South Korea to Follow G20 Unified Cryptocurrency Regulations

South Korea to Follow G20 Unified Cryptocurrency Regulations

The South Korean government reportedly plans to soften its crypto regulations in line with the policies set by the G20 nations in an effort to create “unified regulations.” The Korean regulators have also agreed to apply the standards set by the Financial Action Task Force to its crypto policies.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

G20’s Unified Crypto Regulations

South Korea is reportedly planning to follow the policies set by the G-20 nations and soften its crypto regulations, the Korea Times reported.

The G20 is an international forum for the governments and central bank governors. Its members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom, United States, and the European Union.

South Korea to Follow G20 Unified Cryptocurrency Regulations

The top financial policymakers of these countries have agreed to acknowledge and regulate cryptocurrencies as financial assets, the news outlet noted, elaborating:

Financial policymakers of G-20 nations have set a July deadline for the first step toward ‘unified regulations’ of cryptocurrencies. One reason for the move by the G-20 is that they see cryptocurrencies as ‘too small to jeopardize’ financial markets. The combined market value of cryptocurrencies is less than 1 percent of the global GDP.

Financial Action Task Force Standards

While the G-20 classifies cryptocurrencies as financial assets, the Korean government has earlier classified them as non-financial products due to their speculative nature. Acknowledging the differences, the country’s Financial Supervisory Service (FSS) was quoted expressing:

It’s almost certain that cryptocurrencies will be classified as assets and the main issue will be centered on how to regulate them properly under the unified frame that will be agreed upon between G-20 nations. Given the current stance, this isn’t good, but we will step up efforts to improve things.

South Korea has also agreed to apply to cryptocurrencies the standards of the Financial Action Task Force (FATF), an inter-governmental body formed to fight money laundering and terrorism financing, the publication conveyed.

Softening Crypto Policies

Recently, the new FSS chief indicated that he will ease the country’s cryptocurrency regulations. Governor Yoon Suk-heun said there are many positive aspects of cryptocurrencies, promising to release updates on this issue in the near future.

South Korea to Follow G20 Unified Cryptocurrency RegulationsMeanwhile, the country’s National Tax Agency has been collaborating with the finance ministry to collect tax data in order to establish crypto tax policies. While cryptocurrency transactions are currently tax-free in Korea, crypto operators are required to pay income taxes, the news outlet detailed.

Despite the new FSS chief suggesting an easing of crypto regulations, his department has launched an investigation into crypto exchanges, in collaboration with other related authorities. In March, the prosecution arrested four employees of crypto exchanges including the CEO of Coinnest. Last week, they started investigating the country’s largest crypto exchange, Upbit. This week, three people were arrested from HTS Coin exchange for alleged fraud and embezzlement charges.

Do you think South Korea will soon ease crypto policies? Let us know in the comments section below.


Images courtesy of Shutterstock and the South Korean government.


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The UK and USA need to extend their “special relationship” to technology development

The UK and the USA have always had an enduring bond, with diplomatic, cultural and economic ties that have remained firm for centuries.

We live in an era of profound change, and are living with technologies set to change things ever faster. If Britain and America work together to develop these technologies for the good of mankind, in a way that is open and free, yet also safe and good for our citizens, we can maintain the global lead our nations have enjoyed in the fields of innovation.

Over past months we have seen some very significant strides forward in this business relationship. All of the biggest US companies have made decisions to invest in the UK. Apple is developing a new HQ in the iconic Battersea Power Station, close to the new US embassy, while Google is building a billion dollar new HQ in the increasingly fashionable King’s Cross. Facebook, Amazon, IBM and Microsoft are all extending their operations, and a multitude of smaller US firms are basing their international headquarters in London.

They are all coming here because as we prepare to leave the EU we are building a forward looking Britain that is open to the wider world, and tech is at the heart of this.

Similarly, there have been major expansions or new investment from British firms into the US. Jaguar Land Rover, the UK’s largest automotive manufacturer, supports more than 9,000 jobs in the USA and have recently opened their new multimillion-dollar corporate North America HQ in New Jersey.  iProov, a leading British provider of biometric facial verification technology, became the first international company to be awarded a contract from the US Department of Homeland Security Science & Technology Directorate’s Silicon Valley Innovation Program last month.

We want to work with our global partners – to share expertise, and encourage investment – as we harness technology for the wider good. And that of course includes our old friend and closest ally, the USA.

We have a great deal to offer.

The UK was recently ranked the most AI ready nation among all the OECD countries. In the past three years, new AI start-ups have been created in the UK on an almost weekly basis.

Recently, UK government and industry together committed over $1 billion to support our AI sector, much of which will go towards entrepreneurs. Funding has been set aside to create a nationwide network of tech incubators, that we’re calling “Tech Nation”, which will support new AI businesses as they get off the ground.

We are also excited by — and I am a firm advocate for — the development of blockchain and similar technologies. The UK is leading the way in many areas where blockchain has the potential to be used, such as Fintech. There are now more people working in UK Fintech than in New York or in Singapore, Hong Kong and Australia combined.

And we are eminent in the development of immersive technologies, like Augmented and Virtual Reality, which look set to radically improve many areas of life in coming years, with applications as varied as flight simulation and surgical training techniques.

There is so much to be gained from close collaboration between our two countries on these new technologies and from sharing our expertise.

Together, we can reap the economic benefits of stealing an early lead in their development. We estimate that AI, for example, if widely adopted, could add $33 billion to the UK economy. But, perhaps most importantly, we can also work together to build a strong regulatory and ethical frameworks for their wider application.

It is the role of governments across the world, the UK and US included, to set frameworks for these decentralised, cross border systems so we can manage their use in a safe and effective way.

Our aim should be to harness the power and capability of technology but always for the benefit of, and in service to the populace.

We in the UK are avowedly pro-tech, always seeking to put its power in the hands of our citizens.

We have all learned valuable lessons from the recent scandals regarding data use, most recently around Facebook’s use of data.

We want to build a system that protects and cherishes the freedom of the Internet while protecting the rights of individuals, and their property, including intellectual property.

We want to see freedom in a framework; where our tech entrepreneurs have the space to innovate, knowing they do so with full public trust. Trust underpins a strong economy, and trust in data underpins a strong digital economy.

So in the UK we are developing a Digital Charter, to agree norms and rules for the online world and put them into practice. Our starting point is that what is unacceptable offline should not be tolerated in the online world. That includes how tech companies treat private citizens and use their data, as well as how people treat each other online.

Important changes like these cannot be agreed by one country alone. It is more important than ever that we work together and find common ground so we can make sure that tech continues to change the world for the better. Based on our mutual love of freedom and individual rights Britain and America have through history risen to challenges together. I firmly believe working together we can build that brighter future.

What do AI and blockchain mean for the rule of law?

Digital services have frequently been in collision — if not out-and-out conflict — with the rule of law. But what happens when technologies such as deep learning software and self-executing code are in the driving seat of legal decisions?

How can we be sure next-gen ‘legal tech’ systems are not unfairly biased against certain groups or individuals? And what skills will lawyers need to develop to be able to properly assess the quality of the justice flowing from data-driven decisions?

While entrepreneurs have been eyeing traditional legal processes for some years now, with a cost-cutting gleam in their eye and the word ‘streamline‘ on their lips, this early phase of legal innovation pales in significance beside the transformative potential of AI technologies that are already pushing their algorithmic fingers into legal processes — and perhaps shifting the line of the law itself in the process.

But how can legal protections be safeguarded if decisions are automated by algorithmic models trained on discrete data-sets — or flowing from policies administered by being embedded on a blockchain?

These are the sorts of questions that lawyer and philosopher Mireille Hildebrandt, a professor at the research group for Law, Science, Technology and Society at Vrije Universiteit Brussels in Belgium, will be engaging with during a five-year project to investigate the implications of what she terms ‘computational law’.

