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Blockchain Boom in Ireland, but Brexit Looms

Financiers and investors fear that a “no deal” Brexit could spell “bust” for Ireland and the nations’ blockchain industry.

Strong growth has returned to Ireland one decade after the banking crisis and international bailout. But, financiers and investors fear a “no deal” Brexit — in which the United Kingdom leaves the European Union without a trade agreement at the end of the month — could again destabilize Ireland’s boom-and-bust economy.

The U.K. received 11 percent of Ireland’s exports of goods in the past year, while supplying more than one-fifth of its imports. The Irish central bank conjectures that an orderly exit from the EU would decrease the gross domestic product by 1.5 percent, according to a Reuters story.

While the economic uncertainty — like in many countries — has driven curiosity in cryptocurrencies such as Bitcoin, Ethereum and others in Ireland ahead of Brexit, it casts a shadow over a burgeoning blockchain boom.

“It’s hard to see beyond the shadow of Brexit at the moment,” said Dave Fleming, global head of research and development for Mastercard Labs in Ireland. “If Ireland is affected, it will probably be similar to 2008 and the whole world might be affected so possibly blockchains might help.” The Irish will have to wait and see, he says.

Ireland’s hope

If Britain leaves without agreeing to terms on the border with Northern Ireland, a more strongly enforced border could partially isolate Ireland and reignite conflict. According to Anthony Day, chief operating officer of Deloitte’s EMEA Blockchain Lab in Ireland, Brexit brings to mind the concept of a “digital border” between Ireland and the U.K. As Day explained:

“We see significant potential for Blockchain to provide the capability to enable secure, real-time and automated infrastructure to support trade, reporting, and the movement of goods and people. However, establishing the relevant working groups, governance, deploying such platforms and completing the necessary transformation within both public and private sector organizations would be a multi-year initiative, and the timescale for Brexit is immediate.”

Brexit has dampened Irish consumer confidence and stymied foreign investment. Ireland’s biggest companies are drawing up backup plans in case of a no-deal Brexit. Business owners fear tariffs, customs paperwork and delayed shipments of goods from Britain. AIB, Ireland’s biggest bank, said this past Monday that one-third of companies have canceled or postponed investments because of Brexit.

“A Brexit ‘no deal’ is clearly the biggest concern,” said Raul Sinha, a banking analyst at JPMorgan Chase.

Cryptocurrency and Ireland

According to Day, blockchain is flourishing in Ireland. The exchange Coinbase, development company Consensys, and Wachsman PR have all opened offices in Dublin. Deloitte deliberately chose Dublin as the home for the EMEA Lab and invested in a dedicated facility.

Day notes that the Irish government has committed 500 million euros toward its Disruptive Technologies Innovation Fund. Through the fund, business and research groups can apply for funding to progress blockchain and other technologies.

“From a Blockchain perspective,” Day said, “we have seen strong engagement from across Ireland’s major sectors (Financial Services, Food & Agriculture, Technology, Aviation and others) in applying Blockchain to address established industry pain points such as transparency, data sharing, fraud and driving efficiency in trading activity.” Fleming also sees many big enterprises adopting blockchain:

“Well, as far as I can see, there is a massive uptake of crypto inside financial firms. From people I have talked to inside the industry, I’d say most firms, including the Big 4, as well as most of the banks located here, will be moving most of their verification methods to the blockchain within a few years. People from all over the tech sector are picking up crypto and figuring it out.”  

ConsenSys, which opened an office in Dublin last year, remains active in the city.

“What is surprising is the amount of blockchain activity taking place in Ireland,” ConsenSys Ireland MD Lory Kehoe told Cointelegraph. “While the blockchain eco-system is relatively new in Ireland we are seeing rapid development of the market here.”

Ireland's Blockchain Landscape

Kehoe cites working groups like Blockchain Ireland (BI), a group of government and private companies and individuals, as a big part of the development of the ecosystem there:

“Ireland has a number of fantastic third level programmes in computer science and also a talent center of thousands of people who have come to work for some of the major social and tech companies that have their EMEA headquarters here.”

He believes, however, more needs to be done to ensure that coding and developer education is introduced to the education cycle early.

“Business and government need to work together to equip Irish citizens with the skills they need to work in the economy of the future,” Kehoe said.

The government’s role

Jillian Godsil, co-founder of Blockleaders.io — who also works with Blockchain Ireland — and Kehoe both mentioned “exciting news” coming soon from Blockchain Ireland.

“The whole of Ireland will go crazy for Blockchain,” Godsil said.

The growth of the blockchain industry comes as tech and finance companies move to Dublin — many are coming from the U.K. ahead of Brexit. So, while throughout history the Irish have left their homeland to seek work, hundreds of U.K. businesses are already relocating to the Emerald Isle in order to keep operations based inside the EU, thus creating more jobs for those living in Ireland.

Barclays, Bank of America, CitiBank, Google, Facebook and more are all moving their EU headquarters to Ireland from London. Citibank and Bank of America have merged U.K.-based subsidiaries into Irish subsidiaries, bringing in billions worth of assets to the country.

