germany - Pwim.Net

German Policymakers Cannot Accept Facebook’s Libra

German Finance Minister Olaf Scholz has stated that Berlin will reject the emergence of parallel currencies such as Facebook’s stablecoin, Libra.

During a panel discussion in Berlin on the 17th of September, Scholz said, “We cannot accept a parallel currency,” before emphasizing, “You have to reject that clearly.”—as reported by Reuters.The German cabinet is expected to adopt a comprehensive blockchain strategy with the aim of digitally enhancing its economy. The strategy also consists of plans to tackle risky new technologies such as Libra, which German policymakers fear could become an alternative currency.

David Marcus, Head of Facebook’s Calibra, continues to reject Germany’s notion that Libra’s cryptocurrency project intends to form a new currency.At a meeting between Libra Founders and 26 global central banks Marcus stated that Libra’s purpose was to create a “better payment network” which would run on top of existing currencies. He assured the group that the creation of new money would remain “the province of sovereign nations.”

Image via Shutterstock

German Government to Revamp its Energy Sector with Blockchain-Based Strategy

Peter Altmaier, Germany’s Federal Minister of Economics, has asserted that blockchain technology, presents tremendous opportunities in pilot projects. As a result, it will come in handy in revamping the nation’s energy sector through strategies, such as digitalization.

The minister has proclaimed that the German government intends to support various blockchain projects, as well as incorporate innovative cross-technological laboratories in the energy industry. He also notes that blockchain technology will instigate process efficiency and transparency in the country’s energy industry.

Altmaier stipulates:

“The potential of the still young blockchain technology is high. Germany is one of the world’s leading locations. With the blockchain strategy, we want to contribute to maintaining and expanding this lead. One focus is on the energy sector. Here we can score double by using the opportunities of blockchain technology in pilot projects and at the same time driving forward the digitization of the energy transition.”

Blockchain technology is transformative

Blockchain technology has the potential of transforming the energy industry by propelling efficiency in financial flows or power trades.

The German government intends to transform the energy sector by using blockchain in the following:

Stimulating and stabilizing innovations in this industry.

Propelling investment opportunities by making framework conditions reliable and precise.

Digitalization of administrative services in this sector.

Spreading information through collaboration and networking.

Olaf Scholz, Germany’s Federal Finance Minister, also weighs in by stipulating that the nation wants to be the desired technology location in the world.

He asserts:

“We want to be at the forefront and further strengthen Germany as a leading technology location. The blockchain technology can contribute to this. It is a building block for the Internet of the future. At the same time, we must protect consumers and state sovereignty. A core element of state sovereignty is the issuing of a currency, we will not leave it to private companies.”

Notably, the blockchain strategy crafted by the German government is intended at exploiting unique opportunities, as well as the mobilization of its capabilities for digital transformation.

Image via Shutterstock

German Startup Plans to Launch Bitcoin ETN on Frankfurt, Luxembourg Stock Exchanges

Scheduled to take place on Dec. 2, Iconic, a German startup, wants to integrate cryptocurrency into the stock market through the listing of their bitcoin derivative with regulated trading on the Frankfurt and Luxembourg Stock Exchanges.

As reported by Handelsblatt on Oct. 29, the startup had already submitted the prospectus of their financial products. The bitcoin derivative exchange-traded note (ETN) will acquire a regular ISIN number and can stand as a viable investment alternative for those interested in Bitcoin. Patrick Lowry, CEO of Iconic said:

“Financial institutions and investors have been asking for an easy way to invest in Bitcoin and other crypto-assets for many years. So far, they have not had an institutional product to do that. Iconic has now developed a similar investment product in Europe and is pleased to be able to offer it on regulated marketplaces in Luxembourg and Frankfurt.”

Lowry also noted that the NYXBT index, the Bitcoin index of the New York Stock Exchange (NYSE) is what underlies the Iconic ETN.

This development in the view of Philipp Sandner, Head of the Blockchain Center of the Frankfurt School of Finance and Management, is quite auspicious as the German startup has succeeded where US providers keep falling. He added:

“Iconic has convinced both regulators and Deutsche Börse. The listing of their Bitcoin product on the Frankfurt Stock Exchange is a remarkable step. The German company has managed what US providers are still failing. A true Bitcoin ETF Europe is thus a significant step closer.”

