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China: Shenzhen Special Economic Zone to Use Blockchain for Electronic Tax Invoices

Tencent and the Shenzhen Municipal Taxation Bureau will launch a mobile payment platform for a taxation invoice system based on blockchain.

Shenzhen, a major city in the Guangdong Province and the first economic special zone in  China, will use blockchain technology for electronic tax invoices. This development was reported by the China Economic Net, а domestic news website focusing on economics, on Dec. 12.

The Shenzhen Municipal Taxation Bureau and Chinese tech giant Tencent have “successfully connected the blockchain invoice system with the WeChat payment platform.” The article reports that WeChat, the 1 billion user social media platform operated by Tencent, has opened its payment platform for the blockchain invoice function.

According to the director of the Information Center of Shenzhen Taxation Bureau, a blockchain electronic invoice is different from a traditional electronic invoice, as it has “the advantages of ‘distributed’ storage, traceability and non-tamperability.”

The article highlights that WeChat payment blockchain invoices are the first stop for the blockchain electronic invoice implemented within the mobile payment platform, adding:

“The application of the blockchain electronic invoice to the WeChat payment platform is a substantial exploration made by the Shenzhen Tax Department based on the actual needs of the taxpayers to further optimize the business environment.”

Previously this fall, the Shenzhen central sub-branch of the People’s Bank of China (PBoC) — the country’s central bank — launched the trial phase of the “Bay Area Trade Finance Blockchain Platform,” aimed at providing real-time monitoring of various financial activities, as Cointelegraph reported Sep. 4.

Last week, the BeiShangGuang — an abbreviation that stands for the three major Chinese cities of Beijing, Shanghai and Guangzhou — has reportedly become China’s most concentrated area of legislation and policy related to the blockchain industry.

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UAE Central Bank, Saudi Arabia to Develop Joint Cryptocurrency for Interbank Transactions

The United Arab Emirates and Saudi Arabia are jointly developing a digital currency meant for interbank transactions.

The United Arab Emirates’ (UAE) central bank is collaborating with the Saudi Arabian Monetary Authority (SAMA) to issue a cryptocurrency accepted in cross-border transactions between the two countries. English-language Dubai-based media outlet GulfNews reported on this collaboration on Dec. 12.

Mubarak Rashed Al Mansouri, the governor of the UAE’s central bank, said during a meeting on the global banking standards and regulation for the Arab region that:

“This is probably the first time ever that witnesses the cooperation of monetary authorities from different countries on this topic and we hope that this achievement will foster similar collaboration in our region.”

Still, Al Mansouri also pointed out that this “is just a study” and that they “have not gone deeper into it.” The digital currency under development is supposed to be used only between banks. According to Al Mansouri, this would be ”much more efficient.”

Al Mansouri added that the recent development in financial technology brings both challenges and opportunities. The key, according to him, are regulators that better understand the risks and the best ways to mitigate them.

As Cointelegraph reported at the beginning of October, a digital currency backed by the Dubai government will get its own payment system. Consequently, local consumers will be able to use the digital currency to pay for goods and services.

The Abu Dhabi Global Market also recently conducted a test of a blockchain-based Know Your Customer (KYC) system. The first phase of the pilot held in the international free zone in the capital of the United Arab Emirates has reportedly been successful.

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Galaxy Digital and Block.One Lead $30 Million Funding Round for US Disruptor Bank

The cryptocurrency VC fund has become the latest to pile into the neo-banking sector.

Cryptocurrency-focused merchant bank Galaxy Digital and Block.One have led a $30 million Series A investment round in U.S. neo-banking platform Good Money. The news was confirmed by a press release Dec. 10.

Aiming to balance user ownership with part donation of profits and equity, Good Money provides banking services and a handful of associated financial instruments to U.S. account holders.

The investment came mostly via Galaxy and Block.One’s joint Galaxy EOS VC fund, one of several funds under the Block.One umbrella.

“Modern banking is a primary driver of so many issues we face as a society – from economic inequality, institutional racism, environmental destruction to political corruption,” Good Money founder Gunnar Lovelace commented in the press release.

The neo-banking market is quickly gaining ground over traditional providers both within and outside the U.S.

