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G-20 Summit Results: Crypto Is Important for Global Economy, Needs to Be Regulated and Taxed

Recap of the G-20 summit in Argentina.

Members of the Group of 20 (G-20), an international forum for the governments and central banks of countries with developed and developing economies, addressed cryptocurrencies in their recent declaration on sustainable development of the global economy.

Declaration summary: Crypto is important, but it needs to be put under scrutiny and tax regulations

On Dec. 1, the G-20 declaration titled “Building Consensus for Fair and Sustainable Development” was published on the official website of the Council of the European Union and the European Council. The document summarized the 13th gathering of G-20 nations that took place on Nov. 30 and Dec. 1 in Buenos Aires, Argentina.

The declaration addressed crypto regulation, albeit briefly: Cryptocurrencies are mentioned just once there, in the broader context of an “open and resilient financial system” that “is crucial to support sustainable growth.”

While recognizing the importance of the cryptocurrency industry for the global economy, the G-20 also noted that it will introduce Anti-Money Laundering (AML) and anti-terrorist measures per standards of Financial Action Task Force (FATF), an intergovernmental body formed to fight money laundering and terrorist financing:

“We will regulate crypto-assets for anti-money laundering and countering the financing of terrorism in line with FATF standards and we will consider other responses as needed.”

Further, in the same segment of the declaration, G-20 participants expressed a positive stance on non-bank financial institutions, pointing out the potential advantages of technology in the financial sector, given that the tech innovators are managing associated risks:

“We look forward to continued progress on achieving resilient non-bank financial intermediation. We will step up efforts to ensure that the potential benefits of technology in the financial sector can be realized while risks are mitigated.”

There is more crypto-related news coming from the international summit, however. On Dec. 2, Japanese news outlet Jiji reported that the G-20 countries have also called for the international taxation of cryptocurrency. According to the publication, the final text of a document cooperatively prepared by G-20 leaders outlines “a taxation system for cross-border electronic payment services.”

The article specifies that — under current laws — foreign companies that do “not have a factory or other base in Japan” cannot be taxed by the local government, while the G-20 leaders seek to “build a taxation system for cross-border electronic services.”

The Japanese news outlet also mentioned an estimated deadline for the system, saying that the final version of regulations, after considering proposals from each member state, is expected to be introduced by 2020. The issue will reportedly be discussed next year, when Japan will become the host of the summit and Japanese Prime Minister Shinzō Abe will take the position of G-20’s president.

Previous G-20 commentary on crypto

G-20 officials have previously maintained a ‘hands-off’ approach on crypto. In March 2018, after a call from France’s finance minister, Bruno Le Maire, the G-20 participants concluded the first public debate on virtual currencies.

The meeting resulted with a “firm” July deadline that had been put forward for “very specific recommendations” on how to regulate cryptocurrencies globally, despite the Financial Stability Board (FSB) — the group which coordinates financial regulation for the G-20 economies — resisting calls from some G-20 members to discuss regulating cryptocurrencies at the conference.

Moreover, many of the G-20 participants decided that cryptocurrencies needed to be examined further before making a concrete regulatory move, albeit some countries including Brazil stated that they won’t be following the G-20 recommendations.

Nevertheless, the G-20 members agreed that the FATF would have its standards applied to the cryptocurrency markets in the respective countries, a position they recently reiterated in Buenos Aires:

“We commit to implement the FATF standards as they apply to crypto-assets, 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.”

In July, a summary of provisional decisions made by the dedicated Finance Ministers & Central Bank Governors said that “technological innovations, including those underlying cryptoassets [sic], can deliver significant benefits to the financial system and the broader economy.” Nevertheless, the document also listed various related problems, including tax evasion and AML concerns:

“Crypto-assets do, however, raise issues with respect to consumer and investor protection, market integrity, tax evasion, money laundering and terrorist financing.”

