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Binance Reveals Liechtenstein-Based Fiat-To-Crypto Exchange

In a recent move, Binance has partnered with Liechtenstein Cryptoassets Exchange (LCX) to launch a partnership fittingly named Binance LCX. As per a press release posted on August 16th, the collaboration between the two entities will be launching a fiat-to-crypto portal in Liechtenstein. 

Binance’s “experienced team” will take a key role in providing and maintaining the exchange infrastructure, while Binance LCX will take the reins for customer support, legal compliance and due diligence, KYC, AML and communication with local governmental figures/regulatory bodies. The entity spawned as a result of the partnership intends to build a team of 10 to 15 individuals to support the exchange and will be situated at its Liechtenstein office.

The fiat-to-crypto exchange will offer support for Swiss Francs (CHF) and Euros (EUR), coupled with “major cryptocurrency pairs.” While the two firms have not released an extensive list of pairs, it is widely speculated that the new exchange will support BTC, ETH, and XRP at the bare minimum. The latter cryptocurrency noted may be a surprise to some, as the regulatory state of this asset is still up in the air. However, recent tweets from Michael Arrington, an XRP proponent and the co-founder of TechCrunch, and Binance CEO Changpeng Zhao have led some to believe that XRP/EUR and XRP/CHF support is likely.

The newly-established firm also noted that it will add more trading pairs as time moves on, with planned pairs being subject to regulatory approval/disapproval. Changpeng Zhao, or CZ as he is better known by the cryptocurrency community expressed his excitement for this venture, stating:

I believe Binance LCX will create a sustainable and reliable fiat-crypto gateway for professional and regular investors alike. I hope Binance LCX will drive new standards for usability and compliance for the blockchain industry, and we are very excited to bring the relevant experience and best practices to grow our team in Liechtenstein

In a similar comment, LCX CEO Monty Metzger, the primary executive at the other end of the partnership, also added that his firm is thrilled to join hands with Binance in this move. While many governments are hesitant to openly endorse cryptocurrency-related companies, individuals or ventures, Liechtenstein’s Prime Minister issued a welcoming statement and even made an appearance at the grand unveiling of the Binance LCX office.

Liechtenstein has quickly proven itself to be a “crypto haven,” with the regulatory environment surrounding this nascent asset class being rather lax. The small European country has begun to see a large influx of crypto-related companies, as some projects seek crypto-friendly banking relationships. Taking this into account, it is clear to see why LCX wrote that “Liechtenstein is the ideal location” for this new exchange.

As reported by Ethereum World News previously, Binance made a similar announcement in June, launching its first fiat-to-crypto exchange in Uganda. So although the global roll-out may be slow, it has become apparent that Binance is ready to tackle the lack of fiat support in exchanges worldwide with its own platforms.

Photo by Henrique Ferreira on Unsplash

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Mastercard Secures Patent To Close The Gap Between Credit Card Payments And Crypto

On Tuesday, it was announced that Mastercard had just secured a patent that will allow for the financial services firm to link crypto assets and fiat bank accounts.

Mastercard Wins Crypto-Related Patent

CNBC recently reported that Mastercard now has a patent that will protect its proprietary method of building a bridge between “blockchain-based assets and fiat currency accounts.”

Firstly, Mastercard brought attention to the fact that there has been an increase in cases where consumers, who “value anonymity and security,” use cryptocurrencies instead of government-issued fiat.

However, the patent expressed worries about how blockchain systems can be relatively inefficient and questionable, with companies/processors accepting crypto payments not knowing who is at the other end of the transaction.

Additionally, the patent called out the inefficiency of the Bitcoin blockchain, pointing out that Bitcoin transactions take ten plus minutes for a block confirmation, while centralized digital payments are nearly instantaneous.

Drawing attention to the Bitcoin block time, the patent document noted:

It often takes a significant amount of time, around ten minutes, for a blockchain-based transaction to be processed, due to the computer processing time and resources required to verify and update the blockchain. Conversely, traditional fiat payment transactions that are processed using payment networks often have processing times that are measured in nanoseconds.

Details on the solution to this problem were rather scant, with the patent not outlining the exact method in which Mastercard could address the aforementioned issues.

However, the patent did mention the management of “fractional reserves of blockchain currency,” indicating that the financial service firm is looking to allow Mastercard consumers to pay for items with their credit card backed by a fraction of a consumer’s crypto holdings.

CNBC also pointed out that this new system would help to secure crypto payments, and would “use evaluating risk algorithms (used in credit cards) to evaluate the potential for fraud.”

Writing to CNBC, Seth Eisen, Mastercard’s senior vice president of communications, noted:

We’re consistently looking at ways to bring new thinking and new innovations to market to create value for us and our customers and cardholders.

Eisen later added that just because a patent was filed and subsequently accepted, doesn’t guarantee that Mastercard will be bringing a fiat-crypto product to market any time soon.

Tom Lee Sees Mastercard News As A Bullish Signal

Nonetheless, Tom Lee, the co-founder and head of research at Fundstrat Global Advisors, has called this patent a bullish sign.