As Cointelegraph reported, European entities such as Revolut have sought to combine blockchain and cryptocurrency offerings with banking services, targeting banks’ high transfer fees to woo users out of their comfort zone.

Good Money follows a similar ethos, abandoning ATM fees and offering each user equity in the company. Ahead of its launch, it remains unknown whether the latest funding input creates room for cryptocurrency support.

Galaxy itself meanwhile has faced a tough year. It has emerged that the company lost $136 million through Q3 as the drop in cryptocurrency prices took its toll. CEO Michael Novogratz remains buoyant on Bitcoin (BTC) making a comeback, telling mainstream media an institutional investor influx should produce results by Q2, 2019.

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South Korea’s Second Largest Bank Begins Blockchain Record-Keeping to Reduce Human Error

South Korea’s Shinhan Bank wants to reduce human error in its processes as part of a multi-phase hook-up with blockchain technology.

South Korea’s second-largest commercial bank, Shinhan Bank, has embarked on a project to implement blockchain in internal processes to decrease human error. The initiative was reported by English-language daily news outlet The Korea Times on Dec. 10.

Shinhan, which has sought integration with both the blockchain and cryptocurrency spheres over the past eighteen months, also completed a staff training program to increase knowledge of blockchain for various applications.

According to The Korea Times, the bank implemented interest rate swap transactions using the technology on Nov. 30 in what it called a “first” for a South Korean lender.

Now, operations such as financial record-keeping are set to become automated, removing the chances of human-based mistakes and enhancing overall efficiency.

“Prior to the blockchain-based process, there had been no standardized rules governing keeping and managing financial records, a reason why market participants had to rely on their own records which often times led to errors despite the cross-checking process requirement,” the publication quotes an unnamed official as saying, adding:

“The new system helps remove such human errors and helps improve work efficiency through clearer, task-related communications rather than wasting time on correcting mistakes.”

Shinhan caused a stir in November 2017 when it announced it was working on offering its clients cryptocurrency wallets.

Since then, several partnerships and trials have seen blockchain technology specifically make its way to the forefront of the business.

In August, Shinhan signed a deal with South Korea’s largest telecoms provider KT Corporation in a move centered around provision of blockchain-based financial services.

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Huobi Opens First Russian Office in Partnership with State Bank’s Digital Tech Center

Huobi has launched its first branch in Russia in partnership with local state-owned VEB bank’s blockchain and crypto center.

Singapore-based cryptocurrency exchange Huobi has officially launched its first branch in Russia on Thursday, Dec. 6, according to a press release shared with Cointelegraph today.

The Moscow-based exchange, dubbed Huobi Russia, is established in partnership with the state-owned Russian Development Bank’s (VEB) Digital Transformation Center and supported by Huobi’s regional exchange partnership program, Huobi Cloud.

The Center of Digital Transformation was created by VEB to promote blockchain and other crypto-related technologies, as its website states.

Back in September of this year, Huobi first joined Russia’s VEB Innovation Fund and became a resident of the Digital Transformation Center to share experience on crypto regulation, with the fund’s CEO claiming that Huobi’s expertise will assist in building a “legal basis that could compete with current promising jurisdictions.”

Speaking at a private event on Thursday, Huobi senior business director David Chen claimed that the launch of Huobi Russia will help to promote the company’s “leading technology and trading expertise to Russian users,” including such skills as “unmatched safety, stability, and user experience.”

Huobi Russia CEO Andrei Grachev also noted the increasing volumes of crypto trading in Russia, claiming that the volumes have “recently exceeded US $20 million in a single day,” regardless of the current bear market.

Russia’s VEB Innovation Fund, created in 2011, is reportedly the “first” Russian specialized center for support and development of disruptive technologies in the fields of management and the functioning of enterprises and government corporations, according to the center’s website.

The innovation center is exploring and implementing various blockchain projects, and houses more than 20 branches of major blockchain and tech companies such as the Ethereum Foundation, Bitcoin (BTC) tech company Bitfury, PricewaterhouseCoopers (PwC), and others.

Vladimir Demin, chairman of VEB’s Innovation Fund, claimed that Russia is “actively promoting the blockchain market,” with VEB willing to play an “important role as a leader in blockchain research and legislation,” as reported in the press release.

