Malta to Give “Peace of Mind” to Crypto Companies

Malta to Give “Peace of Mind” to Crypto Companies

The government of Malta has come up with an idea that businesses dealing with cryptocurrencies may find interesting. A new policy document seeks to set up a special agency which will “certify” blockchain platforms and “verify” crypto transactions. It is supposed to “bring peace of mind” to companies using these technologies to cut out central authorities and banks. Valletta also proposes legislation that will define the roles of intermediaries and regulate initial coin offerings.

Also read: Gibraltar Launches Regulation to Protect Cryptocurrency Value and Reputation

Government Will Provide “Legal Certainty and Trust”

The new Malta Digital Innovation Authority will certify blockchain platforms used by companies in the country. It will also be responsible for “verifying” cryptocurrency transactions by checking if the logged information is genuine. The government hopes to bring some peace of mind to businesses using distributed ledgers for cross-border payments.

Authorities in Valletta are recognizing that companies utilize blockchains to cut out central authorities. However, they acknowledge that the technology allows for cheaper and more efficient money transfers. Worried that those platforms are not currently certified in any way, the government has decided to provide some “legal certainty and trust”. Officials believe companies will benefit from the work of the new authority, while also cutting out intermediaries such as banks.

Malta to Give “Peace of Mind” to Crypto Companies

The Parliamentary Secretary for the Digital Economy Silvio Schembri presented the new policy document at a press conference with various stakeholders, the Maltese Independent reported. He called the event a “historic moment” and provided further details on how authorities plan to implement regulations concerning the cryptocurrency sector in successive stages.

The first step will be to set up the Malta Digital Innovation Authority. A bill will set out the regime for the registration of service providers and the certification of technology arrangements, Schembri explained. On stage 2, another draft will formalize the framework for Initial Coin Offerings (ICOs). A third law will impose regulation on services directly related to cryptocurrencies. Intermediaries like brokers, exchanges, wallet providers, asset managers, and investment advisors will be subjected to its provisions.

Malta Strives to Be a Hub of Innovation

Silvio Schembri stressed that promoting policies which favor the development of Malta as a hub for new technologies, including in the public sector, will be among the main goals. The aim is to foster innovation by creating a successful ecosystem, he added. That will be achieved through the “utilization of cutting edge technology in useful business cases and the adherence to best practices”. The lawmaker also noted that the Digital Innovation Authority would protect Malta’s reputation taking into account its international commitments under anti-money laundering directives.

Malta to Give “Peace of Mind” to Crypto CompaniesDuring the press conference, officials mentioned several applications of distributed ledger technology. In larger companies, internal DTL platforms can be used to maintain payroll systems and record movement of goods and invoices. Businesses can also take advantage of public platforms that share consensus mechanisms such as bitcoin and ethereum. Regulated financial institutions can utilize DTLs to offer services to their clients.

The Parliamentary Secretary for the Digital Economy said the government would consult with all stakeholders before finalizing its policies, including relevant authorities like the Financial Intelligence Analysis Unit (FIAU) and the police. Local and international representatives of the industry will also be involved in the process. Silvio Schembri added that the public is free to provide feedback in the next three weeks. After that, the bills will be introduced in the Parliament of Malta.

Do you think policies outlined by Maltese authorities will attract more crypto businesses to the island nation? Share your thoughts in the comments section below.


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Switzerland Enacts ICO Guidelines

Switzerland Enacts World’s First ICO Guidelines

Just days before the tiny nation of Gibraltar was said to draft their first initial coin offering (ICO) regulations, Financial Market Supervisory Authority (FINMA) of Switzerland appears to have stolen its thunder in an eleven page document published today. It could be the standard by which developed countries look to install their own versions.

Also read: Citibank India Bans Bitcoin 

Switzerland Publishes ICO Guidelines

“The guidelines also define the information FINMA requires to deal with such enquiries and the principles upon which it will base its responses,” an agency press release began, “creating clarity for market participants.”

ICOs have bedeviled regulators the globe over since their inception Summer of 2013 as a creative way to crowdfund projects. They deliberately mirror initial public offerings, IPOs, which are famously used to bring traditional companies to market. However, IPOs have taken all the trappings that come with success: barriers to entry making them a very expensive proposition, requiring gaggles of lawyers and regulatory hoop-jumping. ICOs, due to their nascency, have gotten around all that to the tune of 6 billion USD in 2017 alone.

Switzerland Enacts World’s First ICO Guidelines

“FINMA has seen a sharp increase in the number of initial coin offerings (ICOs) planned or executed in Switzerland and a corresponding increase in the number of enquiries about the applicability of regulation,” the regulator insists. Following up on their Spring of last year Guidance document, “setting out how it intends to treat enquiries from ICO organisers,” FINMA wishes to solidify “transparency at this time” as it “is important given the dynamic market and the high level of demand.”

