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Ethereum Dominates European Blockchain Startup Scene

LeadBlock Partners, a European Venture Capital fund that invests in early-stage B2B Blockchain solutions, has revealed in a survey that Ethereum is the most dominant blockchain platform among all the European blockchain startup firms.

According to a survey conducted by LeadBlock looking at over 200 startups in the European Union, around 27% of their blockchain startup firms use the Ethereum blockchain. Trailing closely behind is Hyperledger and Corda, which make up 20 percent and 16 percent of the blockchain ecosystem used by European enterprise-grade blockchain startups.

Ethereum has come a long way since its establishment in 2015, and they are not only dominating among European enterprises but also North American blockchain startup projects.

Why Ethereum is Dominating European Startups

Ethereum is a go-to choice for real estate companies, as it offers robustness, scalability, and overall stable architecture. Also, Ethereum is overall known as one of the best tools for the tokenization of assets. The report by Leadblock Partners also indicates that European blockchain startups tend to choose Ethereum because it helps them cut costs.

On a Scale of 1-10, How Good is Ethereum?

Aside from the fact that it helps cut costs, startup firms tend to resort to the Ethereum blockchain ecosystem, because of its great scalability factor. Scalability refers to the rate and speed at which a blockchain network can process transactions.

According to a news report by Blockchain.News, Ethereum hit over 1 million daily transactions per second last year, something that their counterpart, Bitcoin, has not yet been able to do.

As their technology continues to evolve, Ethereum founder Vitalik Buterin speaks up about the success of his implemented blockchain network and affirmed in a Tweet that its “layer 2 strategy has basically succeeded.”

Buterin has spoken about the difficulty of upgrading blockchain scalability designs and explained that the transaction processing time still leaves room for improvement.

G20 Lays Regulatory Foundation to Accept Digital Payments by November Summit

G20 officials have announced that they will begin the preliminary regulatory groundwork for the group to accept digital payments with the work to commence in October.

As announced by its officials, the G20 summit which is represented by 19 countries and the European Union will begin preparations for the group to accept digital payments in October. Digital currency payments could be realized by G20 members before their next summit slated for Riyadh, Saudi Arabia next month.

According to a Kyudo News on July 11, the G20 officials have enacted a policy change in their acceptance of digital assets and have begun building the necessary infrastructure in direct response to China’s accelerated development of its digital Yuan and Facebook’s development of Libra.

New Risks Means New G20 Policy

At the 2019 G20 summit in Osaka in June 2019, the G20 officials agreed that crypto-assets can bring significant benefit to the financial system and the broader economy, according to the “G20 Osaka Leaders’ Declaration”. The officials also expressed that that digital assets do not carry any threat to monetary stability and asserted that technological innovation in payments could bring significant benefits to the economy.

This stance by the officials was contradicted a few months later in October 2019, when the Financial Stability Board (FSB), the G20 body published a study on the challenges that stablecoins pose to the global economy. The FSB stated that regulatory frameworks have already covered several activities associated with stablecoins, although there are other risks that many national regulators could be left unprepared for as well as threats to public policy and financial regulation.

The G20’s policy towards digital assets which is largely steered by the European Union appears to be continuing to react to developments withing the digital assets space, and this latest policy change enactment appears to be mainly driven by China’s announcement that their central bank digital currency (CBDC) architecture has been completed.

China and EU Trade Talks Included the Potential Cooperation of Central Bank Digital Currencies

The European Union and China recently had trade and economic discussions regarding topics including central bank digital currencies (CBDC) and supply chain.

During the video conference, according to the Ministry of Commerce of China, the two parties discussed the strategic cooperation of the steady recovery and growth of the global economy post-pandemic.

According to the official report, “a series of fruitful results and consensus have been reached in the negotiation of China-EU investment agreement,” including the expansion of the digital economy, and other financial cooperations. The official report said:

“The two sides agreed to strengthen cooperation in green finance and promote the convergence of standards. Agreed to strengthen information sharing and exchanges and cooperation in the fields of digital currency and financial technology.”

The Chinese officials stated that the country is looking forward to singing a memorandum of understanding on bilateral supervision cooperation and to support each other in building international financial centers. The European Union, however, expressed that there will be more reciprocity needed from China before making further progress.

Executive Vice-President of the European Union Valdis Dombrovskis said:

“The current crisis gives us no other option but to work hand in hand with our global partners, including China. By pulling together we can recover more quickly economically, and make progress on areas of mutual interest such as trade and investment relations. However, we also need to address sticking points such as reciprocity in the way our companies are treated. We will need to make further progress on these and other issues ahead of the next leaders’ summit in the autumn.”

