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Cyprus’ Finance Minister: Blockchain Draft Bill to be Ready This Year

The finance minister of Cyprus, Harris Georgiades, said that the country’s blockchain regulation draft will be ready this year.

The finance minister of Cyprus, Harris Georgiades, has said that the country’s blockchain regulation draft will be ready this year. English-language local finance news outlet FinancialMirror reported the news on July 4.

Per the report, Georgiades described blockchain technology as “a new technological revolution similar to that of the internet.” Demetris Syllouris, House speaker, also praised the technology’s potential during the event:

“Full implementation of this technology across the public and private sector is expected to radically change the structures of modern societies, the way they are organized and their operation.”

According to him, the national strategy will sustain Cyprus’ digital innovation, provide the necessary framework, and a roadmap exploring the application of distributed ledger technology (DLT) across many industries while also addressing risks and threats. The national blockchain pilot programs will reportedly involve the Department of Land and Surveys, the Department of Customs and Excise, the Tax Department and the National Betting Authority.

As Cointelegraph reported in February, the Cyprus Securities and Exchange Commission (CySEC) is calling for the transposition of the European Union (EU)’s Fifth Anti-Money Laundering (AML) Directive (AMLD5) into national law — bringing local regulation of cryptocurrencies under its provisions.

In December last year, Cyprus was among the seven EU states that co-signed a declaration calling for help in the promotion of DLT use in the region.

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Seven EU States Sign Declaration to Promote Blockchain Use

During an EU meeting, seven southern EU member states released a declaration asking for help in the promotion of blockchain.

Seven southern European Union member states have released a declaration calling for help in the promotion of Distributed Ledger Technology’s (DLT) use in the region, the Financial Times (FT) reports Dec. 4.

The declaration was reportedly initiated by Malta and signed by six other member states, France, Italy, Cyprus, Portugal, Spain and Greece, during a meeting of EU transport ministers in Brussels on Tuesday.

The participating governments explained that DLT –– one type of which is blockchain –– could be a “game changer” for southern EU economies.

Namely, the document cites “education, transport, mobility, shipping, Land Registry, customs, company registry, and healthcare” as services which can be “transformed” by this technology. The group also cites blockchain tech’s use for protecting citizens’ privacy and making bureaucratic procedures more efficient.  

The report further notes that this technology has potential beyond digital government services:

“This can result not only in the enhancement of e-government services but also increased transparency and reduced administrative burdens, better customs collection and better access to public information.”

In mid-November, a member of the Executive Board of the European Central Bank, Benoit Coeure, declared that he considers Bitcoin the “evil spawn of the [2008] financial crisis.”

Also in November, banking groups BBVA and Banco Santander joined the EU International Association for Trusted Blockchain Applications (IATBA), Cointelegraph reported. The association itself is set to be launched Q1 2019 and aims to develop blockchain infrastructure and standards.

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What Would Happen to Crypto In a Global Market Meltdown?

Michael J. Casey is the chairman of CoinDesk’s advisory board and a senior advisor for blockchain research at MIT’s Digital Currency Initiative.

The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.

A common thought experiment in the crypto community is to ponder how cryptocurrencies would fare in the event of another global financial meltdown.

It is not an idle question. There is a host of troubling developments in the global economy: the threat of a trade war, jitters in Italian debt markets, problems at Deutsche Bank and new emerging market crises in Turkey and Argentina.

Meanwhile, central banks, led by the U.S. Federal Reserve, are tightening or signaling tighter monetary policy. That’s putting a brake on the huge gains that low interest rates and quantitative easing had bestowed on global markets in the eight years since the end of the last crisis.

With this combination of risk factors already in play, there’s always a chance that some unforeseen trigger could set off another terrified rush for the exits among global investors.

What would the impact be on bitcoin and other cryptocurrencies? Would their reputation as independent assets see them benefit from safe-haven inflows? Or would the market-wide reduction in risk appetite spread wide enough that crypto assets get caught up in the selloff?

Opposing scenarios

Some crypto hodlers salivate at the idea of market panic.

They contend that, unlike the 2008-2009 collapse, when Satoshi Nakamoto’s newly launched cryptocurrency was essentially out of sight and unavailable to the hordes seeking a haven from the fiat world’s chaos, bitcoin is now widely recognized as a more versatile alternative to traditional flight-to-safety assets such as gold.

