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Full House: Crypto Cards Show a Strong Hand in 2019

As investor confidence in crypto grows, some of crypto’s biggest name launch cards.

Until recently, cryptocurrency debit cards appeared to fall short of expectations. Despite many failed efforts in recent years, crypto debit cards are enjoying a second wind thanks to a surge in crypto prices over the summer. With some of the crypto world’s biggest names launching crypto debit cards, Cointelegraph takes a look at the latest updates in the burgeoning payments sector. 

What are cryptocurrency debit cards and how do they work? 

Cryptocurrency debit cards are almost exactly the same as the bank card you carry around every day in your wallet, except for the fact that you can use them to deposit and convert cryptocurrencies. Crypto debit cards represent the transitional stage that cryptocurrencies are currently evolving through. Merchants — for the most part — aren’t ready to accept payments for everyday items and services in crypto, along with the fact that many cryptocurrencies still face issues with transaction time. Consequently, many exchanges only offer the possibility to trade cryptocurrencies for other existing cryptocurrencies, presenting an issue for investors looking to convert their tokens to fiat. 

In this respect, crypto debit cards present a happy middle ground for both investors and merchants alike. Payments with a crypto card does not require the merchant to have any technology to accept cryptocurrency payments, as they use the existing Visa/Mastercard infrastructure widely used by businesses the world over. Crypto cards either convert currency seamlessly for the payment or give the user the opportunity to transfer it into a dedicated fiat account for payments. 

New Litecoin Foundation partnership rolls out new card

The Litecoin Foundation, a nonprofit organization dedicated to advancing and promoting blockchain technology, announced that it has teamed up with Bibox Exchange and the blockchain firm Ternio to roll out its own crypto debit card. 

The new card, dubbed “BlockCard,” will be released as a joint venture by the companies and, for the meantime, is restricted to U.S. customers only. According to a post published by the Litecoin Foundation, BlockCard will enable customers to spend cryptocurrency both online and in-store worldwide. It might not come as a surprise that the most prominent cryptocurrency available to service users is Litecoin (LTC). Customers will also be able to use Bibox Exchange’s and Ternio’s native tokens, Bibox Token (BIX) and Ternio (TERN) respectively. 

While Bibox Exchange is set to act as the custodian of users’ funds and to leverage north of $200 million worth of cryptocurrency trading volume, Ternio aims to  provide a dedicated blockchain platform. 

Litecoin creator and managing director of the Litecoin Foundation, Charlie Lee, said the card launch represents an opportunity to get more people spending Litecoin: 

“This is an exciting partnership for us as it furthers the Litecoin Foundation’s mission to create more use cases for spending Litecoin in everyday life. Leveraging Ternio’s BlockCard platform with Bibox’s exchange engine gives Litecoin holders unparalleled access to use their LTC at merchants around the world.”

Although a cursory glance back at recent efforts to launch crypto debit cards may prove a sobering experience for most entrepreneurs, Ternio founder and CEO Daniel Gouldman told Cointelegraph via email that the payments industry is there for the taking: 

“The payments industry is currently $4 trillion a year on its way to being $5.5 trillion. Commerce literally is about exchanging value. More and more people are figuring out that cryptocurrencies hold some tremendous advantages over traditional systems which are archaic.  When you have JP Morgan, Facebook, Mitsubishi bank, Samsung and other multinationals all employing a cryptocurrency of some kind — it’s clear that not only tech savvy bitcoin enthusiast/anarchists see the value. Cryptocurrencies are going to revolutionize payments.”  

Since Bitcoin’s resurgence in the summer of 2019, many top cryptocurrencies are riding the back of a bullish market. Consequently, the launch of several new crypto card initiatives isn’t really that surprising. Despite an increasingly crowded market, Gouldman thinks that BlockCard has what it takes to outshine its competitors: 

“Unlike other crypto cards — they force you into fiat at the moment of your deposit which means you’re carrying around a glorified prepaid card that you could buy at Walgreens or Wal-Mart. They charge you for the deposit directly — undercut the value of your asset (by a lot) and then you’re stuck in cash with no easy way to get back into crypto. We allow the users to stay in crypto so they can easily withdrawal whenever they want and the process is seamless.”

