Autor Cointelegraph By Veronika Rinecker

Chairman of the Digital Euro Association: ‘The primary aim of the digital euro is still not clear’

Chairman of the Digital Euro Association: ‘The primary aim of the digital euro is still not clear’

Uverejnil používateľ | máj 13, 2022 |

The European Central Bank (ECB) is planning to launch a prototype of the digital euro in 2023. In the next five years, Europe could have its own central bank digital currency (CBDC) up and running. However, there are still many questions surrounding the prospective digital currency. In what form could it be issued? Is the ECB too late to the CBDC party, especially compared to other central banks such as that of the People’s Republic of China? To address these and other questions, Cointelegraph auf Deutsch spoke with Jonas Gross, chairman of the Digital Euro Association (DEA) and member of the expert panel of the European Blockchain Observatory and Forum.New digital cashGross said that compared to digital cash issued by a commercial bank, central bank money carries fewer risks. A commercial bank can always go bankrupt, but a central bank cannot because in an emergency, it can print as much money as needed. And, in times of crisis, people may want, at least in theory, to transfer all their digital money from a private bank to the central bank, which will mean the end of the commercial banks’ business.There are two potential mechanisms to avoid such a scenario: Either to set a cap on the amount of funds that a citizen can hold in central bank money or implement a negative interest rate applied to CBDC funds above a specified limit. “The digital euro is mainly to become a kind of digital cash, also a new payment method and less a store of value. The central bank does not want to take away the banks’ business.”Complete anonymity The digital euro will not be adopted by European Union citizens if it won’t have certain features such as complete anonymity, said Gross. His team did a study that showed that it is technologically possible to make a digital euro just as anonymous as cash. It is also technically possible, Gross maintained, to allow digital euro payments to remain anonymous only up to a certain threshold, let’s say up to 10,000 euros, above which identification could be required. “This can be a great advantage for the digital euro, especially in view of the fact that cash is becoming less and less important,” Gross said. “In an extreme case, in a few decades there could be very little use of cash, as is now the case in China or Sweden. And, if we didn’t have a digital euro that at least partially enables anonymous payments, then we would no longer have any privacy in payments. Even if it seems counterintuitive, the digital euro can promote privacy if one were to implement such a system with a focus on anonymity.”ECB’s indecisionAccording to Gross, the biggest problem at the moment is that the ECB has not yet defined the aim and functions of the prospective digital euro. Last year, the ECB, in cooperation with several member states’ central banks, tested four design options for the digital currency. The first was the digital euro on the KSI blockchain, the core technology that Estonia’s e-government used.The second option is a digital euro built on the TIPS, a European electronic payment system launched in 2018. The third possibility is a hybrid solution that sits in between the blockchain and the conventional banking system. Finally, the fourth is a bearer instrument, which is a sort of money card that can be used for payments or hardware capable of processing offline payments without access to the internet. These are only the rough possibilities, Gross said, and the ECB has not yet settled on a single design because the range of potential applications of the digital euro is not entirely clear. Possible geopolitical risks Projects like the digital yuan, China’s CBDC, could weaken the position of the euro altogether, especially if foreigners are also granted access to using it. Digital currencies can make it easier and cheaper to pay in that currency, Gross explained. Amid the Russia-Ukraine war, the issue of international payments and monetary sanctions is becoming geopolitically important again.“The Russian government says Russian gas must now be paid for in roubles,” Gross said. “The Chinese can theoretically also come up with the idea that the products we have to export, which are currently transacted in U.S. dollars or euros, must from now on be paid for in the Chinese currency, for example in the digital yuan.”China can strengthen its currency by digitizing it, and this could cause the euro to lose some of its influence in the future. This is why the ECB should move faster on the digital euro and decide what it wants to get out of the CBDC after all.This is a short version of the interview with Jonas Gross. You can find the full version here (in German.)

