Implications of Creating Binance US

Willmen Blanco
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Implications of Creating Binance US

The exchange house will be fully compliant with US regulations. The resolution may be motivated by the recommendations that FATF will publish

Binance communicated the prohibition for users of the United States to commercialize with cryptocurrencies in its platform. The Asian company added that the resolution was accompanied by the launch of a new portal registered in that nation, which will adhere to local regulations.

After these announcements, the residents of the United States wonder what is happening with Binance, since the company has been offering exchange services for more than 150 cryptocurrencies in that country for several years. In addition, 15% of the exchange volume in Binance.com belongs to users from that country.

It was reported that the decision affected the company’s valuation on Monday, June 17th. The value of the platform’s token, known as Binance Coin, dropped 9.89%, after the blockade was announced. The price recovered in the course of the afternoon, being quoted again at $35 dollars per unit.

However, analysts say that Binance US will have to compete with Coinbase, Kraken or Geminis on equal terms. The company will decrease its offer of crypto assets, possibly focusing its business on Bitcoin and Ethereum. This seems to indicate that Binance will lose its advantage in the United States, since one of its main attractions was precisely the wide variety of cryptocurrencies admitted.

Binance: Regulated Cryptocurrency Market

The exchange house seems to have decided to avoid legal problems with the Securities and Exchange Commission (SEC) of the United States. The firm said that it will not manage operations, but will only provide its services as a wallet. The company BAM Trading Services will be authorized for the purchase and sale of cryptocurrencies in the country.

It was also reported that its subsidiary, Binance DEX, decided to make the same move with the US market, which it announced two weeks ago. According to Changpeng Zhao, CEO of Binance, it is confirmed that the board of directors has opted to offer a regulated version that pleases the authorities:

“We (Binance.com) have been working tirelessly to improve our regulatory knowledge and capabilities as we aim to provide our services in the utmost compliant and secure manner in whichever new market we plan to enter,” said Zhao.

It was noted that Binance.com users can exchange cryptocurrencies, the vast majority of which are considered by the SEC as securities. That is, all operations related to these assets are under the jurisdiction of the Authority, which can subject the exchange house to an investigation.

With the creation of a new platform complying with all US regulations, Binance can continue working in this market. Of course, the trade will be more limited, but it will not have problems with the authorities.

FATF’s Role in the Matter

It is not entirely conclusive why Binance has decided to launch this platform on this occasion. The United States has had strict regulations for cryptocurrencies for months. However, this did not seem to affect the operation of Binance.com.

Everything seems to point to the Financial Action Task Force (FATF). The intergovernmental body released on Friday, June 21st, a document to monitor the trade of cryptocurrencies worldwide. These legal recommendations could be considered by more than 200 countries, including the United States.

The publication could affect money exchange houses, as well as cryptocurrency funds and custody services, state Bloomberg experts. It was said through the media that the document could demand that startups provide information about their clients and the transactions made in their platform. Therefore, it would not be surprising if US authorities imposed these recommendations to function legally in the country.

By Willmen Blanco

Bank and Stock Market of Spain request regulation of Libra

Maria Rodríguez
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Bank and Stock Market of Spain request regulation of Libra

American, Spanish and Russian authorities consider the cryptoactive as unsafe

Since the irruption of social networks in digital economy, some banks ask for a homogeneous regulation. With the recent announcement of Facebook Inc. about launching its own cryptocurrency, Libra, in 2020, the reactions in favor and against it have not been long in coming. This time, the President of the National Securities Market Commission (CNMV) of Spain, Sebastián Albella, requested a global regulation for Facebook’s digital asset.

“From the National Securities Market Commission (CNMV) and the Bank of Spain, we hope to have regulation at European and international level, because all this new phenomenon represents significant risks of custody, money laundering, among others”, Albella told local media.

One of the reasons why authorities in the United States, United Kingdom, Russia and Spain consider this development to be unsafe is because they believe that Facebook has a lot of information about its users and their families to also manage a digital asset.

According to Albella, Libra is a cryptocurrency that represents a value, but does not fit into the parameters of cryptoactive or ICOs. The official maintains that the cryptocurrency is “interesting”, but it is not part of the competences of the National Securities Market Commission (CNMV), which is only in charge of ICOs and cryptoactives because they have more similarity with securities such as bonds and stocks, in addition to granting rights.

