitepaper is the cornerstone of the startup’s credibility and just one small error can be the difference between success and failure.

The perfect white paper has to strike a careful balance between fact, information, and pitching to ensure that it is accessible and interesting to any kind of reader, but that it also provides all the details required to give investors the full picture. Attention must also be given to any regulatory or legal requirements imposed by the applicable jurisdictions to ensure that the white paper and the project is fully compliant.

What should a good white paper contain?

A good white paper should contain the following:

Executive Summary

This should give readers a good idea of what the white paper is about by summing up all of the key points in just two short paragraphs.

The Problem

This section must consist of market research and an in-depth explanation of the problem that exists within a particular market.

The Solution

The solution must describe how the proposed product will solve the aforementioned problem, and how it will counteract the issues raised during the market research.

Description of the product

In this section, a full description of the solution/product/service must be given including all features and specifications.

Tokenomics

Here, the token sale and the token economics must be detailed carefully and accurately so that investors know exactly where their investment is going, and what they will receive in return.

Roadmap

The startup must outline every ICO stage that the project will be rolled out over subsequent months/years, and the use of funding as and when each goal is achieved.

Team

Providing information about the team behind the ICO is imperative for building trust and credibility. Details need to be given about the relevant experience of each team member, and their responsibilities in the project.

Legal Requirements

Depending on which jurisdiction the ICO is operating in and from, there will be certain legal requirements that you are bound to include. These as a standard, comprising of a Disclaimer, Company Information, and information on sources of funding.

Creating a whitepaper

Creating a whitepaper is not just a matter of ticking off these sections and presenting it to investors; care, time, and careful consideration need to be given to each and every section, and it is advisable to have it checked by a legal professional with experience in the sector.

If you are considering launching your ICO in or from Malta, there are rules that you have to adhere by. Furthermore, as new legislation comes into force, any white papers that were launched before November 1st 2018, need to be rewritten and amended so that they are compliant.

E&S Group reviews and amends white paper to ensure it is legally compliant. Remember that you cannot have an effective ICO without a winning white paper so making sure you get it right is the key to your success. To find out more about E&S Group ICO Legal Service send us an email on [email protected].

 

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E&S Group is attending the Largest Swiss Blockchain Summit 

Categories Blockchain, Cryptocurrency, Regulatory, ICOs, Malta, Law, E&S Group, Conference, Blockchain Leadership Summit

E&S Group is attending the Largest Swiss Blockchain Summit 

Switzerland has set bars to remain at the forefront, maintaining its position as a world leader in this technology. Statistics released by the investment group Crypto Valley Venture Capital (CVVC) show that over 600 companies and institutions are now located in Switzerland and neighbouring Liechtenstein, with 3,000 people employed. The report of CVVC is mostly focused on the TOP 50 companies in the blockchain industry based in the ‘Crypto Valley’.

“Switzerland is extremely well located on the Blockchain map”, explains Vincent Pignon, Blockchain adviser to the State of Geneva. According to the earlier report from PwC, Switzerland used to be the second in ranking at a global scale in 2017, just right after the USA, in terms of attracting the funds with ICOs.

In 2018, Switzerland is still holding on to its leading position in the industry by cooperation with Lichtenstein, in addition, assisting the banking sector to reform their banking access rules. The country maintains one of the biggest entrepreneurs and blockchain developers’ communities in the world and hosts the DLT-related events on a regular basis.

The largest Swiss Blockchain Summit, Blockchain Leadership Summit takes place on the 23rd and 24th of November, 2018. This key industry event will welcome 2500+ attendees, opinion leaders and industry drivers including:- investors, politicians, start-ups, executives and over 70 top speakers and experts. The topics discussed during the 2-day event will focus on Governance and Leadership in Blockchain, Financial Regulation, Institutional and Corporate Investment Sector, Taxation, Legalization and Insurance of Crypto Assets.

The first summit in Zurich was organised in March by InnMind, the first Swiss-made global business ecosystem for the innovative community, start-up founders, experts, investors, mentors and service providers. The event got the status of a global Think Tank of decision and policy makers from blockchain and crypto world united 30 world’s top experts, 500 professionals, proactive investors, and startups.

E&S Group team is going to Basel, the cultural capital of Switzerland, its oldest university city and the centre of European science, to join the community of the leading digital economy influencers and represent the Blockchain Island.