Founded in 1922, VEB bank, or “the state corporation Bank for Development and Foreign Economic Affairs,” is the first international bank of the Soviet Union, originally named Roskombank. The bank is responsible for developing the Russian economy, as well as managing Russia’s state debts and pension funds.

Other Russian banks have also shown an interest in blockchain technology.

Recently, major Russian state-backed bank Sberbank conducted an over-the-counter (OTC) monetary repurchase agreement based on blockchain technology. And earlier in November, the Russian branch of Raiffeisen Bank International teamed up with local state oil giant Gazprom Neft to issue a blockchain-enabled bank guarantee.

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Chilean Government Making Progress on Crypto Regulation, Says Finance Minister

The Chilean finance minister told local media that the government is making progress on clear crypto legislation.

Chile’s Minister of Finance Felipe Larrain claims that a group of state institutions “is making progress” in developing crypto regulation, local daily newspaper La Tercera reports Friday, Dec. 7.

According to Larrain, the Ministry of Finance is working with Chile’s central bank and Financial Stability Board to provide a balanced legal framework for the crypto industry. He noted that crypto regulations are but one aspect of a wider project to provide legal definitions for the fintech sector. Larrain noted that crypto regulation might take time:

“We are aware that it is important to move in this direction. But all countries in the world are facing similar problems [with crypto regulation], and there is no magic wand to solve them. We are exploring the best solutions to see how to regulate this brand new phenomenon.”

In March, following the closure of crypto-business accounts in major Chilean banks, Larrain promised to develop a legal framework to normalize the situation. Nine months on however, no such legislation has come forward, although the Chilean parliament has made some forays into regulating blockchain technology.

Larrain’s recent statement comes shortly after a Chilean Supreme Court decision, annulled a previous ruling by an anti-monopoly court to protect local crypto exchange Orionx and to reopen its banking accounts. In the decision, a judge claimed that cryptocurrencies “have no physical manifestation and no intrinsic value.”

Despite the alarming publications in local media, Chile’s crypto entrepreneurs told Cointelegraph that the new decision has nothing to do with prohibiting crypto exchanges. Both Orionx and Buda.com, which have been involved in a legal battle since March, assure that their banking accounts will not be affected, as the anti-monopoly court’s decision is still in force.

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Crypto Project Says It Can Reverse Transactions and Recover Accounts Without Private Keys

A new financial blockchain network is offering low-cost, high-speed transactions — and gives users the ability to recover accounts and have these accounts insured.

A startup which bills itself as “blockchain’s financial district” has launched its network — and says its debut heralds “the beginning of true financial freedom.”

WORBLI enables businesses and individuals to enjoy “seamless access to financial services,” and paves the way for developers to build their own applications on its network. Its ecosystem uses EOSIO software, with the startup’s team saying this unlocks a series of benefits. Firstly, users benefit from fast and feeless transactions, allowing applications on the network to operate without bottlenecks and delays — and they also have the ability to amend nefarious transactions and recover accounts, should they need to.

The company ardently believes that blockchain is the future, and will transform the financial services industry beyond all recognition. It says cloud computing, storage, security, inequality of incomes, financial inclusion, accounting, contracts, supply chain logistics, voting and social networks all stand to be revolutionized. Its founders strike an upbeat tone by saying that WORBLI will be at “the forefront of product innovation” in these sectors and more.

Overall, its network is designed to reduce the amount of friction that cryptocurrency users and blockchain developers experience, dramatically increase the scale and reach of this technology, and develop exciting products “only possible as a result of blockchain.”

Eliminating barriers to entry

The company is seeding and launching a fiat and digital currency bank known as Gamma that will provide traditional banking products for crypto customers and everyday users. WORBLI says this platform is “designed to eliminate the barriers of entry into the digital currency and technology market for the average user.”

Through WORBLI, users are only going to need a single account when they are storing, buying and trading blockchain assets. Security is also a priority — with the company vowing that their individual accounts and wallets will be insured against losses due to hacking.

It is also hoped that stringent Anti-Money Laundering (AML) and Know Your Customer (KYC) checks when a WORBLI network user account is created will reduce the burden on companies who are trying to stay compliant.

