Lebanon to Launch a CBDC in 2021 to Boost Confidence In the Country’s Banking Sector

According to the country’s central bank governor, Riad Salameh, Lebanon is set to debut its own Central Bank Digital Currency (CBDC) in 2021. Bloomberg, which reported on this development, cited a Lebanese state-run News Agency, noting that the Mediterranean island plans to make the paradigm shift due to transitioning to cashless networks and restoring confidence in the banking sector.

This comes as more jurisdictions begin to pay closer attention to CBDCs and the possibility of launching country-specific projects to support digital ecosystems. In fact, recent months have seen a spike in CBDC activity by local banks such as the PBoC and international bodies like the Bank of International Settlements (BIS). The latter published its first CBDC series report in collaboration with 7 major central banks.

With Lebanon set to join this bandwagon, Salameh emphasized the need to prepare for a Lebanese CBDC, per the global trends but mainly as a confidence boost to the country’s banking ecosystem. According to the central banker, implementing a CBDC will help increase cash flow efficiency both locally and internationally. Currently, this remains a challenge despite a good chunk of Lebanon’s GDP being complemented by remittances.

Salameh also highlighted that a cool $10 billion is held by Lebanese in their homes, an issue that could be attributed to the volatility of the country’s fiat currency ‘Lira.’ Earlier this year, Lebanese citizens found themselves in limbo after the currency devalued by almost 50% times compared to the dollar. At the time, they took to the streets with the sophisticated citizens opting to hedge against the Lira volatility by buying Bitcoin.

Notably, Lebanon began CBDC talks as early as 2018 but now seems to be in a more urgent position than in previous years. The country’s economy took a great hit this year, forcing local banks to cap withdrawals and increase foreign currency cash flows’ limitations. Previously, the main CBDC motivation was to curb terror financing and money laundering; this later shifted to making payment networks efficient, but now the urge seems to be a confidence boost in Lebanon’s banking sector.

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Author: Edwin Munyui

Australian Senate Sees Blockchain Technology As The Future Of FinTech And RegTech

Australian Senate releases a report on the impact of blockchain technology on the country’s economy, technology status, and regulation technology. Released earlier this month, the 281-page interim report, “Select Committee on Financial Technology (FinTech) and Regulatory Technology (RegTech)”, focused on innovative technologies, laying out the benefits of implementing blockchain technology across the economy.

The interim report further mentioned the myriad of initial coin offerings (ICOs) and the benefits it could bring despite the wave seeming to have already passed.

The potential of blockchain is immense

In a full section dedicated to blockchain technology and associated cryptocurrencies, the interim report mentioned the benefits of the innovative currencies in shaping the future of the Australian economy. The Senate highlighted the potential of the blockchain in growing economic value and benefited a range of industries – financial and insurance services, scientific and medical research, technical and service industries.

“Other areas include healthcare and social assistance, agriculture as well as real estate services.”

The benefits of blockchain technology are expected to translate into financial growth for these industries, the report stated. In the next five years, blockchain technology will help raise an estimated $175 billion annually with a $3 trillion target in the next decade.

Further supporting integration and building on blockchains is Michael Bacina, Partner at Piper Alderman, a fintech and blockchain firm, stated,

“Most fintech and regulation technology projects will either be built predominantly on distributed ledger technology or blockchain or heavily using that within the next 10 years”

A closer look on initial token offerings

The ICO wave seems to have passed with newer and more decentralized methods of raising capital using crypto emerging by the day (tsk, DeFi). However, the report mentioned the ICO ecosystem asking why Australians are not yielding from them anymore.

Highlighting the disparity between Australian and the global ICO ecosystem, Power Ledger’s co-founder and Executive Chairman, Dr. Jemma Green, stated the continental state only contributed to less than 1% of the $26 billion raised in public token offerings. Dr. Green said,

“And so I think there’s a bigger play around capturing the value for those markets in the Australian economy, as opposed to them being based outside Australia. It’s stimulating the fintech sector, providing employment opportunities, and delivering better quality services to the Australian people.”