Countries that Do Not Accept Libra

The international community reacted almost immediately after the announcement of the future launch of this cryptocurrency. US lawmakers even asked to stop the project until Facebook representatives presented themselves in the US Congress to respond for some accusations regarding the handling of their users’ information.

Another reaction was the one of the French Finance Minister, Bruno Le Marie, who said he was concerned that the new cryptocurrency be used to launder money or finance terrorism. Le Maire even asked the central banks of the Group of Seven (G7) for a report about the Facebook project no later than mid-July.

Russia is also against Libra. This country is still debating how will be its regulation for digital assets, a rule that would be ready in two weeks. The Chairman of the State Duma Committee on Financial Markets Anatoly Aksakov, declared that the country will not legalize Libra because it represents a threat to the Russian economy.

Banks Call for “Homogenous Regulation”

Some banks demand a homogeneous financial regulation due to the irruption of big technological companies like Facebook in the sector.  The presidents of CaixaBank, Jordi Gual, and Bankia, José Ignacio Goirigolzarri, said that they study the movement of the social network. “It’s a relevant movement, but very initial, there’s a lot of room left to play on regulatory matters, cybersecurity, we’ll play the game and see how everything is going”, said the bank’s Chief Executive.

However, both managers indicated that this and other means of payment need homogeneous regulation regardless of which agent is behind the operation. “The competition is good, but especially if all the competitors play with the same rules, the same activity, identical regulation”, said Goirigolzarri.

Facebook’s cryptocurrency has the support of international companies such as Uber, Visa and PayPal. Its objective would be to simplify the sending of money through the messaging service of WhatsApp, Instagram and Facebook Messenger.

Because future Libra users do not need to have a bank account to operate, it became a potential new threat for banking. They request surveillance in the privacy and use of personal data, as well as the guarantee that cryptocurrencies such as the one proposed by Facebook have enough reserves to ensure their conversion to traditional currencies such as dollars.

By María Rodríguez

One Million Wallets to Boost Digital Bank in Venezuela

Willmen Blanco
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One Million Wallets to Boost Digital Bank in Venezuela

The objective is to start the operations, on a trial basis, of the Digital Bank announced in 2018. The wallets will be assigned to young people registered in a youth care program

The President of Venezuela, Nicolás Maduro, approved a plan to create one million cryptocurrency wallets for young Venezuelans registered in a youth social program. The announcement was broadcast on radio and television nationwide on Wednesday, June 19th, 2019.

The plan was approved within the framework of the celebration of the second anniversary of “Chamba Juvenil”, a social program created to insert young people into productive activities. During the event, where members of the Executive branch and a group of young people participated, it was announced that these cryptocurrency wallets would mark the start of operations, on a trial basis, of the Digital Bank for Youths and Students.

It should be noted that the creation of this entity was announced by Maduro in early May 2018, with an allocated budget of 20 million Petros, the government’s digital currency. At that time, the amount was equivalent to US $1.2 billion. Since then there had been no new announcements about the project, until the one made on Wednesday.

Youth and Sports Minister, Pedro Infante, informed during the event that the creation of the digital wallets is aimed to incorporate the largest number of young Venezuelans into the cryptoeconomy. “This million young people that will open their wallet accounts will join the ecosystem of the Digital Bank for Youths,” he said.

Infante did not explain the procedure for creating the cryptocurrency wallets; thus, certain details were not clear, such as whether young people will control their own private keys. According to studies on the operation of the Petro platform, it is evident that the wallets do not offer users control over their private keys. However, Infante said that this plan includes the participation of the National Superintendence of Crypto Assets and Related Activities (SUNACRIP), institution in charge of coordinating the activities of this sector in Venezuela.

Maduro also approved a financing of 924 million bolivars, equivalent to US $148,124.39 according to the official rate, to initiate exchanges through the Digital Bank. According to the Vice President of the economic sector, Tareck El Aisami, the young beneficiaries will be able to operate and exchange Petros with any of the existing cryptocurrencies in the ecosystem. Until now, the Petro can be purchased only with Bitcoin, Litecoin and Dash, as indicated on its official website. However, the official did not clarify whether the Digital Bank will expand the exchange options regarding the government’s digital currency.

Maduro exhorted the young people present, as well as the representatives of the public banking system, to engage in the development of the cryptocurrency sector in Venezuela. He said that the crypto asset will be a formula to avoid international financial sanctions applied against the country.