ICOs are a participatory token economy in the literal, digital sense. They usually focus upon a specific project, and combinations and permutations on this idea are as vast as the myriad of ICOs themselves: ownership in a company, payouts, tradeable coins, some of which are expected to appreciate beyond just being a digital stock certificate. They’re an adventuresome investment, and, as these pages have well-documented, slickly written white papers and website landing pages have often amounted to little more than exit scams.

Not All ICOs are Equal

A vast majority of ICOs rely upon the Ethereum platform and its Ethereum Request for Comments (ERC20), which is used for smart contracts. Something like over twenty one thousand such contracts exist, and estimates hold that ERC20 commands a supermajority ICO marketshare.

Swiss guidelines are “not applicable to all ICOs. Depending on the manner in which ICOs are designed, they may not in all cases be subject to regulatory requirements. Circumstances must be considered on a case-by-case basis […] At present, there is no ICO-specific regulation, nor is there relevant case law or consistent legal doctrine.” As such, “FINMA will focus on the economic function and purpose of the tokens (i.e. the blockchain-based units) issued by the ICO organiser. The key factors are the underlying purpose of the tokens and whether they are already tradeable or transferable.”

Switzerland Enacts World’s First ICO Guidelines

Swiss guidelines subdivide tokens into three classes: payment, utility, and asset. Payment tokens are basically cryptocurrencies as most understand them; utility tokens are access to services; asset tokens function more like derivatives, bonds, equities, and can serve as interest or dividend payments.

FINMA’s deepest worry involves anti-money laundering (AML) law subversion. “FINMA’s analysis indicates that money laundering and securities regulation are the most relevant to ICOs,” and as such guidelines contain “requirements for financial intermediaries including, for example, the need to establish the identity of beneficial owners.” Revealingly, the agency baldly asserts, “Money laundering risks are especially high in a decentralised blockchain-based system, in which assets can be transferred anonymously and without any regulated intermediaries.”

Switzerland Enacts World’s First ICO Guidelines

Supportive of Blockchain Technology

ICOs with payment token arrangements FINMA won’t be thought of as securities, and instead be required to comply with AML regulations already in place. Additionally, utility token ICOs “do not qualify as securities only if their sole purpose is to confer digital access rights to an application or service and if the utility token can already be used in this way at the point of issue.”

Asset token ICOs, however, “FINMA regards asset tokens as securities, which means that there are securities law requirements for trading in such tokens, as well as civil law requirements.” Where there are hybrids, it appears the most regulation applies rather than a default to a less regulated token.  

The Swiss body was careful to suggest it supports blockchain development, and it quotes FINMA head Mark Branson as insisting, “The application of blockchain technology has innovative potential within and far beyond the financial markets. However, blockchain-based projects conducted analogously to regulated activities cannot simply circumvent the tried and tested regulatory framework. Our balanced approach to handling ICO projects and enquiries allows legitimate innovators to navigate the regulatory landscape and so launch their projects in a way consistent with our laws protecting investors and the integrity of the financial system.”

Do you think FINMA’s guidelines will be the world standard? Let us know in the comments section.


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Salon Offers Visitors In-House Cryptocurrency Mining When Blocking Ads

Salon Offers Visitors Cryptocurrency Mining to Block Ads

Mainstream web magazine Salon has started allowing its readers an ad-free site, if readers start mining cryptocurrency for them, after sustaining a decline in income due to ad blocking technology.

Also read: Japan Cracks Down on Foreign ICO Agency Operating Without License

Salon’s Mining Initiatives

Salon Offers Visitors Cryptocurrency Mining to Block AdsSalon, a left-leaning political and lifestyle webzine started in 1995, has launched a cryptocurrency mining option for its visitors in an effort to recuperate some of its declining income. The site is run by Salon Media Group, a publicly-traded company with offices in San Francisco and New York City.

“Like most media companies, Salon pays its bills through advertising,” the site explained, adding that the increase in visitors using ad blockers has “cut deeply into our revenue.” Acknowledging technological developments, Salon wrote “your computer itself can help support our ability to pay our editors and journalists,” noting:

For our beta program, we’ll start by applying your processing power to mine cryptocurrencies to recoup lost ad revenue when you use an ad blocker.

Salon also made the disclaimer that “mining uses more of your resources which means your computer works a bit harder and uses more electricity than if you were just passively browsing the site with ads.”