According to Green, ICOs provides a potentially large industry that would help build job opportunities for thousands of Australians. However, regulations need to be set in place to promote the growth of decentralized capital raises, the report further explained.

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Author: Lujan Odera

Russia’s New Amendment On Crypto Laws Could See Bitcoin Miners Lose All Their Rewards

  • New reports from Russia confirm amendments in the country’s crypto laws that could ban Bitcoin (BTC) miners from receiving mining rewards.
  • The amendment is yet to be finalized, but experts argue if the law is passed, it could have a drastic impact on the overall use of crypto assets in the country.

As first reported by a Russian news outlet, Izvestia, the Ministry of Finance in Russia, is proposing an amendment to the federal law on digital financial assets (DFA) that could see Bitcoin miners receive no rewards on their efforts. According to the letter, the amendment allows Bitcoin mining using Russian infrastructure, but miners are not allowed to receive rewards in crypto.

The amendment further bans all transactions using virtual currencies in the country with three main exceptions. However, the amendment to DFA is yet to be finalized. The letter has been sent out for interdepartmental coordination and approval across different government departments.

A Closed Mining Cycle

The new amendment raises several questions on the implementation and wording of the document. As stated above, Bitcoin, Ethereum, and other crypto miners will be allowed to mine their tokens but will be stripped of its financial value as miners cannot receive BTC or ETH.

Several experts have since condemned the amendment as a “revenue loss” for the country, calling for revisions on the bill. Speaking on the issue, Dmitry Zakharov, CEO of Moscow Digital School, stated the “wording does not bode well for miners” as no other alternative has been offered on how to receive mining rewards. He added,

“Perhaps experts will try to come up with some interesting legal constructions, but all of them will be fraught with significant risks of bringing to administrative and criminal liability.”

If the amendment passes, then Russia could lose a share of its revenues, another expert on the matter said. According to Anton Babenko, partner of the Padva and Epstein law office, prohibiting receiving crypto could lead to more people not reporting their revenues, leading to tax losses.

A Leeway? Or Not?

Russia implemented a total crypto ban last year causing a public outcry that caused the parliament to shut down the ban. The latest amendments stipulate a similar ban – prohibiting any individuals, companies, or entrepreneurs from performing any transactions with virtual money. However, the amendments stipulate three exceptions to the rule – an inheritance of crypto assets, enforcement proceedings, and if a debtor goes bankrupt.

Any use of crypto in the country could lead to legal and criminal liability on the user with a 100 thousand rubles fine on individuals or five to seven years prison time and up to 1 million in fines for legal entities.

The new rules aim at tightening the use of cryptocurrencies in Russia in a bid to stop illicit items and illegal activities using Bitcoin and crypto in Russia. According to a law expert, the new amendment constitutes a “total ban on cryptocurrencies” which could have a severe impact on the countries crypto space.

The country’s policies on crypto could be a missed opportunity for the country, economist, Vladislav Ginko said earlier this month even as Russia extends its efforts in hoarding physical gold.

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Author: Lujan Odera

Brazil Fast Tracks CBDC Launch; Central Bank President Calls for Roll Out In Next Two Years

  • Brazil’s central bank president, Roberto Campos Neto, announced the country’s plan to launch its own central bank digital currency (CBDC) by the end of 2022.

Speaking at a Bloomberg-sponsored event, Roberto Campos Neto, president of the Banco Central, praised digital currency payment systems as the future of financial systems claiming the country is in the pipeline of launching their CBDC in the coming two years.

Despite starting their research on its digital payments systems and CBDC recently, Brazil aims to accelerate its efforts in the field to provide a stable and working platform by 2023. According to Neto, Brazil’s CBDC will be built on an instant payment system allowing efficient, open, and interoperable transactions across similar systems in a bid to improve the financial system.

Neto stated Brazil is ready to launch its CBDC given it has “all the ingredients” to start its CBDC project and complete it by 2022. He said,

“To have a digital currency, you need an instant payment system that is efficient and interoperable; an open system, where you can create competition; and a currency that has credibility, is convertible and international. After that, I think you have all the ingredients to have digital currency. We think we will have it in 2022.”