Historically, the crypto community has complained about high fees and regulation issues in connection to previous efforts to launch crypto debit cards. Gouldman said that the Ternio team shares the community’s disappointment and has developed BlockCard with the goal of giving customers the best deal possible: 

“There was this thought process that the banks were ripping people off and it really soured people on large institutional players. But we traded this lack of trust in banks and other fintech companies for crypto companies that are gouging people. It’s really disgusting. If a company isn’t giving you a square deal — it’s because their values are very different than certainly ours but also — I suspect most consumers. We’re not perfect but our thesis is about lowering costs and making it more convenient. […] And creating competition is good because it’s good for markets and good for consumers. We’re pro-consumer. That’s who we are and that’s who we’re always going to be.” 

In the crypto world, competition is tough, with a lot of companies vying for the top spot in a niche sector. However, Gouldman said that the spate of card launches is a sign that things are changing for the better: 

“There are a lot of great card companies out there and I’m excited for the entire industry. We won’t and shouldn’t live in a world filled with only one option; more options means consumer choice and forces innovation. The industry hasn’t seen crypto really break out for payments but it’s really about to. Write that down. Buy the t-shirt. It’s about to get real.”

Coinbase Card rolled out in six European countries

On June 11, Coinbase launched its Visa debit card in six European countries. Customers in Spain, France, Italy, Ireland, Germany and the Netherlands will be able to sync the cards to their Coinbase accounts to spend their cryptocurrencies at any merchant that accepts Visa cards. This latest offering from Coinbase comes in two formats: a mobile app for iOS or Android, and a physical card that can be used to make fiat withdrawals from ATMs. News of a European launch followed the April announcement of Coinbase Card, a service previously limited to United Kingdom customers. 

Powered by customers’ Coinbase account crypto balances, Coinbase Card allows transactions worldwide in multiple cryptocurrencies, such as Bitcoin, Ethereum and Litecoin. According to the press release, cryptocurrencies stored in users’ account are instantly converted to fiat currency at the moment of purchase. The card will also be supported by an app that enables service users to select which crypto wallets are used when spending. The app also provides receipts and transaction summaries. 

Coinbase’s European offering will also allow customers to choose which cryptocurrency to make payments with, which Coinbase converts to cash for a fee. 

At the time, news of the UK crypto debit card launch received a mixed response from online members of the crypto community. While some advocate that this is a necessary step towards greater adoption, others noted that the restriction to U.K.-based customers and reports of transaction fees could prevent the product from taking off. 

Coinbase Card is issued, authorized and regulated by the electronic money institution Paysafe Financial Services Limited. 

Coinbase cancels Shift Bitcoin debit card 

Coinbase’s previous efforts to maintain a crypto debit card service have not always been so successful. Coinbase’s Shift Bitcoin debit card reportedly ceased operations on April 11, according to an email allegedly from the Shift team that was posted on Reddit on Feb. 18. The shutdown of Shift was the latest blow to the crypto debit card sector, following a number of high-profile companies also throwing in the towel. 

Launched in November 2015, Shift was part of what initially seemed a promising new innovation: cards that allowed users to spend Bitcoin (BTC) via the existing Visa debit infrastructure. Although there are numerous companies in different countries still offering them, their much-touted global appeal has waned. 

According to the screenshot uploaded to Reddit, the Shift BTC card service terminated on April 11, 2019. The company did not give an official response stating the reason for the shutdown of the product. The company did assure current service users that the product will function as usual up until the advertised cut-off date. 

Comments on social media indicated that a lack of demand was the reason behind Coinbase’s decision to withdraw the Shift BTC card. 

Where did it all initially go wrong for BTC cards? 

While the summer of 2019 is proving to be a popular time for card launches, the market was not always so buoyant. One of the most prominent setbacks for the sector occurred in January, when Visa ended its relationship with debit card provider WaveCrest. At the time, the decision from the payment titan set the cat among the pigeons in the crypto community. The company later revealed that the relationship had been terminated due to WaveCrest violating Visa’s policies:  

“We can confirm that WaveCrest’s Visa membership is being terminated due to continued non-compliance with our operating rules. All of WaveCrest’s Visa card programmes will be closed as a result.

“Visa has other approved card programmes that use fiat funds converted from cryptocurrency in a number of jurisdictions. The termination of WaveCrest’s Visa membership does not affect these other products.”

This is not the only time that payments giants have created uncertainty for crypto debit card providers. Back in October 2018, Finance Magnates reported that both Mastercard and Visa would classify cryptocurrency and initial coin offerings (ICOs) as “high risk.” Quoting undisclosed sources, the publication reported that a ban would be applied to brokers operating from “unregulated or loosely regulated environments.” Unfortunately this description would spell disaster for many crypto debit cards, as there is no universal policy for regulating crypto payments. Consequently, many debit card companies offering crypto services would appear as not having applied the necessary due diligence to their business. 