In a crisis, they say, bitcoin could shine – as might other cryptocurrencies designed as alternatives to fiat cash such as monero and zcash. Unaffected by future monetary policy responses, immune from draconian interventions such as the Cypriot bank deposit freeze of 2013, and easily acquired, they could prove their value as digital havens for the digital age in such a moment. Accordingly, the bulls’ argument goes, their prices would surge.

On the other hand, if there’s enough of a market-wide departure from risky investments, it’s hard not to see this sector being swept up in it.

Just as the most extreme gains in crypto prices in the latter part of 2017 were inextricably linked to the rapid “risk on” uptrend seen in stocks, commodities and emerging-market assets, so too a major selloff could easily infect these new markets.

Cryptocurrencies and tokens are perceived by most ordinary investors as high-risk assets – you buy them with money you can afford to lose when you’re feeling upbeat about market prospects. When the mood sours, this class of investment is typically the first to be retrenched as investors scramble to get cash.

At $300 billion, according to Coinmarketcap’s undoubtedly inflated estimates, the market cap of the overall crypto token market is more than three times its value of a year ago (even though it’s down more than half from its peak in early January).

But it’s less than 1 percent of the end-2017 market cap of $54.8 trillion for the S&P Global Broad Market Index, which includes most stocks from 48 countries. If risk-hungry investors are panicking and looking for things to dump – or for that matter if they’re looking for something safe to buy – it won’t take much of their funds to move the crypto markets, one way or another.

Low correlations

Backing the bitcoin bulls’ argument is the fact that correlations between cryptocurrency and mainstream risk assets – the degree to which prices move in tandem with each other – are quite low.

A 90-day correlation matrix compiled by analytics firm Sifr put bitcoin’s correlation with the S&P 500 index of U.S. equities at minus-0.14. That’s a statistically neutral position since 1 represents a perfect positive correlation while -1 is a perfectly negative relationship.

But they say that in a crisis “all correlations go to 1.” The panicked state of the crowd, with investors selling whatever they can offload to cover debts and margin calls, means that everything could go out with the flood.

Intellectually, too, that sort of wholesale downturn would comfortably stand as a logical counterpoint to the conditions seen last year when market valuations reached excessive levels. We cannot separate the flood of money that flew into crypto at the end of the year from the fact that eight years of quantitative easing had driven a “hunt for yield” in once-obscure markets as the return shrank on now pricey mainstream investments such as corporate bonds.

With bond funds paying little more than, say, 2 percent for years, bitcoin looked attractive to mainstream investors. When that artificially-stoked liquidity disappears, the reverse could happen.

Despite all of this, I do believe a global financial crisis could be an important testing moment for crypto assets.

Perhaps there’ll be a two-phase effect. In the immediate aftermath of the panic, there would be a selloff as every market is hit by the liquidity squeeze.

But after things settle, one can imagine that the narrative around bitcoin’s uncorrelated returns and its status as a hedge against government and banking risk would gain more attention.

Just like the mid-2013 surge in bitcoin that accompanied the Cypriot crisis’ lesson that “they can come for your bank account but not for your private keys,” so too a wider financial crunch could spur conversation around bitcoin’s immutable, decentralized qualities and help build the case for buying it.

The wider point here is that, whether it’s as an aligned element that rises and falls in sync with the broader marketplace or as a contrasting alternative to it, cryptocurrencies can’t be viewed in isolation from the rest of the world.

Image via Shutterstock

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Ripple (XRP) Enters EdTech With University Blockchain Research Initiative, Around 20 Top Univ. Involved

Around 20 educational institutions have partnered with Ripple (XRP) on its newly unveiled University Blockchain Research Initiative (UBRI) that is centered on supporting and accelerating academic research, technical development and innovation in blockchain, cryptocurrency and digital payments.

The collaboration, which involves top universities around the world, attests to the fact that blockchain technology can bring revolution to education. It will expose the education community to many a number of use cases in the blockchain industry that can heighten research within the space.

Owing to Ripple’s outstanding performance in the blockchain world, it is no doubt that it can perform excellently in the academic community and create nonexistent ideas in this space, the same manner it is doing in the fintech world.

In so doing, Ripple has dedicated more than $50 million in funding, expertise and technical resources to UBRI’s maiden partners, which includes 17 internationally recognized institutions around the world.