WORBLI is the first sister chain of EOS which is going to deliver a full suite of financial services and decentralized applications (DApps) to the crypto world. Describing the startup’s mainnet, Domenic Thomas, the company’s CEO, told Cointelegraph, “We have been in continuous communication with the EOS community, making strategic partnerships all over the world, and it’s clear that a solution like WORBLI is a much [welcomed] and essential addition as a sister chain to EOS.”

Apps prepare to launch

Several inaugural DApps are already in the pipeline at WORBLI, and these are expected to launch shortly after the network has gone live — including a charity payments application, insurance and risk transfer products, innovative exchanges, remittance, payroll services and custodian wallets.

Over time, WORBLI plans to integrate with an array of crypto wallets as well as a number of payment gateways, enabling customers to buy WBI tokens in a broader range of currencies. The company is not expecting to trade on exchanges until later in 2018. Work is under way to establish relationships with United States governance bodies — including the Internal Revenue Service (IRS), the U.S. Federal Reserve, and the Securities and Exchange Commission (SEC).

A minimum viable product for Gamma is also being produced this year, paving the way for it to undergo development and rigorous testing from 2019 onward. With global marketing set to have a significant emphasis for the business’s activities next year, it is hoped that Gamma will subsequently be in a strong position for launching in the global markets — including Africa, Latin America, Australia and Europe.

Next year, the emphasis is going to remain on recruiting and retaining top talent to help drive WORBLI forward, including a “world-class executive team” to develop Gamma and its other applications further.

 

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

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Inside Chilean Power Battle: Crypto Exchanges vs. State Banks

The prerequisites and aftermath of the Supreme Court decision regarding crypto exchanges accounts.

On Monday, Dec. 4, the Chilean Supreme Court welcomed the decision of state-owned Banco del Estado to close the accounts of local cryptocurrency exchange Orionx. The new phase in the legal battle between the banks and several crypto exchanges — including Buda.com and CryptoMarket (CryptoMKT), which had appealed against the denial of services — may look somewhat sinister from the outside. But the main players of the Chilean crypto market assured Cointelegraph that the recent decision could not prevent them from operating in the country.

Exchanges vs. banks — a brief outline of the confrontation

In March, two crypto exchanges — Buda and CryptoMKT — came out with a joint statement, claiming that some banks in Chile had closed their accounts. “We are killing the whole industry long before exploring it and understanding its approach,” the release read. CryptoMKT also claimed that another bank received instructions not to deal with anyone who is related to cryptocurrencies. Both crypto businesses then urged the Chilean Association of Banks (ABIF), which coordinates all the private and foreign financial institutions in the country, to intervene — or at least clear up its stance on cryptocurrencies.

A response was given within a few days of the statement: The president of ABIF, Segismundo Schulin-Zeuthen, told Chilean business outlet Diario Financiero that the banks were free to moderate relations with their clients. Schulin-Zeuthen also criticized Buda and CryptoMKT for “[generating] false judgments about the institutional role of the ABIF,” while the association’s role consisted of discussing and analyzing existing regulation in the finance sector.

The bank that closed the crypto exchanges’ accounts was soon revealed to be Itau Corpbanca, the fifth-largest bank in Chile, along with a branch of Latin American banking giant Itau Unibanco and Scotiabank Chile, a branch of a Canadian banking group by the same name. They were soon joined by Banco del Estado — the only public bank in the country managing up to $52 billion in assets, as of 2017.

Later in April, Itau Corpbanca opposed the crypto industry’s stance that the move was illegal and insisted that the closure of accounts result in an internal investigation. According to Itau, Buda had failed to comply with their Anti-Money Laundering (AML) policy. Moreover, the bank accused the exchange of failing to verify the users’ data, as Buda’s website only requested basic information during the registration and did not verify the identities of its clients.

The whole story, including the media coverage and official responses, fueled a huge backlash on social media. As Cointelegraph reported in April 2018, crypto enthusiasts blamed financial institutions for “a huge negative blow to Chile’s reputation as a rational, innovation-friendly, free market economy,” stating that those actions “stifle innovation.” Twitter users created a hashtag #ChileQuiereCrypto (Chile wants crypto), urging the government to resolve the problem with crypto exchanges.