Last month the European Research Council awarded Hildebrandt a grant of 2.5 million to conduct foundational research with a dual technology focus: Artificial legal intelligence and legal applications of blockchain.

Discussing her research plan with TechCrunch, she describes the project as both very abstract and very practical, with a staff that will include both lawyers and computer scientists. She says her intention is to come up with a new legal hermeneutics — so, basically, a framework for lawyers to approach computational law architectures intelligently; to understand limitations and implications, and be able to ask the right questions to assess technologies that are increasingly being put to work assessing us.

“The idea is that the lawyers get together with the computer scientists to understand what they’re up against,” she explains. “I want to have that conversation… I want lawyers who are preferably analytically very sharp and philosophically interested to get together with the computer scientists and to really understand each other’s language.

“We’re not going to develop a common language. That’s not going to work, I’m convinced. But they must be able to understand what the meaning of a term is in the other discipline, and to learn to play around, and to say okay, to see the complexity in both fields, to shy away from trying to make it all very simple.

“And after seeing the complexity to then be able to explain it in a way that the people that really matter — that is us citizens — can make decisions both at a political level and in everyday life.”

Hildebrandt says she included both AI and blockchain technologies in the project’s remit as the two offer “two very different types of computational law”.

There is also of course the chance that the two will be applied in combination — creating “an entirely new set of risks and opportunities” in a legal tech setting.

Blockchain “freezes the future”, argues Hildebrandt, admitting of the two it’s the technology she’s more skeptical of in this context. “Once you’ve put it on a blockchain it’s very difficult to change your mind, and if these rules become self-reinforcing it would be a very costly affair both in terms of money but also in terms of effort, time, confusion and uncertainty if you would like to change that.

“You can do a fork but not, I think, when governments are involved. They can’t just fork.”

That said, she posits that blockchain could at some point in the future be deemed an attractive alternative mechanism for states and companies to settle on a less complex system to determine obligations under global tax law, for example. (Assuming any such accord could indeed be reached.)

Given how complex legal compliance can already be for Internet platforms operating across borders and intersecting with different jurisdictions and political expectations there may come a point when a new system for applying rules is deemed necessary — and putting policies on a blockchain could be one way to respond to all the chaotic overlap.

Though Hildebrandt is cautious about the idea of blockchain-based systems for legal compliance.

It’s the other area of focus for the project — AI legal intelligence — where she clearly sees major potential, though also of course risks too. “AI legal intelligence means you use machine learning to do argumentation mining — so you do natural language processing on a lot of legal texts and you try to detect lines of argumentation,” she explains, citing the example of needing to judge whether a specific person is a contractor or an employee.

“That has huge consequences in the US and in Canada, both for the employer… and for the employee and if they get it wrong the tax office may just walk in and give them an enormous fine plus claw back a lot of money which they may not have.”

As a consequence of confused case law in the area, academics at the University of Toronto developed an AI to try to help — by mining lots of related legal texts to generate a set of features within a specific situation that could be used to check whether a person is an employee or not.

“They’re basically looking for a mathematical function that connected input data — so lots of legal texts — with output data, in this case whether you are either an employee or a contractor. And if that mathematical function gets it right in your data set all the time or nearly all the time you call it high accuracy and then we test on new data or data that has been kept apart and you see whether it continues to be very accurate.”

Given AI’s reliance on data-sets to derive algorithmic models that are used to make automated judgement calls, lawyers are going to need to understand how to approach and interrogate these technology structures to determine whether an AI is legally sound or not.

High accuracy that’s not generated off of a biased data-set cannot just be a ‘nice to have’ if your AI is involved in making legal judgment calls on people.

“The technologies that are going to be used, or the legal tech that is now being invested in, will require lawyers to interpret the end results — so instead of saying ‘oh wow this has 98% accuracy and it outperforms the best lawyers!’ they should say ‘ah, ok, can you please show me the set of performance metrics that you tested on. Ah thank you, so why did you put these four into the drawer because they have low accuracy?… Can you show me your data-set? What happened in the hypothesis space? Why did you filter those arguments out?’

“This is a conversation that really requires lawyers to become interested, and to have a bit of fun. It’s a very serious business because legal decisions have a lot of impact on people’s lives but the idea is that lawyers should start having fun in interpreting the outcomes of artificial intelligence in law. And they should be able to have a serious conversation about the limitations of self-executing code — so the other part of the project [i.e. legal applications of blockchain tech].

“If somebody says ‘immutability’ they should be able to say that means that if after you have put everything in the blockchain you suddenly discover a mistake that mistake is automated and it will cost you an incredible amount of money and effort to get it repaired… Or ‘trustless’ — so you’re saying we should not trust the institutions but we should trust software that we don’t understand, we should trust all sorts of middlemen, i.e. the miners in permissionless, or the other types of middlemen who are in other types of distributed ledgers… ”

“I want lawyers to have ammunition there, to have solid arguments… to actually understand what bias means in machine learning,” she continues, pointing by way of an example to research that’s being done by the AI Now Institute in New York to investigate disparate impacts and treatments related to AI systems.

“That’s one specific problem but I think there are many more problems,” she adds of algorithmic discrimination. “So the purpose of this project is to really get together, to get to understand this.

“I think it’s extremely important for lawyers, not to become computer scientists or statisticians but to really get their finger behind what’s happening and then to be able to share that, to really contribute to legal method — which is text oriented. I’m all for text but we have to, sort of, make up our minds when we can afford to use non-text regulation. I would actually say that that’s not law.

“So how should be the balance between something that we can really understand, that is text, and these other methods that lawyers are not trained to understand… And also citizens do not understand.”

Hildebrandt does see opportunities for AI legal intelligence argument mining to be “used for the good” — saying, for example, AI could be applied to assess the calibre of the decisions made by a particular court.

Though she also cautions that huge thought would need to go into the design of any such systems.

“The stupid thing would be to just give the algorithm a lot of data and then train it and then say ‘hey yes that’s not fair, wow that’s not allowed’. But you could also really think deeply what sort of vectors you have to look at, how you have to label them. And then you may find out that — for instance — the court sentences much more strictly because the police is not bringing the simple cases to court but it’s a very good police and they talk with people, so if people have not done something really terrible they try to solve that problem in another way, not by using the law. And then this particular court gets only very heavy cases and therefore gives far more heavy sentences than other courts that get from their police or public prosecutor all life cases.

“To see that you should not only look at legal texts of course. You have to look also at data from the police. And if you don’t do that then you can have very high accuracy and a total nonsensical outcome that doesn’t tell you anything you didn’t already know. And if you do it another way you can sort of confront people with their own prejudices and make it interesting — challenge certain things. But in a way that doesn’t take too much for granted. And my idea would be that the only way this is going to work is to get a lot of different people together at the design stage of the system — so when you are deciding which data you’re going to train on, when you are developing what machine learners call your ‘hypothesis space’, so the type of modeling you’re going to try and do. And then of course you should test five, six, seven performance metrics.

“And this is also something that people should talk about — not just the data scientists but, for instance, lawyers but also the citizens who are going to be affected by what we do in law. And I’m absolutely convinced that if you do that in a smart way that you get much more robust applications. But then the incentive structure to do it that way is maybe not obvious. Because I think legal tech is going to be used to reduce costs.”

She says one of the key concepts of the research project is legal protection by design — opening up other interesting (and not a little alarming) questions such as what happens to the presumption of innocence in a world of AI-fueled ‘pre-crime’ detectors?

“How can you design these systems in such a way that they offer legal protection from the first minute they come to the market — and not as an add-on or a plug in. And that’s not just about data protection but also about non-discrimination of course and certain consumer rights,” she says.

