Tech giants face class action lawsuit over targeted crypto ad ban

More Blockchain and cryptocurrency organisations have joined the anti-crypto advertising ban enforced by tech giants such as Google, Facebook and Twitter.

According to Russia’s RNS, three more countries that now include Kazakhstan, Armenia and Switzerland have joined Russia, South Korea and China in a joint class action lawsuit that will be filed in New York this May. Legal costs will be crowd-sourced from donations made to a fund registered in Luxembourg.

Facebook, Google and Twitter as said to be displaying cartel-like behaviour when enforcing a restrictive ban on cryptocurrency ads, which appears to be aimed at curbing enthusiasm and hindering the adoption of new and possibly game-changing technologies. This blanket ban is penalising legitimate companies who wish to utilize advertising platforms to gain investors and users and spread the word about their projects, which subsequently affects the amount of funds raised.

The Chinese Association of Cryptocurrency Investors (LBTC), Russian Cryptocurrency and Blockchain Association (RACIB) and the Korea Venture Business Association (KOVA) came to an agreement to take the matter to court, and have been joined by many more organisations since.

Facebook banned crypto ads on the social network back in January citing complaints about advertisements from its user base.

Google restricted cryptocurrency ads and related content last month – this included ICO promotions, wallets and crypto exchanges, although a quick Google search for “ICO” returns multiple advertisements.

Russian search engines Yandex and Runet have also joined in and have started banning crypto ads.

The joint lawsuit is set to be filed in May 2018.

Wall Street heavy weights are going into Bitcoin

Have Wall Street legends turned the market?

Ethereum, Bitcoin and many of the major cryptocurrencies are back in the green with the finger being pointed at Wall Street legends George Soros and John D. Rockefeller who are allegedly investing.

Although it’s still early days, 2018 has not been a great start for crypto with the price of Bitcoin plummeting from record highs.

What caused the crash? It would appear that several elements played a part but the massive tax bills American traders have racked up, estimated to be in the region of $25bn, are undoubtedly a factor, combined with regulatory uncertainty in several Asian countries and tech giants such as Facebook and Google banning adverts related to crypto.

Billionaire investment fund Soros Fund Management has been given the green light to trade in digital currencies, although the firm’s $26bn fund has not yet made a wager according to Bloomberg.

Venture capital firm Venrock, which was founded by descendants of John D. Rockefeller, recently announced it was partnering with a cryptocurrency firm from Brooklyn.

According to Hedge Fund Research, funds that invested in cryptocurrencies at the beginning of 2017 made colossal profits of around 3,000%.

It seems that April will be an interesting month for cryptocurrencies, as, at the time of writing, Bitcoin was trading at $7,147.92 with Ethereum at $415.72.

The Spanish taxman wants your crypto trading data

Spain’s tax regulator, commonly known as Agencia Tributaria or the Agency for Tax Administration (AEAT), has issued 60 formal requests to cryptocurrency entities seeking private customer data, such as identification documents, account ownership, trades and other information.

Cryptocurrency cash machine operators, exchanges and payment gateways were some of the companies that received the request earlier this week.

The information is apparently being used as part of an investigation across the crypto industry to decide whether new control procedures are required.

Furthermore, AEAT obtained data from the National Fraud Investigation Office (ONIF) on the whereabouts of offshore bank accounts held by 16 cryptocurrency exchanges registered in Spain.

It is not yet known if AEAT is seeking this information to clamp down on people not declaring capital gains from the buying and selling of cryptocurrencies. According to Tom Lee, the head of research at Fundstrat Global Advisor, US taxpayers accrued $92 billion in taxable gains from cryptocurrencies in 2017.

Financial Conduct Authority Issues Crypto Derivatives warning

FCA LOGOThe UK’s financial regulatory body issued a statement on Friday aimed at businesses providing “derivatives” and similar services to the public.

The FCA said that it does not consider cryptocurrencies to be a commodity or traditional currency from a regulatory standpoint as currently no legal framework exists, but they believe some derivatives may be considered to be financial instruments under the current legislation more specifically the Markets in Financial Instruments Directive II (MIFID II) and therefore businesses must seek authorisation or clarification from them as soon as possible.

Any operation, dealing, arranging or advising of derivatives that reference either cryptocurrencies or tokens issued through an initial coin offering (ICO) will require authorisation by the FCA, this also includes options and CFDs.

“It is firms’ responsibility to ensure that they have the appropriate authorisation and permission to carry on regulated activity. If your firm is not authorised by the FCA and is offering products or services requiring authorisation it is a criminal offence. Authorised firms offering these products without the appropriate permission may be subject to enforcement action.” said the FCA

The FCA is carefully monitoring the crypto industry as it grows, they released a statement last December warning that CFDs were extremely high risk and speculative products and that consumers should be fully aware of the price volatility, leverage ratios, higher charges in comparison, funding costs and transparency.

