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German Regulator Greenlights $280 Million Ethereum Real Estate Bond

Fundament Group announced that the German Federal Financial Supervisory Authority approved its Ethereum-based real estate bond.

The German Federal Financial Supervisory Authority (BaFin) approved an Ethereum-based real estate bond of security issuance firm Fundament Group. The company announced the news in a press release shared with Cointelegraph on July 23. 

Regulated real estate bonds on the Ethereum blockchain

The given bond backed by a portfolio of properties in major German cities with an issued volume of 250 million euros ($280 million). The firm’s solution reportedly leverages standardized and regulated financial instruments to build a real estate-backed asset that can be traded worldwide independently of banks.

Providing liquidity to real estate investments through tokenization

The company hopes that the project will bring more liquidity into the traditionally illiquid real estate market. Furthermore, this is also reportedly the first BaFin-approved real estate backed security token. Fundament Group co-founder Florian Glatz commented on the development, saying:

“As the first company to receive approval from the German Financial Market Authority for a blockchain-based real estate bond, we are excited to enter the sales process for the Real Estate Security Token, while already preparing the tokenization of other highly attractive assets.”

The company allegedly allows its customers to withdraw and deposit funds in Ether (ETH) and euros. Lastly, the release specifies that the firm focuses on properties located in major urban centers in Germany, including Berlin, Hamburg, Rostock, Jena and Fulda.

German authorities also showed openness towards blockchain and cryptocurrency. In a recent statement, the central bank noted that the potential benefits of Facebook’s Libra should not be suppressed despite regulatory uncertainty and potential risks.

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Germany’s Central Bank: Gov’ts Should Be Neutral on FB’s Libra

Germany’s central bank said that potential benefits of Facebook’s Libra should be made possible despite associated risks.

Potential benefits of Facebook’s Libra should be made possible despite the existing regulatory uncertainty and associated risks, Germany’s central bank said.

In a monthly bulletin called “Crypto tokens in payment transactions and in securities settlement” released on July 22, the Bundesbank evaluated potential advantages and shortcomings of central bank digital currencies (CBDCs), as well as stablecoins such as Facebook’s widely-discussed crypto project Libra.

Regulation of Libra should be as technology-neutral as possible, Bundesbank says

In the document, Germany’s central bank stated that global innovative projects such as Libra should not be made impossible as they aim to increase prosperity and transaction costs.

However, global regulators should ensure that a number of important standards such as security, monetary and financial stability are not negatively affected, and payment transactions are not compromised, the bank wrote. The Bundesbank stressed that competition in the European payments should be ensured to stay.

At the same time, the regulation should not hinder innovation, the bank emphasized:

“ […] a government should be as technology neutral as possible, so that the benefits of innovation can be made available for the financial sector.”

The bank added that a number of important technical, organizational, and regulatory questions regarding Libra Association is still open, while there are also some speculative considerations for its potential impacts. As such, the bank stated that global supervisory authorities and central banks should keep carefully monitoring and evaluating the project.

CBDCs and stablecoins can impact central banks

In the document, the Bundesbank considered CBDCs and stablecoins as two major recent developments that can affect the role of global central banks. 

Outlining potential general advantages presented by CBDCs, the Bundesbank said that it sees no need of CBDCs for non-banking entities, as they can be used by them as a substitute for commercial bank money, which in turn could have a negative impact on credit supply.

The new crypto-related statement by the Bundesbank echoes recent reports on Bundesbank President urging global regulators to not suppress projects such as Facebook’s Libra in their infancy. Jens Weidmann reportedly stated at a G7 event that regulators should be careful to avoid inadvertently suppression of innovative concepts before all the details have been clarified.

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Bundesbank Head Says Don’t Suppress ‘Innovative Concepts’ Like Libra

Bundesbank President Jens Weidmann spoke in favor of Facebook’s Libra during a recent G7 event, a report says.

The head of Germany’s central bank Jens Weidmann spoke in favor of Facebook’s Libra during a recent G7 event.

Bundesbank head warns against suppressing innovation

Weidmann, Bundesbank President and the Governing Council member of the European Central Bank, argued that global regulators should not suppress the project in its infancy, according to an email newsletter in a shared by eToro senior market analyst Mati Greenspan on July 19.

According to the letter, Weidmann reportedly supported the Libra project during a recent G7 meeting, arguing that digital currencies such as Libra can be attractive to consumers in case if they deliver what the promise.

The head of the Bundesbank urged the global community to allow time to initiatives like this, emphasizing the nascent stage of the Libra’s development and warning against inadvertently suppressing innovative concepts before all the details have been clarified.

Previously, Bundesbank’s representative Burkhard Balz claimed that crypto does not pose a threat to financial stability.