Ex-Visa exec launches own card

Although Mastercard and Visa have a lukewarm approach to cryptocurrencies, the same cannot be said for ex-Visa exec Steven Parker, who now heads Crypterium, a crypto payment firm that announced it has shipped around 4,000 crypto debit cards since its launch.

The company, based in Estonia, launched the Crypterium Card on June 12, offering users a prepaid card compatible with several major cryptocurrencies, such as Bitcoin, Ether, Litecoin and USD Coin, along with Crypterium’s own CRPT token. 

Having delivered 3,736 cards to roughly 70 countries in the week following the product’s launch, Crypterium said it was experiencing “booming demand” on the back of the BTC price surge and fledgling bull market. Crypterium co-founder and chief operating officer, Austin Kimm, spoke to Cointelegraph through email about how crypto debit card providers had had a tough time in the past: 

“Timing is everything. Being the first is not always the best idea as the world needs to be ready to accept a shift in thinking. Many people couldn’t see the benefit of the internet when it first launched. Until now, crypto debit cards have had to fight on multiple fronts.” 

Kimm named a number of factors that had previously held back the growth of crypto debit cards, including price volatility and institutional investment domination: 

“A dramatically falling crypto market (by value) limited owner desire to spend what is probably a lot less in value than it was when they first bought or received it. Lack of trust by a wider community limiting the spread of currency. The vast bulk of Crypto owners bought their crypto as an investment, very few earned it as income (miners apart) compounding the lack of incentive to spend crypto.”

Although many still consider Visa and Mastercard to be the gold standard in terms of global customer reach, Kimm said that this belief is misplaced: 

“Many companies might say they are able to issue their cards worldwide, but it is simply not true. Visa and Mastercard have a regional strategy limiting the reach of card crypto card issuers. The history of TenX is interesting in that they had a regional issuing capability for Singapore, but shipped cards worldwide. This led to Visa blocking their services completely and in the process destroying the value of their card issuing partner wave crest holdings. This regional strategy means that all cards are being issued in the same places, USA, UK, Singapore. But where is cryptocurrency having the greatest impact? Latin America, Asia and many developing markets. The use case in developing markets is significantly greater than that in developed markets.” 

Kimm said that its strong customer base in the Asia-Pacific region influenced his decision to partner with Union Pay International: 

“They are huge in the developing markets, and they have no regional issuance restrictions. That means that with one single partnership, Crypterium can issue cards to any citizen in any country in the world (we still require usual KYC information) reaching those users that need us most and whom everybody else has ignored. Users that will want to use the card for everyday transactions.”

Wirex 

After the initial fiasco involving Visa cancelling its working relationship with WaveCrest in January, many companies found themselves in the awkward position of attempting to offer crypto debit card services without actually having a card provider themselves. One company, Wirex, found itself this predicament, however, due to the fact that the company had begun to seek out relationships with other card providers prior to WaveCrest’s collapse, Wirex soon landed on its feet. Having ridden out the whole debacle, Wirex co-founder Dmitry Lazarichev spoke to Cointelegraph about the intricacies involved in launching a crypto debit card: 

“There are several challenges when trying to launch a crypto supported card in every country. First and foremost, although over-simplifying its classification, the entity issuing the card and accounts should be licensed by the appropriate local regulator as an e-money/money transmitter institution or the local regulatory equivalent. 

“Second, a ‘BIN sponsor’ is required — that is a company which holds principal membership with a card payment network – Visa and Mastercard being the best-known and having widest coverage. In January 2018, WaveCrest ceased operating under Visa’s network, which essentially stopped all companies overnight who relied on WaveCrest’s card services. Wirex was one of very few companies, if not the only one, to find another card issuer and BIN sponsor, in Contis Financial Services.” 

Lazarichev added that gaining approval as an authorized agent of Contis, along with successfully passing a number or due diligence tests, gave their reputation a boost after the initial knockback with WaveCrest:  

“We had been approved as an authorised agent of Contis, an FCA e-money license holder, which helped in terms of credibility to secure the card issuance. This required thorough checks of our policies for KYC [Know Your Customer] and AML [Anti-Money Laundering] purposes, specifically processes and controls. We successfully passed the audit for PCI- DSS which we were awarded later during the year (we are level 1 certified — the highest in the industry). We are not ICO funded. Traditional institutions are historically wary of working with ICO funded companies.”