Among the first batch of partners is the University of Nicosia, Cyprus, one of the frontrunner in blockchain education in the world. Also, it involves the The University of Pennsylvania where UBRI is financing selected MBA-MS candidates yearly in a newly established Wharton-Engineering dual-degree program. The support will give students working on blockchain or cryptocurrency a top regard.

In the same line, the Center for Information Technology Policy (CITP), Princeton University is saddled with the responsibility of creating an UBRI program that will research on the policy impact of cryptocurrencies and blockchain in the whole world.

While the schools involved in UBRI will individually design their research topics and other necessary things, Ripple will finance the research and technical development to increase societal understanding of blockchain.

Importantly, UBRI has linked Ripple with MIT Computer Science and Artificial Intelligence Lab’s new FinTech initiative that comprises close to a dozen respected companies in the financial services industry. With Ripple, they will be working with groups of CSAIL’s 116+ researchers on topics revolving around blockchain, cryptocurrencies, cybersecurity and global payments.

UBRI’s complete list of partners as published by Ripple today:

Australian National University College of the Law

CITP at Princeton


Delft University of Technology (Netherlands)

Fundação Getulio Vargas (Brazil)

Haas School of Business, University of California, Berkeley

IIT Bombay

International Institute of Information Technology, Hyderabad (IIIT-H)

Korea University

McCombs School of Business, UT-Austin

The University of North Carolina at Chapel Hill

The University of Pennsylvania

UCL (University College London)

University of Luxembourg

University of Nicosia (Cyprus)

University of Oregon

University of Waterloo.

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Cyprus Securities and Exchange Commission Plans Blockchain-Based Electronic Payment System

The Cyprus Securities and Exchange Commission (CySEC) has announced that it intends to integrate Blockchain or distributed ledger technology (DLT) to its electronic payment system.

The financial regulator has signed a partnership with the Blockchain Technology for Algorithmic Regulation and Compliance Association (BARAC) to develop and introduce the Blockchain technology mechanism.

In its press statement, CySEC’s partner BARAC announced the various benefits of DLT to the financial industry like enhancing efficiency, boosting security and eliminating duplications in transactions.

“Blockchain Distributed Ledger Technologies (DLT) are of great interest to the financial industry because they have the potential to improve efficiency, augment security, eliminate duplications, simplify compliance and increase settlement speed, transparency and verifiability while preserving privacy and anonymity.”

CySEC’s support on Blockchain and initial coin offerings

CySEC is aggressively advancing projects to explore the other potential benefits of Blockchain. The regulator is also taking part in several international research projects on the technology as a member of the European Securities and Markets Authority (ESMA).

Moreover, CysSEC also voiced out its positive views on Blockchain and initial coin offerings (ICO). In her statement, the regulator’s director Demetra Kalogirou said that ICOs are a means to generate small funds to finance start-up companies and they will focus on them in 2018.

“We think it’s a product, a way to raise small funds to finance start-ups. . . . 2018 is the time to put crowdfunding in place. We have given it priority.”

Cyprus’ future as an ICO and Blockchain hub

With the launching of the DLT technology for CySEC electronic payment system consumers are expected to reap several expected benefits like faster transactions, reduced fees and improved transparency of payments.

The success of the various DLT projects in Cyprus is also expected to make the country an attractive location for financial technology (fintech) companies, as well as an ICO hub in the near future.

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Cyprus Securities Regulator Trials Blockchain Oversight in OTC Markets

The Cyprus Securities and Exchange Commission, Cysec, has revealed new details about its efforts to explore blockchain technology, hinting live trials might already be underway.

According to a report by Cyprus Mail, the agency is particularly interested in the regulatory implications of shared, distributed ledgers, and is testing how the technology could grant it greater oversight of over-the-counter markets.

There, the regulator asserts that licensed investment firms are already trading in digital currency derivatives, an offering now in the early stages of development in the U.S. markets, as well as globally.

Cysec chair Demetra Kalogirou said:

“We have already been using [blockchain] in Cyprus with investment services companies that carry out OTC [over-the-counter] transactions.”

Kalogirou went on to state that Cysec will consider the wider use of so-called RegTech systems to better facilitate the compliance of supervised entities.

Greater fintech adoption will allow Cysec to maintain the country’s “dynamics in the provision of financial services and products,” Kalogirou added.

According to the report, the commission is working on a draft legislation to cover crowdfunding efforts for startups, though it is not clear if any new rules would include initial coin offerings (ICOs).

Cyprus flag image via Shutterstock

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