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New Legislation In Ukraine Will Let Crypto Firms Open Bank Accounts

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New Legislation In Ukraine Will Let Crypto Firms Open Bank Accounts
New Legislation In Ukraine Will Let Crypto Firms Open Bank Accounts

Ukraine is getting closer to providing legal status for cryptocurrencies like Bitcoin (BTC) with a new draft bill published on Monday. On May 18, the Ministry of Digital Transformation of Ukraine published a new draft bill “On Virtual Assets” that aims to determine the legal status of crypto assets, the rule of their circulation, and issuance in the country. The current version of the bill is not final and is open for discussion by the crypto community until June 5, 2020.

According to one of the co-authors of the new draft bill, the main purpose of the initiative is to finally enable local crypto firms like exchanges to open bank accounts. Michael Chobanian, the president of the Bitcoin Association Ukraine, an organization that co-authored the new bill alongside state authorities, law firms, and industry players, says that crypto exchanges are still unable to set up a bank account in Ukraine to date. As such, the proposed draft bill is designed to move the crypto industry out of the “grey zone” and finally bring legal presence to companies in Ukraine. According to the bill, virtual asset service providers — crypto exchanges, issuers, and users — “have the right to open accounts in banking and other financial institutions.”

Unlocking sufficient benefits for the crypto industry in Ukraine has its costs though. Earlier this week, Andriy Khavryuchenko, founder of software firm DevNull.AI, tweeted that Ukraine’s bill “On Virtual Assets” would make all crypto wallets in Ukraine illegal, unless they registered with the Ministry. According to the draft law, local firms are required to register in order to operate a fiat-to-crypto business in Ukraine legally, Chobanian said, “If you do it without the registry, you are basically illegal, that’s what the law says,” Chobanian noted. The executive also pointed out that such firms will have to ensure Anti-Money Laundering or AML, and Know Your Customer, or KYC, compliance.

According to Chobanian, the new bill comes in response to a request by the Financial Action Task Force, or FATF. Last year, they announced that they would seek to adopt AML guidelines for crypto by June 2020. Ukraine has been considering a law to regulate crypto assets for at least four years. First reports on Ukrainian crypto regulation came in late 2015, when the Verkhovna Rada of Ukraine announced plans to define the legal status of Bitcoin by January 2016.

Similar to Russia, none of the existing crypto legislation initiatives have been adopted so far in Ukraine. Local authorities are reportedly working on at least three separate bills, including one devoted to cryptocurrency taxation. In late 2019, the Ministry of Digital Transformation of Ukraine reportedly partnered with the world’s largest crypto exchange, Binance, to collaborate on local crypto legislation. According to Chobanian, Binance has not participated in authoring the bill “On Virtual Assets”, but is expected to give their feedback about the proposed law.

Blockchain News

What Does What Happened To Wirecard Mean For Blockchain

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What Does What Happened To Wirecard Mean For Blockchain
What Does What Happened To Wirecard Mean For Blockchain

Some of the most impactful frauds in modern history, from the Enron scandal to the Bernie Madoff investment scheme, were carried out by malignant actors inside or at the helm of corporate entities who manipulated the tangled, esoteric financial records. This is precisely the kind of behavior blockchain technology is designed to obliterate. The rapid demise of the German financial technology company Wirecard, which established itself in the blockchain community as a major crypto debit card issuer, seemingly belongs to the same category of events. In the long term, it might contribute to the growing public demand for increased transparency of corporate financial records and money flows.

The power to issue cryptocurrency debit cards connected to the Visa and Mastercard systems is an enviable one. Businesses that find themselves in this position serve as a gateway between the realm of digital cash and the world where it can be exchanged for goods and services as handily as fiat money. This middleman job is also quite lucrative, as companies that absorb both the volatility risks and trouble of compliance are entitled to hefty fees on every step of the process. 