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MEP Stefan Berger: ‘Yes, we need regulations, but you still have to leave room to breathe’

MEP Stefan Berger: ‘Yes, we need regulations, but you still have to leave room to breathe’

Uverejnil používateľ | apr 14, 2022 |

The European Parliament’s Committee on Economic and Monetary Affairs recently approved a draft of its comprehensive Markets in Crypto Assets, or MiCA, crypto regulation package. The new framework covers a wide range of crypto-related subjects, such as the status of all major currencies and stablecoins and the regulation of crypto mining and exchange platforms.Stefan Berger, a member of the Christian Democratic Union (CDU), is the Parliament’s rapporteur for the upcoming MiCA regulation — the person appointed to report on proceedings related to the bill. In the associated negotiations, the German politician vehemently opposed, among other things, a ban on proof-of-work (PoW)-based assets such as Bitcoin (BTC). Cointelegraph auf Deutsch spoke with Berger about the controversies surrounding the MiCA framework and his opinion on the new Transfer of Funds Regulation, also known as TFR. “Critical examinations of one’s own assets are already taking place”The European Commission’s first proposal to introduce MiCA in September 2020 came at the right time, said Berger. “We are at the threshold of this technological development, and the regulation has taken up several points that urgently need to be regulated,” he said. MiCA was designed to be “a purely forward-looking financial market regulation” that was to “be kept technologically neutral.” There was initial agreement on MiCA’s key points in the Parliament, but shortly before the vote, the Left, Greens and Social Democrats suddenly took issue with the regulation on environmental grounds. The discussion revolved around sustainability, said Berger, and whether the European Union should ban consensus mechanisms such as PoW that apparently do not meet certain sustainability criteria.In the end, Berger introduced his own solution: linking crypto assets to the EU taxonomy, which is already used to assess financial investments and funds for their sustainability. “If we have equity funds evaluated by the commission, we can also evaluate crypto assets or stablecoins,” Berger said. “After that, everyone can decide for themselves whether to continue. The rethinking of the financial products in which one invests and the critical examination of one’s own assets are already taking place.”PoW ban is off the tableThe MiCA regulation is currently being considered in trilogue negotiations between the European Commission, Council of Ministers and European Parliament. The proof-of-work ban is off the table, and Berger hopes that the EU institutions will come up with a taxonomy solution “that will not be too complicated.” He said:“I think that in the end, we will come to a good result and that the discussion will not move in the direction of banning proof-of-work again, but exactly the opposite.”The MiCA regulation is expected to come into force between mid- and late 2023. The framework leaves relatively little wiggle room for financial supervisory authorities in the member states, as they must cooperate with European bodies such as the European Banking Authority and European Securities and Markets Authority. Overall, Berger observed, MiCA largely enjoys support from the European crypto community:“Many member states are interested in having such a regulation that allows growth and keeps developments open. We are the first continent to have such a regulation, so many are looking at it.”“Yes, we need regulations”Anti-Money Laundering regulation wasn’t included in the latest MiCA draft, but the European Commission has prepared a separate package, the Transfer of Funds Regulation, to address the issue. This framework lays down stricter disclosure rules for parties engaging in crypto-asset transactions. In principle, Berger welcomes this AML regulation; however, he does not support the part that deals with so-called “unhosted” wallets — crypto accounts that are not managed by a custodian or centralized exchange. Berger said:“If I pay with 100 euros in cash in a supermarket, I don’t have to show my ID card or identify myself. I simply pay with cash, and that’s it. And why should that be different in the crypto sector? I don’t understand that. We in Germany love cash, and we still accept an EU-wide cash payment cap of 10,000 euros. Why don’t we make the same rules of the game for crypto if we already have these rules of the game? Normal world, crypto world. Yes, we need regulations, but you still have to leave room to breathe.”“Cryptos are not always evil”The final decision on the TFR will depend on the results of other trilogue negotiations, and Berger isn’t the rapporteur in that process. The section dealing with “unhosted” wallets was proposed neither by the council nor the commission, Berger said. Similar to the addition of the proposed PoW ban into MiCA, the initiative originated from the side of the Left, the Social Democrats and the Greens.The negotiations, therefore, could still lead to the crypto-hostile TFR language getting dropped, according to Berger. He also hopes that German Finance Minister Christian Lindner, who belongs to the Liberal faction, will work to ensure that the current draft undergoes changes. That, however, can prove difficult: The majority in the council lean Socialist, and Lindner himself is in a coalition with Social Democrats and Greens in Germany. “Many who think in centrist terms don’t want decentralized systems anyway. Basically, we also have a bit of a right-left split in the European Parliament over this issue. But I am still optimistic that the commission and the Council of Ministers will see it a little differently.”Berger noted that it takes time to understand how Bitcoin, stablecoins and other digital assets work, and many politicians in the European Parliament are not quite there yet.Will their understanding improve? Yes, said Berger, as blockchain technology is becoming more and more important. Even the harshest critics should see that “cryptos are not always evil” — after all, more than $130 million in donations in the form of cryptocurrencies have gone to assist Ukrainians during the country’s conflict with Russia, for example. “And that’s why I’m also doing all this with MiCA, to lay the foundations for a somewhat-changed world.”This is a short version of the interview with Stefan Berger. You can find the full version here (in German).