The European Commission also stated that a range of regulatory issues in the financial services sector were discussed, including cooperation on green finance, and the international role of the Euro and the Renminbi.

Experimenting with central bank digital currencies

China’s central bank has been rolling out a central bank digital currency, also known as digital currency electronic payment (DCEP). The People’s Bank of China has many times announced that its CBDC was ready, however, it is still currently being tested.

In May 2020, local government employees in the city of Suzhou have received China’s DCEP. The Suzhou municipal government employees will be receiving 50 percent of their transportation subsidies for May in DCEP. The DCEP will be issued to the employees by the nation’s four state-owned banks, including the Agricultural Bank of China, Industrial and Commercial Bank of China, Bank of China, and China Construction Bank. The employees were asked to download digital wallets developed by the banks to be able to receive their subsidies.

Earlier this year, Banque de France, the French central bank launched a program of experiments to test out the potential central bank digital money aimed for interbank settlements.

Potential participants have been invited to submit their applications to experiment with the digital euro, and Banque de France announced the 8 successful applicants: Accenture, Euroclear, HSBC, Iznes, LiquidShare, ProsperUS, Seba bank, and Société Générale Forge.

The three main objectives of the CBDC experiment includes identifying benefits, analyzing potential risks, and modeling as CBDC-based interbank settlement. The French central bank will be working closely with the 8 successful applicants to carry out the experiments in the coming months.

European Central Bank President: Coronavirus Has Accelerated Digital Currency Adoption

COVID-19 has led to an acceleration in digital payments adoption and technological innovation, as seen by the spending pattern of European citizens.

During an online conference with the Deutsche Bundesbank, European Central Bank (ECB) President Christine Lagarde discussed current banking and digital contactless payments.

Digital era is here to stay

According to ECB President Lagarde, consumer preferences have seen an increase in digital contactless payments, with Europeans taking to online platforms for their retail needs during the pandemic. With the digital revolution at our footsteps, “more than four in five Europeans regularly use the internet, up from one in five two decades ago,” said Lagarde. Global payments have been increasingly on the surge, as the pandemic has driven the digitization trend forward.

Lagarde spoke about financial strategies that the European Union could adopt with digital payments and currency to remain competitive on a global scale. She addressed the shift in consumer preferences and the fast-paced digital trend, discussing European Central Bank officials’ current plan for a European Central Bank Digital Currency (CBDC). She said:

“The coronavirus (COVID-19) pandemic has accelerated this trend towards digitalization. E-commerce, which has grown steadily in recent years, increased by almost a fifth in terms of volume of sales between February and June 2020, while in-store sales declined.”

Since COVID-19 erupted, Lagarde has asserted that online payments have soared in volume, recording double-digit growth. With consumers globally transitioning to a new digital normal, Lagarde said:

“This trend is unlikely to be reversed once the pandemic is over.”

Digitalization of Europe

The former chair of the International Monetary Fund (IMF) quoted a survey conducted in 17 European countries that indicated that most European consumers expected to continue leveraging digital services “as often as they do now or even more often,” after the pandemic.

With digital payments, scalability is an important issue, and Lagarde addressed the importance of dominating payments on a global scale to remain competitive. She said that foreign countries have taken the lead in digital payment options, referencing China. The European Central Bank President said:

“Europe has fallen behind in this competition. The lack of payments integration in Europe means that foreign providers have taken the lead. […] In a digital world, consumers must have the possibility to pay with sovereign money.”

Will China be the first to roll out a national CBDC?

The European Central Bank president added that China had managed to transition from cash to mobile payments within a decade and that tech firms were also responsible for driving this digital trend forward. Lagarde mentioned that to stay ahead of the global competition, a CBDC must be implemented. The former head director of the IMF said that the European Union was currently still working out the logistics behind the launch of a central bank digital currency to facilitate more efficient cross-border payments and overall digital transacting.

The results studying the potential effects of the launch of a CBDC in Europe are to be announced in the upcoming weeks.

China has on its end been gaining momentum in the global race to be the first to launch a regulated and national digital currency. The country has been developing its CBDC for quite some time, testing its digital currency electronic payment (DCEP) in wealthier cities around China with small-scale retail transactions.

Five EU Member States Take Position Against Stablecoins

Five members of the 27-member European Union Bloc has urged the body to pass regulations to stiffen the emergence and existence of stablecoins in the region.

The legislation is backed by France, Italy, The Netherlands, Spain, and Germany. As reported by Reuters, the motion being moved by these country’s ministers will see the European Union restrict the use of stablecoins or asset-backed digital currencies like Tether (USDT) in the zone until associated risks and regulations have been duly addressed.