“I always think that the presumption of innocence has to be connected with legal protection by design. So this is more on the side of the police and the intelligence services — how can you help the intelligence services and the police to buy or develop ICT that has certain constrains which makes it compliant with the presumption of innocence which is not easy at all because we probably have to reconfigure what is the presumption of innocence.”

And while the research is part abstract and solidly foundational, Hildebrandt points out that the technologies being examined — AI and blockchain — are already being applied in legal contexts, albeit in “a state of experimentation”.

And, well, this is one tech-fueled future that really must not be unevenly distributed. The risks are stark.   

“Both the EU and national governments have taken a liking to experimentation… and where experimentation stops and systems are really already implemented and impacting decisions about your and my life is not always so easy to see,” she adds.

Her other hope is that the interpretation methodology developed through the project will help lawyers and law firms to navigate the legal tech that’s coming at them as a sales pitch.

“There’s going to be, obviously, a lot of crap on the market,” she says. “That’s inevitable, this is going to be a competitive market for legal tech and there’s going to be good stuff, bad stuff, and it will not be easy to decide what’s good stuff and bad stuff — so I do believe that by taking this foundational perspective it will be more easy to know where you have to look if you want to make that judgement… It’s about a mindset and about an informed mindset on how these things matter.

“I’m all in favor of agile and lean computing. Don’t do things that make no sense… So I hope this will contribute to a competitive advantage for those who can skip methodologies that are basically nonsensical.”

Europe eyeing bot IDs, ad transparency and blockchain to fight fakes

European Union lawmakers want online platforms to come up with their own systems to identify bot accounts.

This is as part of a voluntary Code of Practice the European Commission now wants platforms to develop and apply — by this summer — as part of a wider package of proposals it’s put out which are generally aimed at tackling the problematic spread and impact of disinformation online.

The proposals follow an EC-commissioned report last month, by its High-Level Expert Group, which recommended more transparency from online platforms to help combat the spread of false information online — and also called for urgent investment in media and information literacy education, and strategies to empower journalists and foster a diverse and sustainable news media ecosystem.

Bots, fake accounts, political ads, filter bubbles

In an announcement on Friday the Commission said it wants platforms to establish “clear marking systems and rules for bots” in order to ensure “their activities cannot be confused with human interactions”. It does not go into a greater level of detail on how that might be achieved. Clearly it’s intending platforms to have to come up with relevant methodologies.

Identifying bots is not an exact science — as academics conducting research into how information spreads online could tell you. The current tools that exist for trying to spot bots typically involve rating accounts across a range of criteria to give a score of how likely an account is to be algorithmically controlled vs human controlled. But platforms do at least have a perfect view into their own systems, whereas academics have had to rely on the variable level of access platforms are willing to give them.

Another factor here is that given the sophisticated nature of some online disinformation campaigns — the state-sponsored and heavily resourced efforts by Kremlin backed entities such as Russia’s Internet Research Agency, for example — if the focus ends up being algorithmically controlled bots vs IDing bots that might have human agents helping or controlling them, plenty of more insidious disinformation agents could easily slip through the cracks.

That said, other measures in the EC’s proposals for platforms include stepping up their existing efforts to shutter fake accounts and being able to demonstrate the “effectiveness” of such efforts — so greater transparency around how fake accounts are identified and the proportion being removed (which could help surface more sophisticated human-controlled bot activity on platforms too).

Another measure from the package: The EC says it wants to see “significantly” improved scrutiny of ad placements — with a focus on trying to reduce revenue opportunities for disinformation purveyors.

Restricting targeting options for political advertising is another component. “Ensure transparency about sponsored content relating to electoral and policy-making processes,” is one of the listed objectives on its fact sheet — and ad transparency is something Facebook has said it’s prioritizing since revelations about the extent of Kremlin disinformation on its platform during the 2016 US presidential election, with expanded tools due this summer.

The Commission also says generally that it wants platforms to provide “greater clarity about the functioning of algorithms” and enable third-party verification — though there’s no greater level of detail being provided at this point to indicate how much algorithmic accountability it’s after from platforms.

We’ve asked for more on its thinking here and will update this story with any response. It looks to be seeking to test the water to see how much of the workings of platforms’ algorithmic blackboxes can be coaxed from them voluntarily — such as via measures targeting bots and fake accounts — in an attempt to stave off formal and more fulsome regulations down the line.

Filter bubbles also appear to be informing the Commission’s thinking, as it says it wants platforms to make it easier for users to “discover and access different news sources representing alternative viewpoints” — via tools that let users customize and interact with the online experience to “facilitate content discovery and access to different news sources”.

Though another stated objective is for platforms to “improve access to trustworthy information” — so there are questions about how those two aims can be balanced, i.e. without efforts towards one undermining the other. 

On trustworthiness, the EC says it wants platforms to help users assess whether content is reliable using “indicators of the trustworthiness of content sources”, as well as by providing “easily accessible tools to report disinformation”.

In one of several steps Facebook has taken since 2016 to try to tackle the problem of fake content being spread on its platform the company experimented with putting ‘disputed’ labels or red flags on potentially untrustworthy information. However the company discontinued this in December after research suggested negative labels could entrench deeply held beliefs, rather than helping to debunk fake stories.

Instead it started showing related stories — containing content it had verified as coming from news outlets its network of fact checkers considered reputable — as an alternative way to debunk potential fakes.

The Commission’s approach looks to be aligning with Facebook’s rethought approach — with the subjective question of how to make judgements on what is (and therefore what isn’t) a trustworthy source likely being handed off to third parties, given that another strand of the code is focused on “enabling fact-checkers, researchers and public authorities to continuously monitor online disinformation”.

Since 2016 Facebook has been leaning heavily on a network of local third party ‘partner’ fact-checkers to help identify and mitigate the spread of fakes in different markets — including checkers for written content and also photos and videos, the latter in an effort to combat fake memes before they have a chance to go viral and skew perceptions.

In parallel Google has also been working with external fact checkers, such as on initiatives such as highlighting fact-checked articles in Google News and search. 

The Commission clearly approves of the companies reaching out to a wider network of third party experts. But it is also encouraging work on innovative tech-powered fixes to the complex problem of disinformation — describing AI (“subject to appropriate human oversight”) as set to play a “crucial” role for “verifying, identifying and tagging disinformation”, and pointing to blockchain as having promise for content validation.

Specifically it reckons blockchain technology could play a role by, for instance, being combined with the use of “trustworthy electronic identification, authentication and verified pseudonyms” to preserve the integrity of content and validate “information and/or its sources, enable transparency and traceability, and promote trust in news displayed on the Internet”.

It’s one of a handful of nascent technologies the executive flags as potentially useful for fighting fake news, and whose development it says it intends to support via an existing EU research funding vehicle: The Horizon 2020 Work Program.

It says it will use this program to support research activities on “tools and technologies such as artificial intelligence and blockchain that can contribute to a better online space, increasing cybersecurity and trust in online services”.

It also flags “cognitive algorithms that handle contextually-relevant information, including the accuracy and the quality of data sources” as a promising tech to “improve the relevance and reliability of search results”.

The Commission is giving platforms until July to develop and apply the Code of Practice — and is using the possibility that it could still draw up new laws if it feels the voluntary measures fail as a mechanism to encourage companies to put the sweat in.