Let the Ads Display or We Will Mine Crypto

The mining option is now shown to all Salon website visitors using an ad blocker. Anyone arriving on any page of the site will immediately see the message, “We noticed you’re using an ad blocker. We depend on ads to keep our content free for you. Please consider disabling your ad blocker so we can continue to create the content you come here to enjoy.” They are subsequently presented with two options: to disable their ad blocker and allowing ads to be displayed or to keep blocking ads but allow Salon to use their spare computing power.

Salon Forces Visitors to Mine Cryptocurrency if They Block Ads

Salon Forces Visitors to Mine Cryptocurrency if They Block AdsFor its beta program, Salon is mining monero, which is more profitable to mine than bitcoin on common PC processors. The cryptocurrency also has a widely used application for websites like Salon to easily deploy, called Coinhive. The program allows websites to mine monero with their visitors’ CPUs, with or without their knowledge. While often described as malware, Coinhive is nonetheless used by several well-known websites including the Pirate Bay.

Salon informs their users upfront that its mining functionality is “Powered by Coinhive,” and displays a link to let visitors read more about the process. The webzine also says that “Nothing is ever installed on your computer and Salon never has access to your personal information or files.”

How Much Processing Power Is Used

To opt-in, users are asked specifically if they would like to allow mining for the duration of the current site visit. Once the “allow for this session” link has been clicked, the users’ processors will immediately start working intensively.

In our informal testing using a modern 4-core Intel processor, all 4 cores’ usage was instantly maxed out within a couple of seconds after clicking the allow button.

Salon Forces Visitors to Mine Cryptocurrency if They Block Ads

As soon as the Salon page was closed, the processors returned to normal. Without clearing cookies, the site will remember users’ opt-in preferences for up to 24 hours, Salon noted, adding that they will be asked to opt-in again after that. Furthermore, Salon clarified:

We automatically detect your current processing usage and assign a portion of what you are not using to this process. Should you begin a process that requires more of your computer’s resources, we automatically reduce the amount we are using for calculations.

What do you think about Salon’s plan to force their users to choose between ads and mining crypto? Let us know in the comments section below.


Images courtesy of Shutterstock and Salon.


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Steps towards Self-Regulation in Croatia and Slovenia

Steps towards Self-Regulation in Croatia and Slovenia

Communities in two countries, which share a border, history and perspectives, have expressed similar views about the future of the cryptocurrency sector. A new association in Croatia hopes to lay the foundations of self-regulation in the industry. In neighboring Slovenia, entrepreneurs and government officials have promised to work together to “educate the public” on the benefits of the blockchain technology.

Also read: Crypto Exchanges Launch P2P Platforms from Latvia and Bulgaria

Croatian Crypto Companies to Advise Regulators

Businesses and enthusiasts in Croatia have united their efforts to help authorities take informed decisions about the cryptocurrency sector. A new umbrella organization will be bringing suggestions and important matters to the attention of policy makers in Zagreb, Bitfalls reported this week. The Blockchain and Cryptocurrency Association will be advising regulators on anything from buying and selling cryptocurrencies, to crypto payments and salary payouts in bitcoin.

UBIK [“Udruga za Blockchain i Kriptovalute”] intends to create “a focused and strong community of people involved with the blockchain technology and the domain of cryptocurrency in Croatia”, but also in the region. Providing relevant information, education and knowledge about the crypto economy is among its priorities. The Croatian crypto association plans to help authorities and its members with legal, financial, and technological support in the development of the regulatory framework and realizing strategic blockchain projects.

Steps towards Self-Regulation in Croatia and Slovenia

Interest in bitcoin, other cryptocurrencies and the underlying technology has grown significantly in Croatia in the past year that saw skyrocketing prices on crypto markets. The local community has expanded with new companies working with blockchain technologies and more businesses accepting crypto payments.

A comprehensive regulatory policy is yet to be adopted by Croatian authorities. During a discussion on digital currencies back in 2013 the Croatian National Bank reportedly stated that bitcoin was not illegal in the country. More recently, in 2017, HNB noted that cryptos were neither legal means of payment, nor electronic money under current law in Croatia. The country has appealed for common EU decisions in regards to cryptocurrencies.

Government and Businesses to Educate Slovenians about Blockchain

More positive signals came this month from Croatia’s neighbor Slovenia, another former Yugoslav republic and current member of the EU. Government officials and blockchain companies promised to work together to “educate the public on the benefits and the opportunities that the innovative technology brings”. They met to set up an open dialogue between authorities and entrepreneurs, necessary to clarify and address the challenges. Slovenian Prime Minister Miro Cerar also took part in the meeting hosted by Viberate, a startup developing a decentralized live music marketplace.

Steps towards Self-Regulation in Croatia and Slovenia“We have called for regulation that would assist blockchain projects with existing financial limitations and allow us easier recruitment processes. The government has agreed that it will provide us with more favorable conditions in due time”, Insurepal, one of the participating companies, said in a blog post. It expressed hope that similar public discussions will help Slovenia become one of the most advanced countries in the field of blockchain.

