Non-Custodial Crypto Wallets Not Covered by Proposed Prohibition, Clarifies European Commission

Non-Custodial Crypto Wallets Not Covered by Proposed Prohibition, Clarifies European Commission

On Tuesday, besides prohibiting anonymous crypto transactions, the EU’s executive arm also added anonymous crypto asset wallets to its prohibition list, requiring the full application of AML/CFT rules to ensure complete traceability.

This created some confusion as to what exactly the crypto wallets meant here, which the European Commission confirmed is not applicable to non-custodial privacy wallets rather only to exchanges.

“Indeed, open-source, non-custodial wallets, will not be covered by the prohibition,” an EC spokesperson told Cryptonews.com.

Anti-money laundering (AML) frameworks are only applied to actors that are gatekeepers of the financial system, which in crypto means VASPs like exchanges that provide virtual asset services.

“But this requirement does not apply to un-hosted wallets that are retained by the users themselves,” the spokesperson added.

This week, European Union (EU) policymakers proposed tightening regulations on the cryptocurrency sector by prohibiting the anonymous transfer of crypto assets and requiring companies to collect data on both senders and recipients as part of its broad plan to crack down on money laundering and terrorist financing.

“The present proposal aims at introducing in EU law these new requirements of the VASPs, by providing an obligation for these actors to collect and make accessible data concerning the originators and beneficiaries of the transfers of virtual or crypto assets they operate,” reads the proposal.

The law, as we reported, basically extends the Financial Action Task Force’s “travel rule” that applies to wire transfers to the entire crypto industry.

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Author: AnTy

European Central Bank Kicks Off New Phase Of Digital Euro Project

European Central Bank Kicks Off New Phase Of Digital Euro Project

The European Central Bank (ECB) is moving forward with its central bank digital currency (CBDC) plans. Today, the bank announced that its Governing Council had approved the investigation phase of the digital euro project.

Investigation Phase Scheduled For 24 Months

The ECB, which has been discussing the potential launch of the CBDC for years, will now move to the exploration stage. According to the announcement released by the bank, the investigation phase of the euro-zone CBDC would last for 24 months.

This phase is aimed at addressing key issues in the design and the distribution of a CBDC. For this purpose, the ECB said it would consult with stakeholders ranging from banks to retailers.

The ECB further noted that the digital Euro is aimed at complementing cash and not replacing it. The project is focused on making sure digital payments are still within the purview of central banks. This is to avoid leaving digital payments to the private sector. ECB President Christine Lagarde said,

“Our work aims to ensure that in the digital age, citizens and firms continue to have access to the safest form of money, central bank money.”

Lagarde added that the CBDC would meet the needs of EU citizens and avoid making negative impacts on local financial stability and the ECB’s monetary policy.

Lagarde had previously said in an interview with Bloomberg that she expects the CBDC to launch within four years.

According to Fabio Panetta, an ECB Executive Board member, experiments carried out so far show that the digital Euro would be environmentally friendly. He said that the energy usage would be negligible compared with the energy consumption and carbon footprints of cryptocurrencies like Bitcoin.

ECB Digital Euro Journey

The ECB has been discussing the potential issuance of the digital Euro for years. In January, the European Commission and the ECB collaborated to evaluate the potential issues that could arise from the digital Euro.

The bank also held a public consultation in which 8,000 participants gave feedback. The consultation that closed on January 12th found privacy a primary concern among 41% of respondents.

Privacy has been one major concern for governments regarding CBDCs as they struggle with finding a balance between preventing illicit financial activity and preserving confidentiality.

However, several central banks around the world are moving forward with their CBDC plans. Central banks in countries like the United Kingdom and Japan are moving from discussion to exploration of a CBDC.

If the ECB eventually adopts a CBDC, it would most likely follow in China’s footsteps. China has already advanced CBDC plans with trial runs in different provinces across the country. Meanwhile, both South Korea and Sweden appear to have moved from exploration to testing in recent months.