The move by affected projects to seek regulations will be expected to face to face “a tough approach” as German Finance minister Olaf Scholz told reporters during a joint statement. This tough approach will also include a “ban on any private sector activities” that do not meet regulations. “We all agree that it’s our task to keep financial market stable and to ensure that what is a task for states remains a task for states,” Scholz added justifying the need to stiffen stablecoin regulations.

The Move Is an Approach to Clampdown on Facebook Libra

The move by the EU members sponsoring these stablecoin regulations can be seen as an attack on the embattled Facebook Libra project.

“We’re waiting for the Commission to issue very strong and very clear rules to avoid the misuse of cryptocurrencies for terrorist activities or for money laundering,” French Finance Minister Bruno Le Maire said, adding, “The central bank, I mean the ECB, is the only one to be allowed to issue a currency. And this point, it’s something that cannot be jeopardized or weakened by any kind of project including the so-called Libra project.”

Prior to this time, The European Union has been bullish on stablecoins as the European Central Bank President Christine Lagarde once urged the members to take the lead on stablecoins.

The EU however is known to have a dislike for the Libra project with most members of the union as most regulators in the region have scrutinized the project.

Leaked EU Commission Draft on Crypto Assets Law: How Will Cryptocurrency be Regulated?

A leaked European Union legislative draft on digital assets reveals the European Commission’s plans for cryptocurrency trading and issuance across the nation.

Downside of the proposed crypto regulatory measures

The draft legislation, proposed by Europe’s Markets in Crypto-Assets (MiCA) department, is allegedly supposed to be released by the end of the month. It dictates that the European Union wishes to treat cryptocurrency and regulate it as they would any other financial instrument. In that sense, the regulation would follow a clear framework, and legally, cryptocurrency issuance and trading would be treated the same as existent monetary investments and securities markets.

The leaked draft lays down the financial rules in a straightforward manner. A downside of it, however, may be that cryptocurrencies’ innovative growth may be hindered. The field of digital assets has been quickly evolving and new digital innovations are brought forth daily.

As the industry is fast-changing and new technological solutions are proposed on the regular, the question brought forth by many is whether the European Union’s legislative draft may potentially hinder the growth of cryptocurrency assets.

Sneak Peek of the EU crypto assets regulatory draft

The proposals brought forth by MiCA are not unlike that of the EU’s Markets in Financial Instruments Directive (MiFID), which is a regulatory framework overlooking investments, securities markets, and fiat trades. In the legislative draft, MiCA proposes a comprehensive definition of crypto assets, followed by a clear set of rules to follow for those that intend to trade and invest in cryptocurrencies.

The regulatory framework and financial laws apply to investors, cryptocurrency exchanges, platforms, service providers, etc. The guidelines put forth for service providers also bear resemblance with the Financial Action Task Force (FATF)’s definition of a “virtual asset service provider.”

A part of the leaked proposal on crypto asset reads:

“This proposal is part of a broader framework on crypto-assets and distributed ledger technology (DLT), as it is accompanied by proposals ensuring that existing legislation does not present obstacles to the uptake of new technologies while still reaching the relevant regulatory objectives.”

Digital currency adoption on the rise

Recently, in an online conference with the Deutsche Bundesbank, European Central Bank’s President, Christine Lagarde, broached the subject of current banking and digital contactless payments. Lagarde said that with coronavirus, consumer preferences have shifted, and digital contactless payments have been on the rise. This trend is most likely to stay and continue after the pandemic.

Furthermore, she spoke about the European Central Bank’s plans and progress regarding central bank digital currencies (CBDC). She said:

“Europe has fallen behind in this competition. The lack of payments integration in Europe means that foreign providers have taken the lead. […] In a digital world, consumers must have the possibility to pay with sovereign money.”

Leading the pack for CBDC is China, which has already begun the experimentation phase for its digital currency, DCEP. The Digital Cash Electronic Payment, China’s version of a CBDC, is to be fee-free and is being tested in the wealthier cities of the country.

European Central Bank Assesses Potential Digital Euro CBDC Issuance

The European Central Bank (ECB) has been looking into central bank digital currency issuance for quite some time and evaluating whether a digital euro would be a beneficial addition to its financial system.

Reasons for a CBDC issuance

A report assessing the implementations behind a potential central bank digital currency (CBDC) issuance was recently released by the European Central Bank. The report detailed that for a digital euro to thrive, it must comply with the existent financial regulations of the Eurosystem and provide more financial accessibility and efficiency in an increasingly digital age.