The regulatory burden, however, is so onerous that there is usually no more than one major principal provider issuing the bulk of Visa and Mastercard cryptocurrency cards at a time. A company called WaveCrest was once backing a handful of the most popular products in this space — such as Cryptopay, Bitwala and TenX — until it fell out of grace with Gibraltar regulators and was shown the door by Visa in early 2018. A German payments group, Wirecard, then stepped in to fill the void, eventually onboarding crypto card providers Crypto.com and Wirex, as well as WaveCrest’s orphans, TenX and Cryptopay. A rare European fintech success story, Wirecard rose to prominence as a global payments processor and triumphantly entered DAX, Germany’s premier stock market index. Wirecard was big in the fintech field long before the term came to be associated with the convergence of finance and blockchain technology. Seamus Donoghue, the vice president of sales and business development at Metaco — a provider of digital asset technology solutions — observed:

“Wirecard AG began processing payments for gambling and pornographic websites 20 years ago and has grown to become a bluechip DAX listed German tech darling. With a peak market capitalization of 25 billion dollars, it counts Olympus, Getty Images, Orange and KLM among its customers. As a payment service provider, merchants use it to accept payment through credit cards, PayPal, Apple Pay and others.”

Operating on a truly sizable scale within the traditional financial system, Wirecard “does not appear to have branched out to service crypto firms in any meaningful way,” said Jeff Truitt, the chief legal officer of Securrency — a firm providing technology infrastructure to the regulatory technology and financial technology industries. Truitt also noted that few of the mainstream press articles covering Wirecard’s meltdown mentioned its affiliation with crypto at all.

Foreshadowing Wirecard’s present collapse was a chain of incidents where the group’s various units were suspected of fishy accounting practices. The Financial Times even ran a specialized series, “House of Wirecard,” looking into various instances where the company’s financial reporting raised questions. Last year, Wirecard emerged largely unscathed from a scandal that uncovered a pattern of systematic book-padding across the firm’s Asian operations. The latest round of controversy began to unfold on June 18, when Ernst & Young auditors reported that they were unable to locate more than $2 billion that was supposed to be sitting in Wirecard’s Philippines-based accounts. 

A few days later, the payment processor’s board admitted that the funds likely did not exist. From there, things escalated quickly with CEO Markus Braun’s arrest on June 23 and Wirecard’s insolvency filing on June 25, followed by the United Kingdom’s financial regulator suspending the firm’s subsidiary that issues Visa crypto debit cards. Fortunately for cardholders, the ban proved to be short-lived, as it was lifted after just three days. Against the backdrop of law enforcement officers searching its Munich headquarters, Wirecard is now going into administration. As the Financial Times reported, potential buyers are already lining up for its various units. Expectedly, in a matter of a few days, the value of the company’s stock all but evaporated. Despite EY claiming that its “robust and extended audit procedures” could do little to detect the complex fraud scheme, disgruntled investors are taking legal action against the auditor for failing to report the abuse soon enough.

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Blockchain News

How Blockchain Can Fix Freelancing?

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How Blockchain Can Fix Freelancing?
How Blockchain Can Fix Freelancing?

A new startup wants to change the way freelance talent and respective clients find each other through a community-run platform. To accomplish this, the project will feature its own governance token. The core premise of the platform, known as Braintrust, is to remove middlemen from the process of hiring highly skilled talent for contract and freelance work — primarily in the IT industry. But unlike the many iterations of this concept born in the initial coin offering era, Braintrust will not force users into a proprietary token for payments. Instead, it borrows some concepts from DeFi governance, and especially Compound, to create a community-run platform.

Jackson believes that existing freelancer aggregation platforms, like Upwork and Fiverr, suffer from fundamentally misaligned incentives between the owners of the platform and its users:

“Their job is to connect buyer and seller, company and talent, and then facilitate the transaction. And then take as large a fee as possible as a percentage of that transaction.”

The fees incurred by freelancers are usually about 20% of the total billed amount. This is the norm for any “two-sided market” born on the internet, with eBay pioneering that model. Normally, these firms can get away with large fees due to the value they add by creating a trusted environment and providing escrow services. But that aspect can be recreated by a peer-to-peer vetting system, Jackson explained. Users will be incentivized to validate new clients and freelancers as additions to the community. 