Chilean Banks Against Crypto Exchanges

In mid-April, the Chilean crypto exchanges decided to fight for their rights and started a legal battle, applying to Tribunal de Defensa de la Libre Competencia (TDLC) — an independent, anti-monopoly institution established to ensure that free competition rules are not violated. Buda and CryptoMkt, joined by Orionx (whose accounts had also been closed), had filed a petition against several banks, including Itau Corpbanca, Scotiabank and Banco del Estado.

Guillermo Torrealba, Buda’s co-founder and CEO, summed up the whole turmoil in an comment for Cointelegraph:

“There hasn’t been one regulator, legislator or government official saying that cryptocurrencies aren’t legal, it was just the decision of a very powerful sector of the economy: the banking industry.”

Blockchain regulation instead of crypto promises

Only a few weeks after the first complaint, TDLC ruled against Banco del Estado and Itau Corpbanca, forcing them to re-open Buda’s accounts.

Later in June, the same decision was made in favor of Orionx. As the company wrote on its official Facebook page, the anti-monopoly court ordered Banco del Estado and Banco de Chile — another major bank in the country that was mentioned in the initial lawsuit — to reopen Orionx’s accounts within three days.

It would be logical to assume that the long-term battle would force Chilean authorities to introduce relevant legislation on cryptocurrencies to prevent such situations in the future.

In late March, following the first news of the closure of the crypto accounts, Diario Financiero spoke to Chile’s Minister of Finance Felipe Larrain. He was reassured that both the Ministry and the Central Bank of Chile had started exploring the possibility of crypto regulation to normalize the situation:

“Technical progress and the digital economy bring people new services; we have to consider this fact. But when the regulation issues arise […], we have to avoid situations that could affect the normal development of markets and healthy competition.”

Chile’s central bank reaffirmed that intention in May. Mario Marcel, the president of the institution, proposed incorporating the crypto regulation in order “to allow having a registry of participants in these activities and thus have information to monitor the associated risks.” Marcel also stated that the industry needed more transparency and consumer protection — as cryptocurrencies could possibly be involved in illicit activities, such as money laundering and the financing of terrorists.

Six months after the recent claim, there is still no sign of a legal framework for cryptocurrencies in Chile. In October, local deputies instead introduced a resolution on blockchain adoption to the lower house of the country’s parliament. Miguel Angel Calisto and Giorgio Jackson — along with eight other MPs — urged Chile’s President Sebastian Pinera to implement blockchain in all the country’s public areas, along with carrying out studies on the advantages of decentralized security and energy solutions.

The Supreme Court comes into play

A new, unexpected chapter began on Dec. 4, when the Chilean Supreme Court published its resolution in favor of Banco del Estado. As cited by major Chilean newspaper El Mercurio, the document reads:

“The resolution taken July 11, 2018, is revoked. It is declared in its place that the protection appeal filed by Orionx SPA against the Banco del Estado is rejected.”

The Supreme Court further explained that the actions conducted by Banco del Estado were not “unjustified” or “illegal,” as the bank acted correctly and did not violate any rules of the Chilean constitution. Moreover, the top court stated that the cryptocurrencies “have no physical manifestation and no intrinsic value.” The document also proclaimed that they are controlled neither by a government nor by a corporation, citing the characteristics of crypto as reasons for letting banks refuse services to the exchange.

No pasaran: How Chilean crypto exchanges treat the highest court’s decision

Despite the apparent harshness of the Supreme Court’s decision, Chilean crypto exchanges believe it will have no bearing on the case. Reacting to the aforementioned resolution, Orionx published a statement on their official Facebook page:

“Orionx wants to clarify that this ruling does not imply the closure of the company’s current bank accounts. [D]ue to the fact there is a current precautionary measure issued by TDLC, which prevents banks from closing the mentioned accounts.”

Moreover, Orionx emphasizes that it disagrees with the arguments provided by the Supreme Court and regrets the latest ruling.

Buda shares the same stance, also citing the ruling of the anti-monopoly court in its official statement:

“The valid ruling in our favor pronounced by TDLC assures that our bank accounts will be maintained during the trial that is held in the mentioned court.”