Still, the actual recommendations for how to approach the cryptocurrency sphere at the international level were not presented, and the deadline was pushed to October 2018:

“[W]e ask the FATF to clarify in October 2018 how its standards apply to crypto-assets,” the summary read. It is unclear if those recommendations have been presented to date, as there has been no information from the G-20 regarding that issue.

On Oct. 22, as the G-20 remained silent, Jeremy Allaire, the CEO of the Goldman Sachs-backed crypto investment app Circle, stated that crypto-related regulatory matters have to be addressed “at the G20 level.” Prior to that, on Oct. 19, the FATF said that by June 2019, jurisdictions will be obliged to license or regulate cryptocurrency exchanges and some firms providing encrypted wallets internationally as part of AML and anti-terrorism procedures.  

More international action

In separate news regarding international adoption and regulation of crypto technology, on Dec. 4, seven southern EU countries — including France, Italy, Spain and Malta — formed an alliance called the “Mediterranean seven” with the aim to promote the use of Distributed Ledger Technology (DLT) among governments, as per Financial Times. The EU, as well as Italy and France, are members of the G-20 alliance.

More specifically, the EU countries have reportedly signed a declaration stating that areas like “education, transport, mobility, shipping, land registry, customs, company registry, and healthcare” can be “transformed” and boosted with the use of DLT.

“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,” the declaration reportedly states.

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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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Report: Belgian Think Tank Calls for Crypto Exchange and ICO Regulations at EU Level

A report from a Belgian think tank that will reportedly be distributed to European Union (E.U.) ministers calls for unified legislation on cryptocurrencies and more scrutiny on how they are distributed to investors, Reuters reported September 5.

The report, ostensibly released by Brussels-based think tank Bruegel, comes ahead of an informal meeting of economic and financial affairs ministers from the E.U. on cryptocurrency investments and taxation of the digital economy. The meeting will take place in Austria from September 7-8.

According to Reuters, the report urges the regulation of cryptocurrency exchanges and Initial Coin Offerings (ICOs) at the E.U. level in order to manage associated risks and harness the potential of blockchain technology.

At the same time, Bruegel reportedly notes that the virtual nature of cryptocurrencies limits the development of regulations, while entities operating crypto trading platforms could face stricter disclosure rules, or even a potential ban.

Drawing on global experience, Bruegel notes the Chinese approach to cryptocurrency market regulation, suggesting “as done in China, mining farms can be forbidden.”

The report added that there may be a “scope for regulatory arbitrage” following the crackdown on crypto business in Asia, citing the upcoming move of crypto exchange Binance to the island state of Malta.

Bruegel notes that regulators should tolerate crypto exchanges that move in order to seek jurisdictions with more laissez faire regulations, stating that there is a need “to experiment and learn about the best approaches to this fast-developing technology.”

On August 30, Bloomberg reported that E.U. ministers plan to discuss the challenges posed by digital assets and the possibility of tightening regulations at the upcoming meeting.  Per a draft note seen by Bloomberg, participants will also discuss a general lack of transparency in the industry and the potential for cryptocurrencies to be used for tax evasion, terrorist financing and money laundering.

Earlier today, Cointelegraph reported that members of the European Parliament along with blockchain experts held a meeting entitled “Regulating ICOs — Is the Crowdfunding Proposal what we were looking for?” on Tuesday to discuss possible regulations for ICOs. The attendees examined potential complications currently arising in the ICO industry.

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European Parliament Members, Blockchain Experts Meet to Discuss ICO Regulation

Members of the European Parliament along with blockchain experts met Tuesday, September 4, to discuss possible regulations for Initial Coin Offerings (ICO).

At the recent EU event entitled “Regulating ICOs — Is the Crowdfunding Proposal what we were looking for?” the attendees examined the potential complications currently arising in the ICO industry.

Ashley Fox, a British Member of the European Parliament, pinpointed three main issues to consider at the meeting: challenges faced by ICOs in raising capital, the existing regulatory approaches on the matter, and the future perspectives of the industry.