To learn more, visit: https://innmind.com/about

If you would like to attend one of the most significant events of the year with us, E&S Group will be happy to give you an exclusive 50% discount for any ticket. All you have to do is to use the promo code: BLS2018_exclusiveE&SGROUP. If you would like to get further information on this event please send us an email on [email protected].

 

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A Half Year Report on virtual currencies in 2018

Categories Blockchain, Cryptocurrency, Regulatory, ICOs, Malta, ICO Legal Service, Law, The Blockchain Island, DLT Regulation, Smart Contracts, E&S Group, Technology, Trading, Cryptocurrency Exchange, Tokenomics, Regulation, Tokens, Binance, Utility Tokens, Security Tokens, DLT

A Half Year Report on virtual currencies in 2018

2018 has been an interesting year for crypto with colossal crashes, much-needed market adjustments, and of course, the emergence of a large number of new tokens and cryptocurrencies. Along with significant advances in regulation and legal frameworks that seek to understand, support, and protect those stakeholders operating within this new industry, there is no doubt that the rest of 2018 is going to be just as, if not more exciting as the previous six months.

Mid-January Market Crash

If you were holding Bitcoin in December 2017, you probably couldn’t believe your luck. As the value of a single Bitcoin headed towards $20k, a mad rush to invest ensued and predictions on where the price may head reached stratospheric new heights. Then on January 16th 2018, Bitcoin investors woke up to a nasty shock. The value of their coins had dropped by 15% and this news had a knock-on effect on the value of all other altcoins, causing a huge slump in the value of the market. The excitement and hype that had surrounded cryptocurrencies just a few days before, disappeared just like the profits of those who invested in it.

As prices continued to fall, investors started to panic. They started selling their coins in an effort to nip their losses in the bud and the moniker “Black Tuesday” was coined. Some crypto-coins saw losses of up to 40% and it seemed like many naysayers predictions were coming true and that the bubble had finally burst. Some voices remained steadfastly optimistic however and maintained that price slumps were common in all markets, not just the crypto one. After such an exponential increase in value, it was naturally expected that the market would correct itself because after every meteoric rise comes to a reverse-swing of the pendulum that needs to be ridden out – January was exactly that. As prices are now more stable it is hoped that they will increase at a steady rate, signalling a new era of market stability and maturity.

TRON Makes a Name for Itself

Since January of this year, TRON has experienced a steady increase in value. Despite a few issues, mainly caused by the crypto price-crash, it seemed to have found its niche which suggests a bright future for both the platform and its cryptocurrency.

TRON is a decentralised, blockchain-based, protocol project that functions as a content distribution platform for the digital entertainment industry. Whilst the platform itself is yet to go live the TRX coin is gaining significant traction.

Created by Justin Sun in 2017, the concept behind it is to establish a global network of free entertainment content which allows creators to publish, store and distribute their own content without the need for an intermediary. Whilst its value per coin was only $0.30 in January, it is expected to hit $1 by the end of 2018.

Its main selling point is that it is not just another cryptocurrency. It has a platform that solves a problem and offers functionality to a range of users and publishers. Over the last year, TRON has increased in value by 1.39% making it one of the top crypto coins in terms of growth, making it one to keep your eye on as we progress through 2018.

The Unexpected Rise of Litecoin

Many have dismissed Litecoin as “the poor man’s Bitcoin” but despite this, its popularity has increased drastically over the past few months. It was initially launched via an open-source client on GitHub in 2011, a sort of spin-off of the original Bitcoin Core client, but it offered much lower block generation times, a higher number of coins, a modified GUI, and a different hashing algorithm.

In 2013 it experienced a big surge in value and by May 2017 it had secured a spot as one of the Top 5 global cryptocurrencies in terms of its market cap. Now accepted by a wide range of online retailers, its adoption is increasing and many are seeing it as a better alternative to the rather bloated and over-inflated Bitcoin.

12 and even 6 months ago, blockchain was not something that was widely understood but as we progress to the end of 2018, it is expected that we will see a dramatic uptake of blockchain integration across a diverse range of sectors. Following in the footsteps of IBM, Microsoft, and Maersk, even smaller SMEs are likely to be interested in harnessing its potential.

