500 Estonian Crypto Companies Lose Permits After $220B Scandal

Estonia, one of the European Union’s most crypto-friendly countries, is cracking down on hundreds of licensed crypto companies in response to a $220 billion money laundering scandal, according to Bloomberg. Estonia was among the first EU countries to license crypto companies but has been forced to clamp down after hundreds of billions of dollars of dirty money was detected in the Estonian unit of Denmark’s largest lender Danske Bank A/S. It’s put the country at the center of Europe’s biggest money laundering scandal.

Source: 500 Estonian Crypto Companies Lose Permits After $220B Scandal

Negen Nederlandse bitcoinstartups gestopt vanwege strengere regels – Emerce

Negen Nederlandse bitcoinstartups gestopt vanwege strengere regelsNiet minder dan negen Nederlandse bitcoinpartijen zijn gestopt vanwege de strengere regels voor bedrijven die cryptomunten aanbieden. Dat meldt Bitcoin Magazine.Zonder vergunning mogen bedrijven die geld omwisselen in crypto’s of wallets aanbieden sinds vorige week niet meer actief zijn in Nederland. De regels zijn ingevoerd om witwassen tegen te gaan.Transacties boven de 15.000 euro moeten worden gemeld. Daarnaast moeten bedrijven onderzoek doen naar de identiteit van hun klanten. Ook worden de bestuurders en andere betrokkenen doorgelicht.De partijen moeten de kosten voor het toezicht daarnaast zelf betalen. Per bedrijf komt dat neer op 20.000 euro.Een van de bekendere namen is Bitkassa, voortgekomen uit een bitcoininitiatief in Arnhem. Een andere bekende naam is Bittr, waar gebruikers een vast bedrag aan bitcoins konden aanschaffen via een simpele bankbetaling.Ook de Rotterdamse broker Nocks is gestopt. De software is overigens al verkocht.Coingarden uit Utrecht noemt de ‘te hoge kosten’ als voornaamste reden om te stoppen. De oprichters gaan door met goudbroker Bitgild.Post-a-coin, een giftcarddienst van Bèr Kessels, valt eveneens onder de wet, net als de miningpool Simplecoin, bitcoin gamingplatform Chopcoin en BitZeb. Een negende startup Bitqist is reeds overgenomen doot Bitvavo. Geen van deze startups had kennelijk voldoende financiële draagkracht.

Source: Negen Nederlandse bitcoinstartups gestopt vanwege strengere regels – Emerce

Q3 2019 Cryptocurrency Anti-Money Laundering Report – CipherTrace

First, the third quarter saw growing awareness of perhaps the biggest clampdown on virtual asset transactions to ever impact crypto exchanges as well as banks and other financial institutions. After months to absorb its implications, these businesses are coming to grips with the fact that in just seven months they will need to comply with the so-called FATF funds Travel Rule. In a major challenge to business models and user privacy, among other changes this rule requires virtual asset service providers (VASPs) to securely transmit (and store) sender and receiver information whenever cryptocurrency moves. At the same time, US regulators emphasized that a similar Travel Rule which has long applied to fiat funds transfers—also applies to cryptocurrency transactions. This has left firms struggling to find a technical solution in time to avoid potentially severe penalties or blacklisting. It will no doubt have implications as regulators seek to have KYC information shared globally.The Blockchain Security Company

Source: Q3 2019 Cryptocurrency Anti-Money Laundering Report – CipherTrace

DSHR’s Blog: Bitcoin’s Lightning Network

Discussions of cryptocurrencies and other blockchain technologies are bedeviled by a nearly universal assumption that attributes that are possible to achieve in theory are guaranteed to be realized in practice. Examples include decentralization and anonymity.Back in June David Gerard asked: How good a business is running a Lightning Network node? LNBig provides 49.6% ($3.7 million in bitcoins) of the Lightning Network’s total channel liquidity funding — that just sits there, locked in the channels until they’re closed. They see 300 transactions a day, for total earnings on that $3.7 million of … $20 a month. They also spent $1000 in channel-opening fees.Even if the Lightning Network worked (which it doesn’t), and were decentralized (which it isn’t), Gerard’s point was that the transaction fees were woefully inadequate to cover the costs of running a node. Now, A Cryptoeconomic Traffic Analysis of Bitcoin’s Lightning Network by the Hungarian team of Ferenc Béres, István A. Seres, and András A. Benczúr supports Gerard’s conclusion with a detailed analysis.