In his testimony, Peter Kerstens, chairman of the the European Commission’s Taskforce on Fintech, pointed at the “dramatic increase” of ICOs’ volumes in 2018, despite the increasing number of reports on fraudulent ICO projects. According to Kerstens, the growing figures mean that ICOs are “very interesting and promising vehicle instruments” for raising capital.

Kerstens stressed the fact that while the ICO industry faces mainly similar problems with other traditional funding activities, it is still different in terms of the amount of money that can be raised. As a major benefit, Kerstens stressed that while it is “extremely hard to raise millions of euros for a startup,” it is “not that hard” for an ICO project.

Addressing the issue of the main differences between ICOs and crowdfunding, Kerstens stressed the fact that ICO tokens are not “intermediated,” which means there is no third party between issuers and investors, posing the main subject of concern.

According to Kerstens, most of the aspects of ICOs “cannot be covered by crowdfunding proposals” due to the multiple differences between the industries as well as the uncertain status of ICOs as financial instruments, among other reasons.

Turning to the question of ICO regulation, Aeternity’s global communications expert Julio Alejandro has provided a “very original contribution,” claiming that there is no way to stop an ICO project from creation except by banning crypto exchanges.

Alejandro claimed that “you can complain, you can cry, you can believe,” but “the only way that you can actually stop an ICO from creation is stopping an exchange,” adding:

“Whenever you want to stop the diffusion and relocation of information, how are you gonna stop it? Are you gonna ban USBs, the computers? What exact are you gonna ban? You’re banning knowledge.”

Alejandro then stressed the benefits of the ICO industry that are highly valued by the crypto community, such as an ICO’s anonymity, borderless character, mutual transparency, and ability to operate without an intermediary.

Alejandro further stated that if any centralized organization “tries to regulate ICOs in some sense,” the industry would become “obsolete” from its technical perspective.

On September 7, economic and financial affairs ministers from the EU’s 28 member states are set to hold a meeting on the challenges posed by digital assets and the possibility of tightening regulations. The event, scheduled to take place in Vienna, Austria, will discuss the main issues around crypto, such as tax evasion, terrorist financing, and money laundering.

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Report: Belgian Think Tank Calls for Ministers to Coordinate EU-Wide Crypto Regulation

Calls to enforce clear and uniform guidelines for crypto across European Union (EU) member states are to be made before EU finance ministers this week, Reuters reports September 5.

Brussels-based think tank Bruegel is said to have prepared a new report devoted to the crypto industry for EU finance ministers, who are due to meet this Friday and Saturday in Vienna, Austria. The report is said to reserve particular scrutiny for initial coin offerings (ICOs) as well as for crypto exchanges, the latter of whose presence in the EU is set to increase this year.

As the Bruegel document reportedly itself highlights, Hong Kong-based Binance has recently been working on relocating its headquarters to Malta in the wake of industry crackdowns across Asia. Beijing-born crypto exchange Huobi, as Cointelegraph has reported, is also eyeing its entry into the EU market.

The think tank has reportedly claimed that while new EU rules on money laundering will eventually tighten checks on crypto exchanges by 2020, regulatory oversight is in practical terms largely left to national authorities.

This fact, as per Bruegel, “might suggest that there is scope for regulatory arbitrage,” which the think tank notes might be tolerated in order to temporarily foster opportunities for all parties “to experiment and learn about the best approaches to this fast-developing technology”.

Bruegel reportedly notes that being “virtual,” assets such as Bitcoin (BTC) pose intrinsic challenges to regulators on spot markets. Nonetheless, entities that oversee their production, exchange, and trading via related speculative instruments could be subject “to stricter disclosure rules or even be banned,” according to Reuters’ reading of the document.

Such entities also include mining farms, which as Bruegel’s document has reportedly stated, are forbidden in countries such as China.

Bruegel has also reportedly proposed the need for more transparent rules for ICOs, especially given the prevalence of entities that use the fundraising model to launch utility tokens — which, as they are not securities, are largely “unregulated” under EU financial laws.