On the other hand, Maduro asked the members of the Executive branch concerned with the financial sector to create a special Petro plan that contemplates the use of said currency in credit plans for young people, as well as the acquisition of goods and services. It is a Special Petro Plan for Youths, for the diverse use of cryptocurrencies in young Venezuelan’s daily economic and commercial lives, as well as for the financing of young people’s projects,” said Maduro.

Petro, which was created in 2017 as a government crypto asset, has generated adverse comments, especially due to the scarce information on its operation.

Late last year, few exchange houses were willing to incorporate this digital currency into their wallets and their acceptance was minimal. In response, the Executive branch has sought ways to encourage adoption, such as the payment of bonuses with petros, but there is no evidence of significant use in Venezuelans’ daily lives.

By Willmen Blanco

Austria Seeks to Improve Solar Energy Distribution

Maria Rodríguez
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Austria Seeks to Improve Solar Energy Distribution

The blockchain application that will be used is part of a big project that seeks to turn the city of Graz into one of the cities with sustainable energy and free of carbon emissions

A company dedicated to the commercialization of energy supported by blockchain technology, announced that it will launch a P2P (peer-to-peer) network, which will serve to improve the distribution of solar energy in Graz, one of the largest cities in Austria. The name of that company is Power Ledger and it is one of the companies that are working in the solar energy sector.

To conduct this optimization project, the company of Australian origin, formed a powerful alliance with E-NEXT, which is a subsidiary company dedicated to investigate, create and implement technological advances and innovation in the energy industry. E-NEXT is part of one of the most important energy companies in Austria, Energie Steiermark. They share as a common objective to install a trading platform for energy that is supported with blockchain tools.

The project is part of the intention to optimize the distribution of energy as well as to arrive, one step closer, to the transformation of the system, using 100% of renewable energy, which is free of carbon emissions. For this reason, it is expected that with the help of the Power Ledger technology platform, the unnecessary use of energy (in the distribution of solar energy generated by the company) can be reduced. Similarly, it is expected that some houses could generate their own solar energy. This will also allow citizens to sell the excess energy of their homes.

The first test of Power Ledger will start operating in about 10 homes in the city of Graz. Then, it will achieve bigger number homes. According to local information, the Austrian energy network will support all the process.

The Blockchain Platform of Power Ledger

According to the statement issued by the company’s spokespeople, Power Ledger will enable blockchain support for the first tests of this project that will seek to optimize the distribution of solar energy, generated by the Austrian energy company and households in Graz.

This blockchain platform will allow the protection of identity information in the data of the energy distribution network by taking into account the privacy protection laws of the European Union (EU).

The initiation of these energy improvement projects and the restructuring of the use of sustainable energy system in the city of Graz, are part of a set of measures that the Austrian government conducts. This improvement project is part of the plan called “Austria Smart”, which seeks to solve most of the power generation distribution problems. It has as a final goal to turn the entire city of Graz into 100% sustainable with zero carbon energy by 2050.

It is also known that, at this time, Power Ledger blockchain platforms are being tested in Australia, Japan, Thailand and the United States. This is to adapt the blockchain applications that will be used for the project.

It is important to note that the city of Graz is one of the most technological cities in the European country and that, at the moment, it has a technological center dedicated to blockchain. Its name is BlockchainHub, so surprises could continue.

By María Rodríguez

FATF: Exchanges of Cryptocurrencies Must Share Information of their Users

Maria Rodríguez
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FATF: Exchanges of Cryptocurrencies Must Share Information of their Users

The objective is to operate with transparency, although firms such as Chainalysis believe that this will affect users and services

The Financial Action Task Force (FATF), the international government organization dedicated to combating money laundering and financing of terrorism, gave its 37-member countries its recommendations to regulate cryptocurrency exchanges.

In a recent statement, providers of virtual assets, including exchange houses, are required to provide information about their clients to the institution where the funds are moved when making a withdrawal. That is a controversial request, since it is currently requested from different agents to safeguard the confidential information of their users.

This recommendation makes official the suggestion presented by the FATF in February. One of the requests is that countries must be sure that when they send money, companies must obtain and maintain accurate and required information from the originator (who sends) and the beneficiary (who receives).

In the case of exchanges, they must provide this information to the beneficiary institutions; if there is any. In addition, countries must ensure that beneficiary institutions obtain and maintain the information required (not necessarily accurate) from the originator and the required and accurate information from the beneficiary.