G7 cannot accept private companies issuing currency

Meanwhile, G7 finance ministers have recently warned that digital currencies such as Libra pose risks for the world’s financial system if they are not regulated tightly. During a news conference on July 18, French finance minister Bruno Le Maire reportedly said that G7 “cannot accept private companies issuing their own currencies without democratic control.”

Weidmann’s new supporting word for Libra somewhat contradicts with some of his previous remarks about digital currencies. In late May, Weidmann expressed concerns over the potential risks of digital currencies, including destabilization of the financial system. At the time, the official said that easy access to digital currencies could speed up a collapse of lenders, which would fundamentally alter the business model of banks even in a good economic environment.

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Israeli Citizen Accused of Stealing Over $1.7 Million in Crypto

A Tel Aviv resident has been arrested and accused of international phishing fraud, using a collection of websites to steal cryptocurrencies.

Eliyahu Gigi, a 31-year-old from Tel Aviv, has been charged with stealing over $1.7 billion in a variety of cryptocurrencies. Gigi allegedly stole BTC, Ethereum, and Dash from users in the Netherlands, Belgium, and Germany. 

Lawyer Yeela Harel of the cyber department in the State Attorney’s Office filed charges against Gigi on July 17, according to a report published the same day by Globes. Gigi has reportedly been charged with crimes including theft, fraud, and money laundering, among others.

According to the report, Harel’s indictment claims that Gigi set up a network of scam websites to steal crypto through the use of malware. He is accused of using a number of methods to cover his tracks, including employing remote servers and shuffling the stolen funds around through different wallets. 

Gigi and his brother, a demobilized soldier, were reportedly arrested in June. The pair were suspected of being involved in international phishing fraud, but Harel moved to indict only Gigi.

The police apparently first began to look into Gigi when they received information suggesting that he was dropping scam links on digital wallet forums. According to the report, Gigi would link to a website that appeared to have a downloadable wallet manager. However, Gigi appeared to have collected and misappropriated users’ account credentials to steal their crypto.

As previously reported by Cointelegraph, an employee at Microsoft was recently arrested on suspicion of stealing $10 million in crypto. Volodymyr Kvashuk allegedly stole and flipped crypto gift cards for Microsoft products, selling them for a profit to customers over the Internet.

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EY Spearheads Blockchain Tracking Platform for German Logistics Firms

The platform is estimated to automate around 75 million processes each year and save about 12 million sheets of paper per year.

German logistics firms partner to jointly create a blockchain tracking platform, local news outlet Tiroler Tageszeitung reports on July 16.

Per the report, logistics firms LKW Walter, GS1 Austria, and its EDITEL Austria subsidiary, Bundesvereinigung Logistik Österreich, Deutsche Bahn subsidiary DB Schenker, and WU Vienna are participating in the project. Furthermore, big four auditing firm Ernst & Young (EY) is managing the initiative.

The system will reportedly see freight documents being digitized on the blockchain with the aim of reducing costs and resource consumption while ensuring higher transparency standards, and protect against counterfeiting. The project will be developed with attention to compliance with the international standard for the electronic consignment note, e-CMR.

The outlet cites estimates that the platform will automate around 75 million processes each year and save about 12 million sheets of paper per year. Michael Schramm, head of the German-speaking EY Blockchain competence center, commented on the project:

“Blockchain holds enormous potential for all industries, especially those with many standardized processes such as transport and logistics – if you use the technology properly.”

The analysis and pilot phases of the development are reportedly scheduled to begin later this year and last until the end of 2019. According to EY, after the pilot stage will be concluded, the initiative is expected to result in a commercial platform next year.

As Cointelegraph reported earlier this month, maritime shipping firms Ocean Network Express and Hapag-Lloyd have joined blockchain tracking platform TradeLens.

In June, also Russian authorities have signed an agreement with Danish logistics giant Maersk to officially launch blockchain shipping platform TradeLens.

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German Central Bank: Cryptos Are Not a Threat to Financial Stability

Central Bank of Germany representative Burkhard Balz says that cryptocurrencies do not pose a threat to financial stability.

Central Bank of Germany representative Burkhard Balz said that cryptocurrencies do not pose a threat to financial stability during a talk at the European Parliament reported a post published on the institution’s website on July 9.

Burkhard Balz, Member of the Executive Board of the Deutsche Bundesbank, stated that “crypto-tokens currently do not pose a risk to monetary or financial stability.” Furthermore, he also noted that “gaps may occur where they fall outside the scope of regulators’ authority or where there is an absence of international standards.”

