Norwegian Bank Grants Access to Bitcoin Investments Through Online Banking

Norwegian Bank Grants Access to Bitcoin Investments Through Online Banking

Norwegian online bank Skandiabanken now recognizes bitcoin as a new investment class and allows its customers to access their bitcoin holdings through its online banking platform, according to a Norwegian media report.

Through an integration of the Coinbase wallet, which enables the buying and storing of cryptocurrency holdings in bitcoin, ether and litecoin, the bank’s customers now have direct access to these holdings using Skandiabanken’s online banking.

Christoffer Hernæs, head of innovation and development at Skandiabanken, said that Skandiabanken “recognize[s] cryptocurrency as an investment class” and that it has “an equal footing with other securities.”

Skandiabanken is, therefore, one of the first financial institutions to publicly acknowledge bitcoin as an alternative investment asset class at a time when the vast majority of its competitors are shunning the cryptocurrency that many believe poses a threat to the current banking business model.

Hernæs also points out that Japan has recently moved to officially recognize bitcoin as a legal payment method, and that bitcoin’s average daily volatility has decreased from 10 percent to 4 percent last year.

Bitcoin’s decrease in volatility and the sharp increase in price over the last 12 months have led to a wave of new bitcoin users around the world. In Norway, more and more individuals are now also turning their eyes toward digital currencies, Hernæs stated.

Not all banks in Norway share Skandiabanken’s enthusiasm for offering its users access to bitcoin as a new investment class. Norway’s largest bank, DNB, closed the bank account of Norges Bitcoinforening, Norway’s Bitcoin association, in September 2016, citing concerns that the association’s funds may have a connection with money laundering and terrorist financing.

Hernæs acknowledges DNB’s concern in regard to the country’s strict anti-money laundering regulations that require a stringent assessment of each banking client. However, he also said, “We recognize that this is something people want to put their money in. When we think it is right to look at new solutions we can offer, we think it is a better approach than categorically thinking that this is scary.”

The head of Norway’s Bitcoin association, Stephan Nilsson, is pleased about Skandiabanken’s new Bitcoin service: “This is very positive. These are the signals we have been waiting for from the Norwegian banking industry.”

Skandiabanken joins the ranks of the very few banks in Europe that are embracing Bitcoin. Only Germany-based Fidor Bank and Georgia-based Liberty Bank offer similar services to its customers. Fidor Bank allows German customers to buy and sell bitcoin directly through a collaboration with bitcoin.de, and Liberty Bank allows its customers to buy bitcoin through its ATM network in Georgia.

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Irish Banks to Test New Blockchain-Based Interbank Payment System

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Irish lenders Allied Irish Banks, Ulster Bank and Permanent TSB have teamed up with global consultancy Deloitte to work on a pilot program that will leverage blockchain technology to increase the speed and security for the country’s domestic interbank payments.

The collaborative project carries the name Project GreenPay and will use technology developed by Ulster Bank’s parent company, Royal Bank of Scotland (RBS).

The payments platform being trialed is called Emerald. RBS’s Emerald platform, which was built on top of the Ethereum blockchain, has already been tested in the Dublin-based startup hub Dogpatch Labs, where participating banks have been conducting dummy payments among themselves to test the blockchain-based system for performance, stability and accuracy. The platform is able to acknowledge payments in less than 10 seconds while processing large transaction volumes.

The distributed ledger technology pioneered by Bitcoin allows transactions to be recorded and shared with permissioned members on a distributed ledger, enabling payments to be processed in a more secure and efficient manner.

“[The blockchain is] essentially a software that provides a way of recording transactions in a trustworthy way. It has the potential to disrupt multiple industries for the benefit of customers, and we’re determined to investigate how we can harness this for the financial sector,” said Ulster Bank’s chief administrative officer, Ciarán Coyle.  

“When we saw that RBS had that capability, we decided to use the platform in the Republic. We looked at how we could prove it at an industry level and looked at doing collaboration at an industry level,” he added.

For RBS’s Head of Innovation Engineering Richard Crook, it “made sense” for RBS’s Irish subsidiary, Ulster Bank, to adopt its Emerald payment system for the collaborative industry-wide payment network trial. “We’re delighted to support that and further prove that blockchain [technology] can be used to better serve customers,” Crook added.

David Dalton, consulting partner and financial services industry leader at Deloitte Ireland, stated that the pilot project would leverage the company’s blockchain lab in Dublin, and added: “We believe blockchain adoption will happen more quickly than anticipated and without a proactive and well-adopted strategy, banks and insurers risk being locked out of potential innovations enabled by this technology.”