It is also proposing a range of other measures to tackle the online disinformation issue — including:

  • An independent European network of fact-checkers: The Commission says this will establish “common working methods, exchange best practices, and work to achieve the broadest possible coverage of factual corrections across the EU”; and says they will be selected from the EU members of the International Fact Checking Network which it notes follows “a strict International Fact Checking NetworkCode of Principles”
  • A secure European online platform on disinformation to support the network of fact-checkers and relevant academic researchers with “cross-border data collection and analysis”, as well as benefitting from access to EU-wide data
  • Enhancing media literacy: On this it says a higher level of media literacy will “help Europeans to identify online disinformation and approach online content with a critical eye”. So it says it will encourage fact-checkers and civil society organisations to provide educational material to schools and educators, and organise a European Week of Media Literacy
  • Support for Member States in ensuring the resilience of elections against what it dubs “increasingly complex cyber threats” including online disinformation and cyber attacks. Stated measures here include encouraging national authorities to identify best practices for the identification, mitigation and management of risks in time for the 2019 European Parliament elections. It also notes work by a Cooperation Group, saying “Member States have started to map existing European initiatives on cybersecurity of network and information systems used for electoral processes, with the aim of developing voluntary guidance” by the end of the year.  It also says it will also organise a high-level conference with Member States on cyber-enabled threats to elections in late 2018
  • Promotion of voluntary online identification systems with the stated aim of improving the “traceability and identification of suppliers of information” and promoting “more trust and reliability in online interactions and in information and its sources”. This includes support for related research activities in technologies such as blockchain, as noted above. The Commission also says it will “explore the feasibility of setting up voluntary systems to allow greater accountability based on electronic identification and authentication scheme” — as a measure to tackle fake accounts. “Together with others actions aimed at improving traceability online (improving the functioning, availability and accuracy of information on IP and domain names in the WHOIS system and promoting the uptake of the IPv6 protocol), this would also contribute to limiting cyberattacks,” it adds
  • Support for quality and diversified information: The Commission is calling on Member States to scale up their support of quality journalism to ensure a pluralistic, diverse and sustainable media environment. The Commission says it will launch a call for proposals in 2018 for “the production and dissemination of quality news content on EU affairs through data-driven news media”

It says it will aim to co-ordinate its strategic comms policy to try to counter “false narratives about Europe” — which makes you wonder whether debunking the output of certain UK tabloid newspapers might fall under that new EC strategy — and also more broadly to tackle disinformation “within and outside the EU”.

Commenting on the proposals in a statement, the Commission’s VP for the Digital Single Market, Andrus Ansip, said: Disinformation is not new as an instrument of political influence. New technologies, especially digital, have expanded its reach via the online environment to undermine our democracy and society. Since online trust is easy to break but difficult to rebuild, industry needs to work together with us on this issue. Online platforms have an important role to play in fighting disinformation campaigns organised by individuals and countries who aim to threaten our democracy.”

The EC’s next steps now will be bringing the relevant parties together — including platforms, the ad industry and “major advertisers” — in a forum to work on greasing cooperation and getting them to apply themselves to what are still, at this stage, voluntary measures.

“The forum’s first output should be an EU–wide Code of Practice on Disinformation to be published by July 2018, with a view to having a measurable impact by October 2018,” says the Commission. 

The first progress report will be published in December 2018. “The report will also examine the need for further action to ensure the continuous monitoring and evaluation of the outlined actions,” it warns.

And if self-regulation fails…

In a fact sheet further fleshing out its plans, the Commission states: “Should the self-regulatory approach fail, the Commission may propose further actions, including regulatory ones targeted at a few platforms.”

And for “a few” read: Mainstream social platforms — so likely the big tech players in the social digital arena: Facebook, Google, Twitter.

For potential regulatory actions tech giants only need look to Germany, where a 2017 social media hate speech law has introduced fines of up to €50M for platforms that fail to comply with valid takedown requests within 24 hours for simple cases, for an example of the kind of scary EU-wide law that could come rushing down the pipe at them if the Commission and EU states decide its necessary to legislate.

Though justice and consumer affairs commissioner, Vera Jourova, signaled in January that her preference on hate speech at least was to continue pursuing the voluntary approach — though she also said some Member State’s ministers are open to a new EU-level law should the voluntary approach fail.

In Germany the so-called NetzDG law has faced criticism for pushing platforms towards risk aversion-based censorship of online content. And the Commission is clearly keen to avoid such charges being leveled at its proposals, stressing that if regulation were to be deemed necessary “such [regulatory] actions should in any case strictly respect freedom of expression”.

Commenting on the Code of Practice proposals, a Facebook spokesperson told us: “People want accurate information on Facebook – and that’s what we want too. We have invested in heavily in fighting false news on Facebook by disrupting the economic incentives for the spread of false news, building new products and working with third-party fact checkers.”

A Twitter spokesman declined to comment on the Commission’s proposals but flagged contributions he said the company is already making to support media literacy — including an event last week at its EMEA HQ.

At the time of writing Google had not responded to a request for comment.

Last month the Commission did further tighten the screw on platforms over terrorist content specifically —  saying it wants them to get this taken down within an hour of a report as a general rule. Though it still hasn’t taken the step to cement that hour ‘rule’ into legislation, also preferring to see how much action it can voluntarily squeeze out of platforms via a self-regulation route.

 

European Union Votes for Closer Regulation of Cryptocurrencies

With a majority vote, the European Parliament has reached an agreement to enforce closer regulation of cryptocurrencies. A December 2017 agreement with the European Council that proposed closer regulation of cryptocurrencies to prevent their abuse in money laundering and terrorism financing has found support from EU Parliament members in a vote on Thursday, a press

The post European Union Votes for Closer Regulation of Cryptocurrencies appeared first on CCN

European Parliament Votes for Tighter Crypto AML Regulations

Crypto AML regulations

Members of the European Parliament decided to vote in favour of tighter crypto AML regulations. These anti-money laundering reforms will include closer regulation for cryptocurrencies. 574 members voted in favour of this, with only 13 votes against and 60 abstentions, according to an EUP press release.

The press release stated that this is the fifth update to the EU’s anti-money laundering directive, known as ‘5AMLD,’ that is a follow up to the terrorist attacks in Paris and Brussels in 2015 and 2016, and also the Panama Papers leaks.

The new reforms have been created ...

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Bitcoin in Brief Monday: A Panther’s Moonshot Bet

Bitcoin in Brief Monday: A Panther’s Moonshot Bet

Bitcoin in Brief today is slanted toward a crypto winter slowly thawing, as Pantera Capital bets on a moonshot price point. Also, the world’s most popular decentralized digital asset has been forked more than a plate of good pasta; there’s a growing list of countries who’re less likely to nab your crypto profits; Yahoo! smashes rumors; and a good-hearted wager between bitcoin core and bitcoin cash partisans exemplifies how ecosystem actors should treat one another.

Also read: Bitcoin in Brief Saturday: Hide Your Seed

A Panther’s Moonshot

Bulls have a panther as their advocate to help thaw this crypto winter. We reported this week, “Pantera Capital, an investment firm exclusively operating in the cryptocurrency and distributed ledger technology sectors, has published a letter predicting that bitcoin has established the low for its current bear market. Pantera cites a number of factors as informing its market outlook.”

Bitcoin in Brief Monday: A Panther’s Moonshot Bet

Among those factors are taxes on capital gains, where estimates are in the many, many billions expected from enthusiasts. That in turn, the fund theorizes, dragged prices down, and bitcoin core has found a bottom at $6,500, as holders were forced to sell in order to pay government bills. We continue, “Pantera also states that ‘It’s highly likely’ for the price of bitcoin to exceed its previous record highs of $20,000 ‘within a year,’ asserting that ‘A wall of institutional money will drive’ the growth in price.”

Speaking of Taxes

Until that prediction comes true, readers should pack their bags to save money from the tax man! Start looking for places to stay in Germany, Slovenia, Denmark, Belarus, South Korea, Singapore, as they’re some of the most advantageous.

Bitcoin in Brief Monday: A Panther’s Moonshot Bet

We stressed how many “jurisdictions have yet to update their tax laws to encompass cryptocurrencies. Rules governing taxation are often incoherent and very different even in countries that are part of a common space. In the European Union, for instance, tax rates in member-states vary between 0 and 50%.”