Moreover, the firm insists that the Supreme Court’s resolution on Orionx has nothing to do with their company. Speaking to Cointelegraph, Buda’s co-founder Agustin Feuerhake said:

“The situation with Buda.com has been slightly different. Since [the] very beginning[,] we had a relevant KYC [Know Your Customer] policy. We also tackle money laundering and terrorism financing, so the bank’s argument to close an account does not apply to our case. There are no anonymous users on Buda.com.”

Feuerhake further added that the Chilean courts are not evaluating the ban on crypto exchanges, but rather seek ways to “condemn banks for abusive behavior” toward them.

As the decision of the Supreme Court did not mention Buda and CryptoMKT, it might be a turning point in the plot. The legal framework for crypto, if introduced, could side with crypto exchanges or stand with the banks.

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Four International Banks Complete Commercial Paper Transaction on R3’s Corda Platform

Four international banks have completed a live commercial paper transaction based on blockchain consortium R3’s Corda platform.

A group of international banks in partnership with enterprise blockchain software firm R3 have completed a live commercial paper transaction based on blockchain platform Corda, Finextra reported Dec. 6.

The transaction was implemented on the Corda-based Euro Debt Solution application developed by R3, with German banking and financial services company Commerzbank, French corporate and investment bank Natixis, and Dutch financial services firm Rabobank as the participant.

In the course of transaction, Natixis reportedly issued 100,000 euro ($113,722) notional, while Rabobank acted as the incestor and ING as both dealer and escrow agent. Commerzbank developed the pilot framework, software and distributed ledger (DLT) network for the trade, and instructions on regulatory implications.

The banks have also developed a legal framework for the project in cooperation with external counsel Allen and Overy. Marnix Bruning, head of money market and central bank sales at ING reportedly said that the initiative “marks the start of building an improved DLT platform that enables direct settlement and reduces operational risk and costs at the same time.”

Launched in 2016, Corda is a decentralized platform based on the Ethereum blockchain, that is geared for use by financial institutions. Corda purportedly enables businesses to build interoperable blockchain networks that transact directly and privately.

Financial institutions around the world have been actively implementing blockchain technology into their operations. Yesterday, Cointelegraph reported that Brazil’s largest private bank partnered with United Kingdom bank Standard Chartered to create a blockchain-based platform for small loans. The two parties successfully conducted a proof-of-concept for the platform based on R3’s Corda Connect.

Also this week, Saudi Arabian developmental institution the Islamic Development Bank Group (IsDB) partnered with a Tunisian startup iFinTech Solutions to develop interbank blockchain tools. The new offerings will purportely improve Islamic financial institutions’ liquidity management and increase overall efficiency.

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Swiss Bank Gazprombank to Launch Crypto Services Next Year

Swiss bank Gazprombank has partnered with fintech and crypto startups Avaloq and Metaco to develop crypto asset services.

Swiss bank Gazprombank recently partnered with fintech startup Avaloq and crypto firm Metaco to offer clients crypto services, an Avaloq press release reports Dec. 6.

Fintech company Avaloq and crypto custody solution specialist Metaco are reportedly collaborating with Gazprombank –– which as CHF 3.1 billion ($3.12 billion) in total assets under management ––“to implement their integrated crypto asset solution” aimed at banks and wealth managers.

The system is meant “for the management of client portfolios across all asset classes, including cryptocurrencies.” The press release reports that this is the latest development in a preexisting relationship with the bank, noting that:

“Gazprombank (Switzerland) Ltd, which is already an Avaloq client, aims to offer a cryptocurrency service to its clients in mid-2019.”

The implementation of the system is meant to make transactions in crypto assets “simple.” After the implementation, the report states that clients will be able to buy, sell and transfer crypto “without any need for a crypto-wallet or private key management.”

The solution makes use of Metaco’s Hardware Security Module (HSM), which, according to the press release, “ensures a military security solution for storing private keys and managing wallets and operations” with multisignature support.

According to its website, the Swiss Gazprombank is 100 percent owned by Russian state-owned Gazprombank (JSC), and regulated by the Swiss Financial Market Supervisory Authority (FINMA).

As Cointelegraph recently reported, New York-based Signature Bank obtained approval from the Department of Financial Services of New York (NYDFS) to employ its blockchain-based digital platform.

Also this week, Brazil’s largest private bank Itau Unibanco partnered with United Kingdom bank Standard Chartered to create a blockchain-based platform for small loans.