Litecoin is predicted to peak at a value of over $600 per coin by the end of 2018 and there is no doubt that it has huge potential. Negating many of the issues that are faced by Bitcoin users, it presents a practical, simplified and completely viable alternative to the crypto-giant.

Malta Takes the Lead in Industry Regulation

In the last 12 months, it has seen cryptocurrency, blockchain and ICOs negate a minefield of regulatory and legal issues. Problems around its classification, AML and KYC regulations, and the reluctance of many banking institutions to support the burgeoning technology has resulted in many setbacks for the crypto world but that is all set to change.

The island of Malta has long been a hub for digital technologies and it is well known for its iGaming, Finserv and Fintech industries that when combined, account for around half of the country`s GDP. Then, in March 2018 the Government announced the drafting of three new bills that would seek to provide legal and regulatory clarification on DLT, crypto, and ICOs. These bills are the Virtual Financial Assets Bill which would provide a regulatory framework for ICOs and virtual currencies, the Malta Digital Innovation Authority Bill and the Technology Arrangements and Services Bill which will oversee companies that operate within the market, as well as providing a much-needed guidance and clarification.

This makes Malta the first jurisdiction in the EU, and the world to create a comprehensive legal framework that not only protects all stakeholders including operators and investors, but also supports the growth and development of the industry. By ensuring explicit legal clarification as well as adherence to AML and KYC regulations. This means that the industry will receive a much-needed confidence boost and will help to increase the  level of public trust in this new market sector.

Binance Relocates to Malta

As a result of Malta’s decision to support cryptocurrencies and related industries, an exciting announcement came just a few days later. Binance is the largest cryptocurrency exchange in the world and commands 10% of the global trading volume as well as having a market capitalistion of $1.3billion at the time of writing. Its founder Changpeng Zhao started Binance in July 2017 and in just a couple of short months, it has grown to be the market leader.

Following the introduction of restrictive laws in Japan and China regarding cryptocurrencies and exchanges, Binance was on the look out for a more welcoming and flexible home. On March 23rd, Binance announced their move to Malta and the crypto community rejoiced. Such a vote of confidence is a big deal for the small EU country and it is expected that such a move will encourage many other companies and startups to follow suit.

The Blockchain Boom

This time last year, most people had heard of the blockchain but only in the context of it being intrinsically linked to Bitcoin. Now, the technology has broken away from just monetary uses and has earned a lot of attention for its potential. In the last few months, more and more use cases have come to prominence at blockchain has found uses in industries such as logistics, healthcare, politics, real estate, and even crypto-powered beer vending machines. It has also been tipped to completely revolutionize the way we vote, as well as provide microloans to SMEs in developing countries and to solve the energy crisis in third world countries.

 

E&S Group is a leading corporate & 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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The Chinese paradox: virtual currencies vs ledger technologies

Categories Blockchain, Cryptocurrency, ICOs, Law, Bitcoin, Regulation

The Chinese paradox: virtual currencies vs ledger technologies

The Chinese government has increased its pressure on those engaging with cryptocurrency related activity within the country.

Whilst it is clear that Beijing supports blockchain, the technology that underpins crypto, it is also trying to limit speculation in digital currencies, almost one year since they banned ICOs.

Blockchain technology works by creating a permanent and secure record of transactions between two individuals. By facilitating this direct link between parties, it is possible to eliminate the need for third-party intermediaries such as banks. Bitcoin was the first cryptocurrency that used blockchain technology, and since then hundreds of other crypto coins have been launched into the market. Last year, prices of Bitcoin reached record highs as investors speculated that blockchain was set to change the world as the internet did. Whilst it is being used around the world by companies, individuals, and governments, it is still yet to fully prove itself on a larger scale.

Banned the sale of cryptocurrencies

China was once the world leader when it came to Bitcoin trading and it is still responsible for the majority of the world’s BTC mining output. But, due to increased regulatory scrutiny as well as the value of Bitcoin climbing quickly, the country’s bank and other financial authorities banned the sales of new cryptocurrencies through ICOs as well as Bitcoin-Yuan trading.