Forking Crazy

Be honest. You’ve never heard of Bitcoin Minor, Bitcoin King, nor Bitcoin Boy. How many times would you guess the Bitcoin network has been forked? During an extensive and really interesting investigation, we revealed nearly 70 times. That’s right, 70.

We summarized findings as how forking “bitcoin used to be a rarity. Then it became the norm. And then it became a meme, with anyone and everyone forking bitcoin on a weekly basis. There have now been a total of 69 bitcoin forks plus another 18 altcoin forks. Holders of bitcoin, monero, ethereum, and litecoin can claim almost 80 additional coins for free. Whether it’s worth their time to do so, however, is another matter.”

The Fork of All Forks Remains a Solid Option

The most famous of forks is, of course, bitcoin cash (BCH). Its being faster, sleeker, younger, and bigger (block wise) has lead those on the bitcoin core (BTC) side to take a stance on BCH’s long term viability. And while each side feels passionate about its coin, and the future that it entails, debate often become rancorous, turning everyone off.

Bitcoin in Brief Monday: A Panther’s Moonshot Bet
A reader responds to a hilarious bet.

We reported how two well-known advocates joked and ribbed one another about Core’s anticipated Lightning Network solution. They bet bragging rights if a demonstration of the solution failed a basic transaction. Loser would have to wear a t-shirt of the winner’s coin. Regardless of which won, the import is how the two men exchanged laughs and good humor, and the ecosystem needs more of both.

Japan Continues to Lead

No laughing matter is how the crypto winter continues its thaw as “Yahoo! Japan has confirmed that it is entering the crypto space by acquiring a stake in a Japanese cryptocurrency exchange that is already licensed by the country’s financial regulator. The company plans to launch a crypto exchange in the fall of this year,” we explained.

Bitcoin in Brief Monday: A Panther’s Moonshot Bet

We Have the Best Readers in All of Crypto

Thanks to our readers liking and sharing, our post on aspects of Islam possibly opening to cryptocurrency was picked up and republished and referenced around the world. Some contend it was the root cause of bitcoin’s recent price rebound. Great job, gang.

The crazy good book by Wendy McElroy we continue to serialize brings in wonderful reader comments and observations. To wit:

Bitcoin in Brief Monday: A Panther’s Moonshot Bet

Do you think bitcoin will continue to rise or to fall to new lows? Let us know in the comments section below.


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These Countries Won’t Tax Your Bitcoins Too Much

These Countries Won’t Tax Your Bitcoins Too Much

A growing number of governments can’t resists the temptation to get their hands on some of the bitcoins their citizens are making. Several states, however, think that leaving some breathing space for crypto users and entrepreneurs is a better idea in the long run. Crypto-friendly tax regimes can still be found around the world.

Also read: Tax Paying Americans Owe $25 Billion in Cryptocurrency

Tax Exemptions Offered Here:

Germany, Europe’s economic locomotive, has been quite careful with crypto taxation. Last month the Federal Ministry of Finance issued a notice which treats bitcoin as a currency. The Bundesrepublik is not going to tax cryptos when exchanged with euros. Purchases with bitcoin are subject to VAT, just like any other. No tax will be imposed, however, on long-term investments in cryptocurrency. If a trader sells a bitcoin more than a year after its purchase, the profit is exempt from taxation. The same applies to yearly profits of less than €600.

These Countries Won’t Tax Your Bitcoins Too MuchCapital gains of individual investors trading cryptocurrencies are not taxed in Slovenia. Its residents are not required to report them in their income tax returns. However, private individuals who receive their income in cryptocurrency, are obliged to declare the digital money and pay regular income tax. The country uses a progressive scale and rates vary from 16% on incomes of less than €8,000 a year to 50% on incomes exceeding €70,000.

Tax authorities in Denmark have said that fintech companies should pay taxes just like any other business. On the other hand, individual investors trading cryptos do not owe any tax on their gains.

Belarus has created a friendly environment for crypto investors, both corporate and private. Activities like mining, issuing, and trading coins were legalized in March. A presidential decree introduced tax exemptions for crypto incomes and revenues for a period of five years.

These Countries Won’t Tax Your Bitcoins Too Much

Gains from cryptocurrency transactions are still tax free in South Korea. The Finance Ministry and the tax authorities in Seoul are working on a legislation that is likely to change the situation. The new tax bill should be adopted in the first half of this year, according to officials. No concrete time frame has been set.

Buying bitcoin will save you taxes in Singapore. Digital coins are not considered commodities there and are not recognized as currencies. In the absence of special requirements, gains from crypto investments of private individuals are not taxed. Companies trading cryptocurrencies, however, are expected to pay taxes on their profits.

Incoherent Rules Govern Crypto Taxation

These Countries Won’t Tax Your Bitcoins Too MuchMany jurisdictions have yet to update their tax laws to encompass cryptocurrencies. Rules governing taxation are often incoherent and very different even in countries that are part of a common space. In the European Union, for instance, tax rates in member-states vary between 0 and 50%.

The Eurasian Economic Union is another example, with Belarus exempting crypto transactions from taxation, while Russia is collecting 13% tax on crypto incomes and 24% corporate tax on profits.

The situation in the US is also complicated. Several states have taken steps to become crypto-friendly jurisdictions. Wyoming passed a bill exempting cryptocurrencies from property taxation. Two other states want to legalize bitcoin as a payment option for tax purposes. Arizona has promised to become the first US state to start accepting taxes in cryptocurrency. Georgia may also allow its residents to pay taxes in bitcoin.

What taxes on crypto incomes and profits do you have to pay in your country? Tell us in the comments section below.


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22 EU Countries Sign Blockchain Partnership – Progress Made

22 EU Countries Sign Blockchain Partnership

22 EU Countries Sign Blockchain Partnership: Digital Day 2018 was held yesterday, and the European Commission lead the signing of a Declaration which constructs a European blockchain partnership made up of 22 European countries. The EC’s VP, Andrus Ansip, called on Europe to lead the way in digital innovation by embracing blockchain technology and artificial intelligence. In his speech yesterday in Brussels he said:

“AI and blockchain are the areas where Europe is best positioned to play a leading role. However, it is no secret that we have to invest – both politically and financially. There ...

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Poles Protest Unfair Taxation of Crypto Incomes and Profits

Poles Protest Unfair Taxation of Crypto Incomes and Profits

A decision by the Polish government to tax crypto transactions, even those that do not return profit, has provoked discontent among traders in the country. The local crypto community has decided to protest against the official stance of the Finance Ministry with an online petition which is gathering support. Taxes on crypto-related income in Poland can reach 32%. Each purchase and sale will be taxed as a transfer of property rights, regardless of the end result for the parties.

Also read: 0 to 50% – Time to Pay Crypto Taxes in the European “Union”

The State Wants a Third of Crypto Incomes over €20,000

The Finance Ministry of Poland has recently published its official position on the taxation of cryptocurrency incomes and profits. The tax returns of Polish citizens should contain information about revenues from trade and exchange for cryptocurrencies like bitcoin, litecoin or ether, the department said.

Poles Protest Unfair Taxation of Crypto Incomes and ProfitsThe turnover from crypto transactions must be reported as personal income and taxed according to the country’s current tax code. Poland has implemented a progressive income tax scale with two brackets – 18% for incomes of up to up to PLN 85,528 zloty (€20,400), and 32% for those that exceed that annual amount.

The ministry insists that the general terms of the Personal Income Tax Act cover income derived from cryptocurrency transactions. Furthermore, it says purchases and sales of cryptocurrencies are considered transfers of property rights. As such, they are subject to 1% tax rate under the rules governing civil law agreements.