No specific timeframe has been set for when the new payment system could be implemented in the Irish financial system, and there is no guarantee that it will. However, Project GreenPay is another clear signal that banks across the world are embracing blockchain technology to improve the efficiency and security of their services. It will not be long until the blockchain will become an integral part of the global financial system.

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Palestine May Launch Its Own Cryptocurrency as Sovereign Legal Tender

Palestine Plans Cryptocurrency as Sovereign Legal Tender

Palestinian officials are planning for the region of Palestine to receive its own digital currency within the next five years. The motivation for this stems from concerns about potential Israeli interference, Azzam Shawwa, Governor of the Palestinian Monetary Authority (PMA), told the news agency Reuters.

Palestinians have no sovereign currency of their own and use a combination of different currencies, including the euro, the dollar, the Jordanian dinar and the Israeli shekel, to conduct their daily financial transactions.

Due to the lack of a sovereign currency, Palestinian officials have little control over money supply and inflation. This is why the Palestinian Monetary Authority wants to introduce a bitcoin-like digital currency as the territory’s new legal tender, which will be called “the Palestinian Pound,” according to Shawwa.

It is the Palestinian Monetary Authority’s goal to become a fully-fledged and internationally recognized central bank for an independent Palestine. However, it is still unclear how a digital sovereign currency for Palestinians would sit with the 1994 Paris Protocol agreement. The protocol agreement gives the Palestinian Monetary Authority the functions of a central bank; however, it has not granted the institutions the right to issue its own currency. The Paris protocol recommends the use of the shekel in the region and, thereby, effectively provides Israel with a veto over the establishment of a Palestinian currency.

A sovereign digital currency, though, would make sense for Palestine. Not only would it allow the PMA to have more control over the country’s money supply and inflation, but it would also circumvent the practical challenges of delivering hard currency into the country as the PMA has no money-printing facilities.

“If we print currency, to get it into the country you would always need clearance from the Israelis and that could be an obstacle. So that is why we don’t want to go into it,” Shawwa explained to Reuters.  

While the digital Palestinian pound is planned to be issued within the next five years, this will be no easy task for Palestinian authorities, given that the Palestinian Monetary Authority has been trying for over a decade to become an internationally recognized central bank.

Another option for the Palestinian monetary situation would be to keep the current status quo of the four above-mentioned currencies in use or to officially recognize one of the these currencies as the territory’s legal tender. However, a digital sovereign currency would be the preferred choice for Palestine, according to Shawwa.

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Japan to Receive Its First Interest-Paying Bitcoin Deposit Accounts

Japan to Receive First Interest-Paying Bitcoin Deposit Accounts Through Coincheck

A little over a month after Japan declared the digital currency bitcoin (BTC) to be an officially recognized legal payment method, the Japanese bitcoin exchange Coincheck has announced the first interest-paying bitcoin deposit accounts for the Japanese market.

According to a report by the Nikkei Asian Review, the Tokyo-based digital currency exchange will start offering bitcoin fixed-term deposit accounts to its users. Coincheck Lending offers four possible plans, each with a different timeframe and interest rate.

Users will be able to deposit bitcoins for a period of 14 days to receive a 1 percent annual interest rate, a period of 30 days will generate 2 percent annual interest, 90 days will make users 3 percent, and for a one-year bitcoin deposit users will receive 5 percent interest.

That means that a user who, for example, wants to hold 10 BTC as a long-term investment and receive interest on his holdings can generate an interest income of 0.5 BTC, which equates to around $885 at today’s bitcoin exchange rate. All interest payments on the deposits are received at the end of the deposit term.

According to the Coincheck Lending page, bitcoin is currently the only deposit currency on offer, but other digital currencies such as Ethereum, Ripple, Monero, Factrom and Augur will be available to deposit “in the near future.” All verified Coincheck users are able to use the new lending service provided they agree with the company’s loan consumption agreement.

Bitcoin Has Been Paying Interest for a While

While Coincheck is the first bitcoin startup to introduce bitcoin deposits in Japan, it is not the first company to provide this service. The old argument of bitcoin opponents that bitcoin is inferior to fiat currency as it does not pay interest has long been untrue.

Several bitcoin exchanges, including Bitfinex and Poloniex, offer users the possibility to lend bitcoin to margin traders in return for daily interest payments. Furthermore, U.K.-based bitcoin savings account providers BSave and Magnr also pay interest on bitcoin deposits.

Risk/Return on Bitcoin Deposits

The idea of earning a fixed interest on bitcoin holdings may sound appealing to investors, especially those who consider themselves long-term holders. However, a fixed-term bitcoin deposit is not the same as a fixed-term deposit in fiat currency, as the former comes with no regulatory protection should the company with which users deposit their funds goes bankrupt. Coincheck actually highlights this fact on their lending page, stating that “users have a risk [of] not being able to receive deposited cryptocurrencies in a case [where] Coincheck [goes] bankrupt.”