The report read:

“A digital euro could support the Eurosystem’s objectives by providing citizens with access to a safe form of money in the fast-changing digital world. This would support Europe’s drive towards continued innovation. It would also contribute to its strategic autonomy by providing an alternative to foreign payment providers for fast and efficient payments in Europe and beyond.”

A potential digital currency issuance could enhance the digitalization of the European economy and be introduced in response to a decline of cash payments, according to the report.

In addition, as the pandemic has changed consumer behavior globally, increased adoption of digital payments caused by social distancing should also be taken into consideration. Therefore, a digital currency for contactless payments could be attractive to consumers. The report read:

“Consumers may even perceive cash to be a vector of infection […] They might therefore become less willing to use cash and more inclined to use contactless and online payments.”

The report depicted that there were still many questions to be answered before a research and development phase could be implemented by the European Central Bank.

Requirements for future CBDC

Before a CBDC could be launched, several key requirements were detailed by the ECB. Based on the report, the digital euro must be in stride with current technology, “be available through the entire euro area and be interoperable with private payment solutions.” The digital currency must possess cash-like features and “provide functionalities that are at least as attractive as those of payment solutions in foreign currencies;” It must also be a tool for improving monetary policy transmission.

A digital euro must “improve the overall resilience of the payment system” and be accessible outside of the Eurozone, all the while remaining consistent with Eurosystem standards. A potential digital currency should provide offline payment alternatives, as well as be free of charge, secure and have a strong European branding; it must also comply with the Eurosystem landscape and provide more financial accessibility.

If a digital euro was to be launched, it must be available outside the Eurozone as well, be secure, cost-efficient, and run on environment-friendly technology aimed at minimizing one’s ecological footprint.

Next experimentation phase to start in 2021?

The report released by the European Central Bank provided a comprehensive assessment of what the Eurosystem landscape should expect if a CBDC was to be issued. However, before moving forward with the experimentation phase, the ECB also expressed the importance of taking into consideration stakeholders and citizens’ stances as well on introducing a hypothetical digital currency within society.

If the project is cleared by European financial authorities, the research and development phase of the digital euro may start sometime in mid-2021, led by the High-Level Task Force on CBDC. As per the report, “Towards mid-2021 the Eurosystem will decide whether to launch a digital euro project, which would start with an investigation phase.”

Digital currency to complement fiat

On several occasions, European Central Bank President Christine Lagarde stressed the importance of keeping in stride with the booming digital age. However, she rectified that though Europe may potentially benefit from a digital euro if the central bank decides to go forward with the project, it will most likely complement fiat currency, “it would not replace it.”

ECB to Meet the Growing Demand for Digital Payments with a CBDC Digital Euro

Christine Lagarde, the President of the European Central Bank (ECB), once again broached the topic of central bank digital currency (CBDC) issuance and why the bank was seriously considering the creation of a digital euro.

What ECB wants to achieve with CBDC

In an interview with local news outlet Le Monde, Christine Lagarde discussed how the coronavirus pandemic drastically changed the economic landscape worldwide. She broached the topic of a digital euro and announced the central bank’s intentions for it. European Central Bank has been driving forward their quest for a CBDC, beginning its experiments by recently launching a public consultation system to get a public opinion of the proposed digital euro.

President Lagarde said:

“It’s simply a matter of making our currency fit for the digital age. When we see how quickly digital payments are spreading, especially among young people, it’s important to meet this demand.”

The former chair of the International Monetary Fund (IMF) emphasized once again that if a digital euro was to be issued, it would complement fiat, rather than replace it. She also clarified on what the European Central Bank hoped to accomplish with a digital currency issuance. She explained:

“If we can have a means of payment that is more efficient, costs less, causes less pollution, can be used as easily as cash, protects privacy while ensuring traceability, reduces the cost of transferring money between countries and strengthens the international role of the euro, we would be remiss not to study it!”

ECB plans for a potential CBDC issuance

The European Central Bank, under Lagarde’s direction, has been thoroughly assessing whether to create a central bank digital currency that could be used in the Euro Zone as well as in other countries. Through a report, it announced that if the project was cleared by European financial authorities, the research and development phase of the digital euro may start sometime in mid-2021. The financial project will be led by the High-Level Task Force on CBDC.

Several criteria were listed by the ECB, to be considered before the launch of a digital euro. The launch of a digital euro by the central bank may be inevitable, especially if other countries progress forward with their CBDC plans and ECB wishes to stay competitive on a global scale. The October report read:

“A digital euro could support the Eurosystem’s objectives by providing citizens with access to a safe form of money in the fast-changing digital world. It would also contribute to its strategic autonomy by providing an alternative to foreign payment providers for fast and efficient payments in Europe and beyond.”