The companies, which took part in the meeting, also announced the establishment of the Blockchain Alliance CEE. It will focus their efforts on improving visibility and raising the reputation of the sector through unified communication.

The current government in Ljubljana has a positive attitude towards the crypto industry. Speaking at the Digital Slovenia 2020 conference last year Prime Minister Cerar acknowledged the progress made by local businesses and said his country could become a leader in blockchain-development in the European Union. Slovenia is also among countries that do not tax individuals on capital gains from bitcoin and other cryptocurrencies.

Do you think positive developments in Southeast Europe in regards to crypto regulation will influence decisions in the EU? Share your thoughts in the comments section below.


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Several States Spearhead Bitcoin Adoption in the U.S.

Several States Spearhead Bitcoin Adoption in the U.S.

U.S. states with positive attitudes have advanced towards bitcoin legalization – a process that a growing number of elected officials consider inevitable, if not desirable. Numerous crypto-friendly bills have been introduced, and some of them have received approval in committees and houses of state legislatures. One wouldn’t necessarily think of states like Arizona, Tennessee, and Wyoming as the backbone of a great nation’s economy. How about… pioneers of its future development?

Also read: US Regulator Warns Against Pump-and-Dumps and Advises How to Buy Crypto

Bitcoin Doesn’t Stink – Arizona Will Take It

For some time now legislators in the Grand Canyon State have been thinking how to facilitate residents receiving incomes and profits in cryptocurrency. If bitcoin is good for ordinary citizens and businesses, it should be good enough for the state coffers, local lawmakers have decided. Last week Arizona got closer to accepting cryptos as legal tender for taxation purposes.

Several bills recognizing coins as currencies have been making their way in the State Legislature, as news.bitcoin.com reported. Two of them, SB1091 and SB1145, were aimed at regulating tax payments with digital currency. The SB1091 draft, sponsored by four Republican lawmakers, was endorsed by the Senate on February 8, with a 16 – 13 vote, after passing the Finance Committee in January. If the bill is adopted by the House, Arizona will become the first U.S. state to accept taxes in cryptocurrency in just a couple of years. The new law states:

A taxpayer may pay their income tax liability using a payment gateway, such as bitcoin, litecoin or any other recognized cryptocurrency, using electronic peer-to-peer systems.

It then clarifies that the Department of Revenue “shall convert cryptocurrency payments to United States Dollars at the prevailing rate after receipt and shall credit the taxpayer’s account with the converted dollar amount actually received, less any fees or costs incurred for conversion”. A similar bill was voted down in New Hampshire two years ago with concerns that the state would have to bear responsibility for converting the cryptos on volatile markets. Its sponsor, NH State Representative Eric Schleien (R), explained that there would be no cost and no risk to the state, as conversion would be automatic.

Several States Spearhead Bitcoin Adoption in the U.S.

Another draft law, HB2601, is expected to regulate crowdfunding through initial coin offerings in Arizona. Its first reading in the House of Representatives is scheduled for June 2, 2018, and the second reading should take place on July 2. It is sponsored by Representative Jeff Weninger (R) who is also among the authors of the tax amendments. Recently, he told Fox that state legislators want to “send a signal to everyone in the United States that Arizona is going to be the place to be for digital currency technology”.

Others Have Taken the Same Road

Tennessee is another state that may soon legalize cryptocurrencies and crypto payments. A proposal to do that has come with a bill that would officially recognize cryptocurrency financial transactions and smart contracts in the state. It would also protect ownership rights of information secured on blockchain networks.

We are not just competing with other states in this space, we are competing with the whole world.

That’s what Tennessee House Representative Jason Powell (D) said after a presentation on blockchain technology last month. The Nashville lawmaker also called for adopting a “meaningful legislation” in the Volunteer State, as reported by The Tennessean. “It is really important to say that Tennessee is supportive of this technology and we want to be a leader in this innovation”, Powell added. Local authorities have already indicated that money transmitter licenses will not be required to trade cryptocurrencies in the state.

Wyoming may also become a crypto-friendly jurisdiction and is already taking steps to Several States Spearhead Bitcoin Adoption in the U.S.improve its attractiveness for startups from the sector. Several drafts have been introduced in the state legislature. Respective committees have passed two of them and they are now ready for the House of Representatives.

According to bill 0070, “a person who develops, sells or facilitates the exchange of an open blockchain token is not subject to specified securities laws”, if the token can be exchanged for goods and services. The legislation exempts exchanges from regulations applicable to brokers and dealers. Exemptions for cryptocurrency traders and transactions are also included in a draft to amend the Money Transmitter Act (0019).