Australia’s bullish environment proves stable for crypto cards 

Despite the struggles facing many crypto debit card companies in Europe and beyond, BTC.com.au launched its own Bitcoin card. Australia, famous for its bullish approach to crypto, has proven to be a healthy environment for this latest crypto venture. BTC.com.au CEO Danny Ariti spoke to Cointelegraph, stating that BTC.com.au has seen an increase in customer demand for the product since its official launch last year: 

“We’ve personally seen a massive uptake and interest in our cards since officially launching the program. We believe this to be the result of making the card an easy and intuitive product with a focus on removing many of the pain points associated with other cash out options. Cards can be loaded with multiple coins with support for additional coins constantly being added, funds are instantly loaded onto the card when a transaction is made – there is no waiting for clearing times that you’d see with regular cash out options, all made more appealing to users with cards operating outside of the traditional banking system.”

The BTC.com.au CEO emphasised that a lack of crypto understanding is partly to blame for the lack of more widespread adoption along with the current requirement to rely on third party companies and investors: 

“One of the main challenges is institutional and mainstream company pressures and restrictions. This is mainly due to a lack of understanding of cryptocurrency and blockchain technology. We don’t believe this to be limited to only a lack of understanding, but also a fear of the exceptional concept that is cryptocurrency and blockchain technology. As we rely on third party companies and institutions in order to develop these card products, their restrictions in the understanding of cryptocurrency is prevalent. An example of this, specifically within Australia, is the $999 limit attached to our card program. This is a result of insurance companies evaluating businesses operating in this space as ‘high-risk’ making it difficult for cryptocurrency-related businesses to obtain the necessary insurances to meet the regulatory requirements to have these limits raised. With widespread use of the cards, we’re hoping that this high-risk view will decrease.” 

Ariti also touched on the damage dealt to the sector by Mastercard and Visa’s policies towards cryptocurrency businesses, but remained cautiously optimistic about renewed interest from card issuers: 

“The industry has seen some curve balls thrown at it with many of the earlier card programs operating on the Mastercard and VISA networks having their programs pulled as result of cryptocurrency-related businesses being heavily scrutinised and being placed in a high-risk industry category. While in Australia we presently only have the ability to operate over the domestic eftpos card network, we’re now seeing renewed interest from card issuers potentially approving new cryptocurrency card programs back onto these global payment networks.” 

Overall, Ariti maintains a positive outlook for the future adoption of BTC debit cards, commenting that the potential benefits and ease-of-use, together with the eventual merchant acceptance of cryptocurrency, will win out in the end: 

“We are optimistic about the future of cryptocurrency cards; they allow users to easily integrate cryptocurrency into their everyday lives with little learning curve by taking a new technology and coupling it with a familiar system and user experience, essentially bridging the gap between the ‘old’ and ‘new’. This of course is all part of a much larger movement until more merchants begin natively accepting cryptocurrency, but this small stepping stone will eventually translate into a much larger revolutionary leap as adoption continues.”

Despite 2018’s prolonged bear market, it’s clear from the recent spate of launches and service expansions from existing providers that entrepreneurs in the crypto industry see opportunities to exploit a potentially fertile market. Much like any business environment, the crypto world has witnessed its fair share of egos and cut-throat competition. For now, there appears to be a certain sense of shared optimism and community spirit regarding the potential for crypto debit cards to facilitate wider adoption of digital currencies. Although more companies are throwing their hats into the ring, there are still plenty of options for card providers to attract customers, with competitive fees, increasingly diverse coin portfolios and user experience all being low-hanging fruit for potential clients. However, as both 2019’s so-called bull run enters a bout of serious volatility and Facebook’s Libra project faces mounting regulatory difficulties, it remains to be seen how institutions, customers and centralized card providers across the crypto sector will react.

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Chiliz to Provide Official Crypto of Football Club AS Rome via Socios

Italian football club AS Roma will join blockchain-based voting platform for sports through a partnership with sports and entertainment blockchain firm Chiliz.

Italian football club AS Roma will join blockchain-based voting platform Socios through a partnership with sports and entertainment blockchain firm Chiliz.

In an official announcement published on July 19, Chiliz revealed that AS Roma is joining Socios, a sports platform powered by Chiliz, in order to launch an AS Roma fan token. The dedicated tokens are set to provide fans with the right to vote in certain club-delegated decisions.

