Venezuelan Accountants Are Uncertain about How to Keep Records in Petro

Willmen Blanco
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Venezuelan Accountants Are Uncertain about How to Keep Records in Petro

The federation that groups together the colleges of accountants issued on November 13th a statement. The union awaits the publication of the legal instrument in the Gazette to know the details of the measure.

The Federation of Colleges of Public Accountants of Venezuela issued on Wednesday, November 13th, a statement indicating that they are uncertain about the legal guidelines provided to keep accounting records in Petro (PTR), the cryptocurrency that Nicolás Maduro’s government has been promoting since 2017.

In the document, the union expressed uncertainty after Maduro’s announcement, in which he decreed the obligation to keep the accounting records of public and private companies, as well as natural and legal entities, in Petro. There are a total of three issues that accountants highlight about the new state measure.

The federation said that the legal instrument that institutes this requirement for the presentation of financial information in crypto assets has not yet been published, and thus, there is no certainty about its content. It explained that the technical scenario of impact regarding this matter will be analyzed and duly disclosed once the respective guidelines are shown before the obligors.

To discuss the government’s measure, the federation was activated in permanent session while awaiting the official publication of the decree. Venezuelan accountant Silvia Rodríguez reported that the federation’s statement seeks to calm taxpayers in the absence of information.

Rodríguez explained that a legal instrument has not been published for performing the accounting in Petro, but there are only unofficial statements. The intention of the colleges of accountants is that taxpayers should remain calm about it. She said that once it is published in the Official Gazette, pertinent measures will be taken, but at the moment there are no guidelines at all.

Taxes and Sanctions

The opinion expressed by Venezuelan accountants is the most recent episode about the adoption that Maduro’s government intends to lead regarding Petro as a cryptocurrency for commercial and even accounting use, something that does not yet have clear rules. In fact, a group of analysts estimated that accounting records in Petro distort the economy of the oil-producing country.

Maduro revealed last week that his decision to deepen the use of Petro in the accounting arena would be a stimulus for further adoption.

The president of the South American country said that it is a decree through which natural and legal persons, as well as companies, are instructed about the obligatory nature of the records, information and economic facts expressed in sovereign crypto assets, without detriment to their records in bolivars.

It is important to remember that there are US sanctions on Petro and that the citizens of the United States are prohibited from trading with any cryptocurrency related to the Venezuelan government.

Petro is a bet of Maduro’s socialistic government, announced in December 2017, which aims to circumvent the financial blockade imposed by the United States in 2016. However, it has been almost two years since its announcement and Venezuela’s situation tends to become worse rather than better.

By Willmen Blanco

Federal Reserve Explains when Stablecoins Could Be “Risky”

Maria Rodríguez
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Federal Reserve Explains when Stablecoins Could Be “Risky”

FED says that the financial system could face “severe consequences” if a broad-based stablecoin is poorly designed or regulated.

The U.S. Federal Reserve (FED) recently assured that stablecoins are potential risks to the traditional financial system. The bank issued that comment after its inform of financial stability.

However, the institution said that overall financial stability conditions had changed little since its last report in May, and that “the core of the financial sector appears resilient”.

Stablecoins are cryptocurrencies designed to minimize the volatility of this digital coins’ price. But some governments and institutions like FED don’t approve the use of these assets.

According to the Federal Reserve, high levels of corporate debt, the impact of an extended period of low global interest rates, and emerging “stablecoin” proposals could generate “risks”.

Low Credits

In its report, the Federal Reserve highlighted the use of potentially volatile short-term funding posing only a modest risk to financial institutions. Especially, FED is worried about those companies that record-high levels of corporate debt. It says that low global borrowing could make an insurance company, and pension funds to take more risks.

It also considers that new financial technologies such as stablecoins (cryptoassets supported by fiat money or other “stable” assets like precious metals), and the crypto currency network proposed by Facebook could cause problems.

“The current combination of very low credit spreads and high levels of indebtedness among risky nonfinancial corporates, including through leveraged loans, merits heightened vigilance. Over the medium term, the low-for-long environment and the associated incentives to reach for yield and take on additional debt could increase financial vulnerabilities”, FED Governor, Lael Brainard, said.

The official added that “looking farther ahead, the emergence of a stablecoin network with global reach could pose important risks to financial stability”.

Stablecoins Would Need Regulation

FED said that stablecoins need constant surveillance. “Innovations that foster faster, cheaper, and more inclusive payments could complement existing payment systems and improve consumer welfare if appropriately designed and regulated”, the inform explains.