Kansas and New Hampshire are two other states that have passed legislation with crypto-related exempts in their money transmitter regulations. In Texas companies are not licensed when offering custodial exchange services to in-state customers, and Montana has no applicable money transmission laws. Authorities in Nevada have promised to create favorable conditions for startups working with blockchain technologies. Most other states have yet to adopt their regulatory frameworks.

Do you think that positive moves towards legalization in individual states will speed up adoption of cryptocurrencies on federal level in the U.S.? Tell us in the comments section below.


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US Regulator Warns Against Pump-and-Dumps and Advises How to Buy Crypto

US Regulator Warns Against Pump-and-Dumps and Advises How to Buy Crypto

The U.S. Commodity Futures Trading Commission (CFTC) has issued its first warning against pump-and-dump schemes involving cryptocurrencies while giving advice on how to buy crypto. This warning follows previous warnings by two other U.S. regulators.

Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies

CFTC’s Warning

US Regulator Warns Against Pump-and-Dumps and Advises How to Buy CryptoThe CFTC issued a Customer Protection Advisory on Thursday to warn the public to “beware of and avoid pump-and-dump schemes that can occur in thinly traded or new ‘alternative’ virtual currencies, digital coins or tokens.”

CFTC Director of Public Affairs Erica Elliott Richardson explained, “As with many online frauds, this type of scam is not new – it simply deploys an emerging technology to capitalize on public interest in digital assets,” adding that:

Pump-and-dump schemes long pre-date the invention of virtual currencies…The CFTC encourages all customers to thoroughly research potential investments, stay informed about tactics commonly used in investment fraud, and avoid investment opportunities they don’t fully understand.

Common Pump-and-Dump Tactics

The agency explained that “the organizers of the scheme will commonly spread rumors and urge immediate buying,” often through social media, noting that:

Some pump and dumps use false news reports, typically about a famous high-tech business leader or investor who plans to pour millions of dollars into a small, lesser known virtual currency or coin. Other fake news stories have featured major retailers, banks, or credit card companies, announcing plans to partner with one virtual currency or another.

After a certain length of time following the pump, the Commission states, the dump will begin. “The price falls and victims are left with currency or tokens that are worth much less than what they expected. From beginning to end, these scams can be over in just a few minutes,” the agency describes and immediately advises: “Customers should avoid purchasing virtual currency or tokens based on tips shared over social media.”

What Crypto Buyers Should Do

US Regulator Warns Against Pump-and-Dumps and Advises How to Buy CryptoCiting that its job is to maintain “general anti-fraud and manipulation enforcement authority over virtual currency cash markets as a commodity in interstate commerce,” the CFTC revealed that it has received complaints from customers who have lost money to pump-and-dump schemes. Emphasizing that ultimately, “Customers should not purchase virtual currencies, digital coins, or tokens based on social media tips or sudden price spikes,” the Commission stated:

Customers can best protect themselves by purchasing only alternative virtual currencies, digital coins, or tokens that have been thoroughly researched – to separate hype from facts.

Last month, the CFTC took action against three cryptocurrency operators and their founders for commodity fraud and misappropriation.

CFTC Joins SEC and Finra in Warnings

US Regulator Warns Against Pump-and-Dumps and Advises How to Buy CryptoThe U.S. Securities and Exchange Commission (SEC) has repeatedly warned against pump-and-dump schemes as well as market manipulations involving any financial instruments that can be classified as securities. In August, the agency issued a statement alerting investors of pump-and-dump schemes involving initial coin offerings (ICOs).

SEC Chairman Jay Clayton made a statement in December cautioning investors against “promoting or touting the offer and sale of coins without first determining whether the US Regulator Warns Against Pump-and-Dumps and Advises How to Buy Cryptosecurities laws apply to those actions,” specifically those related to cryptocurrencies and ICOs. “Selling securities generally requires a license, and experience shows that excessive touting in thinly traded and volatile markets can be an indicator of ‘scalping,’ ‘pump and dump’ and other manipulations and frauds,” he described. The chairman then reiterated the same message last week.

In December, the U.S. Financial Industry Regulatory Authority (Finra) also issued a statement warning investors not to fall for crypto-related stock scams including pump-and-dump frauds, advising them to:

Do your research before purchasing shares of any company offering investment opportunities in cryptocurrency…Don’t be fooled by unrealistic predictions of returns and claims made through press releases, spam email, telemarketing calls or posted online or in social media threads. These actions may be signs of a classic ‘pump and dump’ fraud.

What do you think of the CFTC’s guidance? Let us know in the comments section below.


Images courtesy of Shutterstock, CFTC, SEC, and Finra.