As Cointelegraph has reported, details about EU authorities’ preparation for Friday’s meeting first emerged earlier this month, with member state representatives reportedly preparing to voice their concerns over the potential for cryptocurrencies’ use for illicit ends such as tax evasion, terrorist financing and money laundering.

Nonetheless, parties involved are said to recognize that ICOs “have established an effective and efficient way to raise capital,” and could help to integrate capital markets across the EU.

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Crypto Wallet Abra Announces Direct Transactions From EU Banks in SEPA

Global crypto wallet Abra has enabled the direct purchase and sale of cryptocurrencies for European bank accounts, according to a press-release published by PR Newswire Tuesday, September 4.

Abra, which offers 28 cryptocurrencies for consumers worldwide, will now support Single Euro Payments Area (SEPA) bank accounts. As the company’s official Twitter states, the launch of in-app European bank purchases of digital currency has already started.

Customers can now transfer euros or several other national currencies directly to their wallet which can, in turn, can be converted into the 28 cryptocurrencies offered by Abra including Ethereum (ETH), Litecoin (LTC), and Ripple (XRP).

Bill Barhydt, founder and CEO of Abra, further explained the innovation:

“With users from over 70 countries globally, and a greater demand for the ability to invest in cryptocurrencies from any bank account, it is really important to give investors the opportunity to fund their Abra wallet directly from any bank account.”

Along with backing SEPA bank accounts, Abra has announced three new coins recently added to the wallet: Cardano (ADA), Basic Attention Token (BAT), and Tron (TRX).

Until today’s announcement, the Abra wallet could only be funded by U.S. bank and wire transfers in the United States, along with American Express, Visa, and MasterCard debit and credit cards around the world.

The Single Euro Payments Area (SEPA) is a payment system that simplifies bank transfers in the EU. Currently, it includes 28 EU members, together with the four member states of the European Free Trade Association (Iceland, Liechtenstein, Norway, and Switzerland), and Andorra, Monaco, and San Marino.

As Cointelegraph reported back in March 2018, major U.S. crypto wallet and exchange Coinbase received an e-money license from the UK Financial Conduct Authority (FCA) to conduct its fiat activities in Great Britain, as well as in the 23 countries within the European Union. It was not immediately clear if Coinbase could keep the EU license in the future due to Brexit.

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Report: EU to Discuss Further Crypto Regulation Amid Concerns About Lack of Transparency

Economic and financial affairs ministers from the European Union’s (E.U.) 28 member states will reportedly hold an informal meeting on the challenges posed by digital assets and the possibility of tightening regulations, Bloomberg reported August 29.

According to a draft note seen by Bloomberg, participants will discuss a general lack of transparency and the potential for cryptocurrency to be used for tax evasion, terrorist financing and money laundering at a September 7 meeting in Vienna, Austria.

The European Securities and Markets Authority (ESMA) has previously warned customers about Initial Coin Offerings (ICOs), citing a lack of investor understanding and problems with unregulated financial activities. The ESMA also noted that unregulated exchanges are unprotected due to their existence outside of global financial regulations, which means that customer losses from an event like a cyberattack would not be covered by E.U. law.

Despite previous warnings from E.U. financial watchdogs, the document obtained by Bloomberg says that ICOs “have established an effective and efficient way to raise capital.” The document reportedly also states that ICOs could help integrate capital markets in the E.U.

The E.U. Fifth Anti-Money Laundering Directive came into force on July 9. Measures within the directive set a new legal framework for European financial watchdogs to regulate digital currencies. The new rules enact stricter transparency requirements directed at the use of “anonymous payments through prepaid cards” and  “virtual currency exchange platforms” for the purposes of money laundering or terrorist financing.

In March, the ESMA strengthened requirements for Contracts For Differences (CFDs) in cryptocurrencies. In accordance with the introduced rules, investors must have enough funds to cover at least half of a contract value upon opening, changing the leverage limit of cryptocurrency CFDs to 2:1 from 5:1 at opening.

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Canadian Crypto Exchange Coinsquare Prepares For European Expansion

Despite current market woes and prices lulling at a yearly low crypto exchanges and trading platforms are expanding at an unprecedented rate.