Still, Brexit looms. It could decide whether Ireland’s boom continues or goes bust. In the words of Mastercard’s Fleming, we’ll have to wait and see.

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German Bank Association: New Regulation for DLT-Based Securities May Be Necessary

The German private banking association foresees that the need for new regulation may arise from the emergence of DLT-based securities.

The Association of German Private Banks (Bankenverband) foresees that a need for new regulation may arise from the emergence of distributed ledger technology (DLT)-based securities. The association expressed its concerns in a post on its official website on March 11, Cointelegraph auf Deutsche reported.

Per the post, if securities are issued using new technologies, then there is a need for new safekeeping and settlements processes. According to Bankenverband, corporate actions and securities trading may also be subject to change because of DLT-based securities.

The statement further explains that because of the changes that new technologies will create in business processes, “adaptations of civil and regulatory requirements at national and European level may be necessary.”

Recently, the German Federal Ministry of Finance also published a key issues paper on the treatment and regulation of blockchain-based securities.

As Cointelegraph recently reported, German regulators and lawmakers have thus far failed to create a workable legal framework that would provide legal certainty for applications of blockchain technology.

The news came shortly after German parliamentary representatives have argued that the country’s blockchain strategy should include an appropriate legal framework for cryptocurrency trading and token issuance, which would in turn encourage the sector’s domestic development.

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Nasdaq-Powered EU Digital Exchange DX Launches Security Token Trading

DX.Exchange is claiming an industry first with its launch of security token trading and security token offering listings.

Estonia-based Nasdaqpowered digital trading platform DX.Exchange is claiming an industry first with its launch of security token trading and security token offering (STO) listings. The development was shared with Cointelegraph in a press release on March 14.

As previously reported, DX.Exchange went live in January, with support for various fiat and cryptocurrency trading pairs and tokenized stocks. In March, the platform added tokenized exchange-traded funds (ETFs) to its supported products.

According to the press release, the platform now allows investors to purchase security tokens using both fiat and major cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), Tether (USDT) and Ripple (XRP). Following this latest development, DX Group will also reportedly restructure into a new entity called DXtech Exchange.

Security token trading represents the latest offering enabled by DXtech Exchange’s existing partnership agreement with Cyprus-regulated broker MPS MarketPlace Securities Ltd., which has thus far enabled the platform’s provision of tokenized stocks and ETFs.

Trading of security tokens will reportedly require investors to undergo an additional layer of Know Your Customer checks, in compliance with the European Union Markets in Financial Instruments Directive II.

MPS will be the entity that lists the tokens and acts as a counterparty in their trading. All trades will be automatically matched using matching engine technology and monitored by a surveillance system.

To demonstrate its new services, DXtech Exchange launch STO listing and trading for a security token dubbed IGWT, which will be offered in a time-limited private security token sale of 18 million IGWT. Thereafter, ten percent of the company’s profits will reportedly be regularly distributed to IGWT token holders that will own 100 percent of the tokens.

The press release outlines the eligibility requirements for listing a security token with DXtech Exchange, which include evaluation by the platform’s investment committee, the provision of a legal opinion, full background vetting, a review of the token’s blockchain protocol and providing DXtech exchange with data on to whom and how tokens are distributed.

The platform’s investment committee reportedly assesses security tokens issuers on the basis of their white paper’s transparency, fundraising method and team.

The press release states that the platform eventually aims to list various security tokens including company shares, company profit splits, funds, bonds, real estate and art.

As security tokens continue to gain industry traction, top crypto exchange Binance is also eyeing the sector, signing an MoU last fall with the Malta Stock Exchange’s fintech and digital asset subsidiary, MSX PLC to jointly launch a new security token digital exchange.

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German Blockchain Strategy Should Include Framework for Crypto Trading, Say Politicians

German parliamentary speakers have argued that the country’s blockchain strategy should include an appropriate legal framework for cryptocurrency trading and token issuance.

German parliamentary speakers have argued that the country’s blockchain strategy should include an appropriate legal framework for cryptocurrency trading and token issuance that would encourage the sector’s domestic development.

The suggestion was put forward by the Union parties’ finance spokesperson Antje Tillmann and her colleague Matthias Hauer at a public hearing initiated by the Bundestag’s Finance Committee on March 11.

The hearing was exclusively devoted to the opportunities that blockchain technology can offer to Germany as a financial and business hub. It centered on the current and desired state of blockchain development in the country and the federal government’s initiatives in the sector to date.

In their remarks, Tillman and Hauer emphasized that while still in its early stages, blockchain is poised to make a significant and constructive impact as a base technology for national digitization strategies across multiple fields, and that the foundations for its future implementation should therefore be laid today.

While commending the German federal government’s promotion of blockchain pilot projects across applications such as electromobility, electricity trading and at the Federal Office for Migration and Refugees, Tillman and Hauer argued that efforts to ensure that Germany can compete globally should be stepped up:

“…there has been an increasing outflow of promising [blockchain] startups to European and non-European countries for some time now. Financing rounds based on blockchain technology (so-called initial coin offerings [ICOs]) are meanwhile taking place almost exclusively abroad.”

