The Swiss financial regulator has issued fresh guidelines for fintech startups, giving leeway to licensees to accept up to CHF100 million ($100.1 million) in public deposits, in a radical move designed to boost innovation in the sector.
The move comes as part of the new Banking Act, which has been designed in part to create more favourable conditions for fintech businesses, including expanding the options for crowd-lending models within a regulatory sandbox environment.
The guidelines are part of a wider strategy of supporting the crypto sector by the Federal Council of the Swiss Financial Market Supervisory Authority, which aims to boost Switzerland’s profile as a global destination for crypto and fintech startups.
Crucially, the new guidelines give crypto businesses the ability to accept deposits from the public without the need for the same authorisations as a bank, enabling them to explore innovative models without the full range of compliance expectations.
According to a statement from FINMA, which will oversee firms in the regulatory sandbox and is responsible for issuing the new licenses, the measures will begin to come into effect at the turn of the year. It explained, “With the new measure, companies with special authorisation can accept public funds of up to CHF100 million from 1 January 2019, provided they neither invest nor pay interest on these funds.”
The statement goes on to reference amendments to the Bank Ordinance (BankO), which will come into force in April 2019, noting, “In the BankO, the sandbox will additionally be extended to include crowdlending business models, whereby public funds up to a total amount of CHF1 million can one day be brokered not only for commercial and industrial purposes but also for private consumption.”
The fintech license is aimed at startups looking to explore models of taking deposits, without investing or paying interest on those deposits.
The policy is designed to help cement the reputation of Switzerland and the city of Zug as a haven for cryptocurrency innovation, with an already established and booming crypto sector in the country.
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The U.S. Department of Homeland Security (DHS) has become the latest arm of government to take an interest in blockchain, this time with a view to develop forensic analysis tools for analysing blockchain transactions.
The department is seeking submissions from blockchain experts as part of a consultation exercise, inviting design applications as well as commentary from interested parties. The process is aimed at exploring solutions that would allow Homeland Security investigators to conduct detailed analysis of blockchain transactions, including privacy coins, which have until now eluded existing analytics technologies.
Interestingly, the Department of Homeland Security specifies that while previous analysis work has been conducted on Bitcoin Core (BTC) blockchain, it is interested in new options for analysis on privacy coins such as Monero and Zcash, which exist within private blockchains.
This is relevant given the association of privacy coins along with BTC in alleged criminal use cases for these digital currencies, with criminals turning to the anonymity afforded by transacting on these blockchains.
According to the solicitation document, the technology should “provide working approaches to treating newer blockchain implementations,” as well as having applicability in other administrative use cases. It noted, “Because of the significant impact in areas such as governance, data sharing agreement enforcement, and encrypted analytics interchanges, there are a wide variety of applications in government and the commercial marketplace that can benefit from successful product development.”
The pre-solicitation notice will be finalised on December 19, at which point formal applications will be welcomed, as part of the initial stages of a process that could offer greater access for the authorities to these closed blockchain networks.
In launching the pre-solicitation notice, the Department of Homeland Security becomes the latest government agency to increase its focus on blockchain technology.
Recently the U.S. Defense Advanced Research Projects Agency announced plans for a two day research event, as part of its interest in “several, less-explored avenues of permissionless distributed consensus protocols.”
It comes at a time of increasing awareness of the value of blockchain technologies in public administration across different sectors, with government agencies exploring a number of use cases for blockchain systems.
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Medici Ventures, a wholly-owned subsidiary of Overstock.com, Inc., has purchased a 10% stake worth $2.5 million in Grainchain, a blockchain software provider that facilitates payments in the agricultural sector.
According to the terms of the acquisition, Medici will have the option to purchase another 10% in the company at a later date.
Grainchain said in its press release that currently, small- to medium-sized farms were behind much of agricultural output worldwide, and that these lacked the resources for more modernized and secure transactions. This is where blockchain technology is seen to help, while cutting middlemen and allowing farmers to keep more earnings.
“At the end of the day, we’re just leveling the playing field for the farmer, giving them much more power and control over the selling process,” Grainchain CEO Luis Macias said.
At present, Grainchain offers its services in the U.S. and Mexico, but said that the Medici acquisition will allow for an expansion of operations to Central and South America.
Medici President Jonathan Johnson said of the investment, “Producers operate on razor-thin margins and are up against a host of factors far beyond their control… GrainChain helps to support those producers by simplifying and securing the measuring and payment process and bringing unprecedented transparency to the industry.”