Source: DSHR’s Blog: Bitcoin’s Lightning Network

Blockchain Laws and Regulations | Laws and Regulations | GLI

Areas of law covered include:

1 Government attitude and definition

2 Virtual currency regulation

3 Sales regulation

4 Taxation

5 Money transmission laws and anti-money laundering requirements

6 Promotion and testing

7 Ownership and licensing requirements

8 Mining

9 Border restrictions and declaration

10 Reporting requirements

11 Estate planning and testamentary succession

The GLI to: Blockchain & Cryptocurrency Regulation 2019 covers government attitude and definition, cryptocurrency regulation, sales regulation, taxation, money transmission laws and anti-money laundering requirements, promotion and testing, ownership and licensing requirements, mining, border restrictions and more

Source: Blockchain Laws and Regulations | Laws and Regulations | GLI

‘Billions’ May Be Saved By Tokens Backed With Central Bank Money: BoE Chief – CoinDesk

“The Bank of England approaches Libra with an open mind but not an open door, said Carney. “Unlike social media for which standards and regulations are being debated well after it has been adopted by billions of users, the terms of engagement for innovations such as Libra must be adopted in advance of any launch.”Libra, if it achieves its ambitions, would be systemically important,” he went on to say, continuing: “As such it would have to meet the highest standards of prudential regulation and consumer protection. It must address issues ranging from anti-money laundering to data protection to operational resilience. Libra must also be a pro-competitive, open platform that new users can join on equal terms. In addition, authorities will need to consider carefully the implications of Libra for monetary and financial stability.”

Source: ‘Billions’ May Be Saved By Tokens Backed With Central Bank Money: BoE Chief – CoinDesk

Facebook Token Runs Into Instant Political Opposition in Europe

Facebook Inc.’s ambitious plan to roll out its own cryptocurrency ran into immediate political opposition in Europe, with calls for tighter regulation of the social-media giant.

French Finance Minister Bruno Le Maire said the digital currency known as Libra shouldn’t be seen as a replacement for traditional currencies.

“It is out of question’’ that Libra “become a sovereign currency,’’ Le Maire said in an interview on Europe 1 radio. “It can’t and it must not happen.”

Read more about Facebook’s cryptocurrency plan

Le Maire called on the Group of Seven central bank governors, guardians of the global monetary system, to prepare a report on Facebook’s project for their July meeting. His concerns include privacy, money laundering and terrorism finance.

Libra was also a talking point at the European Central Bank’s annual symposium in Sintra, Portugal, where Bank of England Governor Mark Carney referenced Libra. “Anything that works in this world will become instantly systemic and will have to be subject to the highest standards off regulation,” he said.
Carney’s ‘Open Mind’

While Carney said “we need to have an open mind” about technology that can facilitate cross-border money transfers, “we will look at it very closely and in a coordinated fashion” at multilateral organizations including the G-7, the International Monetary Fund, Bank for International Settlements and Financial Stability Board.

Meanwhile, Markus Ferber, a German member of the European Parliament, said Facebook, with more than 2 billion users, could become a “shadow bank” and that regulators should be on high alert.

Facebook is developing Libra, a stablecoin designed to avoid the volatility of Bitcoin and thus be useful for commerce, in partnership with some of the biggest names in payments and technology, such as Visa Inc. and Uber Technologies Inc. The new currency, which will launch as soon as next year, is pegged to a basket of government-backed currencies and securities.