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Author: Jimmy Aki

European Payment Processor Sever Ties with Binance and Suspends GBP & EUR Deposits and Withdrawals

Another European Payment Processor Sever its Ties with Binance and Suspends GBP & EUR Deposits and Withdrawals

700+ Binance users in France and in Italy are forming a group to sue the exchange after they lost money during the May 19 sell-off as they were unable to access the exchange due to an outage.

European payment processor Clear Junction is the latest one to announce that it would no longer process transactions for the leading cryptocurrency exchange Binance.

The decision has been made following the UK’s financial watchdog, Financial Conduct Authority (FCA), issuing a warning against Binance operating in the UK, the London-based company posted on its website.

As per the move, both GBP and EUR payments are suspended, and the payment processor won’t facilitate deposits or withdrawals in favor of or on behalf of the crypto trading platform.

“Clear Junction acts in full compliance with FCA regulations and guidance in regards to handling payments of Binance.”

Last month, the FCA said that Binance Markets Limited, a separate Binance entity that operates in the UK, is not licensed to do business there but did clarify that the UK customers can continue to use Binance.com.

Still, since then, a growing number of UK banks, including Barclays, Santander UK, NatWest, among others, have limited their account holders’ ability to access Binance or other crypto exchanges in the name of keeping their customers’ money safe.

Binance is the world’s largest cryptocurrency exchange with no official headquarters and has been under the scrutiny of global regulators.

Amidst this, Binance users in two groups – one in France working with 700 people and one in Italy are looking to sue the exchange after they lost money during the May 19 sell-off after they were unable to access the exchange due to an outage leading to them getting liquidated.

However, due to no headquarters, they are trying to figure out just whom to petition.

Binance says it “took immediate steps to engage with users affected by the outage” and to provide compensation, which involves three free months’ worth of Binance’s VIP platform.

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Author: AnTy

Bank Of France Governor Wants Europe To Regulate Crypto Now

The Bank of France governor Francois Villeroy de Galhau has called on the European Union to create a regulatory framework for cryptocurrencies.

According to him, if Europe does not make crypto regulation a priority, there could be dire consequences for the monetary sovereignty of states.

Villeroy Encourages The EU To Speed Up CBDC Plans

Speaking further at a Paris Europlace financial conference, the Central bank governor emphasized the increasing importance of digital currencies in financial markets.

He called on the EU to speed up plans in issuing a digital euro. “On both digital currency and payments, we in Europe must be ready to move as quickly as needed, ” Villeroy said. Villeroy’s statements centered around urgent ways of preventing the weakening of the Euro. He stressed the urgency saying there was little time in doing this.

He noted that many risks were surrounding the ECB’s payments control, with the digital Yuan being part of it. In addition to this, Europeans are using less cash by the day due to the growing role cryptocurrencies play in regional markets.

The use of cash decreased during the first few months of the pandemic, a movement that the governor said could lead to “marginalization of the use of central bank money.”

This is not the first time the central banker would be warning regulators against the risk of cryptocurrencies, including central bank digital currencies (CBDCs) and stablecoins.

During the Bundesbank conference held in September last year, Villeroy described the most imminent risk in Europe to be private financial infrastructures and monetary systems. According to him, they were positioning themselves as issuers and managers of currencies.

China’s Digital Yuan Drawing Criticisms

China is the leader in developing and deploying wholesale CBDCs. The country is currently testing its digital Yuan, where citizens in different provinces transact payments over their mobile phones.

However, the project has been considered a threat by most Western countries. This is due to the reports circulating the media that China is planning to topple the dominance of the US greenback with its digital renminbi.

However, former central bank governor Zhou Xiaochuan responded to these reports last month.

He said the digital yuan is not designed to replace the US dollar’s global dominance. He added that the CBDC is only focused on modernizing the traditional payment system while reducing costs and serving retail payment systems.

Meanwhile, various countries are warming up to CBDCs. The Bank of France has revealed plans to conduct further tests for its digital currency this year after completing a pilot program for its CBDC in January.

In the US, a Digital Dollar Project of five pilot projects was launched last month to test how a Federal Reserve-issued CBDC would operate.