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From taxes to electricity, blockchain adoption is growing in Austria

From taxes to electricity, blockchain adoption is growing in Austria

Uverejnil používateľ | mar 28, 2022 |

Austria has been actively transforming into an attractive location for providers of blockchain-based products, with the government itself experimenting with the technology and trying to create a legal basis upon which companies can use it. With regard to blockchain-based applications in the economy, however, Austria is still in the experimental phase, with most firms still running pilot projects. Still, politicians and economists alike see potential for select industries.Public administration reform via blockchainThe Austrian government is quite open to blockchain innovations, cryptocurrencies aside, and has supported various projects in the public and private sectors.In 2019, a consortium of public administration institutions founded the Austrian Public Service Blockchain (APSB). Active participants in the APSB — i.e., operators of their own blockchain nodes — include the Austrian Economic Chamber, City of Vienna, Federal Computing Center, and Vienna University of Economics and Business Administration. One participant, Kontrollbank, is still in the set-up phase.Meanwhile, private sector blockchain infrastructure is developing in parallel, and the Blockchain Initiative Austria (BIA) association was founded at the beginning of 2021 to advance this purpose. Austriapro — a developer of electronic business standards — is working together with the Austrian Blockchain Center to support the establishment of a secure infrastructure for private-sector blockchain use in Austria. Association members will jointly operate the blockchain nodes in the form of a “consortium chain.”The first pilot project of the APSB and BIA involves data certification and notarization. Here, digital fingerprints of files are placed on the blockchain to be able to prove the unaltered nature of the data at a later point in time. In addition, the Austrian Economic Chamber has provided companies and startups with information about blockchain tech, including a detailed guidebook to help determine whether blockchain makes sense for specific applications. To more strongly promote the technology in the economy, the Austrian Economic Chamber set up a blockchain working group. Its participants primarily exchange information on blockchain topics, discuss current initiatives and best practices, and regularly organize events. Increasing interest from traditional financial institutionsThe blockchain market in Austria and its areas of application are constantly changing. In addition to the government, fintech companies and small financial institutions are also pushing ahead with the technology. Areas of application include, but are not limited to, crypto trading, mining, and custody and payment services, as well as financing via initial coin offerings, initial token offerings and security token offerings.Recently, however, the decentralized technology has also piqued the interest of traditional financial institutions. For example, Raiffeisen Bank — Austria’s second-largest bank — began experimenting with its own euro-pegged stablecoin in the fall of 2020. Employees can already use it to make purchases at the company’s in-house cafeteria.Raiffeisenbank cooperative banks are also big on innovation. Volksbank Raiffeisenbank Bayern Mitte, for example, has been offering Bitcoin (BTC) investment consultants since 2021. It also intends to offer cryptocurrency trading services to clients sometime this year.A ski-jumper in Innsbruck, Austria. Source: Rubblebutz.Oesterreichische Nationalbank (OeNB), Austria’s central bank, is also experimenting with blockchain. In 2021, a new research project known as the Delivery vs. Payment Hybrid Initiative, or DELPHI, launched in Austria. Its goal is to test the issuance of federal bonds against the issuance of a digital euro. Participants in DELPHI include the OeNB; the Austrian Federal Financing Agency, which manages the country’s public debt; and OeKB CSD, which specializes in the central custody of securities and is a subsidiary of credit institution Oesterreichische Kontrollbank. In the process, Austrian financial institutions are researching how to onboard and settle federal bonds using blockchain technology. The OeNB also plans to develop a central bank digital currency.The listing of a Bitcoin product on the Vienna Stock Exchange in September 2020 was another important step, marking the world’s third official regulated market to list such a product. As a result, both Bitcoin and Ether (ETH) products from the Swiss issuer 21Shares AG can be traded on the exchange. In August 2021, the Vienna Stock Exchange also announced the listing of crypto exchange-traded products from ETC Group.Electricity sharing as the energy model of the futureWien Energie, Austria’s largest energy supplier, is currently testing the possible uses of blockchain and smart contracts in electricity sharing models. Together with the startup Riddle & Code, the Austrian electricity provider developed blockchain infrastructure in June 2021 that enables the peer-to-peer trading of electricity. People can join together to form a residential P2P energy community and sell their self-produced solar electricity to each other via the blockchain. Typically, the feed-in, distribution and resale of energy via the electricity grid see high fees charged. But with the electricity sharing model, this process can take place without intermediaries, thanks to the blockchain.Wien Energie plans to expand its solution through smart grids, which decentralized suppliers will use to feed in energy based on the determined supply and demand within a grid.Salzburg AG and Verbund AG, two leading energy companies in Austria, are also working on blockchain-based peer-to-peer trading solutions. Crypto tax reform on the riseAustrian crypto investors are facing new tax regulations. A tax exemption that investors previously enjoyed disappeared on March 1, and crypto income will now incur a 27.5% tax, regardless of how long the assets are held. The new tax applies to all cryptocurrencies acquired since Feb. 28, 2021.Austrian crypto investors are facing new tax regulations. A tax exemption that investors previously enjoyed disappeared on March 1, and crypto income will now incur a 27.5% tax, regardless of how long the assets are held. The new tax applies to all cryptocurrencies acquired since Feb. 28, 2021.The new crypto tax reform is another step toward treating cryptocurrencies the same way as the traditional stock and bond markets. With these new regulations, the state wants to create more legal clarity for investors and, thus, inspire confidence in the new technology. However, it remains to be seen whether the Austrian government will succeed in pushing forward new business models and applications in the blockchain sector.