The post further explains that “the more fans vote and interact with the club through the app, the more rewards they can earn, competing for once-in-a-lifetime experiences, and gaining access to exclusive merchandise, games and leaderboards.” The voting options are set to include naming a club facility, a voice in warm-up activities at the Stadio Olimpico, among others.

The tokens will be tradeable against Socios’ native token, dubbed $CHZ. Alexandre Dreyfus, CEO & Founder of Socios, commented on the partnership:

“This partnership gives us the opportunity to educate a huge audience of mainstream consumers to the benefits of blockchain and cryptocurrencies, across Europe as well as Asia and Latin America. If you add up all the fan bases of our current partners, we’re already looking at a potential audience of hundreds of millions of sports fans and users for both $CHZ and Socios.com.”

In mid-May, Chiliz announced a strategic partnership with Binance Chain, the mainnet of major cryptocurrency exchange Binance. At the time, Dreyfus underscored that the new integration with the Binance Chain mainnet would increase Socios’ access to the liquidity pool of the worldwide Binance community.

The sports industry has been gradually embracing blockchain technology and digital currencies. Recently, major Portuguese sports club SL Benfica revealed it now accepts cryptocurrency for merchandise and tickets.

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European Central Bank Policymaker Says Stablecoins Not Cause for Alarm

ECB’s governing council Jens Weidmann has said that while stablecoins offer opportunities for prosperity, users should be vigilant.

A European Central Bank (ECB) official has stated that users should be aware of the risks associated with the stablecoins use, but not to be alarmed.

As Reuters reported on July 18, member of the ECB’s governing council and president of the Deutsche Bundesbank, Jens Weidmann said that stablecoins — digital currency designed to minimize price volatility by being pegged to another asset — offer users opportunities for prosperity, however users should be vigilant in regards of the associated risks.

Weidmann delivered his comments at a news conference at a meeting of the G7 finance ministers and central bankers. “There is no reason to be alarmed but there is reason to be vigilant,” Weidmann stated.

Weidmann also spoke in favor of Facebook’s Libra cryptocurrency project. He specifically argued that global regulators should not suppress the project in its infancy, adding that digital currencies such as Libra can be attractive to consumers in the event that they deliver on their promise.

However, a range of other policymakers do not share Weidmann’s view on Libra, with French finance minister Bruno Le Maire saying that the G7 “cannot accept private companies issuing their own currencies without democratic control.”

Brad Sherman, a United States Democratic congressman, recently claimed that “Mark Zuckerberg is sending a friend request to oligarchs, drug dealers, human traffickers and terrorists” by launching Facebook’s Libra cryptocurrency.

Notably, at the G7 conference, the Financial Action Task Force — a G7-initiated intergovernmental organization that promotes legal, regulatory and operational measures that aim to fight money laundering on a global scale — approved a new, global cryptocurrency payments network that would be similar to Japan’s proposed SWIFT.

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Binance Jersey Lists Exchange’s Own GBP-Backed Stablecoin

Fiat-crypto exchange Binance Jersey has listed a proprietary GBP-backed stablecoin, dubbed Binance GBP Stablecoin (BGBP).

Fiat-crypto exchange Binance Jersey has listed a proprietary GBP-backed stablecoin, according to a press release shared with Cointelegraph on July 19.

‘Overwhelming demand’ for stablecoin diversification

Listing of the Binance GBP Stablecoin (BGBP) confirms earlier indications that the major industry player had its sights on imminently issuing its own fiat-pegged assets, starting with a cryptocurrency 100% backed by the British pound.

Binance Chief Financial Officer Wei Zhou has given an official statement, in which he noted that:

“There has been an overwhelming demand in the market and Binance community for more stablecoin diversification, including a GBP-pegged stablecoin.”

Zhou added that increasing awareness of the utility of stablecoins and proliferating use cases for the specialized asset have all contributed to Binance’s decision to list the coin, and to press ahead with other fiat-pegged cryptocurrencies.

As previously reported, Binance first launched its Jersey-based platform in January of this year, designing the exchange to support fiat-to-crypto trading of the euro and British pound with Bitcoin (BTC) and Ethereum (ETH) across Europe and the United Kingdom.