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Author: Jimmy Aki

Bank of Japan & European Central Bank Dead-Set on Pushing Asset Prices Higher

Bank of Japan & European Central Bank Dead-Set on Pushing Asset Prices Higher

Deeper negative rates for the BOJ while ECB President Christine Lagarde wants to keep fiscal spending this year and into 2022.

European Central President Christine Lagarde said on Wednesday that eurozone states must keep fiscal spending well into 2022 to protect the bloc from permanent damage caused by the COVID-19 pandemic.

Lagarde called on EU leaders to further kick start the $750 billion euro Next Generation EU spending package in an online interview.

These remarks are in line with her pledge for monetary support for the economy earlier this week when she said the recovery is to be supported by

“favorable financing conditions, expansionary fiscal policies and a recovery in demand.”

“It remains crucial that monetary and fiscal policy continue to work hand in hand. Fiscal policy -– both at the national and at the European level -– remains crucial to bolster the recovery,” she told European Parliament lawmakers on Monday.

Meanwhile, another central bank, the Bank of Japan, is considering signaling to take interest rates further into negative territory; short-term rates are currently at -0.1% and 10-year bond yields around zero. The Japan Times, citing sources familiar with the matter reported,

“In a monetary policy review in March, the central bank may make it clear that it will maintain its negative interest rate policy and that it will not hesitate to cut rates further if necessary.”

However, markets see deeper negative rates as an unlikely policy option that is already putting a strain on commercial banks’ profits. Moreover, there is no consensus within the BOJ on the final decision either.

The BOJ plans to announce its tools next month, with BOJ Deputy Governor Masazumi Wakatabe saying last week that they must

“maintain (their) commitment to achieve 2% inflation. Based on the commitment, we’ll be ready to lower nominal rates as needed.”

Governor Haruhiko Kuroda has consistently said that if the BOJ were to ease further, deepening negative rates would be among the options.

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Author: AnTy

The European Central Bank & EC Join Together to Research A Digital Euro Launch

The European Central Bank & EC Join Together to Research A Digital Euro Launch

European Union entities, the European Commission, and the European Central Bank (ECB) will be coming together to discuss the potential challenges that come from the creation of the Central Bank Digital Currency, the Digital Euro.

Within a joint statement from both the Commission and European Central Bank, the aims of their effort were to explore its prospects for public and private sectors:

“The European Commission and the European Central Bank (ECB) are pursuing their efforts towards ensuring a strong and vibrant European digital finance sector and a well-integrated payments sector to respond to new payment needs in Europe.” The ECB will go on to decide whether the project will be put into motion in mid-2021.

“Such a project would answer key design and technical questions and provide the ECB with the necessary tools to stand ready to issue a digital euro if such a decision is taken,” the joint statement reads.

While the ECB officially closed its public consultation phase on January 12th, the news service EURACTIV, a news service centered on EU policy, found that 41% of polled respondents expressed serious concerns. Concerns regarding security (17%) and Pan-European reach (10%) also emerged.

While the European Union has entered the introductory stages of its CBDC, China’s digital currency – the Digital Yuan – has already established itself as the powerful front-runner and sets its sights on a global payments framework based on CBDCs.

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Author: James Fox

Huobi Global Partners With BCB Group; Traders Gain Access to European Fiat On-Ramp

Huobi Global Partners With BCB Group; Traders Gain Access to European Fiat On-Ramp

Crypto exchange giant Huobi Global has announced a new partnership with BCB Group in efforts to link its trading desks to the European banking system, including the United Kingdom.

Seychelles registered crypto exchange will now offer instant euro and GBP settlements to its clientele.

The deal, which was announced on Tuesday, reveals that Huobi’s over-the-counter (OTC) customers can now complete transactions instantly using either the pound (GBP) or euros through BCB’s BLINC network.

In the recent past, crypto exchanges have faced different hurdles in their efforts to establish banking relationships that can provide an interface to the fiat money world. Before the current deal, Huobi had no established European fiat gateway, BCB CEO Oliver von Landsberg-Sadie stated.