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Germany's 2021: New regulations, the digital euro and NFTs on the rise

Germany's 2021: New regulations, the digital euro and NFTs on the rise

Uverejnil používateľ | jan 25, 2022 |

An interesting year has come to an end for the crypto industry in Germany. Although blockchain technology and cryptocurrencies have not yet found wide acceptance in the country, more and more domestic institutions and investors are becoming interested in the crypto world thanks to legal clarity.Here, we’ll look back at the most important developments in the German blockchain and cryptocurrency industries in 2021.Securities law reform to embrace blockchainIn terms of legal challenges, German legislators have increasingly been taking a lead role and 2021 was no exception.Since June 2021, the Electronic Securities Act (Gesetz über elektronische Wertpapiere) established digital securities and abolished previously legally mandatory documentations of securities. In December 2021, the first e-securities were already issued under the new law in the form of bearer bonds from DekaBank. The fast-growing restaurant chain Beets & Roots from Stuttgart also recently issued participation rights on the blockchain via the Invesdor platform.Another step to boosting blockchain is the introduction of crypto securities. These are issued and managed on a mostly distributed ledger technology-based securities register and now encompass shares of funds. Now existing as a draft, the new ordinance (Verordnung über Kryptofondsanteile) will come into force in 2022. The Fund Location Act (Fondsstandortgesetz) should also be mentioned as a milestone for the acceptance of digital assets. The act, passed in July 2021, enables special funds like pension and insurers, which are designed specifically for the institutional market, to invest up to 20% of their fund volume in crypto assets. Among large German fund providers, for example, Union Investment has already invested significant capital in Bitcoin (BTC).Blockchain in the finance industryAccording to a recent Bitkom survey, 59% of German companies see blockchain, in general, as an important future technology that is still greatly underestimated. Companies with more than 2,000 employees and/or in the financial sector especially are investigating the use of blockchain. More and more German financial institutions are developing products and platforms for digital assets. Bison, the crypto trading app of the Stuttgart Stock Exchange, is already enjoying notable success. Since the beginning of 2021, the number of active users of Bison has doubled to around 550,000 while the trading volume is already hitting around $6.3 billion, or 5.6 billion euro.Exchanges have been able to expand in the country. Austrian crypto exchange operator Bitpanda opened its new location in Berlin in 2021. Coinbase — which became an officially regulated crypto custodian in Germany in August — is building up its German business at full speed.Banks won’t be left behind either. Private bank Hauck & Aufhäuser expanded its range of services in the area of digital assets, while savings banks want to offer customers trading and investing in major digital currencies like Bitcoin and Ether (ETH) directly from their current accounts.Regulations get stricterWhile the blockchain adoption is increasing in Germany, regulators are responding in different ways to address the risks of an unregulated market.In July 2021, the Federal Ministry of Finance published a draft regulation that could greatly impact the industry. The document concerns the current tax exemption of crypto investments after a hold period of one year. Specifically, it says, “The divestment period is extended […] to ten years if units of a virtual currency or token are used as a source of income and income has been generated