ECB Considers “Legal Restraints” Against Bitcoin Says Council Member
This week the European Central Bank (ECB) Governing Council member, Ewald Nowotny, stated in an interview that the ECB is discussing “legal restraints” for bitcoin and other cryptocurrencies.
he ECB has said a lot of things about bitcoin over the past few years, and this week the Austrian economist and ECB council member Ewald Nowotny gave his opinions. Nowotny says the bank is currently looking into regulating decentralized currencies but did not detail what kind of mandates the institution would enforce. The European official believes bitcoin is too volatile and lacks in regulatory supervision.
“Bitcoin is not a currency, it is highly speculative and volatile, it is not subject to any supervision either, and the stock market movements of the recent period make it clear,” explains Nowotny speaking with the Austrian weekly trend report.
Nowotny: Stability Makes a Currency ‘Good’
It’s not the first time Nowotny has scrutinized bitcoin as the ECB council member has been very outspoken against the digital asset. “Bitcoin does not own the main feature that makes a currency good, namely – stability,” explains Nowotny this past July. “The cryptocurrency is subject to speculations,” he adds. However, at the time Nowotny explains that even though the bank wouldn’t ban bitcoin; retail investors should be “aware of the risks.”
Discussing Bitcoin Legal Constraints Within the ECB
Alongside this, last month the president of the ECB, Mario Draghi, told a European Parliament committee that “it would not be [within] our power to prohibit or regulate [bitcoin].” Draghi did detail to the committee members that the ECB hasn’t discussed the regulatory possibilities yet. But the ECB president did, however, reject the Estonian government’s plan to create its own sovereign cryptocurrency. The president told the country, “no member state can introduce its own currency — the currency of the eurozone is the euro.” Moreover, Draghi recently stated in a letter to the EU Parliament, that there is no evidence showing the current cryptocurrency economy is affecting the “real economy” in any positive way.
“Although the market capitalisation of [virtual currency schemes] has increased since the publication of these reports, there is no evidence to suggest that the connection of VCS to the real economy has strengthened significantly,” detailed the ECB president Mario Draghi.
Following Draghi’s recent statements, the ECB council member Nowotny explains during his recent interview that the bank is definitely considering placing regulatory mandates towards bitcoin.
“There is a particular problem in China, because bitcoins are used as a means to curse capital and to circumvent legal regulations,” details Nowotny. The Austrian economist then emphasizes;
We are discussing the legal constraints within the ECB.
Nowotny’s commentary, stating that the ECB is actively researching legal constraints follows in line with the European Parliament’s plan to tighten digital currency regulation this year. The European Union’s legislative initiatives are rumored to be delivered by the end of 2017.
What do you think about the ECB placing ‘legal restraints’ on bitcoin in Europe? Let us know what you think in the comments below.
Images via Shutterstock, and Wiki-commons.
Written by Bitcoin.com
At Last, Banks Want in on Bitcoin: Exponential Rise in Value and Growth
Last year, bitcoin and security expert Andreas Antonopoulos stated that banks will reject bitcoin at first, try to compete with it using blockchain technology, then inevitably adopt bitcoin.
Such trend is becoming more evident and realistic, with some of the largest companies in the finance and banking industries such as the $95 billion investment bank Goldman Sachs and financial services company Fidelity with over $2.13 trillion worth of assets under management, moving to adopt bitcoin and offer services around the cryptocurrency.
Earlier this month, Paul Vigna of the Wall Street Journal revealed that sources close to the matter have disclosed the plans of Goldman Sachs and its bitcoin department to launch a bitcoin and cryptocurrency trading platform. This week, as NewsBTC reported, Goldman Sachs CEO Lloyd Blankfein expressed optimism toward bitcoin, stating that paper money or fiat currency was once considered odd.
“Still thinking about Bitcoin. No conclusion – not endorsing or rejecting. Know that folks also were skeptical when paper money displaced gold,” wrote Blankfein.
In an interview with Bloomberg, Axel Pierron, managing director of bank consultant Opimas, stated that banks are recognizing rapidly increasing demand for bitcoin and the cyrpotcurrency market by their clients. Banks can either isolate themselves from the emerging market or address the growing demand and position themselves at the forefront of financial innovation and disruption.
“They’re clearly receiving interest from their clients, both from retail investors and on the institutional side. It’s highly volatile, it’s highly illiquid when you need to trade large volumes, so they see the opportunity for a new asset class which would require the capability of a broker-dealer,” said Pierron.
But, as Joshua Satten, director of emerging technologies at Sapient Consulting, explained, it is not as simple for banks to blindly adopt bitcoin and cryptocurrencies due to their rise in value and exponential rate of adoption. Satten explained that banks must consider the stance of the US government, since they are strictly reuglated entities by local financial authorities. Satten noted:
“From the perspective of the U.S. Treasury, do you classify it as an asset class or a currency?. If banks are starting to manage and hold bitcoin for their clients, you would have the OCC and the FDIC looking at how they classify the assets on their balance sheet and how they state the assets for the portfolio of a client.”