Image via Shutterstock

Germany’s Federal Financial Regulator Warns Investors Over Bulgarian Crypto Broker

Bulgarian crypto broker, 5 Capital, has been offeringfinancial services to investors without being approved by the Germany financial watchdog, the Federal Financial Supervisory Authority (BaFin). This is against the regulations that guide crypto firms in Germany, as every crypto firm is expected to apply from and obtain an authorized license from BaFin before entering into operation.

In the report, BaFin pointed out that the mentioned Bulgarian crypto broker, which is based in Sofia, offers German customers contracts for difference (CFDs) that supposedly expose them to cryptocurrency instruments.

As a way to keep Germany crypto market safe and reliable, crypto firms operating in Germany are expected to apply for a license from BaFin by the end of 2019 as the new anti-money laundering (AML) regulations have been put in place.

Being wary of the cryptocurrency industry, BaFin has been warning investors about the potential risks associated with the market, especially Bitcoin and other cryptocurrencies. It also warned clients over initial coin offerings (ICOs), informing them of the high risk often associated with various unrealistic technological claims and even scams projects. It focused on brokers who do not provide negative balance protection, which exposes investors/customers to unlimited losses.

BaFin then encouraged traders to be careful while on the 5 Capital website. They advised clients against funding an account or investing via this specific company, strongly warning that non-compliance would not receive any assistance if he/she is duped. What this means is that if 5 Capital ever wishes to function, it has to apply for a license and be in full compliance with BaFin regulations by the end of the year.

Image via Shutterstock

German Financial Regulator Officially Classifies Cryptocurrencies as Financial Instruments

The German Federal Financial Supervisory Authority (BaFin) released a new guideline on classifying cryptocurrencies as financial instruments. The BaFin has taken crypto classification one step further as the previous guidelines only covered security tokens.

In a press release issued on March 2, BaFin described crypto as a “digital representation of a value that has not been issued or guaranteed by any central bank or public body and is not necessarily linked to a currency specified by law and that does not have the legal status of a currency or money, but is accepted as a medium of exchange by natural or legal persons and can be transmitted, stored and traded electronically.”

The fifth EU Money Laundering Directive (AMLD5) began on Jan. 1, and BaFin’s new crypto classification has been a move to adopt a new directive. The process of the AMLD5 adoption would involve changes to Germany’s Banking Act and Payment Supervision Services Act.

License for crypto custody

Companies that are interested in offering crypto custody services in Germany would need to obtain a license from the regulator to be able to offer their services in the country. BaFin has so far received around 40 applications from banks.

German Stock Exchange Boerse Stuttgart has recently announced that its subsidiary Blocknox will begin providing digital asset and cryptocurrency custody services to institutional clients. With new regulations for Germany-based crypto services introduced in January 2020, Blocknox revealed that it has already informed the supervisory authorities for its intent to apply for the required license. This means that Blocknox can provide custody services on a provisional basis. The company intends to submit the final application before the specified deadline to become a regulated financial service provider.

Image via Shutterstock

Microsoft & EU Based Universities Believe Blockchain Can Achieve Paris Agreement Carbon Goals

The deployment of blockchain solutions across all spheres of industry, enterprise, and education represents a major turning point in human history in terms of technological disruption. With blockchain, industries such as financial services are finding alternative modes of cash transfers, with a gradual switching to cryptocurrencies. The use cases of blockchain technology are steadily transcending digital asset opportunities, as key EU partners now believe the technology could help meet the Paris Agreement Carbon Goals. The partners include a coalition of Microsoft and reputable universities in Denmark and Germany.

Possibilities of Blockchain Adoption in Climate Change

The research on the possibilities of deploying blockchain intervention in building an international carbon credit market is documented in a research publication. The paper titled, “Blockchain Application for the Paris Agreement Carbon Market Mechanism – A Decision Framework and Architecture” explores the suitability of blockchain’s distributed ledger technology for a carbon market mechanism based on the Paris Agreement Article 6.2.

Amidst growing concerns on climate change, different sectors are coming together to reduce carbon emissions and mounting greenhouse gases that perpetually deplete the Ozone layer. The Paris agreement seeks to keep global temperatures below two degrees (35.6°F) rise above pre-industrial levels.