Survey reveals that one-in-four millennials would rather invest in Bitcoin than stocks

If you weren’t already aware of Bitcoin’s cultural impact amongst millennials, then this latest survey from Blockchain Capital should wake you up to how this generation view the cryptocurrency.

According to the survey, one-in-four millennials would rather invest in Bitcoin than stocks and shares. The study is a clear indicator that the younger generation view cryptocurrencies as genuine investment opportunities.

To explain these figures, we have to look at the details of the survey Blockchain Capital undertook. The venture capital firm’s research found that a good percentage of those aged between the ages of 18-34 reckon Bitcoin has a bright future.

To be exact, the survey found that 27 percent of respondents would rather take $1,000 worth of Bitcoin, rather than $1,000 of traditional stocks. Meanwhile, 22 percent would take the same amount of the cryptocurrency over real estate and 30 percent would take Bitcoin over government bonds.

Other results from the survey showed that 30 percent of Americans are at least somewhat familiar with the currency. An understandably higher percentage of younger people knew about Bitcoin, than their older counterparts (42 percent of millennials opposed to 15 percent of those over 65).

Considering that only two percent of Americans have owned or own Bitcoin, it appears that there is a genuine opportunity for expansion, as there is already a huge level of recognition for the currency in society.
This was shown in the fact that 19 percent of Americans indicated that they’d buy Bitcoin in the next five years.

Millennials have certainly abandoned any skepticism associated with it, with over half (52 percent) citing Bitcoin as a positive financial innovation.

This survey was taken last year and had over 2,000 American adults taking part.

‘Hybrid’ Crypto Exchange ICO Announces $5m Partnership Deal

Andromeda Group provide huge cash injection to new exchange ICO

Serial crypto investors Andromeda Group have recently announced a huge deal with promising new ICO Qurrex, paving the way for a next generation of cryptocurrency exchanges.  

Qurrex, which features aspects of both centralized and decentralized exchanges, are thought to have cashed in more than $5m USD as a result of the new partnership, which will also see Andromeda experts work on the Qurrex token sale.

Pavel Kornilov, Co-Founder of Andromeda Group, said in a statement: “We see Qurrex as a potentially strong player in the market and glad to develop our relationship. We also believe that the quality of QRX token buyers will be one of the key factors of the future success of the project.”

This deal pushes Qurrex even closer to its $55m max cap target, with the public given a last chance opportunity to get involved in the May main sale.

Thanks to its part-centralized and part-decentralized exchange solution, Qurrex could be on track to deliver the first truly next-generation exchange, offering more tokens and coins, and subsequently, effective liquidity between them.

Now, thanks to a bumper token sale, the business is on track to hit its max cap of $55m before the end of the crowd sale.

Qurrex’s next-generation platform integrates the industrial-grade centralized infrastructure of traditional stock exchanges (CEX), like NASDAQ, NYSE and LSE, with a decentralized blockchain-based network (DEX).

Andromeda, which has previously partnered with prominent crypto companies, such as IOTA, Bancor and eTorro.

This new partnership is not only a financial boost to Qurrex, but one that will also bring about guidance and cooperation across the board.

Qurrex has been designed to create a suitable gateway for professional traders in traditional financial markets to the crypto economy and to meet the challenges of the exponential growth of cryptocurrency trading.

The new platform will integrate the centralized exchange based on enterprise technology of traditional stock exchanges with decentralized network consisting of thousands of nodes of liquidity with partial exchange functions for miners, brokers, liquidity provider and other institutional players.

The Qurrex ICO continues in May, with expectations of hitting the max cap high. Interested parties can take part by visiting www.qurrex.com.

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One of Canada’s largest banks considers use of public blockchain for asset tracking

td bank canadaThese days, more and more recognised companies and organisations are looking towards blockchain technology as a way to improve how they do business.

Both large and small organisations are looking for ways to utilise blockchain, with one of Canada’s biggest banks becoming the latest to consider employing this technology in a meaningful way.

Just last week, a patent application was published which revealed TD Bank’s idea to track assets digitally through the use of a public blockchain.

The patent application detailed the banks idea to use a public distributed ledger, which would in turn help point-of-sale computers keep track of the transactions. The computers would then hold blocks of data that would include information about the assets and their value.

The file states that an advantage of this use of blockchain would be the transparent nature of the data.

It read “One advantage of block chain [sic] based ledgers is the public nature of the block chain architecture that allows anyone in the public to review the content of the ledger and verify ownership.”