Grainchain was founded in 2013, and uses a three-part blockchain-based system to eliminate error and fraud in the process of delivering goods to end-users. According to the company, smart contracts are used between buyers and sellers, and Internet of Things (IoT) devices measure both weight and quality of grains at each step of the way. According to its website, the company has facilitated about 84,000 transactions with over 1,400 active participants, and has overseen the processing of nearly 5.3 billion pounds of various commodities.
While Overstock is most known as a retailer, it has also invested in blockchain through subsidiary Medici, which also holds a stake in VinX, a company that tracks wine futures through blockchain. It has been estimated that about 20% of wine worldwide is labeled fraudulently, which makes blockchain a potential alternative to present tracking systems for wine.
Overstock has also invested in tZero, a new exchange specifically for the selling of tokens.
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It’s no secret that Japanese authorities are looking to take control over tax money it feels is lost in the crypto space. The country is behind an effort being developed by the G20 to implement a global crypto tax strategy that could see governments receive millions of dollars in payments. Back home in Japan, regulators are now looking to introduce a new system that will report significant profits from crypto-based transactions, helping the country recover even more funds.
According to the Japanese media outlet Mainichi Shimbun, the new system to be implemented will give the National Tax Agency (NTA) the ability to gather data from transaction intermediaries, which include crypto exchanges. The NTA will have the authority to request information – such as names, addresses and personal ID numbers – on customers that it suspects of tax evasion. If everything goes according to plan, the system will be developed next year, with an anticipated implementation for the new fiscal year beginning in April 2020.
Not all individuals would be targeted by the new system. The media outlet quotes several sources who said that only those who earn over 10 million yen ($88,700) through crypto transactions would be held accountable.
Currently, crypto exchanges and other companies that are deemed intermediaries only give up data voluntarily. They have the legal ability to refuse to hand over information, but this could change with the new legislation. The exchanges could be forced to adhere to the requests, but would still maintain the right to appeal any request it feels is unwarranted.
The impact won’t be felt widespread, at least not initially. According to a recent survey conducted by the NTA, only just over 300 people indicated that they earned more than 100 million yen through crypto last year. Given the current market slide, the number has probably dropped significantly.
Japan is also ready to come down hard on initial coin offerings (ICO). The Japanese Financial Services Authority (FSA) announced this week that it would introduce stricter regulations on the offering in order to protect investors from fraud. Going forward, any entity wishing to launch an ICO would have to first register with the FSA.
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A payment processor with a significant footprint in the U.S. has joined forces with tech company Vaultbank to bring crypto payments to retail customers. SpotOn, which provides a payment processing solution to more than 100,000 merchants in the country, will soon include crypto payment transactions to its platform, allowing retailers to accept a number of digital currencies, including Bitcoin Core, Ripple, Ether and Stellar.
According to a company press release, customers will now be able to pay in the currency of their choice and merchants can choose whether or not to almost instantaneously convert crypto payments to fiat, or to hold them in their original form. SpotOn also has additional developments in the pipeline, including the introduction of a crypto-based loyalty rewards program and the ability to buy and sell crypto directly on its platform.
SpotOn President RJ Horsely states, “Today’s ever-evolving digital market demands that merchants need a payment service capable of accepting a wider diversity of currencies including virtual currencies. Our new technology will allow thousands of SpotOn merchants to accept cryptocurrency without having to onboard to another payment processor or manually convert cryptocurrency funds into fiat.”
Vaultbank is a firm that creates, issues and trades financial instruments using the blockchain. SpotOn invested in a seed-funding round held by the company, which is developing a platform that will allow users to buy, sell and spend their crypto assets on a single solution. The Vaultbank website indicates, “The Vaultbank Platform plans to tokenize securities like Mutual Funds, and will be a securities compliant platform that performs KYC [Know Your Customer], AML [anti-money laundering], FATCA [Foreign Account Tax Compliance Act] and Accreditation. Users will be able to buy and sell security tokens and top utility tokens at industry competitive rates.”
Vaultbank Chief Operating Officer Aaron Travis added in the press release, “This partnership empowers the customer to pay in whatever digital currency they want, while the merchant gets paid in what they want, dollars.”
By giving merchants an easy-to-use crypto payments solution, coupled with the ability to convert the funds into fiat, can go a long way to helping crypto be accepted as an alternative payment solution. The market volatility has kept many retailers away, concerned about losing revenue. However, transferring funds to fiat – until the markets stabilize – helps to counter this issue.