Around the same time, investors in Japan, South Korea, and the US became extremely interested Bitcoin which resulted in an all-time high value of $19,000 by the end of December. Then on August 24th 2018, five Chinese government bodies; People’s Bank of China, the Banking Regulatory Commission, the Central Cyberspace Affairs Commission, the Ministry of Public Security and the State Administration for Market Regulation published a warning about the risks of fundraising via ICOs.

Prohibition of cryptocurrency transactions

Then, tech giant Tencent announced that they would prohibit any cryptocurrency related transactions made through WeChat pay as well as blocking some accounts associated with ICOs and crypto trading. Also in August, the business district of Beijing, the Chaoyang District placed a ban on all hotels, offices, and shopping areas holding any cryptocurrency related events. A special economic development zone in Guangzhou swiftly followed suit.

Whilst it is clear that the Chinese government wants to maintain a level of financial stability and regulation, this has not stopped several local governments investing heavily in blockchain projects. It seems that whilst blockchain is actively encouraging, cryptocurrency will remain outlawed.

 

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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E&S Group Announces Participation in KSU Fresher’s Week 2018

Categories Tax, iGaming, Blockchain, Cryptocurrency, Malta, ICO Legal Service, Law, E&S Group, University, Technology, Tokenomics, DLT, KSU, Corporate Services

E&S Group Announces Participation in KSU Fresher’s Week 2018

As Malta continues to stride towards solidifying its reputation as the ‘Blockchain Island’, E&S Group is proud to announce its participation in the KSU Fresher’s Week 2018 at the University of Malta.

Held in between the 1st-5th of October 2018, the KSU Fresher’s Week gives new students the opportunity to meet not only each other but also businesses involved in the sectors they may one day wish to work in. E&S Group will have a stand at the event where students are invited to come and meet the team, network, make contacts for future internship opportunities, and learn about the range of services the company provides. Students will also be able to get their hands on merchandise and enjoy a range of games and competitions throughout the week.

E&S Group is a boutique law firm, located in the heart of St Julian’s. Whilst based in Malta, their client portfolio has a global reach across multiple sectors and disciplines. As Malta’s cryptocurrency and blockchain sector continue to increase, so does the demand for special legal professionals with an interest in these emerging industries.

Lawyers and accountants with experience and knowledge in ICOs, cryptocurrency, and blockchain technology are in demand, and as the sector is still in its infancy, this demand is set to grow exponentially. E&S Group is looking to inspire, educate, and develop the talents of potential digital market participants, as well as to attract the island’s brightest professionals to a sector that is set to revolutionise the local, and international economy.

E&S Group provides a range of services including ICO Legal Services, Corporate Services, iGaming, International Tax Planning, Financial Planning, Tokenomics, and more. If you are a student willing to work in one of these fields in the future, be sure to stop by the E&S Group stand to say hello!

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1st of November – Maltese Regulation Comes into Force

Categories Blockchain, Cryptocurrency, ICOs, Malta, Law, The Blockchain Island, DLT Regulation, E&S Group, MFSA, VFA Act, DLT

1st of November – Maltese Regulation Comes into Force

Since March, the Maltese government has begun discussing the ways to regulate the Distributed Ledger Technology (DLT) and the related digital space, including Initial Coin Offerings (ICO), cryptocurrency exchanges, Blockchain based companies, FinTech and Artificial Intelligence (AI). Through this progressive approach taken by the authorities, many big corporations namely, Binance, OKEx and Neufund have chosen Malta to be the place for business relocation. These companies have also helped the Maltese government to draft such progressive laws, encouraging more businesses to transfer their operations to the island. Prime Minister Dr Joseph Muscat tweeted that “[Malta’s] aim [is] to be[come] the global trailblazers in the regulation of blockchain-based businesses and the jurisdiction of quality and choice for world-class fintech companies”.

On the 4th of July 2018, the Maltese parliament unanimously passed three laws, namely: Malta Digital Innovations Authority (MDIA), Virtual Financial Assets Act (VFAA) and the Innovation Technology Arrangement and Services Act (ITAS). This was a success, making Malta a leader in this ever-growing industry, hence dubbed as “The Blockchain Island”.

