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Crypto Exchange Bittrex Cancels Its First ‘Initial Exchange Offering’

Crypto exchange Bittrex has cancelled its first Initial Exchange Offering, which it had been planning to host on its Malta-based counterpart, Bittrex International.

United States crypto exchange Bittrex has cancelled its first token sale, dubbed an Initial Exchange Offering (IEO), which it had been planning to host on its Malta-based counterpart, Bittrex International. The news was announced in an official statement published on March 14.

Earlier this week, Bittrex International had announced plans to host the IEO today, March 15,  allowing investors to use Bitcoin (BTC) to purchase “XRD” tokens, developed by international gaming data blockchain project, Raid.

In yesterday’s announcement, the exchange outlined that it decided to cancel the IEO “as a result of significant changes in the business status of RAID.” Specifically, it explained that:

“A few hours ago [on March 14], OP.GG terminated its strategic partnership with RAID, which was a vital part of the RAID project. When [we] became aware of this significant event, we did not feel that it was in the best interest of our customers to move forward with the IEO.”

Bittrex International states that it chose to act quickly, citing the challenges it faces as a crypto trading platform to remain “vigilant to ensure the integrity of our markets.” The statement added that:

“one of the hardest challenges we face in advancing blockchain adoption is to avoid the rampant fear, uncertainty, and doubt that is everywhere in this industry.”

As previously reported, Bittrex’s move to enter the exchange-hosted token sale space follows the precedent of major crypto exchange Binance. The exchange’s token sale platform Launchpad hosted the high-profile token sale for the Tron-based BitTorrent token (BTT) this January, followed by another public token sale for AI and smart contract project Fetch.AI in February.

Bittrex is currently ranked 49th largest crypto exchange globally by adjusted daily trade volume, seeing about $62.8 million in trades on the day to press time.

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Maltese Financial Regulator Appoints CipherTrace to Monitor Compliance in Crypto Firms

The Malta Financial Services Authority appointed U.S.-based blockchain security firm to assist in tracking the compliance of crypto firms.

The Malta Financial Services Authority (MFSA) has appointed blockchain security firm CipherTrace to monitor activity by crypto businesses in Malta, local news agency The Times of Malta reports on March 11.

CipherTrace is now set to be responsible for overseeing regulatory processes and audit risk management of virtual asset businesses licensed in Malta, CipherTrace CEO Joseph Cuschier explained.

The United States-based blockchain security company will assist the MFSA in combating money laundering and financing terrorism risks associated with entities involved in crypto businesses.

As previously reported, the MFSA envisions coordinating interactions with crypto-related businesses such as initial coin offering (ICO) operators and crypto exchanges through virtual financial agents (VFA agents). Bringing a bridge between crypto operators and the island’s financial regulator, VFA agents can be represented by lawyers, accountants and auditors, which are set to do the due diligence of crypto businesses.

In October 2018, the Times of Malta reported that about two-thirds of VFA agents failed crypto agent certifications, despite examiners easing the test by revising the evaluation scheme.

The MFSA is reportedly expected to grant approvals to VFA agents by the end of March 2019. Once approved, VFA agents will be able to submit applications for operators like crypto exchanges, wallets and ICOs. To date, at least 29 of prospective VFA agents have applied for a license, the article says.

Recently, the International Monetary Fund (IMF) has stated that the MFSA had critical gaps in its oversight for Anti-Money Laundering (AML) and combating the financing of terrorism (CFT) regulations. The authority urged for urgent action in order to protect the financial sector and the broader economy from money laundering and terrorism financing risks.

Earlier in March, the Times of Malta reported that blockchain firms in Malta are still facing troubles with opening bank accounts. CipherTrace CEO Dave Jevans noted that banks often turn away crypto- and blockchain-related business due to a lack of knowledge about their practices.

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Malta Digital Exchange Relocates Operations to Malta Stock Exchange Premises

The Malta Digital Exchange has announced the relocation of its offices to the Malta Stock Exchange.

Malta Digital Exchange (MDX) is moving in with the Malta Stock Exchange (MSE) in contemplation of the launch of its digital exchange division, the Times of Malta reported on March 5.

MDX is reportedly in the process of obtaining a securities license to promote a multilateral trading platform that will introduce a secondary market for digital assets trading. MDX founder and executive chairman Rick Klink said that the “move to the Maltese Stock Exchange means that we are now physically positioned to be at the heart of the next wave of institutional financial innovation.”

The move comes the wake of the International Monetary Fund’s (IMF) statement that the Malta Financial Services Authority (MFSA) has critical gaps in its supervision for Anti-Money Laundering (AML) and combating the financing of terrorism (CFT) earlier this month.

In its Financial System Stability Assessment Report, the IMF recommended to employ more resources to supervise blockchain and cryptocurrency service providers. It also pointed out the need for enhanced screening processes for beneficiary owner information and monitoring of risk-sensitive accounts, including new technologies like digital assets and e-gaming, and IIP-related funds.

Also this month, a number of legal firms and financial companies allegedly told the Times of Malta that banks were declining their applications to open accounts. The sources reportedly said that banks did not differentiate between digital currency and blockchain, though they were not always connected.