Coinbase users now have an extra option available to them when choosing to withdraw their funds from the cryptocurrency exchange. In a move that didn’t receive a great deal of fanfare, Coinbase has added PayPal to its platform, allowing users to make easy fiat withdrawals through the payment services solution. As an added bonus, the withdrawals don’t incur any additional fees.
No official announcement of the PayPal support was provided by Coinbase. However, users have reported receiving an email informing them of the capability. The only mention of it in on the Coinbase website is in the company’s FAQ, and reads, “Beginning in November, Coinbase will add the ability for customers to link their PayPal and Coinbase accounts. Depending on country of residence, customers can either withdraw cash to PayPal or sell their crypto to their PayPal account.”
In order to make a withdrawal using PayPal, users must complete Coinbase’s Know Your Customer process. Once that’s complete, they receive an email confirming that they’re eligible to take advantage of the implementation.
Withdrawals using PayPal are available in U.S. dollars, UK pounds and euros. Currently, only customers in the U.S., Canada, the UK and the European Union are eligible, but this could change soon. Coinbase mentions in its FAQ that it plans to provide support for the Australian dollar, as well as the Canadian dollar, in the near future.
Whether or not deposits will be facilitated through PayPal remains to be seen. It seems like a logical next step, given the platform’s wide range of services.
This isn’t the first time Coinbase has integrated PayPal into the exchange. PayPal withdrawals were available last year, but Coinbase temporarily suspended the option and subsequently eliminated it completely due to what it described as performance issues.
PayPal has over 244 million customers and managed 7.6 billion payment transactions last year. That level of volume could prove to be extremely beneficial to Coinbase and help increase mainstream adoption, as long as it is marketed properly.
According to a number of reactions in social media, the withdrawal capability is somewhat spotty. Some have indicated that it takes up to 13 days to receive the funds and others – even those living in the specified countries – have said that the service doesn’t work at all. It may be a work in progress, but should prove to give Coinbase, and cryptocurrencies, a significant boost.
CoinZoom, a U.S.-based cryptocurrency exchange, will soon start its operations in Australia after its subsidiary, CoinZoom Australia, received approval from the Australian Transaction Reports and Analysis Centre (AUSTRAC).
According to the announcement, CoinZoom Australia will be able to offer its services to people across Australia lawfully. The exchange will now be able to accept and exchange fiat and digital currencies including BTC, Bitcoin Cash, Litecoin, Ethereum, Ripple and other alt coins.
Under the license, CoinZoom Australia will provide its services to people in Australia and around the world.
CoinZoom CEO Todd Crosland stated that receiving the license will help actualize the company’s vision of providing global cryptocurrency traders with innovative trading technology. He added that the license was an essential step in the company’s goal to provide globally compliant digital currency trading.
With the license in place, CoinZoom is expected to launch Coin Zoom Australia next year, possibly in the first quarter of 2019. Customers wishing to use the exchange will be required to comply with Anti Money Laundering (AML) and Know Your Customer (KYC) requirements in America and Australia.
The exchange will provide a simple and easy “one-stop user experience” to link their credit card, bank account, and cryptocurrency wallets. CoinZoom’s trading platform also offers customers a pattern recognition system; CoinZoom Rewards debit card, and social trading capabilities.
CoinZoom has been offering crypto services to people in the United States for quite some time. It is registered as a money service business (MSB) with the Financial Crimes Enforcement Network (FinCEN) to operate in all 50 states.
AUSTRAC has been actively involved in trying to make sure businesses in the crypto space follow regulations during their operations. The authority has also grown its global network of financial intelligence. In November, the financial authority appointed the first ever AUSTRAC financial intelligence analyst to be posted in China. To facilitate its activities, AUSTRAC received additional funding of $5.2 million from the Australian government. In addition to helping grow its global imprint, the funding was aimed at assisting the authority to conduct a more profound analysis of risks, money laundering activities, threats, and terrorist activities in the country.
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CoinGeek’s Becky Liggero spoke to BadChain founder Leo Leiman, who is ready to show off his blockchain-themed apparel in whatever conference he attends.
Leo Leiman, founder of BadChain, has attended numerous blockchain and cryptocurrency conferences in the last couple of years. By his count, he’s been to as many as 50 of them. The Malta Blockchain Summit in particular, he said, is “one of the best” he’s been to, with a great number of investors and foundations involved. “You can feel the money from the investor, because if you see someone in Russia who says he’s an investor, he has for example $100,000, but here it’s more true investors, and projects here [are] better than somewhere else,” he explained.