The system is not a decentralized autonomous organization though, and a non-profit foundation will take care of some aspects of the system, like accepting money. “But that’s just one of many companies or people or entities that are helping build this thing,” Jackson added. Braintrust is also not completely feeless, as the foundation will collect 10% of each transaction from clients. But the exact rates are subject to change by community governance.

Payments on Braintrust will be conducted through traditional fiat USD, though crypto-based payment will also be supported. The Braintrust token, or ., only has governance functionality. Its holders are able to vote on key aspects of the platform: what kind of clients and talent to accept, what features to develop, how much the platform should charge. Jackson hopes that the new model will promote a vibrant talent network that will be actively interested in improving the ecosystem.

“This new model I’m describing actually isn’t possible without a token. The token, [and] the blockchain facilitates replacing the middleman.”

Jackson revealed that Robert Leshner, the founder and CEO of Compound, is an advisor and investor in the project. Furthermore, Braintrust is reusing a fork of Compound’s governance code to power its own systems. The platform’s users will earn the token by contributing to it, for example by evaluating new candidates. 

Unlike some DeFi protocols though, it appears that the platform’s revenue will not be distributed to token holders. Jackson did not wish to go into detail about the token economics, though he promised that it will be explained as Braintrust approaches launch at the end of the year. Braintrust’s concept represents an interesting use of crypto-native systems to solve real-world problems. However, it remains to be seen if it proves to be more successful than previous attempts.

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Iota Is In First Phase En Route To Be A ‘Fully Decentralized Network’ by 2021

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Iota Is In First Phase En Route To Be A ‘Fully Decentralized Network’ by 2021
Iota Is In First Phase En Route To Be A ‘Fully Decentralized Network’ by 2021

Iota, a major blockchain project designed for the Internet of Things, or IOT, has entered the first phase in its roadmap for upgrading the network to IOTA 2.0. According to a June 30 blog post, users can now download the new Pollen release in the first fully decentralized IOTA test network. The release is the first phase in Iota’s IOTA 2.0 transition roadmap, released on June 29. In the roadmap, Iota Foundation laid out three phases to reach the so-called “Coordicide”, an event that will envision the permanent removal of Iota’s Coordinator. Coordinator has been a basic part of IOTA’s network, representing an application run by the IOTA Foundation to digitally confirm valid transactions.

By releasing Pollen, the Iota project marks its first milestone leading up to Coordicide. Dominik Schiener, co-founder of Iota Foundation, outlined that the release is aimed to culminate in a coordinator-less, production-ready network. Schiener continued:

“After years of intensive research, rigorous testing, and tireless efforts by our engineers, we are proud to finally be able to invite everyone to participate in this momentous milestone for the IOTA project. Pollen marks the beginning of the world’s first truly decentralized, scalable, and fee-less Distributed Ledger, which has been IOTA’s promise since day one.”

Alongside other phases, the name of the official testnet of the IOTA 2.0 network release goes in analogy to three stages for the creation of honey: Pollen, Nectar, and Honey. As such, Pollen is set to mainly serve as a research base to validate Coordicide concepts as well as simulate certain attack vectors. According to the foundation, the Pollen phase is expected to finalize Coordicide specifications, providing the “final blueprint of IOTA 2.0.” The second phase, Nectar, is expected to provide a full implementation of Coordicide modules on an incentivized testnet. 

The Nectar stage is aimed to test the network for bugs or issues before finally releasing the mainnet. Expected for release by early Q4 2020, the phase will allow network participants to generate “nectar,” or rewards for finding bugs or potential attack vectors. Honey, the final release candidate for IOTA 2.0, will incorporate all final Coordicide modules, representing the first version of IOTA 2.0, or fully decentralized IOTA mainnet. Schiener says that the foundation expects the network to enter the Honey phase in the first quarter of 2021

In February 2020, Iota introduced Chrysalis, or IOTA 1.5, an intermediate upgrade. Chrysalis added major features to the network, such as reusable addresses and IOTA-based tokens. As reported, Iota Foundation has shut down the Coordinator multiple times in order to tackle major breaches and hacks on its platform. Following criticism on lack of decentralization, Iota released the Coordicide solution in 2019 to replace the Coordinator.

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