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Japanese Crypto Associations Merging to Restore Trust Across the Industry

Japanese Crypto Associations Merging to Restore Trust Across the Industry

Japan’s two cryptocurrency associations have reportedly decided to merge in order to restore trust in the industry and accelerate self-imposed rules. Once approved by the Japanese financial regulator, the new organization will have the power to set penalties for breaches of self-regulation.

Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies

Two Crypto Associations Merging

Japan currently has two cryptocurrency industry associations: the Japan Blockchain Association (JBA) and the Japan Cryptocurrency Business Association (JCBA). The former is headed by Bitflyer CEO, Yuzo Kano, and has a total of 88 members, while the latter has a total of 154 members, according to Minkabu publication.

Japanese Crypto Associations Merging to Restore Trust Across the IndustryThe two organizations have reportedly been in talks to merge after the hack of one of the country’s largest exchanges, Coincheck, where 58 billion yen worth on the cryptocurrency NEM were stolen. They “are hurried to restore trust in the industry,” Forbes Japan reported.

They “will be integrated to establish a new self-regulating organization,” to focus on areas such as safety management system and compensation of customer assets, the news outlet added. In addition, the new entity will also focus on the reliability of crypto exchanges that have already been approved by the Japanese Financial Services Agency (FSA). Currently, there are 16 approved exchanges and 16 under review, including Coincheck.

On Thursday, Nikkei reported:

Two cryptocurrency industry groups in Japan [JBA and JCBA] have agreed to merge in an effort to accelerate the establishment of voluntary regulations and regain public trust in the aftermath of a massive virtual currency heist.

Set to launch on April 1, “The new organization’s chairman will likely be JCBA Chairman Taizen Okuyama, president of Money Partners Group,” the news outlet detailed, adding that Kano is “expected to become the self-regulatory body’s vice chairman.”

Commenting on the news of its merger with the JBA, the JCBA issued a statement on Thursday, stating that no details have been decided at this time.

Accelerating Self-Regulations

Japanese Crypto Associations Merging to Restore Trust Across the IndustryThe new entity will need the approval of the FSA. Under Japan’s revised payment services law which went into effect in April of last year, cryptocurrency operators are allowed to form a self-regulatory organization. They can “set industry rules, conduct investigations on members, and impose punishment,” the Japan Times elaborated.

However, the FSA previously “refused to allow two self-regulatory bodies, urging the industry to create a unified organization by merging the JBA and the JCBA,” Nikkei explained on Thursday, adding that:

Once the new body is approved by the agency, it will gain the power to set penalties for breaches of its self-imposed rules. This should also help address calls by banks and other businesses in the conventional financial industry for virtual currency businesses to establish a robust self-regulatory regime.

Do you think the merger will help the crypto industry gain more of the public’s trust? Let us know in the comments section below.


Images courtesy of Shutterstock.


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Five Siberian Power Plants Attracting Crypto Miners With Surplus Electricity

Five Siberian Power Plants Attracting Crypto Miners With Surplus Electricity

Cryptocurrency miners will soon be able to benefit from surplus electricity and the cold climate at five power plants located in Siberia. Russian energy company En+, which owns those power plants, is already in talks with investors to build crypto mining farms near them.

Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies

Five Power Plant Sites

Five Siberian Power Plants Attracting Cryptocurrency Miners With Surplus ElectricityRussian energy company En+ Group is actively preparing to offer electricity to cryptocurrency miners at some of its power plants, Vedomosti reported on Wednesday.

En+ CEO Maxim Sokov was quoted saying, “We are talking about five sites.” They are in the Irkutsk Oblast, a federal subject of Russia, located in southeastern Siberia. Two sites are near the town of Ust-Ilimskin, one is near the city of Bratsk, and the other two are near the city of Irkutsk.

Five Siberian Power Plants Attracting Cryptocurrency Miners With Surplus Electricity
En+ CEO Maxim Sokov.

Near Ust-Ilimsk, on the Angara River, En+ has a hydropower power plant (HPP) with a capacity of 3,840 MW and a coal-fired combined heat and power plant (CHP) with a capacity of 525 MW.

Near Bratsk, “En + has a hydroelectric power plant with a capacity of 4,500 MW,” the publication noted.

Near Irkutsk, which is also the administrative center of Irkutsk Oblast, “there are two sites: a hydroelectric power plant with a capacity of 662 MW and a [coal-fired] combined heat and power plant with a capacity of 655 MW,” the news outlet detailed.

En+ said the cold climate of the region around the three areas and the availability of cheap electricity make the condition attractive for cryptocurrency mining.