In regions like Japan that have fully and transparently legalized bitcoin through a national licensing program for cryptocurrency businesses and trading platforms, banks can easily adopt bitcoin and alternative cryptocurrencies. But, in countris like the US, it still is difficult to surpass regulatory hurdles.
With some of the largest banks and financial institutions in the US in support of bitcoin and cryptocurrencies, bitcoin is at an optimal position for long-term growth. If it can support hundreds of millions of new users through efficient scaling solutions, it will lead to increased adoption by merchants, banks, institutional investors, and casual traders.
As Morgan Stanley CEO James Goldman stated:
“I’ve talked to a lot of people who have [invested in bitcoin], and it’s obviously highly speculative, but it’s not something that is inherently bad. I think it’s a natural consequence of the whole blockchain technologies, as I understand it.”
Written by newsBTC
ICO’s Still Have Options Despite Increasing Regulation
These days, it seems that regulation for ICOs and token sales is popping up everywhere. The SEC has already famously ruled on the DAO tokens, and both China and Korea have banned ICOs for the foreseeable future. Even the Swiss are starting to get cautious. It may well be that the ‘wild west’ days of the ICO are over.
However, some ICOs are seeking new ways to work around regulations in different countries, both regulations that deal with ICOs and other regulations dealing with distributed businesses. Below is a summary of three attempts to overcome regulation in a legal way, and how they might fare.
Divide and conquer
One option to dodge the regulatory climate is to divide the tokens into ‘security’ type tokens and ‘utility’ type tokens. The goal of this work-around is to allow for investment without falling afoul of the SEC.
The key distinction between the two coins is the dividend payout. In the case of DCorp, for example, the non-security tokens will hold voting rights on the platform, but the security tokens will receive dividends. This framework allows the company to still issue tokens and receive investments from US investors, while at the same time, protecting themselves from SEC regulatory oversight.
Will it work? It seems that by dividing the token, the move may well protect DCorp from SEC oversight. Dividing the tokens means that there are, in fact, two instruments of investment rather than one, and only one of the two will fall within the securities definitions stipulated by the Howey test.
Buying your freedom
Another option that some companies are considering is to simply buyout another entity with the necessary regulatory compliance. By buying the company and transferring the necessary rights or legal controls, the parent company can adopt the business model of the child corporation and dodge regulation.
One example of this work-around is Stox, a prediction marketplace where token holders can predict the outcome of any number of events by betting their STX. The company recently announced the buyout of Commologic, a non-Blockchain technology firm that has existing gambling licenses.
Stox hopes that the buyout will allow them to actively use these licenses in the UK and Malta, where they had been previously obtained. Stox recently said:
“Today Stox became the first regulated ICO prediction platform when it announced its first acquisition of a company with a gambling license, CommoLogic… Through the acquisition, Stox will acquire three gambling licenses from CommoLogic: A software license in the UK., an operating license also in the UK .and a Class 4 (B2B) license in Malta.”
Will it work? It seems that it well work, since the Stox distributed platform is close enough to the CommoLogic platform that it can potentially continue on within the same framework and under the same license regimes.
Another recent work-around is based on what is called the SAFT agreement. SAFT stands for Simple Agreement for Future Tokens, which essentially limits participants in ICOs to ‘accredited’ or ‘sophisticated’ investors, defined as those with an income of at least $200,000 or net assets above $1 mln.
These investors are, by and large, considered to be above the need for regulation because of their level of financial sophistication. In other words, they should know enough to not invest in junk. The agreement is modeled after SAFE (Simple Agreement for Future Equity) which limits participants in investments to those who are sophisticated and promises them future equity in companies. Suleyman Duyar of SaftLaunch said:
“Investors in Blockchain protocol tokens have high demand for a regulated method of participating in token sales. The SAFT provides a a framework which offers answers to many questions surrounding token sales or ICOs. Issuers can use platforms like ours to communicate with our user base and onboard new accredited investors.”
Will it work? The SAFT agreement is considered to be the best overall work-around by some, since it already has a counterpart in the VC world with SAFE, and would likely produce the best and safest results for ICOs within the US regulatory climate. Investors would be accredited by an outside company, which increases the regulatory comfort for the SEC and protects small-scale investors from larger fraudulent schemes.
While regulations continue to abound, these sorts of work-around plans will continue to flourish as well.
Written by CoinTelegraph
Gypsies Peddling Fake Physical Bitcoins, Taking Advantage of Unsophisticated Buyers
Bitcoin’s growth has not only been noted by those online, Roma Gypsies in the Russian town of Obninsk have also used the digital currency’s popularity to make a few quick rubles in a scam of their own.