Speaking to media outlets, Landsberg-Sadie stated that the partnership would provide a robust infrastructure that will enable seamless trading for Huobi’s customers.

“We’re here to provide that robust infrastructure so that these guys can just get on with trading and know that trades are happening in a way that’s properly monitored, that’s regulatory-friendly.”

Huobi’s head of global business, Ciara Sun, stated that the process has been rigorous and although it took some time it is for the benefit of the firm’s European customers. Sun said,

“Partnering with BCB allows us to offer a European fiat on- and off-ramping service that we know is in line with the laws of that area, but it also allows our customers in Europe to experience a smooth and hassle-free user experience.”

Huobi becomes the latest major crypto exchange using BCB’s BLINC platform, following Bitstamp, which had joined earlier. BCB stated that other partnerships with various crypto exchanges would be announced soon.

Huobi Korea Secures Certification From Korea Internet and Security Agency

Huobi Korea, an offshoot of Huobi Global operating in Seoul, has been certified as an information security management system, or ISMS. The certification complies with Korea’s Special Payment Act.

The certification means that Huobi Korea will be granted a broad management system that guarantees security as well as compliance with Korean laws. The new law requires crypto-based enterprises to report transactions as per the updated KYC and AML policies issued recently.

Huobi Korea CEO, Park Si-deok, said that the issuance of the certificate is a testament that the exchange is well prepared to offer quality services to both institutional and individual clients.

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Author: Joseph Kibe

ECB Experts Maintain a Cautious Approach to Digital Euro Development

The European Central Bank (ECB) has been talking a big game about its forthcoming digital euro, particularly considering its functionality.

However, the agency remains resolute in its stance that it shouldn’t rush an asset and instead move with caution.

Synergy is Required for Optimal CBDC Performance

Earlier this week, several experts from the ECB agreed that a cautious approach would be the best way forward considering the digital euro.

In a panel tagged “Upgrading Money to the Digital Age: Introducing Digital Euro,” participants argued that the primary goal would be to form a consensus on the digital euro and the form it should take.

In the panel, Austėja Šostakaitė, a Market Infrastructure Expert at the ECB and a former Senior Economist at the Bank of Lithuania, explained that the ECB would not be considering a digital euro until the middle of 2011. She wants the ECB to focus on solving the most critical questions on introducing the asset into the European financial ecosystem and how to collaborate it with commercial bank money.

Carl Andreas Claussen, an advisor to the Swedish Riksbank, also explained that the Riksbank is currently working on a proof-of-concept for the e-krona. However, he highlighted that a launch for the asset is “four to five years away.” Claussen highlighted,

“There are some legal questions and this is such a big issue that we cannot decide on this. We need some political backing. We suggested to the parliament that they should have an expert committee looking at this.”

Top ECB Brass in On Board

All opinions appear to be in line with the official stance of the ECB. While it first announced its digital euro in September, the agency has made it clear that it wouldn’t be rushing development for the asset. In an online panel from November 12, Christine Lagarde, the agency’s President, explained that it had chosen to focus on the proper implementation.

Lagarde pointed out that the ECB had set a consultation panel to explore the potential of a CBDC. She added that the panel would give a consultation report by January 2021. This report will help the bank make decisions on whether to launch – and what course to follow. While Lagarde highlighted that she believed a digital euro would come to light, she also understood that everyone needed to agree on the right implementation format.

The President has been an ardent supporter of Central Bank Digital Currencies (CBDCs) for a while. Earlier this week, she explained in an article that the digital euro would help bring the Eurozone into the digital financial age.

Lagarde added that the digital euro could complement cash and ensure seamless access to central bank money. It would surely ensure the maintenance of monetary sovereignty – especially in a future where the use of physical cash declines.

Reuters also reported last week that Olaf Scholz, the German Finance Minister, had called on the ECB to expedite the asset’s development. Scholz, an ardent critic of private cryptocurrencies, explained that there is already significant demand for digital payments across the European Union. As he believes, it is time for the ECB to move swiftly towards developing its CBDC.