Additionally, the central bank has been working on its banking infrastructure in a bit to provide instantaneous banking settlements between peer banks. The new infrastructure, PIX, will be launched in November, allowing peer-to-peer open banking transactions that can be settled in a matter of seconds.

Neto, however, did not mention the role that the CBDC will play in its new PIX infrastructure. It is expected to be complementary to the latter. He further clarified the role of a CBDC as:

“A CBDC distinguishes itself from cryptocurrencies without national trust, like Bitcoin, because it is just a new form of representation of the currency already issued by the national monetary authority, that is, it is part of the monetary policy of the issuing country.”

With the launch of its own CBDC project, Brazil joins several countries already working on CBDC’s, including China, Japan, and Canada.

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Author: Lujan Odera

Venezuela Signs In New Taxation Agreement That Will ‘Accept’ Petro Crypto Payments

  • Venezuela to start using petro cryptocurrency in its tax system
  • The country’s crypto will be used to calculate taxes within the country.
  • Could this be a navigation point against sanctions for the President Maduro-led government?

The Bolivian Council of Mayors signed the “National Tax Harmonization Agreement” on Aug. 12, paving the way to a new system to optimize taxation in the country. According to reports, the new laws will integrate the country’s sovereign crypto, Petro, as one of the tools in the new system.

According to reports, of the 335 municipal mayors present in the council, 305 mayors (all from the left-wing United Socialist Party of Venezuela (PSUV) led by Maduro) are in favor of switching the tax system to a crypto-based system. At the same time, the rest still want collection in fiat currency.

Speaking on the issue to the local press, the vice president of Venezuela, Delcy Rodríguez, who is championing the switch to Petro cryptocurrency, said,

“It is the simplification of procedures, making the State’s administrative activity at the service of the people more efficient, of the economic sectors that stimulate economic activity in the productive and commercial areas.”

However, with no official document stating the switch to payment of taxes in Petro, reports have emerged that the crypto is more likely to be used as a peg to calculate taxes rather than the actual payment method.

An ‘incognito’ switch to the dollar?

The country’s economy is facing its worst period of hyperinflation, forcing the citizens to turn to alternative currencies, the U.S. dollar being the most prominent. This has seen the country increasingly price their goods and services in dollars despite most of the people earning the ever-worthless Venezuelan bolivars.

Given the high proportion of Venezuelans holding bolivars, the government cannot price their taxes in dollarized form hence the need to switch to the Petro cryptocurrency. Petro is a crypto-backed by goods priced in dollars, which gives it a better fighting chance of inflation than the bolivar currency. This allows the government to preserve its “dollarized” taxes, even if indirectly.

However, the government does not want to deal with Petros, but rather fiat hence them pricing the taxes in petro but actually not accepting them as a tax. The sovereign crypto-only offers a middleman service between the worthless Bolivian currency and the unwanted US dollars.

The Venezuelan government will keep on pushing the adoption of Petro to its people, and the latest tax use could push adoption further. President Maduro authorized the use of PTR token during the opening of an International Casino in a luxurious hotel, in the city of Caracas this April.

A month later, fuel across the country was subsidized for users who used PTR as a payment option.

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Author: Lujan Odera

Singapore’s Financial Regulator, MAS, Wants More Power to Push Stringent Rules For Crypto

Singapore’s financial regulator, which also serves as the country’s central bank, The Monetary Authority of Singapore (MAS), is seeking to introduce stricter rules for the crypto industry to adhere to the new Financial Action Task Force (FATF) standards.

The financial watchdog is seeking to have more powers that will help in prohibiting any unsuitable enterprise from doing any business within the country. The financial overseer is also seeking powers to oversee, license, and regulate all crypto businesses which offer services in other countries but are based in Singapore.

As per the proposal, the country’s financial authority is seeking to expand the provisions of the Payment Services Act (PSA), which came into effect in January this year. If the proposal is adopted, Virtual Asset Service Providers (VASPs) will be required to conduct their operations in other countries using the same standards and regulations in their country of origin, Singapore. Although the MAS, back in March, already exempted a few of the top crypto companies: Binance, Coinbase, Gemini, and Ripple.