The Paris agreement may seem a big feat, but research has shown that the deployment of blockchain will help offer information transparency and immutability. This will help in promoting data security. According to the authors;

“Blockchain application is promising and can yield benefits in enhanced transparency and increased automation… and it offers clear benefits in terms of interoperability with other emerging technologies, automating the process through smart contracts, enhancing transparency, traceability and auditability, and enhancing system security and trust between Parties.”

New Frontiers for Blockchain Technology

Blockchain is no longer solely focussed on the creation of cryptocurrency and digital assets. Huge enterprises and even charity organizations are leveraging massive blockchain-based projects and initiatives in the pursuit of improving our world and creating a better life for everyone.

EU’s Latest Coronavirus Recovery Deal: What’s Wrong with Fiat and What’s Right with Crypto

EU leaders have come into an agreement on an unprecedented plan to jointly borrow €750 billion to be used for the recovery of the coronavirus pandemic, which has taken over 135,000 lives in the EU.

The recovery fund spearheaded by the EU is made up of €390 billion in grants and €360 billion in loans, which will be added to a new Multiannual Financial Framework (MFF), with the sum of €1.074 trillion as a seven-year budget. The heads of state and government have reached a unanimous agreement, resulting in a total financial package of €1.82 trillion.

Germany and France, led by Chancellor Angela Merkel and President Emmanuel Macron have been delighted for the plan’s approval. Macron described the approval as “a historic change of our Europe and eurozone.” Some supporters of the plan said that it was a strong demonstration of solidarity in response to the coronavirus pandemic, and the economic consequences thereafter.

However, Austria, Denmark, the Netherlands, and Sweden opposed the idea of taking on debt to issue the recovery fund. They were reportedly fighting fiercely to reduce the portion of grants in favor of loans. Mark Rutte, the Prime Minister of the Netherlands, stated that he would not label the deal as “historic,” adding “that’s a term I wouldn’t use.”

As the number of coronavirus cases continues to increase globally, especially with the resurgence of cases in a number of EU countries, some leaders had feared that a potential failure to reach an agreement would cause stock markets to crash. With the stock market plummeting, and the sense of distrust brewing in the traditional markets, the crypto market could see a surge in adoption.

With the current debt-driven economy in the EU, we could potentially witness the collapse of the current monetary and financial systems. With blockchain technology, perhaps there could be the end of the monopoly of government-issued currencies, as suggested by Friedrich Hayek — the author of Denationalisation of Money. Bitcoin could be the next answer to financial crises, as suggested by Bouri et al. in 2017, “Bitcoin is often seen as a panacea, replacing financial institutions and providing shelter from sovereign risk and weakness in the global financial system.”

Countries that are in the midst of economic crises could often tighten controls on the financial market, imposing capital controls on their populations. This could mean prevent their citizens from taking cash out of the bank during financial turmoil, some people have turned to Bitcoin and other cryptocurrencies.

Germany's Federal Ministry of Finance Puts Digital Security Adoption at Core of Blockchain Strategy

Germany’s Federal Ministry of Finance (BMF) and the Federal Ministry of Justice and Consumer Protection (BMJV) have introduced a bill that highlights the adoption of digital securities as a crucial element of Germany’s blockchain strategy.

Germany’s official blockchain strategy will feature the adoption of digital securities at its core according to a new draft bill introduced by the German policymakers at the BMF and DMJV.

As translated from the official summary, the draft bill said, “The adaptation of the legal framework to new technologies, specifically blockchain technology serves to strengthen Germany as a business location and to increase transparency, market integrity, and investor protection.”

According to the current legislation in Germany—financial instruments that are classified as securities must have a secure certified document.

The paper certificate is the point of contact for the transfer facts under property law and it bears, among other things, the traffic protection of potential buyers account. The application of blockchain technology could significantly streamline this process and help to guarantee liquidity by providing a digital replacement for paper certificates.

Regulatory Clarity

The draft bill put forward by the German policymakers at the BMF and BMJV also offers some clarity on the regulatory guidelines for digital securities.

Per the summary, “The Federal Financial Supervisory Authority will monitor the issuance and the maintenance of decentralized registers as new financial services in accordance with the eWpG, the KWG and the central securities depository regulation. The draft differentiates between the keeping of a central electronic securities register by a central securities depository and the keeping of registers for issuing electronic bonds made possible by distributed ledger technologies, among other things.”