The financial institution commented that a global or broad-based stablecoin could generate “severe consequences” in the financial system if it is “poorly” designed and unregulated.

“The possibility for a stablecoin payment network to quickly achieve global scale introduces important challenges and risks related to financial stability, monetary policy, safeguards against money laundering and terrorist financing, and consumer and investor protection”.

For that reason, FED asks Facebook (which plans to launch its cryptoactive in 2020) to avoid volatility from cryptocurrencies by trying them to an underlying basket of assets.

The Federal Reserve is taking an increasing interest in digital currencies. It is looking for a manager dedicated to research about that topic. Whilst, China is studying to launch its state-backed digital currency.

Besides, a former advisor to US President Donald Trump revealed, last month, he plans to issue his stablecoin, which is not fully backed by reserves.

US lawmakers also have studied to vet existing stablecoin offerings, especially market leader Tether (USDT), which currently faces a multibillion-dollar lawsuit that Bitcoin (BTC) figures have dismissed.

So far, however, low borrowing costs have made debt sustainable, but FED calls on to regulate stablecoins, as well as cryptocurrencies, to avoid any type of future risk. That is its final consideration or advice for the community.

By María Rodríguez

Blockchain Will Allow Carrefour and Nestle to Track Baby Milk

Maria Rodríguez
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Blockchain Will Allow Carrefour and Nestle to Track Baby Milk

Both companies seek to provide customers with data on the origin of important food products and also check the entire supply chain of them.

Retail giants Carrefour and Nestlé are using IBM’s Food Trust blockchain platform to guarantee the quality of baby milk production. The intention is to verify the supply chain of the milk-based formula for infants.

The firm wants its customers to feel confident about the products they are buying, especially with baby milk. The process would be similar to the production of other types of food. Customers will know how, where and when these formulas are produced.

In this sense, the idea is to ensure more transparency of the entire supply chain of formulas from the beginning of the production process to the end of it, and also conduct checks of infant nutrition product’s origins.

For parents, the most important is the safety of their children so food giants in different countries are interested in using blockchain technology to offer true and unalterable information about a variety of food products.

Now, thanks to blockchain technology, the GUIGOZ Bio 2 and 3 infant milk will be traced on the blockchain platform, according to what Carrefour recently informed.

How is This Possible?

Customers would be able to scan a QR code that will be incorporated on the milk’s packaging. Doing this, they will access a range of information.

“Blockchain technology enhances transparency and advances the food transition for extremely high-quality products, which parents expect for infant nutrition. For Nestle and Laboratories Guigoz, this innovative blockchain technology creates a new benchmark for transparency and the high standards of care required to ensure the quality of their products”, the firm said.

Carrefour and Nestle are not new in using blockchain technology in their internal processes. Last April, both companies began using this platform through IBM’s blockchain technology to track the supply chain of Mousline, an instant potatoes brand.

But Carrefour rolled out a similar product to the current one. The company promoted a blockchain-powered product, known as Carrefour Quality Line micro-filtered full-fat milk.

The French supermarket chain Carrefour has had a positive experience using blockchain technology. It reported an increase in sales after implementing that technology and track the supply chain of products like meat, fruit and, of course, milk.

Companies like Cargill, Walmart, Vinamilk (in Vietnam) and an Italian subsidiary of Kraft Heinz are also using blockchain technology to guarantee the quality of the products they sell.

In this way, these companies provide customers with unalterable data (one of the characteristics of blockchain technology) about where the food comes from.

The Benefits for Health

Currently, many people are worried about and interested in what they are eating. This since China’s melamine-adulterated milk scandal and the most recently reported Polish distribution of diseased meat. The scandal of China took place in 2008. Melamine is a chemical compound used in the production of laminates and glues.

To prevent similar cases, last February, French President, Emmanuel Macron, called for increasing the use of “data technologies” such as blockchain in the European Union to verify the origin of food products.

It is expected that more countries and companies use blockchain technology to know and make public how food is being produced and avoid diseases since blockchain offers the possibility of storing information about every step in any chain and, also, that data cannot be changed once it is stored.

By María Rodríguez

BaFin Orders KaratGold Coin to Stop its Operations in Germany

Andres Chavez
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BaFin Orders KaratGold Coin to Stop its Operations in Germany

The German financial regulator has proven time and time again to be very strict when it comes to giving penalties and bans to those that break the law. The latest ecosystem to suffer the long arm of the law is the Karatbars one, as financial watchdogs from Germany and South Africa took separate actions against it.