Essential Information

The new FATF guide suggests that in each transfer information about the name of the originator (issuing client), its account number, the number of the account used for the transaction process, as the wallet of virtual assets, must be collected.

In addition, institutions must have the geographic address of the originator, or the national identity number, and the customer identification number (not the transaction number).

In the case of beneficiary, they must give their name and account number where they usually make a transaction; for instance, the wallet of virtual assets.

Taking into account all the aforementioned, the objective would be to avoid the criminal and terrorist use of virtual assets. To make it real, the FATF announced that it will give 12 months of “grace” to comply with the guidelines.

This procedure consists of the so-called travel rule, this is, an old requirement of international banks to send money from a client. However, in the current world of cryptocurrencies this process would affect the privacy of its users and, perhaps, compliance with laws.

The FATF guide even says that nations must ensure that suppliers can mitigate the risks of transfers using mixers or other similar tools. Virtual asset providers must also be able to prohibit transactions with sanctioned people.

Some Days before the G20 Meeting

Chainalysis data firm believes that this rule will generate several services to close, instead of providing greater transparency. The FATF recommendations about anti-money laundering policies are not binding. The member countries adopt them by creating their own legislation. Even so, if they do not comply with the rules, they are blacklisted as dangerous countries for foreign investments.

This announcement was granted some days before the annual meeting of the Group of 20 (G20) to be held in Japan on June 28th and 29th. The G20 proposes to develop a harmonious international cryptocurrency regulation, as well as banks from different countries request a “homologous” regulation due to the launch of Libra, the cryptocurrency of Facebook that would compete with banking institutions.

The request for international regulation of operations with cryptoactives is gaining strength, whilst decisions are being made.

By María Rodríguez

Central Banks are Skeptical about Facebook’s Libra

Willmen Blanco
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Central Banks are Skeptical about Facebook’s Libra

Despite the Bank of England maintains a more open stance, it will follow Libra’s development very closely. The authorities consider that Libra is very far from achieving mass adoption

The financial authorities of Australia, England and the United States have already spoken about the recent launch of Libra, the cryptocurrency announced by Facebook. It was reported that their positions go from skepticism to certain openness.

Until now, the Reserve Bank of Australia, the Bank of England and the Federal Reserve of the United States have positions with respect to the plans of the company Facebook Inc. and the newly created Libra Association, which will manage the operation of the network on which the cryptocurrency will be based.

Philip Lowe, Head of the Reserve Bank of Australia, considers that there is still a long way to go before Facebook’s cryptocurrency becomes an asset of mass use. When Lowe was asked about the implications of the proposal of Facebook in Australian territory, he replied that Libra could be “a long way off”.

“There are a lot of regulatory issues that need to be addressed, and they’ve got to make sure there’s a solid business case, so we must be careful before jumping to conclusions,” said Lowe on Thursday June 13th. Until now, he has held a position of rejection of cryptocurrencies.

For his part, Jerome Powell, President of the Federal Reserve of the United States, considers that not only Libra, but also all other cryptocurrencies are still in their infancy. When he was approached during a press conference on Wednesday June 12th about the possible formulation of monetary policies around cryptocurrencies, Powell simply said: “We are very far from that.”

Concerning the Head of the Bank of England, Mark Joseph Carney, he had already expressed his opinion on Tuesday June 11th. Of the three executives, Carney has shown the most open stance towards Libra. In fact, the English official said that he kept an “open mind” regarding the usefulness of Facebook’s cryptocurrency.

However, Carney assured that the financial institution that he leads will follow “very closely” the social networking service company’s plans regarding the launch of its cryptocurrency. Especially, he expressed concern about how Facebook could make sure to prevent money laundering and ensure the privacy of its users.

Reactions in the Cryptocurrency Ecosystem

Not only authorities from different countries have spoken about Libra. The announcement has also impacted the cryptocurrency ecosystem itself, whose personalities have also referred to Libra.

For example, Changpeng Zhao (CZ), CEO of the Binance exchange house, satirized the privacy of future Libra users. “They know you more than yourself. And now your wallet too. The best against money laundering,” he said.

Udi Wertheimer, developer of Bitcoin, talked about Calibra, the wallet that will be released next year for Libra’s management. He said that this wallet will be “fully owned by Facebook”, not by its users.

On Tuesday, June 18th, the company that owns social networks such as Facebook, WhatsApp and Instagram officialized its plans to create a cryptocurrency. That story had been assembled through rumors and leaks of information during the past months.

By Willmen Blanco

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