This should come to no surprise, as Lee has long been held as one of the most prominent Bitcoin bulls, calling for Bitcoin to hit $25,000 by the end of the year at least once every few months.

Speaking on the CNBC ‘Fast Money’ segment, the Fundstrat analyst stated:

Something like the Mastercard news is postive becuase it’s really validating the idea that digital money, or blockchain-based money, is a valid form of transaction.

It isn’t currently clear what will result of this patent, but many cryptocurrency proponents are hopeful that a gargantuan firm like Mastercard will finally release a product related to cryptocurrencies or blockchain-related technologies.

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Binance To List Euros for Crypto-Fiat Operations

Binance, the most important Exchange in the world according to trading volume, would be close to offering its users the possibility to trade cryptos with a Euro pair

The use of crypto-fiat trading pairs is something that many exchanges try to avoid due to fear of regulations; however, many users repeatedly requested this option to freeze their funds or carry out other financial strategies.

It should be noted that Binance recently announced that it would move its headquarters to Malta, a country with a crypto-friendly policy, making easier the legal use and adoption of Euros for crypto-fiat trading.

It is also important to note that the Binance team has posted some recruiting advertisements on Twitter to open offices around the world. Another reason for the Binance move was the harsh Asian regulations, especially in Japan, a country with which it had several strategic talks that proved unsuccessful.

“CZ”: CEO of Binance

In telephone conversations with Bloomberg, Zhao Changpeng or “CZ,” CEO of Binance, announced that they are making all the necessary arrangements to enable ASAP the first crypto-fiat pair of the famous Exchange.

Until now, the closest thing to this type of operation was the “freezing” of cryptos using the USDT pair, a stable coin that has recently been the subject of controversy due to its alleged lack of FIAT support.

According to Bloomberg, CZ’s statements suggest that Binance’s expansionist plans are giving very positive results:

“Founded in July, Binance made at $150 million profit in the first quarter, with daily trading averaging between $1.4 billion and $1.5 billion, Zhao said. The company has 9 million users, he said, compared with more than 2 million at the start of the year.”

This data is in sharp contrast to the behavior of the cryptocurrency market, which has been declining, especially during 2018, with a significant fall in the general market cap. Bitcoin alone has lost more than half its value.

Euros Are Just The First Crypto-Fiat Pairs

However, despite the problems, Binance seems to have hit the nail on the head with a series of policies and strategies that have made it extremely popular with enthusiasts and prestigious traders.

Binance plans to open offices in other parts of the world, focusing mainly on the European and Asian markets, according to statements by its CEO:

“Zhao said that Binance will soon receive an exchange license from Jersey in the Channel Islands, and plans to open an office there with as many as 100 staff. The company is also in talks with authorities and banks in Taiwan, he said.”

So far there is no definite date; however, it is expected that the pair will be enabled soon since once all legal requirements are met, the technical aspect is easier and less bureaucratic to work on.

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There is No Future Competition from Central Banks for the Current Digital Currencies: Vitalik Buterin

Ethereum co-founder: Central Banks Are a Long Way From Digital Currency

The creator of Ethereum – the second largest blockchain network by market capitalization, Vitalik Buterin added that there is no need for worrying when it comes to competition from any central bank issuing a digital currency in the world.

In his eyes, the possibility of a rivalry for Bitcoin or Ethereum by fiat currencies that are presented in their digital versions by central banks and countries is of very low levels:

“If there is [such a launch] it will be a server and a bunch of marketing buzzwords to make it look like a blockchain,” Buterin said, suggesting central banks lack the ability to create a proper blockchain.

His outspoken comments are in keeping with Buterin’s reputation as an iconoclast—a reputation he reinforced by turning up to speak at the suit-and-tie Toronto event in a unicorn sweatshirt.

Buterin’s remarks come at a time when the popular of digital currency has exploded as an asset class: the value of Bitcoin and Ethereum have respectively increased about five-fold and thirty-fold in 2017, while the overall market for such currencies is worth well over $100 billion.

The gold-rush has coincided with the rally of interest in blockchain Tech, which right now is finding adaptation and being used by various industries – banks, retailers, diamond merchants as a method to record transactions.

Banks, in a global scale, like the Bank of Japan, or Canada – have started to experiment around the blockchain technology to create the digital form of their fiat traditional currencies which could represent a better way to transfer funds or manage their money supplies.

In the case of the United States, some predict the Federal Reserve will create a so-called “Fedcoin” as a digital asset, though a Fed official recently said there currently no plans to do so. Meanwhile, former Fed Chair Ben Bernanke on Monday lashed out at bitcoin, though he also praised blockchain technology.

If a surge of blockchain-based national currencies do arrive on the scene, it raises the question of whether digital assets like bitcoin or XRP (another popular crypto-currency) will still be used as a means for transferring funds across borders.

However, as the Ethereum founder explained – its all just theoretical discussion, concluding that bitcoin and ethereum will be dominant in the crypto-world for the foreseeable future.

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