This week, the BaFin, Germany’s highest financial supervisory authority, revealed that it issued a cease and desist order against the Karabit Foundation late last month because it had been issuing its associated token, the KaratGold Coin, without having the required licensing in the European nation.

The KaratGold Coin is a gold-backed digital asset. On the other hand, the Financial Sector Conduct Authority (FSCA), which is the African country’s primary financial regulator, issued an official warning to the community of crypto investors to avoid any promotions offered by Karatbars International GmbH, which is a German-based company that is, according to reports, associated with the KaratGold coin.

The BaFin order clearly stated that the foundation must “wind up [its] electronic money business” in Germany. At the moment of writing this piece, the financial regulator hadn’t provided another official comment about the matter.

Run On The Ethereum Blockchain

The KaratGold Coin, officially KBC, is on the Ethereum blockchain. Around 30 cryptocurrency exchanges currently list the digital asset, most notably Yobit. It is said that a second coin will be launched in the not so distant future, the KaratBank Coin, or KCB.

The KaratBit foundation has its headquarters in Belize, and it issues the KaratBank Coin and runs the KaratBank network, per information found on the white paper of the KaratBank Coin. The entity is described in the document as unregulated.

In the past few hours, Karatbars International has defended itself and adamantly denied any accusations that were leveled in Handlesblatt, a local business outlet. The Guardian ran the story this week, and the firm itself went to Facebook to talk about the issue.

Handlesblatt had stated that the Foundation had been mandated to return significant resourves to investors, more specifically $100 million in funds. That money is deemed as the equivalent of the amount that was raised through an Initial Coin Offering last year.

At the same time, the CEO of Karatbars Harald Seiz, explained in the Facebook post that the BaFin made a mistake in the order against his company, and instead based its decisions on a scam web page that wasn’t associated with the legitimate one.

Defending Itself

“We are completely transparent, we have nothing to hide, if there are unanswered questions, we will clarify them, of course, we fully cooperate with the relevant authorities and are very anxious to clear up any misunderstandings as fast as possible interested,” Seiz observed in the post.

The executive also explained that the KaratGold Coin (KBC) is a utility token, and as a consequence, it is “not subject to prospectus” requirements under the regulations of the German watchdog. “Karatbars and its products have never damaged a customer or partner,” he said.

In the case of the FSCA decision, it was reported that the regulator stated that KaratBar International had asked investors in South Africa to acquire specific assets without being properly licensed to operate there.

By Andres Chavez

Hahn Air Claims to Be the First Airline to Issue Tickets through Blockchain Technology

Andres Chavez
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Hahn Air Claims to Be the First Airline to Issue Tickets through Blockchain Technology

Air transportation and travel can be among the most benefited sectors by the blockchain revolution, and according to recent developments, it is taking the right steps to take full advantage of the world-changing technology.

As it turns out, it was a German airline named Hahn Air that made the latest move towards blockchain adoption. The company is currently claiming it is the first one to issue a ticket on a blockchain, according to a press release explaining the matter this week.

Hahn Air explained in the document that it is “the first airline that issued a real-world ticket enabled by blockchain technology on the open-source travel distribution platform Winding Tree.” It also stated that it is the first airline “to fly passengers holding blockchain-powered tickets on its scheduled flight from Dusseldorf to Luxemburg on November 18th, 2019.”

The First “Blockchain Passengers”

According to the report, the first “blockchain passengers” in the planet were Maksim Izmaylov, Founder of Winding Tree, Davide Montali, CIO of Winding Tree, and Frederick Nowotny, Head of Sales Engineering at Hahn Air.

Winding Tree is a widely known decentralized platform used in the travel sector, and through its participation, the sale of the ticket using blockchain technology was possible.

“We at Hahn Air are constantly exploring new technologies and we are proud to now demonstrate our technical capability to issue blockchain-powered Hahn Air tickets. We are pleased to be partnering with Winding Tree, the most established company when it comes to distributing travel inventory in the blockchain. Our goal is to investigate and monitor the opportunities this technology holds for travel distribution, even if widespread acceptance is still a vision of the future,” explained Nowotny. 

Great Potential and Endless Applications

Maksim Izmaylov added that “while blockchain technology is currently almost exclusively associated with the cryptocurrency bitcoin it bears great potential for all industries and endless applications. It will have an enormous impact on all areas of economy and commerce over the next decades. We at Winding Tree believe that blockchain will have the power, like NDC, to fundamentally change the face of travel distribution. With a broad knowledge, an innovative mindset and an unparalleled network, Hahn Air is the ideal partner for us.” 