The application was filed all the way back in Autumn 2016 and it’s not known whether or not the bank has pursued this plan further. Generally speaking, large bank blockchains have been used for only private or permissioned ledgers, so this represents the possibility of a monumental change.

The patent application praised the potential use of blockchain in this scenario, insisting that that a ledger such as this would be positive as it would “[minimize the] risk of falsification of ledgers.”

TD Bank’s application also suggested that this potential system doesn’t need to be judged by the speed of blockchains used by other organisations.

Bank Negara Malaysia issues warning against fake cryptocurrency certificate

The Central Bank of Malaysia has issued a warning to the public after a bogus university certificate sporting official stamps was found to be in circulation.

The certificate, which “certifies” that the holder has been awarded a degree as a “Certified Crypto Asset Consultant”, is stamped with both the Central Bank of Malaysia and University of Malaya logos, in what appears to be an attempt at fooling interested businesses or employers seeking an expert in such services.

“BNM does not recognise these certificate holders who use such documentation in offering consultation services. Members of the public are advised to verify the validity of any certification programme before registering” said the Central Bank of Malaysia earlier in the week.

The bank has insisted that members of the public who have been presented with such certificates should verify the authenticity before entering into a relationship.

You can now pay with crypto in over 6,000 South Korean Shops

Two South Korean firms, Bithumb and Pay’s have announced a partnership that will enable 6,000 stores throughout the country to open up goods purchases with cryptocurrency.

Customers who hold their digital currencies on the Bithumb exchange will be able to quickly and easily pay for a coffee in stores such as Starbucks, Outback etc.

Bithumb will integrate with Pay’s already established payment terminals which process payments for gift certificates in 6,000 stores, these include 400 domestic and 200 franchise partners among others.

Customers will use barcodes generated within their mobile app to make payments at their desired shop, adoption will increase to 8,000 by the end of 2018.

Bithumb, often unknown to cryptoethusiasts in the west is one of South Korea’s largest exchanges, in-fact it ranks second for trading volume amassing nearly half a billion dollars each day.

The news follows Bithumb’s recent collaboration with Innovation Corp which seen 50,000 accommodation options allowing customers to rent with cryptocurrencies.

Many companies are integrating with cryptocurrencies to bridge the gap between traditional payments thus opening the space up for more user friendly and transparent alternatives that no longer rely on slow and cumbersome fiat methods.

Gibraltar leads on ICO regulation

Gibraltar has been in the spotlight in recent months following the jurisdiction’s milestone DLT regulations. The DLT regulations, which came into force on 1st January 2018, received a warm reception by many in the FinTech space. Other jurisdictions are now keen to address the blockchain technology that is disrupting traditional industries and businesses. They, too, see they need for regulation, and are looking to Gibraltar for inspiration.

In a speech on Friday 2nd March 2018, The Bank of England’s Governor, Mark Carney, stated it was time to “regulate elements of the crypto-asset ecosystem to combat illicit activities”. Gibraltar’s proactive approach has clearly placed the jurisdiction in a unique position as one of only a few jurisdictions to have some form of regulation for this growing industry.

It looks as though Gibraltar will continue to remain in the spotlight as the jurisdiction looks to address concerns surrounding the increasing number of Initial Coin Offerings (ICOs) that are funding blockchain based startups. It has been widely reported in recent weeks that Her Majesty’s Government of Gibraltar and the Gibraltar Financial Services Commission (GFSC) are preparing to release a draft of the world’s first token regulations.

During a presentation at the Gibraltar International FinTech Forum 2018, otherwise known as the Gibfin conference, which took place between 28th February and 1st May 2018, the GFSC provided attendees with more information about the activities that the forthcoming token regulations aim to regulate. The token regulations will regulate the following activities conducted in or from Gibraltar:

  1. the promotion, sale and distribution of digital tokens;
  2. the operation of secondary market platforms trading in tokens; and
  3. the provision of investment advice and ancillary services relating to tokens.

Promotion, sale and distribution of digital tokens

Tokens that are not considered securities, such as utility and access tokens, will be caught by the new token regulations but gifts, donations, virtual currencies (i.e. Bitcoin) and central-bank digital currencies will not.

The FSC clarified that they will not expand the interpretation of what is considered a security in Gibraltar and also have no intention of defining token categories, or the functionality of tokens, either pre or post ICOs. The intention is to ensure that token sale participants’ are presented, in advance, with all relevant information to enable them to make an informed decision.