More stablecoin fever

Ahead of revealing plans to issue its own assets of the same type, the exchange had embraced — like other major platforms such as OKEx and Huobi —  the proliferating issuance of fiat-backed stablecoins

In fall 2018, it rebranded its Tether (USDT) Market as the combined USDⓈ market to allow for the support of more trading pairs with different stablecoins offered as a base pair in fall 2018.

Earlier this month, Binance completed an upgrade to its Binance Chain mainnet — featuring a revised matching engine and enabling validators to vote on delisting trading pairs on Bianance’s decentralized trading platform, Binance DEX.

Also this month, Binance released a margin trading platform, which it similarly stated had been “one of the most requested services from our community.”

Just yesterday, stalwart if controversial stablecoin issuer Tether  revealed plans to release its stablecoin on a fifth blockchain, one based on a permissionless proof-of-stake (PoS) and open-source protocol.

A study published in June meanwhile indicated that only 66 stablecoins — 30% of total announced tokens — are actually live and operational.

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Report: Global Blockchain in Healthcare to Reach $1.7 billion by 2026

Consulting services firm Acumen Research and Consulting has forecast that the global blockchain in healthcare market will reach over $1.7 billion by 2026.

The volume of blockchain in healthcare market worldwide is forecast to reach more than $1.7 billion by 2026.

In a press release published on July 16, consulting services to information technologies firm Acumen Research and Consulting (ARC) has projected that the global blockchain in healthcare market on the global scale will reach over $1.7 billion by 2026, with a compound annual growth rate of 48.1%.

Based on geography, America purportedly dominates with the largest share in the global blockchain in healthcare market, wherein the United States is a mature market that hosts the greater adoption of smart technology in manufacturing and healthcare.

Europe is ranked second after the U.S. by virtue of strong government support and large healthcare spending. Among the major drivers of blockchain growth in the European healthcare market, ARC points out increasing expenditure on technology and the presence of multinational companies. “However, lack of security is the major factor restraining the growth of the blockchain in healthcare market in Europe,” the release further notes.

ARC names Asia Pacific as the region with the fastest growth rate in terms of blockchain deployment in healthcare thanks to the fastest growing economy and associated opportunities. In the region, Japan ostensibly has a mature market, large population, and highly skilled labor, setting it up to become an important blockchain in healthcare market.

As reported earlier in July, research and consulting firm Allied Market Research forecast that the global blockchain supply chain market will reach over $9 billion by 2025. Among key driving factors, AMR named the sector’s demand for transparency. Improved security of supply chain transactions blockchain could purportedly ensure.

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Prasos Secures Payment Institution License From Finnish Watchdog

Cryptocurrency services firm Prasos has received a payment institution license from a Finnish regulator, allowing it to offer payment services in EEA countries.

Finland-based cryptocurrency firm Prasos has secured a payment institution license via the Finnish Financial Supervisory Authority (FFSA). The news comes by way of an official announcement via its crypto exchange website on July 12.

According to the announcement, Prasos is now the third crypto firm in Europe to secure a payment institution license. According to its website, Prasos operates a crypto exchange, a crypto investment platform, and Bitcoin (BTC) ATMs.

Prasos stated that, thanks to its new license, its crypto investment platform Coinmotion is now capable of supporting a payment service in the European Economic Area (EEA), which includes EU member states as well as Iceland, Liechtenstein and Norway. 

The license will also reportedly allow Coinmotion to cooperate more smoothly with banks and traditional financial institutions, and extend its capabilities pertaining to traditional fiat money.

Prasos Oy’s managing director Heidi Hurskainen said it took around one-and-a-half years to complete the application process; Hurskainen also noted that over this period, crypto legislation within the EU has become more clear.

Looking forward, Prasos is planning to apply — again with the FFSA — for a virtual currency provider license in May, as will apparently be required when new legislation comes into effect that month.

As recently reported by Cointelegraph, two companies in the United States have received notable licensure through the Securities and Exchange Commission (SEC). Blockchain startup Blockstack announced on July 10 that it was running the first SEC-approved public token offering under Regulation A+, while the blockchain org Props announced on July 11 that it had received the first SEC-approved consumer-facing token offering, under Reg A+ as well.

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Crypto Payment Platforms Offer Working Examples — Competition Heats Up

A new deposit functionality has been rolled out following news of a Bakkt payment app and Coinbase Card’s expansion into six European nations…

Once seen by the mainstream zeitgeist as a fringe technology destined to languish on the outskirts of society, cryptocurrency today is alluring many leaders of the fintech sector by offering companies the prospect of being at the forefront of the largest financial revolution of the past century.