Japan’s Financial Services Agency stated that Coincheck’s deposit service is exempt from the country’s banking regulations as bitcoin is not legal tender. However, should bitcoin become a mainstream payment method in Japan, services such as Coincheck’s bitcoin deposit accounts could receive their own regulatory requirements.

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Deloitte’s RegTech Offering: Blockchain-Powered KYC-as-a-Service Solution

Deloitte's RegTech Offering: Blockchain-Powered KYC-as-a-Service Solution

Global consultancy and accounting firm Deloitte announced that it has developed a new KYC-as-a-service solution using blockchain technology that will facilitate the customer onboarding process for financial institutions.

The proof of concept has been developed by the team headed up by Director and Blockchain Leader Thibault Chollet in Deloitte’s Luxembourg branch. The name of the new solution is KYCstart (pronounced “kickstart”). KYCstart creates digital identities for new customers that can then be used across different platforms and institutions, thereby making the customer onboarding process much more efficient while also reducing costs.

Currently, when a new customer is being onboarded by a financial institution, the process involves an employee of the compliance department electronically filling out KYC (Know Your Customer) forms, which include information such as place of incorporation, ownership structure, whether they are regulated or not, whether they have any legal proceedings against them, and what type of business will be conducted with them.

To gather this information, compliance officers will regularly need to reach out to the potential customer via email and phone as well as scroll through the regulator’s database to find any recorded wrongdoings and confirm the regulatory status of the customer.

Deloitte’s new proposed model of completing the onboarding process, however, involves regulated KYC added-value service providers, which are authorized to perform KYC checks for customers who would like to be onboarded by financial institutions, such as banks, insurance companies and investment management firms.  

Customers and clients could then control who their company information is being shared with and would be able to keep track of the authorizations using blockchain-based smart contracts.

“With this proof of concept and related ecosystem, we demonstrate the benefits of using blockchain [technology] and smart contract[s] to considerably reduce the costs of one of the most important burdens of our institutional clients: KYC and customer onboarding,” Chollet explained.

Blockchain Technology Is Making Waves in RegTech

RegTech (regulatory technology), a relatively new branch of financial technology, focuses on leveraging innovative new technologies to improve regulatory reporting and monitoring as well as compliance processes for financial institutions.

The financial industry is particularly keen on this subsector of fintech as financial regulations have tightened substantially since the 2008 global financial crisis, which has led banks to invest heavily in the areas of KYC/AML, compliance and risk management. Hence, any solution that will help banks to streamline their processes and reduce overheads will be very welcome by financial situations.

As Bitcoin Magazine reported in April, blockchain technology is making waves in RegTech. The integration of distributed ledger technology into compliance systems and processes could save financial institutions up to 50 percent in compliance costs, according to blockchain startup Coinfirm and management consulting firm Accenture.

Using blockchain technology, data security could be improved, manual processes could be digitized, customer onboarding documents could be verified for authenticity, the speed and accuracy of daily regulatory reporting to regulators could be increased, and digital identities could be created for companies, which can then be shared among permissioned financial institutions, as Deloitte’s new KYC-as-a-service product is aiming to do.

Deloitte plans to roll out its new KYC-as-a-service solution to financial institutions this summer, and the newly developed KYCstart will be one of the proposed onboarding channels for this service.

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This Blockchain Startup is Taking Aim at “Fake News”

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The spreading of “fake news” has become a common occurrence and a real problem in today’s media. To combat this phenomenon, Polish blockchain startup Userfeeds plans to tokenize news discovery to incentivize users to rank high-quality news content in order to filter out fake news from real news.

Warsaw-based Userfeeds is developing a new solution that uses “the principles and methods of Bitcoin and Ethereum to create transparent and publicly auditable content networks and ranking algorithms that use digital tokens as ranking signals,” according to a statement on the company’s blog.

The Userfeeds team was co-founded by CEO Maciej Olpinski, who previously worked for Google and YouTube, and CTO Greg Kapkowski, an experienced software engineer. They believe that the current system of news discovery and content ranking which involves links, likes and upvotes is broken as it can easily be manipulated by third parties. This enables “fake news” to rank high on platforms such as Facebook and Twitter, as well as on Google’s news search.  

Userfeeds’ first product, Userfeeds Engine, is built on top of the Ethereum blockchain. It will enable developers, publishers and users to run custom content rankings to produce search results, recommendation systems, news feeds, listicles and sponsored links. Its goal is to create new business model opportunities for content publishers and developers beyond advertising and subscriptions.