While Bitcoin, the original cryptocurrency, has attracted a lot of attention since its creation a decade ago, it’s still not widely used beyond market speculation. Facebook meanwhile, plans to build a new digital wallet that will exist in its Messenger and WhatsApp services to make it easy for people to send money to friends, family and businesses through the apps.

“This money will allow this company to assemble even more data, which only increases our determination to regulate the internet giants,” Le Maire said in parliament.

https://www.bloomberg.com/amp/news/articles/2019-06-18/france-calls-for-central-bank-review-of-facebook-cryptocurrency?__twitter_impression=true

TILTing 2019 – exploring the journey of crypto-assets across the EU financial legal framework

At TILTing 2019 the Lab presented a study on the legal instruments that are, as of today, applicable to blockchain-based digital assets under European law, and the relative enforcement challenges. The broader question to be tackled is whether and how regulators deal with such challenges, and what are the interests at stake. http://ipkitten.blogspot.com/2019/05/tilting-perspectives-2019-report-2.html

Blockchain fees are broken. Here are 3 proposals to fix them.

When Satoshi Nakamoto designed the Bitcoin protocol, he had the insight to include the notion of transaction fees. These fees incentivized miners to include transactions into blocks. But initially, Bitcoin did not have, in any meaningful sense, a fee market.A large portion of early Bitcoin transactions were completely free up until 2013 (blue in the above chart). Wallet developers eventually hard-coded tiny fixed fees into their clients, thought of as donations to miners. At first these fees defaulted to 0.1 BTC, but they were driven down as the Bitcoin price rose.

Source: Blockchain fees are broken. Here are 3 proposals to fix them.

What a Bitcoin ‘Reorg’ Is and What Binance Has to Do With It – CoinDesk

“If you bribe 51 percent of the miners, they will change the ledger for you. [This] tells you just how little irreversibility there is in PoW coins,” tweeted Cornell University professor and researcher in blockchain consensus protocols Emin Gün Sirer.A 51% attack on the blockchain network is not a new attack vector for PoW blockchains. However, as highlighted by Gün Sirer, it’s also not really an attack vector. On very special instances, the majority of self-interested miners on PoW blockchains have voluntarily agreed to alter a transaction history to undo critical situations.While the situation isn’t entirely the same, in the past, blockchain networks have seen their histories altered in the wake of critical moments. This happened on the ethereum blockchain back in 2016 when over $60 million worth of coins were siphoned off from the now-defunct smart contract The DAO. It also happened on the vericoin blockchain back in 2014 after $8 million worth of coins were hacked.While controversial, both decisions were supported by the primary developer community who launched system-wide upgrades or hard forks to enable otherwise infeasible amendments to the blockchain transaction history.Yet those choices weren’t without their repercussions; the resulting ethereum fork resulted in two distinct chains, ethereum and ethereum classic, respectively.A resounding noStill, many in the bitcoin community took to social media to deride the idea as both infeasible as well against the philosophical underpinnings of the technology.In Binance’s particular case, prominent members of the bitcoin community point out that bitcoin being the world’s largest blockchain is a particularly unique case with a reputation to uphold.“Talk of forking or reorganizing the blockchain is close to heresy,” tweeted billionaire bitcoin investor Michael Novogratz. “When the ethereum community did it the project was like 5 months old. A baby. Bitcoin now has $100bn market cap and is a legitimate store of wealth.”It would also be unfair according to Adam Back – CEO of bitcoin development startup Blockstream – given that the latest Binance hack is nowhere near as severe as previous hacks suffered on the bitcoin blockchain.“A Bitcoin reorg is just not happening, and I doubt any Bitcoin industry, miners nor developers considered it either. Recall 2014 $473mil, 2016 bitfinex hack $72mil, 2019 binance $40mil etc. #NotHappening,” tweeted Back.

Source: What a Bitcoin ‘Reorg’ Is and What Binance Has to Do With It – CoinDesk