With mainstream society increasingly accepting Bitcoin (BTC) as a means of payment, financial firms are increasingly seeking to offer a frictionless and convenient means for consumers to make payments using crypto.  

Square introduces BTC deposits

On June 26, San Francisco-based mobile payments provider Square announced that users of the company’s Cash App can now receive bitcoin from external wallets. However, Cash App users are restricted from receiving more than $10,000 worth of BTC deposits within a seven day period.

While most Cash App users have been able to purchase or sell Bitcoin since February 2018, a functionality facilitating payments between friends and family has been notably absent, given that such has long-comprised a major value proposition underpinning the app’s fiat utility.

News of the deposit functionality was a poorly kept secret, with crypto Twitter pundit Dennis Parker announcing that Cash App had enabled BTC deposits on June 25, a week following a similar tweet from Marty Bent that also claimed the function was live. Thus, the competition for the crypto payments sector is beginning to heat up.

Platforms compete to corner crypto payments

The integration of deposit functionality reasserts Square as a major contender among the companies seeking to lead the burgeoning crypto payments sector. Revolut, a United Kingdom-based fintech startup, is offering a platform featuring payment processing services, commission-free stock brokerage and foreign currency exchange — and it announced that it had introduced cryptocurrency exchange services to its platform in December 2017. However, users are only able to transfer cryptocurrencies within the Revolut network and cannot receive deposits from external wallets.

On June 20, The Block reported that Bakkt had hired a former Google payments product strategist, Christ Petersen, to assist the company in rolling out an upcoming mobile digital asset wallet application. The app, dubbed Bakkt Pay by anonymous sources, is expected to launch by the end of 2019.

On June 11, a Singapore-based cryptocurrency payments firm, TenX, celebrated its fourth birthday by announcing it had become the first company funded through an initial coin offering (ICO) to receive an e-money license. The license was issued by the Liechtenstein Financial Market Authority, allowing the company to provide “electronic money institution” services across the European Economic Area (EEA). TenX plans to launch its prepaid Visa cards across the EEA during the fourth quarter of 2019.

Square seeks to expand presence in crypto sector

Square first announced that it was “exploring” allowing Cash App users to purchase or sell BTC  during November 2017 in response to customer demand. The announcement followed a trial of the functionality among select users, with a spokesperson stating:

“We’re always listening to our customers and we’ve found that they are interested in using the Cash App to buy Bitcoin. We’re exploring how Square can make this experience faster and easier, and have rolled out this feature to a small number of Cash App customers.”

During March of this year, Jack Dorsey, the founder of Square and Twitter, revealed that Square was seeking to hire several full-time cryptocurrency engineers and a single designer to work on open-source contributions to the Bitcoin and cryptocurrency as part of an initiative called Square Crypto. Recruits would report directly under Dorsey, with the option to receive remuneration in the form of BTC also available.

In an interview with The Next Web published on June 14, Dorsey discussed the progress of the Square Crypto venture, indicating that regulatory challenges were forcing the company to move slowly in its endeavors pertaining to cryptocurrency.

“An Internet company can launch something and it’s available around the world. Whereas with payments, you have to go to each market and pay attention to regulators. You need a partnership with a local bank. This is a very slow process in any new market.” 

Coinbase expands payment operations

On June 11, Coinbase announced that its Visa debit card had been made available to citizens from in Spain, Germany, France, Italy, Ireland and the Netherlands. The announcement also indicated that the company expects to make the Coinbase Card available to more jurisdictions in the coming months.

The Coinbase Card was launched in the U.K. during April 2019. The card’s app makes payments from the balance of a user’s Coinbase account, with Coinbase instantly converting the chosen cryptocurrency into fiat currency upon execution of the payment. Transactions incur a fee of 2.49% within European countries, however, using the card outside of Europe currently draws a 5.49% fee. U.K.-based payment processor PaySafe is the issuer of Coinbase’s cards.

According to unverifiable reports from May, Coinbase had entered into “advanced talks” to purchase pioneering cryptocurrency custody provider Xapo for approximately $50 million plus an earn-out. Xapo is estimated to hold more than $5.5 billion in assets under custody, with the company also offering an app that allows users to send BTC and fiat currencies to other Xapo users without incurring fees as well as facilitates payments to banks accounts in more than 30 countries. The report noted that Fidelity Digital Assets had also shown strong interest in purchasing Xapo.