The lawmakerse proposed that, in order to remain at the forefront of innovation and prevent a further brain drain of blockchain talent, the German government’s blockchain strategy should encompass an appropriate legal framework that would set clear terms for cryptocurrency and token trading:

“The potential of blockchain technology can only be fully realized if there is legal certainty and potential risks are mitigated. The goal must be to retain the entire added value of this promising technology in Germany and to develop our country into a pioneer of the blockchain economy. “

As Cointelegraph reported earlier this month, Germany’s finance ministry has just published a paper on the treatment and regulation of blockchain-based securities, which exempted most token issuance from federal security laws but nonetheless highlighted the risks that ICOs may pose for investors.

Also this month, Germany’s justice and finance ministries proposed to launch a state-run register to regulate the blockchain sector and protect investors from possible abuses.

A nationwide blockchain strategy from the German government is expected to be introduced by mid-2019.

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Coinbase Bought Neutrino for $13.5 Million, Acquisition Contract Allegedly Shows

Coinbase had spent $13.5 million to purchase controversial blockchain intelligence startup Neutrino, documents allegedly show.

Major United States cryptocurrency exchange Coinbase had bought blockchain intelligence startup Neutrino for $13.5 million, according to an acquisition contract reportedly obtained by Bitcoin Magazine on Wednesday, Mar. 6.

The legal document, whose authenticity has not been independently verified by Cointelegraph, is dated Feb. 15, and it reportedly provides the exact amount of the two firms’ purchase contract, which was previously unknown. The document states that the crypto exchange has agreed to acquire “the units of the respective total ownership representing the entire share capital of the Company [Neutrino].”

According to the document, Neutrino’s founders, CTO Alberto Ornaghi, CEO Giancarlo Russo and CRO Marco Valleri, will each receive $2.9 million, proportional to their shares in Neutrino. In the meantime, 360 Capital, an EU venture capital firm that invested $565,000 in Neutrino back in 2017, will reportedly receive $4.99 million.

As the contract was signed, the notary paid each founder $487,000, while 360 Capital received $4 million. The remaining amount — over $8 million — is allegedly stored at a Credit Suisse trust account affiliated with the company. However, it was not immediately clear when the sum will be transferred to the former shareholders.

As Cointelegraph previously wrote, Coinbase acquired Neutrino in mid-February, stating at the time that the company will continue to operate as a standalone business in its London office.

Later the crypto community, namely Block Digest podcast members, revealed that Neurino’s founders were directly affiliated with Hacking Team — a controversial information technology outfit that purportedly sold offensive surveillance capabilities to governments, law enforcement agencies and corporations across the world, with authoritarian regimes allegedly among them.

Following the news, the crypto community launched a hashtag #DeleteCoinbase, urging users to cut ties with Coinbase. In response, Brian Armstrong, co-founder and CEO of Coinbase, announced that Neutrino staff with prior connections to controversial software firm Hacking Team will transition out of their new roles at the company.

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Nasdaq-Powered EU Digital Exchange DX Adds Tokenized ETFs

Nasdaq-powered digital trading platform DX.Exchange has announced the addition of tokenized ETFs, including SPY and QQQ, to its services.

Estonia-based digital trading platform DX.Exchange has added tokenized Exchange-Traded Funds (ETFs) to its services, according to press release shared with Cointelegraph on March 6.

The move involves the tokenization of popular ETFs, such as SPY, which represents the S&P 500, and QQQ, which backs the Nasdaq Composite at a 1:1 ratio. UWT (crude oil) and UDOW are among other ETFs offered on the platform. The ETFs offered can now be purchased both for cryptocurrencies and fiat during trading hours as well as after-hours.

According to the press release, the introduction of tokenized ETFs on DX.Exchange complies both with the latest guidelines issued by the European Securities and Markets Authority and with the EU Markets in Financial Instruments Directive II.

The chief operating officer of DX.Exchange, Amedeo Moscato, stated that he believes that the latest move by the EU-regulated company opens the world of popular financial assets to crypto holders. His statement reads:

“As of today, there’s over 130 Billion USD worth of Crypto that can now be invested in Digital Stocks and ETFs. Crypto investors who wished to hedge part of their crypto portfolio had only USD stable coins or limited options. Now they can invest in real world assets on the blockchain.”

DX.Exchange states that adding ETF trading to the platform will attract investors seeking to benefit from a lower-cost venue for executing their trades. Moreover, the decision will reportedly allow smaller retail investors or investors from developing countries to enter the market.

DX.Exchange first appeared as a concept in May last year and was launched in January of this year. The company uses Nasdaq’s Financial Information Exchange protocol to deliver its products.

As Cointelegraph wrote, the company initially proposed that crypto holders purchase tokens backed by stocks in various major companies, including Amazon, Baidu, Apple, Facebook, Google, Intel, Microsoft, Netflix, Nvidia and Tesla.

The trading at the Estonian exchange is currently only available for traders in the European Union. However, the company plans to make trading available to United States-based customers in 2019, according to a tweet from its co-founder and CEO in early January.