According to the ministry’s interpretation of the tax law, all cryptocurrency transactions, regardless of their net results, are subject to taxation. This means Poles are expected to pay taxes even when they haven’t profited from their dealings with cryptocurrency.

“They Want 1% but Won’t Get a Penny”

Protesting the Finance Ministry’s stance, cryptocurrency traders have organized an online petition, Bloomberg reported. They blame the government for effectively restricting access to the growing cryptocurrency market. Tax regulations have been introduced without any consultation with the affected parties.

The authors of the petition are demanding the abolition of all taxes on cryptocurrency trading. They also call for clear rules for the taxation of profits in the industry. The local crypto community says investors will be losing capital which, as their funds can be taxed hundreds of times.

The current interpretation of the tax regulations in regards to cryptocurrencies requires market participants to pay 1% tax on each transaction. After a hundred transactions, regardless of the market situation, investors could have given all their capital to the state. As a cryptocurrency community, with over 250,000 active members, we oppose these obligations.

As a result of “imprudent government actions”, many Polish blockchain companies and programmers now work on foreign projects, claim the people behind stopregulacjom.pl (Stop Regulation) initiative. “They want to take 1% of each transaction but will not get a penny”, the campaign says. The petition has been signed by almost 3,000 people (at the time of writing).

Poles Protest Unfair Taxation of Crypto Incomes and ProfitsThe Finance Ministry has announced that it’s working on a “more convenient” method of taxation for cryptocurrencies, while stressing that current regulations are binding. The deadline for filing the annual tax returns in Poland is April 30.

With the recently published notice, the country joins a growing number of EU member-states that want to tap into crypto-related incomes and profits. Most of them, however, have not yet adopted comprehensive regulations concerning cryptocurrencies like bitcoin.

Taxation policies vary significantly across the continent. Income tax and capital gains tax are often imposed on crypto-related revenues. Most governments have opted for applying their regular tax laws. Tax rates range from 0 to 50% in different EU countries.

Do you think the Polish crypto community will manage to exert enough pressure on authorities to change the taxation regime regarding cryptocurrencies? Share your expectations in the comments section below.


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England: Unauthorized Crypto Futures and ICOs are Criminal Offences

England: Unauthorized Crypto Futures, ICOs are Criminal Offences

In a statement released 6 April 2018, the Financial Conduct Authority (FCA) of England attempted to clarify its jurisdiction in the ever-booming cryptocurrency industry. While acknowledging cryptos are “not currently” regulated by the bureau, crypto futures, contracts for difference (CFDs), options, and initial coin offerings (ICOs) do indeed fall under their purview. Furthermore, crypto firms running afoul of necessary FCA authorization are committing “a criminal offence.”

Also read: India Searches for Ethereum Over Bitcoin

England’s FCA Warns Crypto Firms About Unauthorized Trading

“We are aware of a growing number of UK firms offering so-called cryptocurrencies and cryptocurrency-related assets,” the FCA statement on the requirement for firms offering cryptocurrency derivatives to be authorised began. “As indicated in our Feedback Statement on [distributed ledger technology], cryptocurrencies are not currently regulated by the FCA provided they are not part of other regulated products or services.”

“Cryptocurrency derivatives are, however, capable of being financial instruments,” the FCA continued, and “although we do not consider cryptocurrencies to be currencies or commodities for regulatory purposes, [firms] conducting regulated activities in cryptocurrency derivatives must […] comply with all applicable rules in the FCA’s Handbook and any relevant provisions in directly applicable European Union regulations.”

England: Unauthorized Crypto Futures, ICOs are Criminal OffencesRegulated “activities in relation to derivatives that reference either cryptocurrencies or tokens issued through an initial coin offering (ICO), will require authorisation by the FCA.” That would include three principal areas: “cryptocurrency futures – a derivative contract in which each party agrees to exchange cryptocurrency at a future date and at a price agreed by both parties; cryptocurrency contracts for differences (CFDs) – a cash-settled derivative contract in which the parties to the contract seek to secure a profit or avoid a loss by agreeing to exchange the difference in price between the value of the cryptocurrency CFD contract at its outset and at its termination; [and] cryptocurrency options – a contract which grants the beneficiary the right to acquire or dispose of cryptocurrencies. Firms unsure about their status are encouraged “to seek expert advice if you have any remaining questions.”

The FCA issued a previous warning regarding crypto CFDs. It was “aimed at retail investors who may be considering or soliciting cryptocurrency CFDs (contracts for difference). The U.K. regulator emphasized the risks associated with the price volatility, charges and funding costs, leveraged trading products, and price transparency,” News.Bitcoin.com reported back in November of last year.

England: Unauthorized Crypto Futures, ICOs are Criminal Offences

Times Have Changed

Just prior to that warning, however, the agency seemed to be championing crypto when it accused financial institutions of withholding financial services from distributed ledger technology (DLT) start-ups on a wholesale basis. Times have changed.

“It is firms’ responsibility,” the FCA concluded, “to ensure that they have the appropriate authorisation and permission to carry on regulated activity. If your firm is not authorised by the FCA and is offering products or services requiring authorisation it is a criminal offence.”

Is licensing a positive or negative step for crypto? Let us know what you think in the comments below.


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EU Markets Watchdog Sets Leverage Limits On CFDs, Cryptocurrencies

The European Securities and Markets Authority (ESMA) has announced leverage limits as temporary product intervention measures on the provision of contracts for differences (CFDs), including those using cryptocurrencies, for retail investors in the European Union (EU). ESMA also announced measures for binary options. The measures will be published in the official journal of the EU … Continued

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0 to 50% – Time to Pay Crypto Taxes in the European “Union”

0 to 50% – Time to Pay Crypto Taxes in the European “Union”

With the increasing popularity of bitcoin and the like, this year’s tax campaign in Europe comes with many questions on how to report and pay crypto taxes. Despite the obvious hesitation on the part of many governments to comprehensively regulate/legalize the sector, cryptocurrency incomes and profits “enjoy” special attention. Different decisions on the matter pose different challenges to citizens of individual member-states.

Also read: Excessive Crypto Regulation Not Optimal, EU Banking Authority Says

Different Approaches

There is no uniform approach towards cryptocurrencies in any region and Europe is no exception when it comes to taxation. The recently held G20 summit proves no global consensus on the status of cryptocurrencies, and each jurisdiction is expected to take its own decisions in the short run. In the absence of pan-European guidelines on how to treat crypto-related incomes and profits, some member-states follow a decision by the Court of Justice of the EU. In a 2015 ruling on the application of value added tax (VAT) to cryptocurrencies, the Luxembourg-based institution set a precedent. It basically drew a parallel between “virtual currencies” and fiat money, when digital coins are used for payments.

0 to 50% – Time to Pay Crypto Taxes in the European “Union”In accordance with that decision, Germany’s Federal Ministry of Finance recently announced that bitcoin should not be subject to VAT, when exchanged with fiat. The tax is applicable only when goods and services are paid for in cryptocurrency. According to German authorities, exchanges can enjoy tax breaks when they trade cryptos, and crypto mining should not be taxed. Trading cryptocurrencies by individuals, however, is subject to standard capital gains tax. Profits of less than €600 and gains from long term holdings (over one year) are exempted.

Several other governments have adopted similar rules. Estonia subjected digital currencies to capital gains tax and VAT. Authorities in Tallinn view cryptos as both means of payment and investments. Slovenia does not tax capital gains of individual investors trading cryptocurrencies, as they are not considered part of their income. Crypto incomes, however, for both individuals and businesses, should be reported and taxed. Applicable rates depend on the annual income and vary from 16% for less than €8,000 to 50% for incomes over €70,000 a year.