To be captured by these regulations, the activities will need to be carried out in or from Gibraltar and will include activities:

  • which purport to be or imply that they are made from Gibraltar;
  • are intended to come to the attention of, or be accessed by, any person in Gibraltar;
  • are conducted by overseas subsidiaries of Gibraltar-registered legal persons (in such cases, the Gibraltar person will be liable); or

are conducted by overseas agents and proxies acting on behalf of Gibraltar-registered legal persons, or on behalf of natural persons ordinarily resident in Gibraltar (in such cases, the Gibraltar person will be liable).

It is anticipated that Gibraltar-based token issuing companies will be required to comply with some form of disclosure rules that are yet to be announced. It is expected that the proposed regulations will require adequate, accurate and balanced disclosure of the relevant information to enable potential token sale participants to make an informed decision.

Additionally, token issuing companies will be obliged to collect know-your-customer (KYC) information on their token sale participants in order to comply with financial crime provisions in Gibraltar.

Additionally, entities that wish to conduct an ICO from Gibraltar will need to be sponsored by firms that the GFSC has authorised to perform such a function. Authorised sponsors will possess the appropriate knowledge and experience and will be responsible for ensuring compliance with the part of the regulations. Authorised sponsors will be regulated by the GFSC.

In order to encourage best practice for token sales conducted in or from Gibraltar, authorised sponsors will be required to have codes of practice in place that token sale entities will be required to comply with. Codes of practice may set out such matters as the method for storing, applying and distributing sale proceeds. Codes of practice will require approval from the GFSC and the regulator will establish and maintain a public register of authorised sponsors and their respective past and present codes of practice.

The GFSC will not however regulate:

  • Technology;
  • Tokens, smart contracts, or their functionality;
  • Individual public token offerings; or
  • Persons involved in the promotion, sale or distribution of tokens.

Secondary market conduct

Secondary market platforms, operated in or from Gibraltar, dealing in tokenised assets (including virtual currencies) and their derivatives will be caught by the token regulations. The GFSC aims to:

  • ensure organised trading takes place on regulated platforms;
  • establish transparency and oversight of secondary markets;
  • enhance investor protection;
  • impose conduct of business standards; and
  • encourage competition.

The proposed regulations will set out requirements for:

  • disclosure to the public of data on trading activity;
  • disclosure of transaction data to GFSC; and
  • specific supervisory actions concerning tokens and positions on token derivatives.

This second area of focus will be modelled, so far as is appropriate, proportionate and relevant, on market platform provisions under the Markets in Financial Instruments Directive II and Markets in Financial Instruments and Amending Regulation, otherwise known as MiFID II and MiFIR, which came into effect in January 2018.

It is proposed that the GFSC will authorise and supervise secondary token market operators, and establish and maintain a public register of such operators.

Investment Advice

The provision of advice on investments in tokens, virtual currencies and central bank-issued digital currencies will be covered by the token regulations, including:

generic advice (setting out fairly and in a neutral manner the facts relating to token investments and services);
product-related advice (setting out in a selective and judgmental manner the advantages and disadvantages of a particular token investment and service); and
personal recommendation (based on the particular needs and circumstances of the individual investor).

The regulations will seek to ensure that such advice is fair, transparent and professional. This third area of focus will be similar to the investment advice provisions in MiFID II.

It is proposed that GFSC will authorise and supervise token investment service providers, and establish and maintain a public register of such providers

Watch this space

We are expecting to receive a draft of the much anticipated token regulations in the coming weeks. However, we understand that the draft will only likely include the first area of focus concerning the promotion, sale and distribution of digital tokens with the remaining two elements of the token regulations to follow later this year.

While we are eagerly anticipating the release of the draft regulations, which will mark another significant milestone for Gibraltar, the jurisdiction is not resting on its laurels. Her Majesty’s Government of Gibraltar has presented a progressive bill before its parliament to amend the scope of the Proceeds of Crime Act 2015, the jurisdiction’s main legislative instrument concerning anti-money laundering and counter-terrorist financing provisions. The intention is to bring:

“undertakings that receive, whether on their own account or on behalf of another person, proceeds in any form from the sale of tokenised digital assets involving the use of distributed ledger technology or a similar means of recording a digital representation of an asset.”

within the scope of anti-money lauding and counter-terrorist financing provisions.

These developments are further evidence of Gibraltar’s continued effort to make the jurisdiction crypto friendly and provide safe environment for both business and consumers.

 

Hassans International Law Firm is the largest law firm in Gibraltar and a driving force behind Gibraltar’s crypto boom. It enjoys consistently high rankings in leading legal directories and this year has once again been ranked Band 1 by Chambers & Partners. The Hassans’ FinTech team consists of 12 experienced practitioners co-led by partners Anthony Provasoli and Vikram Nagrani.