He said the very liberal attitude of Malta when it came to the blockchain industry made it a great venue for the summit. “It is like when Canada or the USA legalized marijuana. A lot of people go there… Here, it’s also, ‘Come here, it’s open, [to] companies for blockchain.”
Dressed up in Bitcoin-themed clothing, he is quick to offer his services. “I can make T-shirts for you, I can make rain coats, or like T-shirts with crypto,” he said, adding that he also designed rings embedded with the cryptocurrency one chooses.
The idea for such designs came from seeing the opportunities among those in the business. “A lot of guys in the industry are smart, and I think that they could be stylish also. And it was like how the idea was born. And I decided to do the merch. It was like this idea, I decided to do it one year ago, and I created a blockchain system for clothing also, just for fun,” he said.
Leiman sees his clothing brand also serving an educational purpose. “I have huge experience in this field, and I know how to make the young generation more happy because they can work everywhere… They can go to, for example, to Malta, and have good income. They can be in this industry, but they have to be smart a bit, smarter than others, but it is okay. It’s a really stylish industry. It is young, fresh,” he said.
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On November 20, the heart of the Russian Federation held the eighth Blockchain Conference Moscow. Its organizer is the Smile-Expo international company.
The large-scale specialized conference brought together 40 speakers from seven countries, including Russia, Ukraine, Switzerland, Germany, and China. 500 attendees came to hear their presentations and observe the products at the demo zone.
Within the conference, the experts shed light on the industry burning issues – cryptocurrency regulation, influence of digital assets on capital management, and the future of decentralized technologies. Bitcoin rate and its prospects appeared among the hottest topics for discussion at the main stage and on the sidelines of the conference.
“Bitcoin is the main marketer. If Bitcoin grows, so does the interest in it. The same situation can be observed in case Bitcoin drops,” thinks Evgeniy Romanenko, crypto economist and moderator of Blockchain Conference Moscow.
Conference: prospects of blockchain tech and crypto market
The eighth Blockchain Conference Moscow gathered Russian and crypto experts from the leading international companies: PwC Legal (Switzerland), Russian Association of Cryptocurrency and Blockchain (RACIB), Moscow-based GRAD Attorney Bar, Airalab, Center for Digital Transformation at Vnesheconombank, State Duma Financial Market Committee, the St. Petersburg community of blockchain developers, QIWI Blockchain Technologies, and MIOT Blockchain & Guilin Pharma.
One of the speakers was Aleksey Studnev, developer and CTO at Izetex PTE Ltd: the expert shared his opinion on the future of blockchain within the nearest decade.
“Cryptocurrency rate is information noise that has no impact on blockchain operation,” reckons Aleksey Studnev. He also claimed that the technology would follow the steps of the Internet and would become an indispensable feature of every smartphone. As reported by the expert, this would be the main aspect to affect the volume of the crypto market that would dramatically grow popular.
DarQube Founder Rostislav Haliplii told about the functionality of modern crypto exchanges and the role of artificial intelligence in trade on the crypto market.
“The primary target of AI technologies introduction into a DarQube platform is assisting traders in building revenue-generating strategies. AI can be applied to turn a good strategy into the brilliant one,” explains the speaker.
The conference consisted of two specialized sections – Fintech (cryptocurrencies) and Blockchain (tokenization and ICO). Among the top speakers, there were Gerbert Shopnik from Bitfury Group, Leader of PwC Legal Switzerland Guenther Dobrauz-Saldapenna, Michael Chobanian from UNA.io, Vice President at RACIB Valeriy Petrov, and Prof Simon Choi from China.
Panel discussions with top speakers
The event consisted of a panel discussion titled ‘Regulation of blockchain and digital financial assets’. The most experienced Russian crypto experts and lawyers took part in it.
Among them, there were lawyer and expert on international financial and corporate law Maxim Pervunin, Director at OECD Centre RANEPA (the Russian Presidential Academy of National Economy and Public Administration) Antonina Levashenko, Partner at Nektorov, Saveliev & Partners (NSP) Alexander Nektorov, lawyers Alexey Sinitsyn and Maria Agranovskaya, and Advisor to the Federal Chamber of Lawyers of the Russian Federation Helen Avakyan.
“Development of documentation that meets the standards is important, it should also reflect emerging aspects and provide new terminology. Another vital step lies in its application,” thinks Maria Agranovskaya from Moscow-based GRAD Attorney Bar.