Circle to sunset payment platform

On June 13, Circle announced that it will start winding down support for the company’s payment app during July, after five years of operations. At the time of the announcement, Circle Pay supported fee-free payments denominated in U.S. dollars, British pounds and euros, and was available to customers from the U.S., the U.K. and 27 other European countries.

The company attributed the decision to sunset the app to the emergence of stablecoins such as Circle’s USD Coin (USDC), describing fiat tokens as superior means of frictionlessly transferring fiat value between entities. By contrast, the company stated that Circle Pay “largely relied on interfacing with the traditional financial system and untokenized fiat currencies.” 

The announcement was published one month after Circle laid off 30 staff members, who then comprised 10% of its entire workforce. Circle’s CEO, Jeremy Allaire, attributed the downsizing to a response to market conditions and regulatory hurdles in the U.S.

Paxful partners with BitMart

In February 2019, peer-to-peer (P2P) Bitcoin marketplace Paxful announced a joint venture that saw Paxful integrated as a means of facilitating BTC payments on the global digital asset trading platform BitMart. 

The partnership will see BitMart users able to make payments using Paxful without being charged listing fees, while Paxful users will be provided the option to convert BTC into alternative cryptocurrencies using BitMart’s exchange. Both companies expect that the agreement will bolster liquidity on their respective exchange platforms.

At the time, Ray Youssef, the CEO and co-founder of Paxful, stated: “We’re excited to integrate with BitMart in efforts to bring more trading options to emerging markets. It has always been our mission to provide financial freedom worldwide and we see this as the next big step in the financial revolution.”

The founder and CEO of BitMart, Sheldon Xia, emphasized that the partnership will significantly expand the number of ways by which the exchange’s users can purchase BTC, stating: 

“With this partnership, investors will now have direct access to multiple payment approaches including bank transfers, gift cards, debit/credit cards, and cash deposits, lowering the barriers to entry for new adopters of digital currency investment.”

BitMart currently has a user base of more than 600,000 and a reported 24-hour volume of approximately $1.18 billion, while Paxful has hosted approximately $20 million worth of bitcoin trades on a weekly basis for the last 12 months.

Centralization vs. adoption

While the proliferation of cryptocurrency payment platforms is undoubtedly pushing the ecosystem toward mainstream adoption, popular payment apps could prove to be a centralizing force upon the crypto community as a handful of major companies compete for consumer loyalty.

However, the increasing presence of large financial corporations within the cryptocurrency economy may create pressure on lawmakers to provide clear guidelines pertaining to crypto, with the prevalence of an unclear or exclusionary regulatory apparatus comprising the primary barrier to a rapid and global expansion of the cryptocurrency payments industry.

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Italy to Lead European Blockchain Partnership Until July 2020

Italy, Sweden and the Czech Republic to preside over the European Blockchain Partnership promoted by European Commission.

Italy, Sweden and the Czech Republic will share the next one-year presidency of the European Blockchain Partnership, Cointelegraph Italy reported on July 9.

Following a meeting of the European Blockchain Partnership today in Brussels, the three countries took on the one-year presidency, which will last from July 2019 to July 2020.

Marco Bellezza, Legal Advisor to Minister Di Maio for communications and digital innovation and Coordinator of the Italian delegation of the EU Blockchain Partnership, said:

“The Italian Presidency of the EU Blockchain partnership is a first acknowledgment of the activity carried out on this front on the impulse of the Minister Luigi Di Maio, with a view to giving Italy a leadership role in the European projects on Blockchain. This is a unique opportunity to further promote the knowledge and use of this technology for the benefit of citizens and businesses by strengthening cooperation within the EU.”

Italy joined the European Blockchain Partnership last September. The partnership is an entity promoted by European Commission five months earlier as a “vehicle for cooperation amongst Member States to exchange experience and expertise in technical and regulatory fields and prepare for the launch of EU-wide [blockchain] applications across the Digital Single Market for the benefit of the public and private sectors.”

In February, the Italian House of Representatives approved a bill defining distributed ledger technologies (DLTs) such as blockchain. At the time, Maria Laura Mantovani, a member of the Italian Parliament in the Movimento 5 Stelle party, told Cointelegraph Italy that a favorable use case for blockchain is its application in online voting.

Last month, the Italian Banking Association announced that Italy’s banks will integrate DLT into internal processes to boost settlements. The deployment of blockchain is also set to improve transparency in transactions between banks and efficiency of communication between counterparties.