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Luxembourg’s Financial Regulator Issues Warning Against Cryptocurrencies and ICOs

The Luxembourg Financial Regulator CSSF issued a warning against investments in cryptocurrencies and ICOs (Initial Coin Offering), Cointelegraph auf Deutsch reported today, March 17.  

In the official warning the authority notes that cryptocurrencies are not backed by any central bank, and warns against the volatility of virtual currencies, stressing that deals are often not entirely transparent and business models are incomprehensible. It warned of the absence of consumer protection and the risk of theft, since cryptocurrency exchanges may be vulnerable to hackers. Furthermore, according to the regulator, information about cryptocurrencies is “often incomplete, difficult to understand or does not reflect the risks of cryptocurrencies”.

The CSSF specifically hones in on their perceived risks of investing in ICOs. According to the authority, the ICO model is unproven and lacks verifiable information about the tokens and the money collected.

The Luxembourg regulator also made a point of saying that it was not concerned about Blockchain technology in use cases apart from cryptocurrencies, noting that Blockchain “could bring certain advantages in their use in the financial sector and in different innovative projects.”

In addition to the CSSF, other European government regulators have also expressed skepticism about cryptocurrencies and ICOs recently. In Fall 2017, the German Federal Financial Supervisory Authority (BaFin) indicated that the purchase of coins or tokens sold in ICOs entails significant risks for investors and described ICOs as “highly speculative investments”. In November 2017, the European Securities and Markets Authority (ESMA) also warned investors about the high risks of the ICOs.

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Cryptocurrency Exchange BitFlyer Launches New EU Branch

Japan-based bitcoin exchange operator bitFlyer has set up shop in Europe, having already expanded to the U.S last year.

The exchange announced yesterday that it had received a payment institution (PI) license to operate its services in the European Union and is initially seeking to attract professional, high-volume traders – a sector it sees as underserved in the EU.

In an announcement, Andy Bryant, COO of the new European branch of the exchange, said:

“Through our web interface or API, traders can get up and running quickly and benefit from some of the most robust systems, highest speeds and an interface designed with their specific needs in mind.”

BitFlyer is currently the sixth largest exchange by bitcoin trading volume (BTC/JPY), according to data from CoinMarketCap. Further, it claims to be the first bitcoin exchange to be regulated in Japan, the U.S. and, now, Europe.

The payment institution license was granted by Luxembourg regulator, the Commission de Surveillance du Secteur Financier (CSSF), and the Luxembourg House of Financial Technology Foundation (LHoFT).

Luxembourg’s Minister of Finance Pierre Gramegna was quoted as saying, “We’re delighted that one of the most successful Japanese startups chose Luxembourg as their EU platform.”

Kicking off with just the BTC/EUR trading pair, bitFlyer indicated it is also planning to add more cryptocurrency options, including litecoin, ethereum, ethereum classic and bitcoin cash, later this year. To bring in new EU-based customers, the branch has rolled out zero percent trading fees as an introductory offer until the end of February.

BitFlyer launched officially in the U.S. last November, after receiving approval from regulators including the New York State Department of Financial Services.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in bitFlyer.

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The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

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Cambridge Blockchain Joins Government-Backed DLT Group in Luxembourg

Digital identity startup Cambridge Blockchain is opening a new office in Paris.

The Massachusetts-based firm is setting up shop at at a startup campus founded by Partech Ventures, which invested in Cambridge Blockchain’s $2 million funding round earlier this year.

That the startup would move to establish a more solid presence in Europe is perhaps unsurprising. Cambridge Blockchain has looked to the financial sector as the primary market for its digital identity solutions, with a particular focus on Europe.

In May, Cambridge Blockchain announced that it was working with LuxTrust, a major digital identity firm backed by the government of Luxembourg, on a new blockchain-powered platform. That relationship with Luxembourg is deepening, as Cambridge Blockchain today said that it was joining the Infrachain initiative, a nonprofit group formed earlier this year by a number of companies with the backing of the country’s government.

Other members include LuxTrust and professional services firms KPMG and Deloitte, among others. With Cambridge Blockchain’s inclusion, that effort has now expanded beyond Luxembourg.

“Thanks to the support of Partech Ventures and Infrachain, we are positioned to tackle the banking industry’s greatest threat: the cost of regulatory compliance,” Matthew Commons, Cambridge Blockchain’s CEO, said in a statement.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Cambridge Blockchain.

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The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at [email protected].