Canada’s premier crypto trading service, Coinsquare, has announced plans to expand into Europe in the fourth quarter of this year. According to the press release European customers will gain access to all of the major digital assets including Bitcoin, Ethereum, XRP, Litecoin, Bitcoin Cash and Dash backed up with a secure and reliable service from the firm.

Chief Digital and Growth Officer of Coinsquare, Thomas Jankowski, said;

“Cryptocurrency investors globally want a platform they can trust. Coinsquare is a regulated, fully-compliant trading platform and we’re thrilled to offer the European market the same secure and intuitive interface that we offer to Canadians.”

Coinsquare, founded in 2014, has become one of Canada’s largest and most trusted cryptocurrency exchanges. Like Coinbase across the border in the US, it allows fiat to crypto trading for a number of different digital currencies. The move will be the first international expansion under the Coinsquare brand but not the first time the company has ventured overseas.

Last month the firm entered into a partnership in Japan with DLTa21, a global cryptocurrency investment bank. The collaboration allowed Coinsquare to open a cryptocurrency exchange for the Japanese market. Chief Executive of Coinsquare, Cole Diamond, added;

“Entering on a massive market like the EU is an exciting step closer to Coinsquare’s vision of becoming a global 21st century financial institution. Already the premier cryptocurrency exchange in Canada, we are careful in how we expand internationally to ensure we can offer the same high quality, secure service in every country we operate.”

However it was not specified which European country or countries the company would be operating in. If it follows the leads of Binance and Huobi it could choose crypto friendly Malta, Switzerland or Gibraltar which top the list of countries open to blockchain business.

Like its rivals Coinsquare continues to expand despite the bearish market of 2018. A new investment fund and portfolio manager offering a suite of products focused on emerging technologies including blockchain and cryptocurrencies was recently announced. Additionally a licensing division enabling the company to tap into regulated markets in the EU and Asia was also launched. More notably Coinsquare added XRP fiat trading to its listings a few weeks ago as part of its ‘global expansion’.

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Spanish Left-Wing Political Coalition Proposes Subcommittee to Study Blockchain, Crypto

Spanish left-wing political coalition Unidos Podemos has called on the state to explore and implement the benefits of blockchain technology, local news agency Europa Press reported August 12.

Podemos, formed from left wing parties Podemos, United Left, Equo and others has suggested that the Spanish government establish a subcommittee responsible for studying the potential of blockchain technology as well cryptocurrency regulation. Alberto Montero, the deputy of the political alliance, has reportedly registered the request in the lower house, along with a project plan.

The blockchain-focused body would bring together public administrations, state authorities and public officials, as well as industry experts.

According to a Montero, the initiative aims to explore the “enormous potential” of blockchaint tech in terms of reducing costs of government operations and boosting the level of security for social and economic transactions.

In addition, the alliance has suggested addressing regulatory approaches for cryptocurrency use in Spain. According to the report, digital currencies such as Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC) are currently “located in a gray area of ​​regulation.”

The coalition also proposes to base policy on the outcomes of the European Union (EU) Blockchain Observatory and Forum, launched by the European Commission in February 2018.

Unidos Podemos is not the only political organization that has recently suggested blockchain adoption in the country’s government. Earlier this summer, 133 deputies from the Spanish ruling party, Partido Popular (People’s Party), proposed a bill to use blockchain in the public administration of the country.

Recently, two major spanish public institutions, the Spanish Society of Authors and Publishers (SGAE) and the Madrid School of Telecommunications Engineering (ETSIT-UPM) partnered to apply blockchain for digital copyright management.

In terms of crypto regulation, the Spanish Congress has reportedly indicated unanimous support for a draft regulatory framework to regulate blockchain technology and cryptocurrencies on May 30, 2018. The draft initiative, proposed by People’s Party, suggests that the state cooperates with National Securities Market Commission (CNMV) and the Bank of Spain to coordinate a common regulatory stance on crypto in the broader European context.