This idea is in line with the claims of Spanish law enforcement representatives, who pointed out that Bitcoin ATMs show a gap in European Union’s Anti-Money Laundering (AML) regulations, as Cointelegraph reported earlier today. Balz also warned in his talk that any increase in the popularity of crypto assets warrants close scrutiny. Still, he also expressed high hopes for digital transformation brought on by artificial intelligence, distributed ledger technology, and cloud services, saying:

“We are not talking about “evolution,” about banking adapting to the wants and needs of a digital generation – we are talking about a true “disruption” that may change the financial sector for good.”

Last week European Central Bank executive board member Benoit Coeure said that financial regulators must act fast to prepare for Facebook’s Libra stablecoin.

As Cointelegraph reported last month, Australia’s central bank said Bitcoin and cryptocurrencies would remain outside mainstream payments.

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As Deutsche Bank Axes 18,000 Jobs, Bitcoin Offers a Powerful ‘Plan ฿’

Deutsche Bank winding down its investment banking arm paints a bleak picture of traditional finance at a time of booming growth for bitcoin and crypto.

Deutsche Bank taking an axe to 18,000 jobs and winding down its investment banking arm paints a bleak picture of traditional finance at a time of booming growth for crypto.

As reported by Reuters on July 7, Deutsche Bank’s momentous decision will entail the bank exiting its equities sales and trading business — which had reportedly raked in €1.96 billion ($2.20 billion) in revenue in 2018. 

While retaining a small-scale equity capital markets business, DB also plans to rein in its fixed-income business — in particular, its rates trading desks — Reuters notes.

The move carries an expected toll of around 18,000 jobs and a 40% shrinkage of risk-weighted assets currently allocated to DB’s trading operations — representing €74 billion ($83.06 billion), and €288 billion ($323.5 billion) of leverage exposure as of Dec. 31, 2018, according to Reuters.

In a tweet published July 7, Morgan Creek Digital Assets co-founder Anthony “Pomp” Pompliano interpreted the news as a robust endorsement for bitcoin (BTC) adoption, remarking:

“Deutsche Bank plans to fire almost 20,000 employees. Bitcoin has no employees to fire. DB is built for the old world. And Bitcoin is built for the new world.”

In his own analysis of the ailing banking sector, eToro analyst Mati Greenspan proposed that DB’s move represents a broader policy failure by the stewards of global monetary policy, noting:

“This is the effect of prolonged zero interest rate policy. Central Banks are making it impossible for investment banks to turn a profit. Even the riskiest bonds around are yielding <2%. How can they be expected to make money from that?”

Greenspan’s opinion has today been echoed in rolling news from major U.K. broadsheet The Guardian, which in addition points to DB’s encumbrance with billions of euros of derivatives contracts. Many of these will purportedly be turned over to its newly-created “bad bank,” —  a so-called Capital Release Unit, tasked with managing the wind-down of DB’s investment banking assets.

Notably, Jim Reid — head of global fundamental credit strategy at DB — had remarked that central banks’ dovish policies were positively impacting “alternative” currencies such as bitcoin while hurting investment banks. He said:

“if central banks are gonna be this aggressive, then alternative currencies do start to become a bit more attractive.”

Moreover, the fact that DB’s decision broke on a Sunday points to yet another Achilles Heel for traditional finance, according to VanECK digital asset strategist and MVIS director Gabor Gurbacs, who tweeted:

“Crypto markets are at least open 24/7 to act on news. In traditional markets some just have to wait until market open to get hammered on news that are public information. To me this appears to be a serious market structure problem! It’s time for plan ฿!”

As one former equities broker today told BBC radio, the Deutsche Bank revelation is viewed by many as an inevitable and belated wake-up to the aftermath of the 2008 crash — the very cataclysm that Satoshi wryly alluded to within the bitcoin genesis block over a decade ago.

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BaFin Head Urges Global Bank Standards in Response to Facebook’s Libra

BaFin’s president Felix Hufeld has urged regulators to develop standards in response to Facebook’s forthcoming cryptocurrency, Libra.

The head of the German Federal Financial Supervisory Authority (BaFin) has urged regulators to develop standards in response to Facebook’s forthcoming cryptocurrency, Libra, Cointelegraph Deutschland reported on June 26

Speaking at the International Club Frankfurter Wirtschaftsjournalisten, BaFin President Felix Hufeld stressed that policymakers and regulators should not stand aside on the issue of Facebook’s Libra as considerable control questions could arise once the coin comes into use.

Hufeld hinted at possible regulatory measures introduced by BaFin, but also pointed to the need for an international regulatory framework:

“We certainly can not just watch. We will have to respond appropriately in any way. I can only hope that we will succeed in developing at least European, if not globally, basic standards.”