The regulator has already published a consultation paper seeking public input and feedback in regards to the expanded powers of the Monetary Authority of Singapore.

The regulator argues that the new proposal will put a halt to regulatory arbitrage where multinational VASPs choose the regulations to adhere to if they suit their mode of business.

The VASPs that will be significantly affected by these proposals are the ones that work abroad but maintain a “meaningful presence” in the city-state; that is, their directors and offices are located within Singapore. Corporations registered in Singapore, partnerships, as well as limited liability partnerships created in the country, will also be affected by the new legislation.

The financial regulator also explains that the regulations will help Singapore to adhere to the set anti-money laundering (AML) standards that were set late last year by the global financial watchdog FATF.

The public has until August 20 to send their views and opinions.

Asia’s most preferred countries, is Singapore, for the crypto industry, because of its friendly crypto environment. There are more than 150 crypto and blockchain-based firms headquartered in the city-state.

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Author: Joseph Kibe

Spain to Implement EU’s 5AMLD For Crypto Firms With Recent Amendment Proposal

Spain’s lawmakers have proposed an amendment to level up the country’s compliance with Europe’s Fifth Anti-Money Laundering Directive (5AMLD).

This set of regulations came into action earlier this year, pushing EU member states to take charge of crypto oversight within their jurisdictions. With Spain behind the EU’s schedule, its lawmakers will be ready to vote on the amendments within 2020.

The 5AMLD was implemented as a first step towards a comprehensive regulatory framework for digital assets. This first step comes after the crypto ecosystem became a new hub for illegal activity, such as terror financing and money laundering. Spain’s government website has since reiterated that its newly tabled draft law is in line with the 5AMLD objectives:

“The Draft Law advances in the reinforcement of the money laundering and terrorist financing control system, incorporating the new community provisions and including additional improvements in the current regulation to increase the effectiveness of prevention mechanisms.”

Once approved, the law will require crypto firms operating in Spain to register with the country’s financial watchdog. These include businesses such as crypto exchanges, custodial service providers, and digital wallet providers.

Apart from registration, entities in this industry will be required to prove compliance over their life span. Spain’s financial regulator will be able to monitor their activity through due diligence provisions.

Crypto Regulation on the Rise?

Spain’s action towards crypto-assets comes at a time when regulators across the globe are looking into crypto oversight. While it has been an uphill task to keep with these innovations, countries such as Japan and Singapore are quite ahead in implementing crypto regulations.

This first-mover advantage has placed Asia on the map as a leader in the digital asset ecosystem. China, which, previously banned crypto activity, has piloted its own CBDC, could this be another ‘regulatory’ perspective? It depends on which side of the table one sits on when it comes to decentralization.

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Author: Edwin Munyui

Iranian Official: Central Bank Should be In Charge of Crypto’s; ‘Take Bitcoin Seriously’

An Iranian lawmaker has argued that the country’s Central Bank ought to be the oversight body of Bitcoin and other digital currencies. Tasnim news agency was the first to report on this development after Rep Mohammad Hossein Farhangi (Tabriz) shared his sentiments in Parliament.

According to Farhangi, Iran’s Central Bank led by governor Abdolnaser Hemmati should take “the issue of bitcoin seriously.” Currently, this industry is overseen by the Ministry of Industry and Mines in which Farhangi sits as a committee member. He has since echoed that this approach is insufficient for the general oversight of cryptocurrencies:

“We do not understand that the government has entrusted the monitoring of Bitcoin to the Ministry of Industry and Mines … because the central bank must oversee digital currencies.”

Farhangi went on to highlight that Bitcoin presents an opportunity for Iran, should it be properly managed, “[a] good opportunity for the country,”

Iran’s Advancement for Crypto

Interestingly, Iran has made laudable progress in the crypto space. Having recently added crypto to recent ‘currency smuggling’ regulation in a bid to curb illegal activities via digital currencies.

This regulation was followed swiftly by a request on efficient mining strategies to be regulated and supported by Iran’s government. Notably, the country’s largest Bitcoin mining operation was licensed last month by the Ministry of Industry, Mine and Trade.