Tax authorities in Denmark have announced that crypto companies will be taxed as any other business. According to the Financial Services Authority, private individuals trading cryptocurrencies will not be required to pay taxes. The agency called for adopting legislation that regulates cryptos and their taxation. Spain is mulling tax breaks for businesses using blockchain technologies and cryptocurrencies. The exact scope of the exemptions is yet to be determined, but the ruling People’s Party has introduced a bill to offer incentives for small companies in the crypto sector.

Waiting for Brussels’ Decision

0 to 50% – Time to Pay Crypto Taxes in the European “Union”A number of EU countries are still waiting for a common, European approach towards cryptocurrency taxation. The government in Belgium, which is home to many EU institutions, has not issued an official stance on the matter. Nevertheless, recent reports suggest that tax authorities are going after Belgian citizens trading cryptocurrencies on foreign exchanges. Anyone speculating on crypto markets is expected to pay 33% tax on their gains, despite the fact that cryptocurrencies are not regulated. Belgians should declare them as “other income” on their tax returns, the Special Tax Inspectorate said at the end of last year.

Bulgaria is another member-state expecting guidance from Brussels. The National Revenue Service has issued a clarification notice saying 10% capital gains tax is applicable to profits from buying and selling cryptocurrencies. Their legal status, however, is yet to be determined by the Bulgarian parliament. It remains unclear how bitcoin incomes and purchases with cryptocurrency will be taxed.

Other EU member-states are losing patience. Dutch finance minister recently described the current regulatory framework as “insufficiently equipped”, as news.Bitcoin.com reported. Wopke Hoekstra spoke of the “inherently cross-border” nature of cryptocurrencies and called for “coordinated international approach”. The government in the Netherlands insists on adopting new European regulations by the end of next year, including amendments to the anti-money laundering directive, which also deals with tax evasion.

The European Neighborhood

While EU regulators are still struggling to grasp the crypto phenomenon, other countries in Europe have taken advantage of their non-aligned status. Belarus, for example, is fighting political and economic isolation by embracing crypto. A decree, signed by President Lukashenko, introduces tax breaks and other incentives for crypto-related activities until 2023. It enters into force in less than a week, on March 28. Whether this crypto-friendly policy will fill government coffers at the end of the day remains to be seen.

How are crypto incomes and profits taxed in your country? Tell us in the comments section below.


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The EU Won’t Wait for Global Agreement on Cryptocurrencies: Spain’s Economy Minister

During the G20 summit, the Spanish Minister of Economy, Industry and Competitiveness, Román Escolano Olivares, revealed that he doesn’t see cryptocurrencies as a threat to the global financial system and that the European Union (EU) may not wait for a globally coordinated effort to regulate cryptos. Speaking on the sidelines of the ongoing summit, the

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G20 Argentina Ends With No New Cryptocurrency Regulation

G20 Argentina Ends With No New Cryptocurrency Regulation

Nations forming the Group of 20 (G20) summit in Argentina this week issued Comunicado oficial de la primera reunión de ministros de Hacienda y presidentes de Bancos Centrales del G20, or first communication from the world’s central bankers concerning their work. The two page document is crammed with statements, and on the final page bankers seemed to table cryptocurrency regulations, while acknowledging both their potential for “efficiency and inclusiveness” but also “tax evasion, money laundering and terrorist financing.” Bankers urged the Financial Action Task Force (FATF) to apply their standards to “crypto-assets” in order to “advance global implementation.”

Also read: Bitcoiners Demand More Crypto CFDs and Spread-Betting in the UK

G20 Will Tackle Crypto Regs Mañana

“We acknowledge that technological innovation, including that underlying crypto-assets, has the potential to improve the efficiency and inclusiveness of the financial system and the economy more broadly,” G20 central bankers noted in their publication, Communiqué: Finance Ministers & Central Bank Governors,19-20 March 2018, Buenos Aires, Argentina. “Crypto-assets do, however, raise issues with respect to consumer and investor protection, market integrity, tax evasion, money laundering and terrorist financing. Crypto-assets lack the key attributes of sovereign currencies. At some point they could have financial stability implications.”

G20 Argentina Ends With No New Cryptocurrency Regulation

The G20 is an international forum for governments and central bankers from Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, the Republic of Korea, the Russian Federation, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union, (plus Spain as a permanent guest member). Collectively, they represent two-thirds of the world’s population and over 80% of the globe’s economic output.

“We commit to implement the FATF standards as they apply to crypto-assets,” the online posting continued, “look forward to the FATF review of those standards, and call on the FATF to advance global implementation. We call on international standard-setting bodies (SSBs) to continue their monitoring of crypto-assets and their risks, according to their mandates, and assess multilateral responses as needed.”

Crypto Enthusiasts Breathe a Sigh of Relief

The FATF ahead of this week’s meeting issued their own report, FATF Report to G20 Finance Ministers and Central Bank Governors March 2018. The 12 page document discusses standards for “virtual currencies,” noting “Virtual Currency Payment Products and Services (VCPPS)” will continue to be monitored, especially “particular methods of terrorist financing activity that pose an emerging threat, as well as at products and services that may represent an emerging vulnerability.” Later, they describe the current state of crypto as a patchwork of “regulatory framework across different countries” which “can be exploited by criminals, stifle innovation and create uncertainty,” stressing the how “FATF will continue its work on FinTech and virtual currencies, including considering how to promote and ensure a more coherent and consistent approach by countries to mitigating the risks and supporting financial innovation.”

G20 Argentina Ends With No New Cryptocurrency Regulation
Mark Carney

The Paris-based FATF is an intergovernmental organization (also known as Groupe d’action financière) focused mainly on money laundering with a particular emphasis on terrorism financing. Its jurisdiction is among 37 member states, operating a blacklist of uncooperative nations … which can amount to severe financial pressure without formal sanction.

Overall, cryptocurrency enthusiasts took a giant breath of relief. Prior to the meeting, crypto markets were tanking. The run-up to Argentina was largely seen as a black cloud, as many member nations had openly called for tighter crypto restrictions on a global level. But then, seemingly out of nowhere, a letter from the chair of the Financial Stability Board (FSB), Mark Carney, advised the G20 against new rules regarding crypto, suggesting what eventually became evident: there is no consensus among global leaders with regard to regulation. News sent markets into bull mode with bitcoin’s price rising above 9,000 USD as of this writing.

Do you think crypto is headed for another bull run? Let us know in the comments!


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Japan to Call for Crypto Rules at the G20 Summit

Japan to Call for Crypto Rules at the G20 Summit

Japanese representatives will push for the adoption of global rules on cryptocurrencies at the upcoming G20 meeting in Argentina. Next week, the summit will gather finance ministers and central bankers in Buenos Aires. Other countries also want to put crypto matters on the table, with signals coming from key members of the European Union.   

Also read: Excessive Crypto Regulation Not Optimal, EU Banking Authority Says

Stringent Regulations Won’t Be Good

Japan, a country with a proactive fintech policy, is going to urge its G20 counterparts to look into cryptocurrencies and agree on some common regulations. Japanese authorities were among the first to adopt a regulatory framework with a mechanism to oversee trading on registered cryptocurrency exchanges. Their new initiative aims at implementing international guidelines for the quickly developing crypto industry.

Japan to Call for Crypto Rules at the G20 SummitAccording to unnamed Japanese officials, quoted by Reuters, Tokyo will urge G20 members to invest more efforts in preventing the use of cryptocurrencies for illicit activities, like money laundering. Other media reports suggest that one of the sources is Japan’s Chief Cabinet Secretary Yoshihide Suga. He has shared his expectations of active Japanese involvement in the G20 discussions on cryptocurrencies and their impact on the global economy.