Attracting Crypto Miners

Sokov revealed that En+ is currently negotiating with several investors, “including international ones – Chinese and American,” for “the construction of mining farms that will act as consumers of electricity,” Ria Novosti described, adding:

En+ will offer miners to build farms to produce cryptocurrencies next to En+ power plants in Irkutsk, Bratsk, and Ust-Ilimsk.

Five Siberian Power Plants Attracting Cryptocurrency Miners With Surplus ElectricityThe CEO emphasized that his company will benefit from attracting miners from China, where strict prohibitive regulation is now in force.

According to Vedomosti, the total demand for power supplies from cryptocurrency miners could reach 100 MW for En+ Group in 2018, and the group could earn about 980 million rubles (~USD$17.2 million). Natalia Porokhova, Head of Research and Forecasting Group at ACRA estimates that each “100 MW can bring En+ from 10 to 15 million dollars,” the news outlet added.

While Russian aluminum producer Rusal, which En+ has a controlling stake in, is currently the main user of the company’s hydropower, En+ believes that it could use up excess capacity and diversify its customer base by offering electricity supplies to crypto miners.

Cryptocurrency mining is currently unregulated in Russia. However, the regulators are drafting a bill for its regulation. Earlier this month, the Bank of Russia said that it will allow crypto mining in the country but proposes that miners sell their coins overseas.

Do you think crypto miners will move to Siberia to set up mining farms? Let us know in the comments section below.


Images courtesy of Shutterstock and En+.


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Coincheck Produces Recovery Plan While Investors Flock to Withdraw Funds

Coincheck Produces Recovery Plan While Investors Flock to Withdraw Funds

Japanese cryptocurrency exchange Coincheck has submitted a report to the country’s financial authority outlining measures it will take following the hack that lost 58 billion yen worth of the cryptocurrency NEM from its platform. However, customers rush to withdraw 40.1 billion yen of their funds so far as the exchange resumes yen withdrawal service.

Also read: Japan’s DMM Bitcoin Exchange Opens for Business With 7 Cryptocurrencies

Coincheck’s Improvement Plans

Coincheck has submitted a report to the Japanese Financial Services Agency (FSA) as mandated under the Order to Improve Business Operations. The order was handed to the exchange by the FSA following the hack that resulted in the loss of 58 billion yen (~USD$544 million) worth of NEM from its platform.

Coincheck Produces Recovery Plan While Investors Flock to Withdraw FundsIn its report, Coincheck explains key areas of improvement to the agency. Specifically, the exchange detailed four of its plans: “1) investigating the facts and causes surrounding this case, 2) [providing] proper support for our customers, 3) strengthening current measures to manage system risk, 4) creating new measures for system risk management and preventing similar events in the future in addition to making it clear where the responsibility lies for different risks.”

“We plan to continue making meaningful improvements to our system,” the exchange noted, adding:

We are continuing to confirm and improve the security of our systems in order to resume transfers of other cryptocurrencies and begin reparation payments as soon as possible.

Coincheck already provided a preliminary report to the FSA immediately following the hack. The agency then conducted an on-site inspection of the exchange as well as extended the inspections to all other exchanges in Japan.

Customers Rush to Withdraw Funds

Coincheck Produces Recovery Plan While Investors Flock to Withdraw FundsOn February 13, Coincheck resumed Japanese yen withdrawals as previously promised and successfully processed 40.1 billion yen (~$376 million), the exchange confirmed.

Yusuke Otsuka, Coincheck COO, said at a news conference that “the exchange would be able to meet future withdrawal requests,” but “declined to comment on the total amount of customers’ yen still stored at the exchange,” Reuters reported. He insisted:

We have the funds, but we are making individual checks so there are no problems (with repayments).

The exchange has also promised to repay its 260,000 affected customers but has yet to decide on the timeframe. The FSA also has not confirmed that the exchange possesses enough funds to make the repayments.

Meanwhile, seven cryptocurrency traders filed a lawsuit against Coincheck on Thursday at the Tokyo District Court. The plaintiff’s lawyer Hiromu Mochizuki told Reuters that the suit seeks “to allow withdrawals to private wallets…outside the hacked exchange.” He was further quoted by AFP that “Plaintiffs are demanding Coincheck return their cryptocurrencies – 13 different kinds including NEM.”

Do you think Coincheck will be able to repay its customers and regain their trust? Let us know in the comments section below.


Images courtesy of Shutterstock, Cnet, and Coincheck.


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Crypto Exchanges Launch P2P Platforms from Latvia and Bulgaria

Crypto Exchanges Launch P2P Platforms from Latvia and Bulgaria

While European institutions are issuing another series of warnings about the risks and sins of dealing with bitcoin, crypto communities on the Old Continent are trying to preserve freedoms not granted by Brussels. Two exchanges from opposite corners of New Europe have announced plans to offer peer-to-peer cryptocurrency trading. Latvia-based Hodlhodl has launched its new P2P platform in beta-mode, and Bulgarian Crypto.bg is developing its own service that may replace the fiat medium with a token.  