The new platform aims to build an incentive-based system that allows digital content such as news articles, blog posts and YouTube videos, for example, to be backed by tokens. These tokens can then be exchanged by users, which produces a time-stamped transaction that can be publicly viewed as a link between the content curator and the content they are backing. This process enables content curators to demonstrate confidence in the content they are posting and makes them accountable.

Userfeeds expects the platform’s reputation tokens to gain value within their specific categories or applications. Furthermore, as is the case for most blockchain-based tokens, they will also be tradable for other currencies to create a mechanism by which content curators can generate revenue for sharing valuable content from trustworthy sources.

To build its new solution, the startup has managed to raise $800,000 in seed funding from BlueYard Capital, Coinbase co-founder Fred Ehrsam and Data Ventures’ Piotr Smolen according to a TechCrunch report.

Now that the company’s seed funding round has been completed, Olpinski told Bitcoin Magazine that it plans “to use this funding to deliver the Userfeeds Engine, the developer focused platform and APIs for ‘tokenized’ content rankings. In addition to that, we’ll build in-house applications that showcase how the Engine can be used to deliver end-user products.”

Userfeeds provides an example of how blockchain technology can be applied to solve modern day problems. By incentivizing content curators to share only well-sourced quality content, we could soon receive more trustworthy and truthful news in social media feeds.

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Bitcoin Investment Trust Ups Its Proposed IPO But Approval Is Still In Question

Bitcoin Investment Trust Ups Its Proposed IPO But Approval Is Still In Question

On January 20, 2017, Grayscale Investments LLC filed for an initial public offering (IPO) for its Bitcoin Investment Trust to be listed on the NYSE Accra exchange in an attempt to bring bitcoin investing to the masses through a publicly tradable investment vehicle in the form of a new stock.

Grayscale Investments, the investment management subsidiary of the Barry Silbert-led Digital Currency Group, established the Bitcoin Investment Trust (BIT) in 2013, hoping to provide investors with the opportunity to invest in the digital currency bitcoin without having to purchase and securely store the digital currency themselves.

The Bitcoin Investment Trust, which carries the ticker GBTC, tracks the TradeBlock XBX Index 24-hour VWAP bitcoin index and charges a 2 percent annual management fee. The Trust currently has around $262 million assets under management. Shares in the Bitcoin Investment Trust can be traded over-the-counter and can be held in traditional investment accounts, such as IRAs and Roth IRAs.

By going public, Grayscale Investments wants to open up its bitcoin investment vehicle to a broader investor base that prefers the comfort of investing in an exchange-traded and fully regulated security.

On May 4, 2017, Grayscale Investments LLC submitted an amendment to its IPO filing with the SEC increasing the size of its proposed IPO from $500 million to $1 billion dollars suggesting that the interest in a publicly-tradeable and regulated investment vehicle that tracks the price of bitcoin would see substantial interest from institutional and private investors.

However, given the SEC recent decisions not to approve the long-awaited Winklevoss Bitcoin ETF (COIN) as well as the SolidX Bitcoin Trust, the chances for the Bitcoin Investment Trust’s IPO to gain regulatory approval are not high.

While Alan Friedland, founder and CEO of Compcoin, doesn’t hold much hope for the ETF approval just yet, he agrees that there is enough demand from established institution investors for bitcoin as an alternative asset class to merit the $1 billion IPO increase.

“Digital coins will be the fastest growing financial market and we are projecting a 1.7 trillion dollar market cap by 2025,” he told Bitcoin Magazine.

When the SEC announced in March that it would not approve the two proposed bitcoin exchange-traded funds, the regulator stated that a bitcoin ETF would require “surveillance-sharing agreements with significant markets for trading the underlying commodity or derivatives on that commodity. And second, those markets must be regulated.”

Since these conditions are still not met for bitcoin, an approval of the Bitcoin Investment Trust looks rather unlikely.  

Spencer Bogart, analyst at Blockchain Capital, thinks that it is “highly unlikely” that this renewed ETF consideration will be approved. “The SEC disapproved the prior two ETFs not because they took issue with the structure of the fund but because the SEC currently considers the major markets on which bitcoin is traded to be too unregulated,” Bogart told Bitcoin Magazine. “Given that this hasn’t changed since the last disapproval, the SEC is unlikely to offer a different response.”

Bogart is more optimistic about the chances of an ETF approval outside of the United States. “I think mainstream investment products will first be approved by foreign regulatory agencies (to some extent this has already happened). In regards to the approval of a U.S.-listed Bitcoin ETF, I think it’s more likely that the SEC changes its view (e.g. with regime change) than it is that the Bitcoin ecosystem changes such that the majority of activity flows to highly regulated markets.”

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