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Author: Jimmy Aki

ECB’s President ‘Hunch’ is EU Might Push Forward with CBDC Plans; Decision in January, 2021

European Central Bank (ECB) president, Christine Lagarde, said on Thursday that the EU would make its decision on whether to pursue a digital euro in January 2021. This comes as more jurisdictions pay closer attention to Central Bank Digital Currencies, given the accelerated paradigm shift to virtual payment networks amidst the COVID-19 pandemic.

Lagarde shared her sentiments during the virtual ECB Forum on Central Banking. In-attendance were other prominent monetary authority figures, including the Fed Reserve chair Jerome Powel and Andrew Bailey, Bank of England governor.

While all the three figures commented on the ongoing developments in CBDC, Lagarde hinted that the EU might decide to move forward with a CBDC, although the decision will be made collectively. She stated that,

“We might well go in that direction … My hunch is that it will come.”

Lagarde was also keen to highlight that the ECB is not in a race to be the first but rather seeks to derive value from a CBDC. She noted that if the CBDC option is fast, cheap, and highly secure, then the ECB should explore the possibilities of joining other nations that have forged ahead with CBDC plans.

“If it is going to contribute to better monetary sovereignty, a better autonomy for the euro area, I think we should explore it. If it is going to facilitate cross border payments, which are very laborious in quite a few corners of our big world, then we should explore it.”

Per Lagarde’s time-frame estimates, a digital euro will take at least 2-4 years before it is finally launched. This will allow the ECB to adequately prepare and get it right once the project is ready for mainstream adoption. Some of the ECB issues are still trying to figure out include Anti-money laundering, terror-financing, and users’ privacy.

Notably, the ECB intensified its efforts in CBDC research this year and recently published a report on the possibilities and implications of a digital euro. The central bank also applied for a trademark the name ‘digital euro’ as part of its effort to hedge, should it chose to roll out a CBDC.

The Fed Chair & Bank of England Governor’s Takes

Jerome Powel, who also shared his comments during the virtual policy panel, said that the U.S is committed to looking at the ‘potential costs and benefits of a central bank digital currency.’ However, he reiterated that it is more important to get it right than being first, especially with the U.S dollar’s position as the world’s reserve currency.

Andrew Bailey, the BoE governor, touched on private stablecoins in what seemed to be a warning to issuing authorities. According to him, the bar is very high for stablecoins, given the users’ expectation of value certainty. In fact, he went on to highlight that the bar or answer might actually be CBDCs.

“They haven’t met that bar in my view. And it may be that the answer to that bar is actually central bank digital currency.”

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Author: Edwin Munyui

BlockFi Eyes European Market in Q1 2021; Excludes the UK Due to Regulatory Uncertainty

BlockFi, a crypto lending service, is eyeing the European retail market with an expected product launch in Switzerland, Italy, and the Netherlands by the first quarter of 2021. The crypto lending firm has already begun the trials for the launch in Italy. However, to many people’s surprise, BlockFi has excluded the United Kingdom from the list despite having several London offices.

David Olsson, Blockfi’s vice president for Europe and Asia, shed some light on the launch of their retail products in the European market and said,

“They’re large enough markets that it’s worth our while to go in and put the resources to work to get traction there, and there is also the regulatory certainty that they’re more pro-crypto and it’s a stable regulatory environment.”

The crypto lending firm said that they are only focusing on institutional clients in the UK for now. The reason for excluding the UK could also be attributed to the latest crypto regulation update in October made by the Financial Conduct Authority (FCA). The October update prohibited offerings of derivative crypto products to retail investors.

While the October update does not impact BlockFi, the firm is currently observing the country’s retail market and regulatory policies surrounding it. The crypto lending firm believes it’s too complicated at present to roll out an elaborate business model in the country.

Olsson said that the October ban on derivatives offering for retail investors would hamper the future of crypto services in the country. He said that the ban looks like “it’s putting crypto on a different footing to equities,”

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Author: Silvia A