Being a highly sanctioned state, Iran’s officials have, in the past, rallied to adopt crypto as a way of avoiding the financial implications of sanctions. While this may not sit well with the imposing parties, Iran and its sanctioned counterparts, such as Russia and Venezuela, may soon have a way out.

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Author: Edwin Munyui

Ukrainian NAPC Now Requires Tax Payers To Report Crypto Holdings As ‘Intangible Assets’

Taxpayers in Ukraine have been presented by the country’s revenue agency a guidance on how to report the cryptocurrency they’re holding.

The document was first revealed by the crypto news outlet Forklog. According to it, taxpayers need to report their digital assets under the intangible property denomination, just like licenses for extraction of natural resources or intellectual property are being reported.

Digital Assets to be Named

In the guidance, cryptocurrencies are being described according to the Financial Action Task Force’s (FATF) definition. They’re digital units of value that can be electronically transferred and traded, also used as means of investment and payment.

In order to report their cryptocurrency holdings, people should name their assets, like for example, Bitcoin (BTC), XRP, Ether (ETH) and so on. They should also mention their acquisition date, how much they owned in the tax period last day and the value of their holdings in hryvnia, the country’s currency, as per the exchange rate from the tax period last day.

Ukraine Trying to Clarify Crypto Rules

Recently, Ukraine has been conducting many efforts in trying to clarify its rules on cryptocurrency. Last month, the Ukrainian Ministry of Digital Transformation has made a surprising announcement that says it doesn’t plan to regulate crypto mining because the blockchain protocol rules already govern this activity.

The financial watchdog in the country came with the rule that crypto service providers have to monitor crypto transactions of over $1,200, also to report any suspicious activity to the authorities. There’s a bill passed by the parliament, proposing 5% taxes on crypto earnings in the first 5 years after the bill takes effect.

Politicians Revealed Their Crypto Holdings

However, Ukraine still needs to come up with more comprehensive rules for the crypto space. While declaring cryptocurrency holdings hasn’t been imposed as a rule yet, some politicians in the country have already revealed the impressive numbers they hold in their crypto wallets.

Back in 2016, Dmitri Golubov of the parliament reported that he has 4,376 BTC, whereas Anatoly Urbansky, a city council member of Odessa, declared he had no less than 256 BTC. Last year, Maksim Kutsy, the governor for the Odessa region, reported 290 BTC and 11,071 ETH.

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Author: Oana Ularu

South Korea’s Central Bank Set To Use Blockchain Technology For Bond Transactions

Bank of South Korea, the country’s central bank, has become the latest central bank to explore blockchain technology to enhance efficiency as well as transparency in interbanking processes.

South Korea’s central bank is now seeking to emulate the World Bank which successfully introduced the use of blockchain technology in bond transactions. According to Cointelegraph the Bank of Korea is developing blockchain-based bonds.

A report which first appeared on a local news outlet Yonhap Informax, reveals that the South Korea’s central bank has been looking for a blockchain services offeror who will help in development of a blockchain-based bond system which will enable the swift distribution of all the bond details to all the participants.

Late last year, the Bank of Korea rolled on a project about Proof of Concept (PoC) with an aim of transferring bond transaction information to a blockchain-based records system that can be accessed by numerous nodes. At the moment these records are stored by the Korea Securities Depository.

The project will bring together various state agencies such as the country’s regulatory authority, the Bank of Korea, Korea Fair Trade Commission as well as financial institutions. The project will have different nodes that will be operated by these institutions.

According to an official privy to the project’s details, various Korea’s financial authorities have actively been piloting the benefits of blockchain technology when it comes to issuance of state bonds. He explained:

“We are using government bonds to record securities and cash transactions in a distributed ledger and test whether a real-time simultaneous payment trading system is possible.”

As per the report by Cointelegraph, the current blockchain research by Bank of Korea in relation to the bond market transactions is being guided by blockchain-based bond transaction between Australian Commonwealth and the World Bank which took place in 2018.

Late last year, the Bank of Korea revealed that it was in the process of coming up with a competent group that will research and give recommendations on the launching and use of a central bank digital currency (CBDC), an exercise that will be conducted this year.

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Author: Joseph Kibe