Differences in each country’s approach, however, are likely to limit the chances of reaching agreement on specific global rules in a joint communique, the official said. Another source confirmed that discussions will focus on anti-money laundering measures and consumer protection, and not so much on how cryptocurrencies could affect the banking system.

The general feeling among G20 members is that applying too stringent regulations won’t be good.

Finance ministers and central bank governors from the Group of 20 will meet in the Argentinean capital on March 19-20. Other nations also plan to put forward ideas for cryptocurrency regulation. In February, high-ranking French and German officials issued a letter urging their colleagues in G20 to discuss the implications of cryptocurrencies, like bitcoin. They stressed on the need for a transnational regulatory approach and announced intentions to jointly propose regulations.

The Trick: Regulate, but Don’t Stifle

The G20 countries intend to discuss issues related to cybersecurity, the fintech sector and cryptocurrencies, Russian Deputy Minister of Finance Sergey Storchak confirmed in the beginning of March. Digitalization has been included in the agenda on ministerial level for the first time. It has been discussed previously only by experts in the Financial Stability Council, Storchak said. In his words, very few of the G20 members regard cryptocurrencies the same way they view fiat money. The Russian official predicted that the summit would most likely confirm that position.

Japan to Call for Crypto Rules at the G20 Summit

What Japan is actually worried about is that some nations have looser regulations, when it comes to cryptocurrencies and their possible use for illicit purposes. Last month, Japanese authorities carried out checks on several exchanges after the theft of over $500 million from Coincheck. They revealed almost 700 cases of possible money laundering. In Argentina, the international Financial Action Task Force (FATF) is expected to present a report exploring ways to prevent the use of cryptocurrencies to launder illicit funds.

According to one of the Japanese officials quoted by Reuters, “the trick will be to apply regulations to protect consumers and prevent illicit activity, without stifling innovation in the fast-growing cryptocurrency and fintech sectors”. The G20 countries account for more than 80% of the world’s gross product and trade. Next week’s meeting will demonstrate if they are ready for a measured approach towards cryptocurrency regulation.

Do you expect common rules for cryptocurrencies from the G20 summit? Share your thoughts in the comments section below.

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Excessive Crypto Regulation Not Optimal, EU Banking Authority Says

Excessive Crypto Regulation Not Optimal, EU Banking Authority Says

The Chairman of the European Banking Authority has spoken against excessive regulation of the crypto sector, warning it might constrain financial innovation. Outlining EBA’s position in regards to the supervision of the Fintech industry, Andrea Enria said regulators need to maintain a “measured approach”. Next week EBA will publish a roadmap, which defines a series of priorities for a period of two years.

Also read: Wirex Launching Bitcoin Debit Cards in Europe

“Regulate and Restrict” or “Let Things Happen”

Speaking at the Copenhagen Business School on Friday, the head of EBA said he was not convinced cryptocurrencies should be placed under the regulations that apply to the traditional financial system. Several central banks have argued that cryptocurrencies lack the institutional backup and cannot fulfil the functions of money – unit of account, means of exchange and reserve of value, Andrea Enria said, admitting that crypto fluctuations seem to confirm this view. “Still, I am yet to be convinced that this is sufficiently strong argument to attract cryptocurrencies under the full scope of regulation”, he stressed. The official pointed out that cryptocurrencies can be used for payments, including international, thanks to an innovative mechanism – the distributed ledger technology.

Excessive Crypto Regulation Not Optimal, EU Banking Authority Says
Andrea Enria

Enria remarked that the policy debate on technological and financial innovation often focuses on two opposite approaches: “regulate and restrict” – banning innovative business not fitting into the rulebook; and “let things happen” – rooted in the belief that a dynamic financial sector needs breathing space to innovate. In his opinion, both regulatory strategies have shown their limitations, with the first being ineffective in open markets, and the second one increasing risks in the unregulated sector. EBA’s chief executive believes that a pragmatic approach involves the implementation of specific regulatory requirements in accordance with the different risks for the firms, their customers, the financial sector, and the whole economy.

Back in 2014, the authority outlined a framework for comprehensive regulation of cryptocurrencies, noting that its development would require many years and a nuanced strategy. Its approach was centered on fulfilling customer due diligence obligations, warning consumers that their crypto investments are not protected, and preventing regulated financial institutions from buying, holding or selling cryptocurrencies. EBA had also proposed segregating banks and crypto operators, in order to avoid “contagion”.

Informed and Measured Approach

Andrea Enria thinks certain functions, such as providing liquidity in crisis situations and lending, should be strictly reserved for the banks and subject to “enhanced regulation and supervision”. At the same time, services, like payments and issuance of electronic money, may be provided by other intermediaries. These services are not intrinsically related to the essential functions of banks, the head of Europe’s banking authority argued.

The crypto sector is changing fast and it’s difficult to regulate and supervise, Enria admitted. Authorities have to continuously review regulations, but they also need to maintain an informed and measured approach, he added. Small innovative startups cannot sustain the compliance burden placed on banks, Enria warned and stressed: “An excessive extension of the regulatory perimeter, attracting most Fintech firms under the scope of bank-like supervision, just because they compete with banks in some market segment, is likely to be a sub-optimal solution”.

EBA’s Chairman is convinced that such move would create the risk of “constraining financial innovation”. He advocates a “proportionate” and “less intense” approach in comparison to regulations applied to the banks, citing “lower potential for systemic risk” from the crypto sector.

In these areas of business, we may well let innovators experiment with new products and business practices.

The Chairman of EBA said, however, that regulators should never allow de facto banks to combine deposit-taking and lending outside strict regulatory requirements and effective supervision. Any financial firm doing that should be regulated and supervised as a bank, he insisted.

Conscious Choice

Excessive Crypto Regulation Not Optimal, EU Banking Authority SaysThe first step for regulators should be to understand how new products and business practices fit in the existing regulatory framework, Andrea Enria said. The conscious choice not to impose the full set of rules on a nascent technology can lead to a more mature and productive dialogue between innovative firms and regulators, he added.

According to EBA’s executive, the debate on how to regulate innovation is often “laden with prejudices and undue simplifications”. In his view a “proportionate, technologically neutral approach” to regulation should be pursued, while avoiding “inherent bias towards the status quo”. This can be achieved through monitoring the existing regulations and setting up sandboxes to facilitate consistent rules to support new technologies and innovative business models. To ensure that supervisors understand these new technologies, EBA intends to create a “knowledge hub” and introduce technological neutrality into supervisory guidelines.

Andrea Enria supported calls for consistent approaches towards regulation across Europe’s Single Market. That would guarantee entities across the Union receive equal treatment and opportunities. “Fintech firms must be able to scale up and offer services across the Single Market, providing benefits to all EU citizens”, EBA’s chairman said. He also noted that competition in the Fintech space is developing globally and warned European businesses would have to cope with significant disadvantages, if local authorities impose different sets of rules. Current variations may result in “regulatory arbitrage” or consumer protection risks.

Excessive Crypto Regulation Not Optimal, EU Banking Authority Says

The Fintech Roadmap

The European Commission has recently issued a Fintech Action Plan with several mandates for the European Banking Authority. Next week EBA will publish its “Roadmap on Fintech” defining a series of regulatory and supervisory priorities for the next two years. EBA wants to analyze provided services and their regulation to ensure consistency across the EU. The banking authority expects to report on its assessment before the end of 2018.

EBA will also conduct further analysis of implemented sandbox regimes to identify best practices and develop guidelines. The EU body will review approaches to licensing in member-states and may recommend amendments to the European financial services legislation. According to Andrea Enria, EBA will try to identify potential national barriers and consider steps to remove them, in order to allow scaling up of innovations.

Do you think Mr. Enria’s comments indicate a positive attitude towards the crypto sector in Europe? Tell us in the comments section below.

Images courtesy of Shutterstock, EBA.


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