Currently, China appears to be in the lead for potentially finalizing an official central bank digital currency. It has been reported that the country has been actively testing out its pilot version of a CBDC, dubbed digital currency electronic payment (DCEP).

EU’s Move to Bypass Encryption on Platforms like WhatsApp Sparks Indignation

European Union lawmakers have created a draft proposal that aims to circumvent end-to-end encryption on applications such as WhatsApp and Signal, in a move to increase cybersecurity measures.

EU wants to access encrypted chats

Following the news of terrorist attacks in France and Vienna, members of the European Union Council have attempted to up security by proposing a bill that would enable government officials to access data running on end-to-end encrypted applications.

The proposal indicated that the European Union wished to join forces with tech firms to ensure transparency and to enable authorities to verify information circulating on encrypted mediums. The goal was to ensure public security in light of recent events, and to protect victims from future terrorist acts, online child exploitation, organized crime, and the list goes on.

EU proposal met with criticism

The proposal has been met with a lot of criticism, as privacy advocates have argued that the EU’s proposal will do the contrary – by allowing lawmakers to access end-to-end encrypted platforms, this will inhibit the privacy and security of users. Currently, the draft is pending and is to be presented in front of the European Union Council board on November 19.

Expressing her disapproval, German politician and Left Party activist Anke Domscheit-Berg said:

“The proposed EU regulation is an attack on the integrity of digital infrastructure and therefore very dangerous.”

Others followed her sentiment and also said that it may create opportunities for hackers and foreign intelligence to infiltrate communication channels, according to the Associated Press.

EARN IT Act

The proposal is not unlike the EARN It Act proposed by Attorney William Barr, which is currently pending approval from the US Congress. The bill proposal seeks to regulate the internet and to hold website hosts accountable for content circulating on their platforms. Numerous critics have shunned the bill, calling it a direct threat to security provided by end-to-end encryption.

With bills as those mentioned above, censorship would be on the rise, and freedom of speech would be inhibited across the web. Digital experts have viewed these types of proposals as inherently dangerous, as it is seen as a way for governments to exert further control, therefore threatening overall security, privacy, and freedom of speech.

What this entails for the crypto and blockchain community still remains unclear, as certain crypto platforms typically leverage encryption to host user content.

Apple Faces Major Complaint for Tracking Code that Allegedly Violates EU Privacy Regulations

A complaint that alleges that Apple’s “Identifier for Advertisers”(IDFA) code is a privacy breach and a threat to users has been brought to the attention of Spanish and German cybersecurity authorities.

This complaint has been filed by Noyb, a digital rights activist group. The legal complaint is led by Max Schrems, an activist that had previously won successful trials against Facebook in the interest of national data protection. The legal complaint faced by Apple consists of the first major action of its kind faced by the tech company under the European Union (EU)’s jurisdiction.

The activist group alleges that the online tracking code pre-installed on iPhones is a violation of the EU’s privacy regulations, as shared by Reuters. Speaking about the matter, Noyb lawyer Stefano Rossetti explained:

“Apple places codes that are comparable to a cookie in its phones without any consent by the user. This is a clear breach of European Union privacy laws.”

The IDFA, which is an online tracking code set up on every iPhone, tracks an Apple user’s online behavior in order to provide ads or content tailored to the consumer’s preferences. Applications such as Facebook depend heavily on suggestions like this to roll out targeted ads to attract consumers. Rossetti reiterated that this goes against the European Union’s privacy directives, which stipulate that user consent is required before these installations are allowed on devices.

He also said that “tracking must be the rule, not the exception,” as the online tracking tool collects private information on users and stores their data without their consent. This is a direct breach of EU regulations.

Big Tech scrutinized for its monopoly – Is blockchain the answer?

The legal complaint comes in the wake of the antitrust hearing led by the US Congress, in which anti-competitive clauses aimed at regulating the Big Tech – Amazon, Apple, Facebook, and Google (Alphabet) – have been brought up.

The US Judiciary Committee has attempted to rein the monopoly these corporate giants are exerting over the tech industry by enforcing certain regulations that will make it fairer for Big Tech’s competitors, namely smaller firms with less bargaining power.

The effort of the US Congress to disperse the power exerted by these tech companies begs the question of whether a decentralized platform may be the answer in the future. On blockchain networks, transactions are recorded on the block, are transparent, and can be accessed by anyone leveraging the blockchain, guaranteeing traceability and therefore security.