Additionally, Hufeld warned about the dangers posed to banks by cheap money, stating that a further reduction of interest rates would put even more pressure on banks. This could purportedly prompt banks to merge or change their business models.

Other European financial market players have also spoken on Libra’s possible effect on the economy. Earlier this week, Bank of France Governor Francois Villeroy de Galhau said that the Libra stablecoin must comply with Anti-Money Laundering regulation and seek banking licenses if it offers banking services.

An alternate member of the Swiss National Bank’s governing board, Thomas Moser, said at the Crypto Valley Conference in Zug that “Overall I think it’s [Libra] an interesting development and I’m pretty relaxed about it. […] They have clearly indicated that they are willing to play according to the rules, they have been contacting the regulators.”

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Deutsche Bank: ‘Aggressive’ Central Banks Making Bitcoin More Attractive

Deutsche Bank lead strategist predicted that interest rate cut by the Fed will make cryptos more attractive as opposed to fiat.

The potential interest rate cut by the United States central bank is apparently one of the reasons for the recent surge of bitcoin (BTC), Deutsche Bank exec Jim Reid said in an interview with CNBC on June 26.

Reid, the head of global fundamental credit strategy at Deutsche Bank, stated:

“if central banks are gonna be this aggressive, then alternative currencies do start to become a bit more attractive.”

Reid referenced a recent speech by Fed’s chairman Jerome Powell, who said yesterday that the central bank is considering a cut of interest rates amidst the current economic uncertainty and inflation risks. As such, the U.S. dollar (USD) dropped versus major fiat currencies yesterday, recording a three-month low against euro (EUR), which was allegedly triggered by expectations of multiple interest rates decreases by the Fed.

Meanwhile, bitcoin has continued to hit new 2019 records of above $12,000, while its market cap surged above $220 billion with a dominance rate reached more than 60% for the first time since April 2017, as reported earlier today.

Reid also noted that the recent spike of crypto prices is partly caused by Facebook’s upcoming crypto project Libra, which white paper was released earlier on June 18. Since then, bitcoin has risen more than 30% from around $9,000 to $12,616 at press time, according to data from Coin360.

In the interview, Reid has reiterated his negative stance towards easing practices by central banks after previously claiming that the existing fiat-based currency system was unstable and nearing its end. Providing his remarks back in November 2017, in the wake of the bitcoin’s all-time high record of $20,000 in December 2017, Reid criticized continuous printing of money by banks, warning that this could lead to the end of paper money.

But the United States isn’t alone. In recent weeks, the European Central Bank President Mario Draghi also hinted at new interest rate cuts.

“Add in the May 2020 Bitcoin halving and you have the perfect storm,” tweeted Morgan Creek founder, Anthony Pompliano,” earlier this month. 

“Cut rates.

Print money.

Make BTC more scarce.”

Ironically, Deutsche Bank itself could be partially blamed for a weakening economy. The bank’s stock has been dropping to record lows over the past year.

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Germany: CDU and CSU Union to Integrate Blockchain Into Public Services

In Germany, the CDU and CSU Union is pushing to integrate blockchain technology into public services.

In Germany, the CDU and CSU Union wants to integrate blockchain technology into public services, Cointelegraph’s German-language version reported on June 25.

The CDU and CSU Union represents the centre-right Christian democratic political alliance of two parties in Germany, the Christian Democratic Union of Germany (CDU) and Christian Social Union in Bavaria (CSU).

In the original announcement published earlier today, the Union revealed that it wants to use blockchain for public service tasks such as administrative services, electronic health records, document protection, and registration.

Specifically, the CDU and CSU Union proposed the creation of a new form of company, which should be linked to an alternative commercial register. The system should enable a digital, encrypted identification, which is done by specially trained notaries.

The plans of the Union, however, go far beyond blockchain administration services. The blockchain experts of the CDU and CSU parliamentary group and deputy parliamentary group leader Nadine Schön also support the development of a state cryptocurrency.

The cryptocurrency should purportedly be realized in the form of an e-euro as a stablecoin, which — like the euro — is administered and regulated by central banks. These “should be spent via commercial bank crypto-tokens that handle them as demand deposits,” the paper said.

The European Central Bank (ECB) declined to comment claiming that “it does not comment on individual party statements.” However, a spokeswoman told Dow Jones News that digital central bank currencies are not an option for the ECB.

The new positions of the CDU and CSU parliamentary group are likely to be reflected at least in part in the Federal Government’s blockchain strategy, which is scheduled for launch this year. Previously, the Union parties had shown a more restrained attitude towards cryptocurrencies than the FDP. An article published by the CDU and CSU in April envisaged legislative changes to the blockchain area and a pro-innovation approach.