The development is not the first one in which the blockchain technology and digital assets are involved with the travel sector. For example, earlier this month, a travel firm named Alternative Airlines established a strategic alliance with Utrust, a cryptocurrency resource to enable payments with digital assets such as Bitcoin, Ethereum, Dash, DigiBytem and UTK, which is Utrust’ native coin.

Blockchain and Biometrics for Security Checks at Airports

Last month, Zamna (a blockchain startup) managed to raise $5 million to automate airport security checks through the implementation of blockchain and biometrics technology. The firm now has heavyweight customers such as International Airlines Group, Emirates Airlines and United Arab Emirates’ General Directorate of Residency and Foreigners Affairs.

As an effort to promote tourism in the location, the state government of Queensland, an Australian province, issued a Grant to TravelbyBit, a crypto startup, as part of a funding process that exceeded $8.3 million. The company, while letting travelers to reserve their flights by paying in crypto, had the plan to increase the number of tourists in the area.

By Andres Chavez

Bitcoiners Criticize Lee’s New Wallet for Considering It Insecure

Willmen Blanco
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Bitcoiners Criticize Lee’s New Wallet for Considering It Insecure

The physical wallet Ballet was created by Bobby Lee, co-founder of the Chinese exchange house BTCC. The private key of the wallet is pre-recorded on the device, which can be an insecure design.

Mass adoption is crucial to ensure the long-term viability of Bitcoin. However, a wallet should not sacrifice the security of its funds to become a simple and easy-to-use device. Ballet, a wallet created by the co-founder of BTC China (BTCC), Bobby Lee, has opened this discussion in the Bitcoin community.

Ballet is a user-friendly physical wallet, which was launched last month on Kickstarter and has been prominent for its design similar to that of bank cards. The project website describes Ballet as the first physical non-electronic wallet that offers support for multiple cryptocurrencies such as BTC, BCH, ETH, and LTC.

The goal of Ballet is to offer a device to store cryptocurrencies without connecting to the Internet (offline or cold) that is easy to use for novice users. Due to this, it does not have options for its configuration or passwords to operate.

The launch of the device has reached notoriety as its creator is Bobby Lee, who besides having started BTCC operations, is the brother of Litecoin founder Charlie Lee. The executive, as a way of promoting the Ballet wallet, commented on his Twitter account that he was on the same flight as actor Bruce Willis, with whom he talked about Bitcoin and the new wallet.

Beyond Lee’s marketing techniques, the wallet has been criticized by Bitcoin users for its lack of security. The device works with its private key, also known as the recovery phrase, which is generated by the company before the user acquires the device, providing these data at the time of delivery.

Renowned bitcoiners, such as Alistair Milne, the BTC Sessions group and White Rabbit, have denounced that the wallet does not provide the basic security required to manage cryptocurrencies. It is worth mentioning that Rabbit discovered a vulnerability in the firmware of a Bitmain miner this year. Ballet users need to rely on the transparency of the company, which might suffer a leak of information or store the data of its private keys.

Reasons to Distrust

The private key of a wallet is usually created at the time when the user first uses the device or platform. These types of wallets are known to be non-custodial, since users manage their own private keys and, therefore, have full control over their money. These tools were created to eliminate the use of intermediaries, such as banks, companies or exchange houses, to protect their operations.

Most physical wallets, such as Ledger, Trezor or KeepKey, are non-custodial as they seek to provide users with greater security and privacy. Although Ballet is also a physical wallet, the company is the one that previously generates the private keys of its users, which is why owners would not be the only ones to have access to the recovery phrase.

Diego Gurpegui notes that this is the biggest vulnerability of Bobby Lee’s wallet. If the private key of a wallet is created by the company, then there is a possibility that a third party copies or leaks such sensitive information. In this case, all the funds in the wallet are compromised, since the recovery phrase provides full access to the device.

The Ballet team states that wallet recovery phrases are created under a 2-factor process (2FKG) that ensures their privacy. The company notes that the device has an encrypted key (EPK) and a recovery phrase, components that are generated in different locations thousands of kilometers away.

Gurpegui says that, although the two components can be created separately, they are printed together in the wallet. He believes that this feature confirms that the device is not safe since the user must continue relying on the company’s word rather than on the technology itself.

By Willmen Blanco

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