The industries had been waiting for these laws to be implemented for a long time. Regarding the Innovative Technology Arrangements and Services Act, 2018 (ACT No. XXXIII of 2018) the Minister for the Digital Economy has established the 1st November 2018 as the date on which the provisions of the said Act shall come into force. In exercise of the powers conferred by article 1(2) of the Virtual Financial Assets Act (ACT No. XXXIII of 2018), 2018, the Parliamentary Secretary for Financial Services, Digital Economy and Innovation, in consultation with  Malta  Financial  Services  Authority,  has  established  the  1st November 2018 as the date on which the Act shall come into force.

The MDIA, which falls under the Malta Financial Services Authority (MFSA), has already been in operation.

What do the VFA Act and the ITAS Acts change?

One of the most important acts is the VFAA, as it regulates the whole Initial Virtual Financial Assets Offering and Virtual Financial Assets ecosystem and increases transparency requirements. The high-level principles and means of prosecution are applied to those who abuse market regulations, for example, by not adhering to the 5th anti-money laundering directive.

The VFAA covers the following; offering of VFAs, regulation of all services providers operating on the VFA space; licencing of all requirements and obligations of ICO issuers or those companies providing any kind of services to ICOs; structuring and implementing the financial instrument tests, identifying the minimum disclosure requirements for ICO whitepapers, control on marketing and advertisement of VFAs.

The law attests that every ICO better named by law as “initial virtual financial asset offering” or “initial VFA offering” needs to pass the Financial Instrument Test to be presented to the MFSA. The Financial Instrument Test is led by VFA Agents, which have to undergo a test to obtain a license from the respective authority. The law states that the VFA Agent is to be a source of guidance between the VFA issuer or the VFA service provider applicant, acting as a contact person between the MFSA and the client.

On the other hand, the ITAS is defined as “a regulatory framework which will be set up for the registration of Technology Service Providers (System Administrators and Auditors) and the certification of Technology Arrangements.” Its role is to “provide for the regulation of designated innovative technology arrangements referred to in the Act, as well as of designated innovative technology services referred to in the Act, and for the exercise by or on behalf of the Malta Digital Innovation Authority of regulatory functions with regard thereto.”

The ITAS provides a liaison with the MDIA. Its purpose is to seek all relevant authorisation by the MDIA.

Operating in Malta, E&S Group adheres to the Maltese laws with regards to ICOs, cryptocurrency exchanges and tokenomics. If you require further information contact us by sending an email on [email protected]. We make things happen!

 

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Malta – at the centre of the Distributed Ledger Technology

Categories Blockchain, Cryptocurrency, ICOs, Malta, Law, DLT Regulation, Smart Contracts, E&S Group, Technology, Cryptocurrency Exchange, Tokens, VFA Act

Malta – at the centre of the Distributed Ledger Technology

In the light of the new blockchain laws presented by the government of Malta, many fintech organisations praised the government’s progressive approach to these set regulations. The Malta Chamber of Commerce, Enterprises and Industry organised an interesting and detailed conference titled; ‘Blockchain: The New Regulatory Framework.’ E&S Group employees attended this conference to understand more about the three laws soon to be in force.

The Parliamentary Secretary for Financial Services, Digital Economy and Innovation, Hon. Silvio Schembri opened up the panel. He spoke about how Malta is becoming a Blockchain Island soon implementing laws that will ensure a safe crypto market on the island. Various influential people coming from various financial sectors spoke about the importance of blockchain technology. The discussion revolved around how the laws will help Malta in the sphere and being a trailblazer in the industry.

Many stakeholders coming from various industries in particular finance, legal, and IT attended the conference. Many interesting points came up during the discussions which brought about how private institutions are reacting to Malta’s DLT shift. In fact, some Maltese banks are welcoming ICOs as their clients. A bank, in particular, AgriBank has started to open up bank accounts to ICO clients. However, they have not started to accept cryptocurrency trading as it is still a bit of a grey area. Strict due diligence procedures also need to be followed by MLRO, making sure that all necessary AML procedures are in place. In addition, an MFSA representative spoke about the Financial Instrument test, VFA agents need to adhere to, presenting their final findings to the authority.

Since the industry is still in its initial stages, AML procedures need to be processed. In fact, the FIAU will have an important role to safeguard Malta’s reputation, seizing fraudulent companies from operating in Malta.

 

Are you looking for the best country to operate your ICO? Is Malta on your list and wish to know more what it offers? Check out the link here or send us an email on [email protected] or by calling us on +356 2010 3020. We make things happen!

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