from them in at least one calendar year.”For investors with German residency, investments in tokens are generally interesting from a tax point of view because after the one-year holding period no more taxes are due on the capital gains. This will now be changed. If tokens are not only held but used for further returns, the holding period increases to 10 years. It, therefore, becomes difficult for the individual investor to use the token beyond buying and holding, as the reporting process is enormously time-consuming.With this new regulation, Germany loses a lot of competitiveness, but it has advantages too. While the investor is waiting for a tax exemption for the actual investment, they can earn additional returns. But now, the Federal Ministry of Finance is intervening and proposing a change: Anyone who wants to earn an additional return with their crypto assets through staking, for example, automatically extends the holding period from one to ten years.The federal government also wants to regulate the anonymity of cryptocurrencies. In the future, trading platforms such as crypto exchanges will be obliged to collect information from senders and recipients such as names, addresses and account data. In addition, the Money Laundering Act will also apply to cryptocurrencies in the future. Transactions with cryptocurrencies must then be disclosed from a value of $1,120, or 1,000 euro at the time of writing. Soccer opens the door for NFTsThe nonfungible tokens (NFTs) craze exploded in 2021, with museums, auction houses, individual artists and bands taking in record sums with the sale of digital art and certificates in 2021.Fanzone, a German start-up founded in October 2020 that has already been able to win Porsche as an investor, also got involved in the NFT market in 2021. As an official partner of the German Football Association, it offers trading cards of the German men’s, women’s and under21 national teams. There was also a flourishing NFT trade in the art world. Musician Fynn Kliemann published a collection of music jingles, while German telecommunications company Deutsche Telekom and Germany’s foreign broadcaster Deutsche Welle developed NFT artwork for the first time. Blockchain and NFTs have further found novel business applications in media industries. In April 2021, German stock exchange operators Deutsche Börse and Commerzbank announced a partnership with fintech 360X AG to develop digital marketplaces and ecosystems for art and real estate. Similarly, Iota launched a marketplace for NFTs based on tangle technology on DevNet in July 2021.On the way to the digital euro2021 was undoubtedly the year of the central bank digital currencies (CBDC) in Germany. The European Central Bank launched a two-year trial phase to investigate the possible introduction of a digital euro, and Germany has taken a leading role.The Deutsche Bundesbank, the country’s central bank, led a working group of German financial institutions, companies and fintechs to discuss the use of central bank digital currencies.In March 2021, the Deutsche Bundesbank, Deutsche Börse and the German Federal Finance Agency, together with several major international banks, tested a new procedure for processing digital bond purchases. The trial run showed that bridging the gap between traditional payment systems and blockchain-based transactions is possible.Blockchain industry hopes for 2022With more legal clarity and trust, we can expect blockchain innovations and use cases to continue to appear and evolve in Germany in 2022. If market participants, including the so-called Mittelstand, or small and medium-sized enterprises and family businesses — that’s more than 99% of all companies in Germany — are willing to embrace the technology, blockchain has a good chance in Germany.

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