The adaptation of the legal framework to new technologies, especially blockchain technology, aims to strengthen Germany as a business location and to increase transparency, market integrity and investor protection.

Meanwhile in China

As Germany updates its blockchain infrastructure, leap-frog technology is being integrated all across the globe, particularly in China that has enlisted the help of the nation’s Tech giants.

As reported by Blockchain.News, Chinese tech giant Tencent Holdings has announced that the company will be investing 500 billion yuan ($70 billion) in the next five years in emerging technologies including blockchain, artificial intelligence (AI), cloud computing, and cybersecurity.

Tencent is aiming to strengthen the development of FinTech in China, following the push of accelerating the development of blockchain as stated by the country’s President Xi Jinping.

German Finance Minister Calls for Speedy Interventions in the Rollout of a Digital Euro

German Finance Minister, Olaf Scholz, sees the digital euro as an ideal apparatus to fill the void triggered by a high demand for digital money from businesses and consumers in Europe. Therefore, he has asked the relevant authorities to speed up the rollout of the European Central Bank (ECB) digital currency.

Simplifying domestic and international payments

Speaking at an online conference on future payments in Europe, Scholz stated:

“On the digital euro, I think we should work very hard. It is nothing where we should wait and see.We should be able to decide at any time that now we should do something with a digital euro.”

The issuance of CBDCs seems to be a race against time because, in the eyes of many nations, owning a CBDC is instrumental in having control of the global markets. Furthermore, CBDCs are touted as game-changers in easing domestic and international payments because transfers will be channeled through the internet and possibly even offline.

Pushing CBDC Adoption

Recently, Russia’s central bank revealed that financial regulators are keeping a keen eye on central bank digital currencies (CBDCs) because they see them as silver linings in the expansion of electronic settlements technologies and e-commerce amid the pandemic.

Scholz echoes these sentiments because he believes digital payments will continue being embraced, and CBDCs can step in with amicable solutions. Nevertheless, the International Monetary Fund (IMF) recently asked central banks not to throw caution to the wind when developing CBDCs because they have to come up with strong legal frameworks for them to work.

CBDCs are digital assets pegged to a real-world asset and backed by the central banks meaning that they represent a claim against the bank exactly the way banknotes work. Furthermore, they are blockchain-enabled, representing a new technology for the issuance of central bank money at the wholesale and retail levels.

German Legacy Bank Hauck & Aufhäuser to Debut Crypto Investment Fund in 2021

Germany’s legacy bank with over 222 years of financial services tradition Hauck & Aufhauser will be launching a cryptocurrency fund in January 2021.

According to the official announcement, the cryptocurrency fund will be administered through the HAIC Digital Asset Fund and it is aimed at institutional investors with a minimum investment fund of €200,000 ($243,000), which is the benchmark for the crypto fund. The launch of the crypto investment fund by the German legacy bank comes following the growing embrace of cryptocurrencies by institutional players around the world.

Dr. Holger Sepp, member of the board of Hauck & Aufhäuser, said in a statement:

“We see that digital assets and cryptocurrencies are becoming increasingly attractive with institutional investors. With the launch of our first crypto fund, together with Kapilendo, we have created an innovative investment vehicle that gives our customers inexpensive and secure access to the new crypto asset class while meeting the established quality standards and high demands of Hauck & Aufhäuser.”

Per the announcement, the fund managers will take a passive investment approach and any such investment in cryptocurrencies will be based on each crypto’s current market capitalization. Kapilendo, a German blockchain startup will help provide the secure storage of the assets in the fund.

Cryptocurrency hedge funds are not uncommon in other world economies particularly the United States of America where renowned hedge funds such as Galaxy Digital, and Tudor Investment Corporation, being managed by Billionaire hedge fund manager, Paul Tudor Jones amongst others. Hedge funds are playing a key role in the current bullish rally of bitcoin as they provide the gateway through which other institutional investors stock up on crypto.

The series of support key players such as PayPal, Square, and now Hauck & Aufhauser are granting to Bitcoin and cryptocurrencies as a whole is not just contributing to the current bullish rally in Bitcoin’s activities, but it is projected to attract more investors in the near future.