The Gypsies have been peddling novelty physical Bitcoins outside a local department store, swindling the public into believing these are the physical manifestation of the purely digital currency.
A great deal
The scam was noticed when an Obninsk resident posted a message on a social network message board warning people of what was happening.
Bitcoin’s growth and popularity seems to be reaching even more and more far flung places, however, understanding of the digital currency is still sorely lacking.
The women posted a note that read:
“Respectable-looking gypsies are selling Bitcoin outside the department store on Aksenov Street. My husband bought two for 1000 rubles, came home and they turned out to be fake and it’s not possible to sell them.”
Since 1000 rubles equates to about $17, that deal would seem too good to be true.
Money to be made
Indeed, the Gypsies persuaded the man that the price of Bitcoin was on the rise and not showing signs of slowing – no lies there. He was told that there were several more thousand rubles to be made off his own 1000 ruble investment.
The coins bear the recognisable Bitcoin logo, pressed upon a circuit board-looking background. But, of course, being physical, they are worth very little other than their novelty value.
One person on the message board offered some helpful advice for the hapless couple, saying that they may be able to sell them for that novelty value at an online trading site – probably for about 300 rubles.
Written by Cointelegraph
BlockMason Successfully Launches Whitelist Capped Token Sale
After months of anticipation, BlockMason has finally launched the initial phase of their Credit Protocol token sale, open to those who signed up to purchase tokens through a whitelist. During the first period of the sale, BlockMason has capped the purchase of CPT tokens to ensure that large purchasers, often known as “whales,” are unable to block out smaller buyers for the highly demanded tokens.
“We have been extremely pleased with the performance of token sale during this opening purchase phase,” said BlockMason co-founder Michael Chin.
“Our capped whitelist successfully prevented hoarders and resellers from purchasing excessive tokens and squeezing out smaller parties, ensuring that our tokens reach maximal dispersal throughout the Ethereum community.”
Chin also acknowledged that, while the whitelist ensured access to tokens for smaller purchasers, there remains a significant pool of interested customers who did not have a chance to sign up for the whitelist and therefore have been unable to purchase tokens.
“While the capped whitelist sale will continue for several days as a security measure against hoarding, we believe our bonus structure will provide strong value for those customers who purchase during the open whitelist phase, or after the sale opens to the general public.”
As the BlockMason team looks ahead to the second and third phases of their token sale, they are jumping into the ICO Barcelona 2017 conference, where they will present the philosophy underlying the Credit Protocol, and why they believe providing secure debt and credit recording on the blockchain will enable the next phase of the digital economy.
The uncapped whitelist token sale for the Credit Protocol will begin on Oct. 6th UTC 1600. The sale will open to the general public on Oct. 8th UTC 1600. You can learn more at www.creditprotocol.com
- Michael Chin – Co-founder
- Timothy Galebach – Co-founder
- Jared Bowie – Co-founder
Written by Cointelegraph
Bitcoin Cash Slides to Three-Week Low Against the Dollar
Bitcoin Cash (BCH) has declined sharply against the dollar this week, putting it on track for a seven-day drop of more than 20%.
BCH Hits Three-Week Lows
The BCH/USD regressed toward three-week lows on Thursday, where it briefly fell below $350. The cryptocurrency is holding steady in the $355 region at press time.
Prices are down 21% compared to last week, putting BCH among the worst-performing digital assets. Bitcoin cash’s short lifespan has been marked by heavy volatility, as investors continue to struggle ascertaining its true worth.
BCH is down one spot on the global cryptocurrency asset chart. At $5.9 billion, Bitcoin Cash is now the world’s No. 4 digital currency by market capitalization. It has been overtaken by Ripple (XRP), which is currently valued at $9.1 billion. XRP is the only cryptocurrency among the ten largest market caps to post a seven-day price increase.
From a technical perspective, BCH is facing strong bearish pressure, having declined below a key support area near $380. The next support target is located around $320.
If one fork wasn’t enough, a new group of cryptocurrency upstarts is looking to create another form of digital money: Bitcoin Gold. The new version of the world’s No. 1 digital currency is expected to hit the market Oct. 25.
Gold’s backers want to democratize the blockchain’s infrastructure by taking it out of the proxy of large firms. The Bitcoin Gold website literally provides no clues about what the new infrastructure will look like. They have a direct link to their Slack account, which could provide more answers.
Bitcoin Gold differs from the upcoming November fork – Segwit2x – because that version addresses issues related to BTC network traffic. The Gold version, on the other hand, is looking to bring more small-scale players into the market. It remains to be seen whether Bitcoin Gold has staying power, or whether it’s an angry response against mining giants. Industry sources say China-based Bitmain is the main focal point of Gold’s uprising.
Written by Hacked.com