Also read: Global P2P Crypto Markets Experience Record Volume Throughout December

Going Global

Intensive work to develop decentralized and unregulated crypto markets has been going on in the EU periphery, where memories of excessive regulation and centralization, political and economic, are still vivid. Two exchanges from both ends of (New) Europe have announced preparations to offer full-fledged P2P services to their users, with global aspirations in mind, as well.

Latvian exchange Hodlhodl has just launched a beta-version of its new platform designed to accommodate safe and secure peer-to-peer transactions of bitcoin and other cryptocurrencies. Users can now open accounts, fill out their profiles, set up two-factor authentication, create offers and study available functionalities. Contracts are currently disabled but developers hope to complete the order book and launch them within a week, the company shared in a blog post.

Crypto Exchanges Launch P2P Platforms in New Europe

In the first stage of the project only bitcoin (BTC) and litecoin (LTC) will be traded. The exchange will operate in beta-mode until July 2018 with 0% commission. A fee of max 0.6% per trade will be applied after that. “The P2P Bitcoin exchange that doesn’t hold funds” will introduce multisig (P2SH) contracts that will allow users to control their funds in escrow. Hodlhodl offers support of native Bech32 Segwit addresses and P2SH-P2WSH Segwit multisig escrow addresses. The exchange services will be decentralized and no KYC (Know Your Customer) or AML (Anti-Money Laundering) procedures will be applied. Passing an “absolutely voluntary verification”, however, will lower commissions to 0.5%.

Plans for the future include introducing support for Lightning Network micropayments and other cryptocurrencies. The website menus are now available in English and Russian, but other languages will be added. Hodlhodl will be working on optimizing transaction fees and increasing security for its users, while offering integration with wallet providers and a mobile version of the platform. Its team promises a “truly global” P2P cryptocurrency exchange.

Every Action Has a Reaction

In the opposite corner of Europe, in Bulgaria, a leading crypto trader has also announced that it is working on a P2P platform, after facing multiple issues with the traditional financial system. Crypto.bg was affected by a sudden crackdown last year when Bulgarian banks blocked access to accounts used by local exchanges. It ceased operations in early December, and then restarted trading before going offline again around Christmas. In January, Crypto.bg announced it was forced to suspend trade “indefinitely”.

This month the exchange posted on its website that it was exploring options to offer services without going through a bank. Now it is planning to trade Bitcoin on a new peer-to-peer platform that is currently under development. A new medium of exchange will be used instead of fiat currency – CryptoLev (Lev is the Euro pegged BGN). It will probably be an ERC20 token based on the Ethereum blockchain, founder and CEO Stamen Gorchev revealed in the company’s forum. He also mentioned Ethereum Classic as a cheaper alternative.

Crypto Exchanges Launch P2P Platforms in New Europe

The new system will offer the opportunity to trade through Cryptolevs backed by a certain amount of bitcoin “locked” in a public address. A foundation modelled on the Ethereum Foundation in Switzerland may provide further guarantees in the future. Other Bulgarian exchanges have been invited to join the project. Xchange.bg, Altcoins.bg, and Cix.bg have also reported interruptions in their activities quoting various reasons including changing bank accounts.

Bank transfers will be made on a peer-to-peer basis and banks will not be able to tell if such transactions are bitcoin-related. Traders will actually be buying and selling Cryptolevs, used to purchase bitcoins. In addition to locally available services, payment options like Paypal and Skrill may also be added in the future, potentially opening the platform to global markets.

Relentless Euro Warnings

While both exchanges are working on their P2P platforms, European institutions have issued new warnings about bitcoin. Up to $5.5 billion of criminal money is being laundered in Europe using cryptocurrency, according to Europol. “It’s growing quite quickly and we’re quite concerned,” the agency’s director Rob Wainwright told the BBC. “The police cannot monitor those transactions. And if they do identify them as criminal, they have no way to freeze the assets unlike in the regular banking system”, Wainwright said.

This week, the European Securities and Markets Authority (ESMA) alerted European investors about the perils of obtaining cryptocurrencies in the absence of legal mechanisms of protection. The regulator charged with “safeguarding the stability of the European Union’s financial system” shared its concerns over the growing number of citizens buying cryptos while ignoring the risks. Valdis Dombrovskis, Vice-President of the European Commission responsible for the financial stability, financial services and the capital markets union, has expressed support for ESMA’s warning.

Do you think that peer-to-peer platforms will dominate cryptocurrency trade in the near future? Share your thoughts in the comments section below.


Images courtesy of Shutterstock. 


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