The experts discussed cryptocurrency influence on capital management and obstacles on the way of digital money development. The panel discussion was part of the Fintech section. Meanwhile, Blockchain section specialists took part in the panel discussion titled ‘Evolution of the blockchain technology – period of experiments’.
Demo zone: Mining 2.0 and cutting-edge hardware
Attendees had an opportunity to visit a traditional demo zone to observe products and services of the event participants – Cryptoferma, FAP LLC, DiPlex, GIXCUP.IO, DarQube, Hotmine, NRGMiner, AS1C, Mining-LAB, Bitferma, Quantium, Pacific, WattsOn, and GoWeb.
Particularly, Hotmine presented its equipment for heat generation by means of mining. As reported by the company representatives, heat produced by such devices will be a basis of the future mining.
At the booth of the manufacturer of 51ASIC mining equipment, attendees had a chance to take a look at ASICs, hardware wallets, control boards, power units, main bodies, and cables.
The leader of the Russian mining market WattsOn showcased its new product – ASIC BITMAIN ANTMINER S15. The company also announced the launch of a new pool.
Attendees had a possibility to ask the demozone participants any questions concerning their products, partnership conditions, and even their forecast of a Bitcoin rate.
“Our company was working during Bitcoin’s first and second fork. We witnessed the period than Bitcoin skyrocketed from $175 to $1000, and then from $2000 to $16 000. Everybody poses us the same question – when will it shoot for the moon again? Here is my point of view: as soon as the next halving comes about, Bitcoin will dramatically rise,” commented a Hotmine representative.
Blockchain Conference Moscow was organized by Smile-Expo, an international company with a 12-year experience in this sphere, which is 250+ events, 356 000+ attendees, 500+ speakers, and 500+ top exhibitors.
Smile-Expo is an organizer of major conferences dedicated to blockchain and cryptocurrencies. The company has been holding the Blockchain & Bitcoin Conference series across the globe since 2014. The events took place in 25 countries.
The sponsors of the eighth crypto event Blockchain Conference Moscow are the leading industry companies: DarQube (Silver Sponsor), TAAS Capital Fund (Investment Partner), Hotmine (Mining 2.0 Sponsor), Kaplink (Investment Partner), MMGP.RU (General Media Partner), WattsOn (Exclusive Sponsor).
For more information about the event and news in the cryptocurrency universe, visit the official website of Blockchain Conference Moscow.
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Another mainstream financial company has seen the light. Calastone, a global funds network based out of London, is going to switch its entire fund trade clearing services system to the blockchain. According to a report by Reuters, the transition is expected to take place next May.
Calastone’s move will put all of its services on a shared ledger. It will allow the company to automate nine million messages, reportedly worth more than $217 billion, that are sent back and forth between counterparties each month. Reuters points out that the company processes mutual fund trades for more than 1,700 financial companies, including Schroders, Invesco and JPMorgan Asset Management.
Under the current operating system, three distinct messages are required when an enterprise wishes to purchase a fund. The first places the order, the second provides the receipt and the third confirms the purchase price. Calastone’s chief marketing officer, Andrew Tomlinson, states, “The more you can automate, the more you de-risk, you more you streamline, the more you speed up.”
By switching to the blockchain, the company anticipates that the entire global fund industry – not including the U.S. industry – could save as much as $4.3 billion annually, per data Calastone received from the Deloitte audit company. This savings is possible by allowing companies to optimize trading and settlement processes and would a welcome relief to an industry that has seen higher costs due, in part, to the financial crisis of 2008.
Julien Hammerson, CEO of Calastone, told the Financial Times yesterday that funds are currently “hampered by continually rising costs and threat of competition, ultimately rendering the current system economically and operationally unsustainable.” The company has asserted that, by implementing blockchain technology, the mutual fund industry alone could save as much as $2.6 billion.
Calastone is just the latest to make the leap to blockchains. Last month, the Depository Trust & Clearing Corporation, a global post-trade market firm, began testing a new platform that is based on distributed ledger technology. DTCC is behind the Trade Information Warehouse, an event processing system that is used for about 98% of all credit derivatives transactions around the world.
Some traditional finance pundits are still too hesitant, or too naive, to understand the value of the blockchain. They continue to hold on to yesterday, arguing that blockchains aren’t secure, that they’re exposed to the risk of fraud and that there is a risk of data being lost. Of course, just a few key words can put those arguments to rest – Deutsche Bank, Wells Fargo (guilty of both losing data and of scamming customers) and Marriott.
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