In February, the MFSA issued a consultation on cybersecurity associated with new technologies. The guidance targets professional funds that invest in virtual currencies, issuers, as well as agents and service providers for Virtual Financial Assets Act (VFAA), with latter ones acting as an intermediaries between clients and the authority.

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Report: Blockchain and Crypto Firms in Malta Face Difficulty in Finding Banking Services

Maltese blockchain and crypto-related companies are reportedly struggling to open bank accounts, as banks are purportedly declining their applications.

Blockchain companies in Malta are reportedly struggling with opening bank accounts, local news outlet the Times of Malta reported on Mar. 1.

The Times of Malta allegedly contacted a number of legal firms and financial companies, who confirmed that banks were declining their applications to open bank accounts, saying that it was beyond their “risk appetite.” The sources reportedly said that banks did not differentiate between digital currency and blockchain, though they were not always connected.

Parliamentary Secretary for Financial Services Silvio Schembri reportedly told the Times of Malta that some banks were willing to open accounts for blockchain companies, but not for cryptocurrency-related ones. Schembri said that “one should make a clear distinction between blockchain operators and crypto operators.”

Schembri is reportedly conducting awareness campaigns with financial institutions “to have a better understanding of the industry”. Schembri said:

“The general understanding is that when it comes to crypto operators, banks are waiting for operators to obtain an MFSA [Malta Financial Services Authority] license before opening their doors – which is understandable.”

Malta has established itself as a blockchain and digital currency-friendly country, and has became known as a “blockchain island.” Recently, the MFSA issued a consultation on cybersecurity, suggesting that the agency’s cybersecurity system should comply with international standards, including guidelines by the European Banking Authority (EBA). The guidance targeted professional funds that invest in virtual currencies, issuers, as well as agents and service providers for Virtual Financial Assets Act (VFAA).

Last December, Malta and six other European Union member states released a declaration calling for help in the promoting the use of distributed ledger technology (DLT) in the region. Specifically, the document cites “education, transport, mobility, shipping, land registry, customs, company registry, and healthcare” as services which can be “transformed” by DLT. The document also cites blockchain tech’s use for protecting citizens’ privacy and making bureaucratic procedures more efficient.

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IMF Recommends Immediate Action on Malta’s AML and CFT Supervision

The IMF has said that Malta does not have the proper supervision for AML and CFT and is calling for “urgent action.”

The International Monetary Fund (IMF) has said that the Malta Financial Services Authority (MFSA) has critical gaps in its supervision for anti-money laundering (AML) and combating the financing of terrorism (CFT), and is recommending “urgent action.” The news was reported by local news outlet the Times of Malta on Feb. 28.

A Financial System Stability Assessment Report was purportedly issued by the IMF on Thursday, Feb. 28, and represents an assessment of Malta’s financial system, the quality of the regulatory and supervisory framework, as well as the country’s ability to cope with financial crises.

Per the report, the IMF stated that “containing financial integrity risks is critical to financial stability. A multi-prong approach is needed to address AML/CFT deficiencies. Enhancing the AML/CFT system is required to protect the financial sector and the broader economy from the ML/TF [money laundering/terrorism financing] threats.”

According to the Times of Malta, the report noted the need for enhanced screening processes for beneficiary owner information and monitoring of risk-sensitive accounts, specifically for non-resident clients, including opaque firms, new technologies like digital assets and e-gaming, and IIP-related funds.

In regard to blockchain technology and cryptocurrencies, the report purportedly recommended to employ more resources to supervise service providers. In addition, the report highlighted “the challenges facing the MFSA [Malta Financial Services Authority] from the increased demands of supervising the growing number of licensed financial institutions in an evolving and more complex regulatory environment, as well as the need to upgrade the MFSA’s operational capacity to enable it to operate more effectively.”

Malta is renowned for its cryptocurrency and blockchain-friendly regulations and political stance. However in January, the IMF highlighted blockchain — alongside remote gaming sectors and the government’s citizenship-by-investment scheme — as being high on their list of concerns regarding possible AML compliance violations. The agency then said:

“The increasing number of financial entities under supervision, the rapid development of new products, the evolving regulatory environment and the tightening of the labor market have put the Malta Financial Services Authority under considerable strain.”

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Report: South Korean Crypto Exchanges Overtake Maltese Ones by Daily Trade Volume

A recent report by CryptoCompare shows that South Korean crypto exchanges saw $200 million more in average daily trade volumes than their Maltese competitors.

Cryptocurrency exchanges registered in South Korea have overtaken their Maltese-registered counterparts by average daily trade volume in November. This is according to a report by cryptocurrency market data provider CryptoCompare, published Thursday, Dec. 6.

The November edition of CCCAGG, a monthly crypto exchange review published by CryptoCompare, shows that South Korean exchanges, including Bithumb, Coinone, Korbit and Upbit among others, registered a combined $1.4 billion of average daily trade volume. In the meantime, their competitors in Malta had only achieved $1.2 billion.

This is a significant change when compared to the October’s CCCAGG. According to CryptoCompare, back then the combined average daily trade volume of Maltese exchanges was at $1.4 billion, whereas South Korea was lagging behind with only $840 million, followed by Hong Kong’s $560 million.

The reason behind the switch might be that in November, Bithumb — a major South Korean exchange — allegedly overtook Binance as the top exchange in terms of daily trade volume. According to CryptoCompare, Bithumb averaged at $1.24 billion last month, while Binance has only reached $641 million.

It is important to note that while Bithumb’s daily trade volume has increased significantly in November, the number of its daily visitors has visibly decreased, as per CCCAGG. CryptoCompare’s own analysts have suggested that this could point to the adoption by the exchange of some incentive programs, such as “competitions, trans-fee mining, [and] rebate programs.”

In late October, South Korea’s main financial regulator, Financial Services Commission (FSC), officially allowed banks to service crypto exchanges, provided they implement adequate Anti-Money Laundering (AML) safeguards and apply Know Your Customer (KYC) checks.

As Cointelegraph reported later, the adoption of this stance by the FSC could provide an impetus to the development of the crypto industry in South Korea.

November in South Korea was also marked by the shutting down of a local crypto exchange Zeniex. A joint project by South Korea and China operating since May 2018, the exchange was mentioned in the FSC’s warning about investing in unauthorized crypto exchanges and Initial Coin Offerings (ICOs).

Also in November, Bithumb reportedly signed a deal with an American fintech crowdfunding platform SeriesOne in an effort to launch a securities token exchange in the United States.

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Malta, Italy Issue Joint Warning Over Potential Unlicensed Cryptocurrency Exchange

A statement from Maltese regulators requires site OriginalCrypto to stop serving the Italian and Maltese markets.

Malta has warned citizens about an unlicensed cryptocurrency exchange serving its domestic market. Regulators ordered the platform to stop operating in a notice Dec. 5.

The offending platform, OriginalCrypto, had first come to the attention of Italian officials concerned it may not have the required license to offer authorized “investment services and activities.”

The platform’s owner, SolutionsCM Ltd., has now come under scrutiny from both countries, with Malta’s Financial Services Authority (MFSA) sharing the warning from Italy:

“The Commissione Nazionale per le Società e la Borsa (CONSOB) has ordered the following companies to cease infringement of art. 18 of the Italian Legislative Decree No. 58/1998, consisting of the provision of unauthorised investment services and activities to the Italian public performed by SolutionsCM Ltd. via the www.originalcrypto.com website.”

As Cointelegraph frequently reports, Malta has sought to become one of the world’s most permissive jurisdictions regarding both cryptocurrencies and blockchain technology.

As part of its bid to transform into a so-called “Blockchain Island,” various regulatory overhauls have accompanied MFSA-endorsed deals with industry businesses, including major exchanges such as Binance and Huobi.

OriginalCrypto remains far from those legitimate activities, however, sources warning about the likely “scam” scheme earlier this year.

“Portraying their platform as a cryptocurrency financial brokerage, OriginalCrypto.com has engineered a clever marketing approach to promote their illicit investment services to consumers across the world,” monitoring site ScamBitcoin wrote in February.

According to the site’s investigations, OriginalCrypto had made dubious claims about its setup, including being operated by a Bulgarian-based parent company “Bali Limited Ltd.”

“We could find no evidence to support that Bali Limited Ltd was an actual corporation,” the site warned:

“Furthermore, the alleged corporate address provided for Bali Limited Ltd does not appear to be a factual physical address and computes to a variance of their disclosed address.”

Last week, the U.S. state of Ohio’s decision to accept cryptocurrency for tax payments drew the ire of the mainstream press after it emerged officials involved were unaware of the scams that had affected previous such efforts elsewhere.

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Seven EU States Sign Declaration to Promote Blockchain Use

During an EU meeting, seven southern EU member states released a declaration asking for help in the promotion of blockchain.

Seven southern European Union member states have released a declaration calling for help in the promotion of Distributed Ledger Technology’s (DLT) use in the region, the Financial Times (FT) reports Dec. 4.

The declaration was reportedly initiated by Malta and signed by six other member states, France, Italy, Cyprus, Portugal, Spain and Greece, during a meeting of EU transport ministers in Brussels on Tuesday.

The participating governments explained that DLT –– one type of which is blockchain –– could be a “game changer” for southern EU economies.

Namely, the document cites “education, transport, mobility, shipping, Land Registry, customs, company registry, and healthcare” as services which can be “transformed” by this technology. The group also cites blockchain tech’s use for protecting citizens’ privacy and making bureaucratic procedures more efficient.  

The report further notes that this technology has potential beyond digital government services:

“This can result not only in the enhancement of e-government services but also increased transparency and reduced administrative burdens, better customs collection and better access to public information.”

In mid-November, a member of the Executive Board of the European Central Bank, Benoit Coeure, declared that he considers Bitcoin the “evil spawn of the [2008] financial crisis.”

Also in November, banking groups BBVA and Banco Santander joined the EU International Association for Trusted Blockchain Applications (IATBA), Cointelegraph reported. The association itself is set to be launched Q1 2019 and aims to develop blockchain infrastructure and standards.