Tuesday, July 30, 2019

When Cash Is Banned, Centralized Cryptos Are Not Going to Save You


Australia is now moving forward with its proposed legislation to ban cash purchases over 10,000 AUD ($6,900) for business purposes. According to the treasury website: "The Black Economy Taskforce recommended this action to tackle tax evasion and other criminal activities." While many Aussies are celebrating Bitcoin's exclusion from this clause, others find the move away from hard cash somewhat chilling. After all, if this finally goes through, banks and the state will be given sole power to deny or approve any and all purchases above this limit. Crypto is not yet affected, but when cash is erased, and the control grid is tightened, be sure that centralized shitcoins are not going to save anyone, either.

Never Mind the Hype Parade
There's always been a lot of zealous hype in crypto circles. Search "bitcoin" on Twitter and you'll be overwhelmed with an avalanche of largely meaningless noise. "Feeling really bullish right now thanks to X, Y, Z!" "If you don't have any Bitcoin by now, you're doing it wrong." "Crypto #Revolution." These hyped-up voices flash in the pan like cheap sparklers, and tend go quiet when the markets tank. They talk about being "unbanked" and the revolution of all things "powered by blockchain."

But at the end of the day, what the hell does all this really mean? A lot of people seem to think that freedom in finance can come easily, without a fight or intentional action. That the dynasty of powers that be are just going to roll over and accept a money they cannot control. For all the shouts of "ditch fiat!" and "why are people still using statist play money?" very few seem to understand the real score, which is this: there's no war being waged on your technology, but on its ability to provide you with financial autonomy, self-sufficiency, and privacy.

The really bad news for these folks, though, is that if Australia pushes through this ban on cash purchases, and they are forced to use only digital assets and credit, it doesn't matter how much of whatever centralized crypto shitcoin anyone holds. At that point, the state is in control, and fiat cash–as evil as it is–would be a lot more friendly.

Five Eyes On Privacy
The alliance of Five Eyes nations (FVEY) really seems to have chosen Australia as a testing ground for implementing Orwellian, anti-privacy measures. Aussies are no longer allowed to be secure in their communications thanks to a controversial new law outlawing encrypted devices and chat applications. Now they are moving away from the privacy of paper money as well. This ostensibly to combat drug trafficking and terrorism via almost completely state-supervised monetary transactions for everyone.

It likely won't be long until similar laws make their way into other FVEY countries like the United States, the U.K., Canada, and New Zealand. If that happens, the only cryptocurrencies that will be able to help secure value are those that are open source, private, secure and decentralized. Not surprisingly, these are the very coins now being specifically targeted by these nations, and slandered as "tools for criminals."

The Survival of Sound Money
If sound money is to survive this financial tyranny, it seems there might be some kind of battle. Many believe technological innovation can make this struggle a more or less peaceful one. When dealing with groups that do not respect the individual, inalienable rights of human beings to their bodies, minds, and property, however, there always comes a point where "no" must be uttered.

Whether it be boldly proclaimed from a stage in the spotlight or silently through a private action or transaction, it still must happen. There is no change without conscious, human action. Bitcoin allows for this by being decentralized. No state has control over the network. "No" is still an option. "No" is still somewhat of an option with fiat paper as well, as much as sensationalists might hate to hear it, or fear to say it.

Cash Is Better Than State-Controlled Shitcoins
These aforementioned hypesters don't get that the propagandized fiat money they rail against (and indeed they are correct in their criticisms) is still much more private and useful than a centralized, government-regulated digital money could or ever would be. The Ripple crowd, for example, brags about how realistic and adoption-friendly they are, the company itself writing a saccharine, syrupy letter to Congress on July 29. They speak about wanting to comply with whatever regulations must be put in place:

We don't take for granted the vital role of central banks in issuing currencies and setting monetary policy in concert with the complex dynamics of economies around the world. For centuries, governments have been well suited for the job because paramount to the acceptance of any currency is trust.

Well-suited? For what job? Is debasing and devaluing people's money, letting terrorists and violent traffickers off the hook, and losing trillions, spending trillions to finance the death and destruction of hundreds of thousands in war and democide "well-suited"? They've lost their minds.

If crypto is to be useful, it has to resemble the models of gold and cash, as far as privacy and user autonomy is concerned, and improve upon them immensely–not make a mealy-mouthed return to state-sponsored, central bank-controlled play money irrelevancy. Imagine being an Australian business owner and trying to buy something, but it's too expensive to pay for with cash. For whatever reason, your bank cannot approve the purchase. Your account is frozen, or their servers are down. You're stuck. This issue doesn't exist with physical money. But it already does with bank accounts and centralized crypto exchanges.

Dignity for the Win
The moment someone tells you in your private life that you're "not allowed" to have something that is rightfully yours, and they try to steal it, you cease trusting them, and cut off the relationship. Why, when it comes to the state, should things be any different?

Like a patient off his head on painkillers, these people talk about pie-in-the-sky crypto utopias to be brought about by "blockchain revolutions" controlled by the very people who oppress them the most. Writing letters to Congress. Laughing at the "idealists" who wish to retain the keys to their holdings.

When cash is out, erased, kaput, if blockchain is going to save people, it's going to be secure money, and not state shitcoins or digital, bank-regulated credit and debt. What the poor Twitter zealots have missed is that this peaceful resistance for non-violent money called the "crypto revolution" is not about just "getting rich," but at its root is about preserving the dignity of precious, individual human life everywhere.

Monday, July 22, 2019

Deutsche Bank Collapse Could Crash Global Financial Markets


German financial services giant Deutsche Bank AG is one of the largest and most important economic institutions in the world. Mainly due to self-imposed scandals, the bank is now having to take drastic measures to stay afloat. Investors everywhere should note that if such a critical piece of the too-big-to-fail banking system falters, it could trigger another global financial crisis.

Deutsche Bank Struggles to Survive
Deutsche Bank AG, the largest banking services group in Germany with well over a trillion dollars worth of assets, has been a major source of concern for international investors, economists and policy makers for more than a couple of years now. In fact, the International Monetary Fund called the bank in 2016 "the most important net contributor to systemic risks" to the global financial system. That same year, various financial publications around the world also started warning that Deutsche might be the "next Lehman Brothers," referring to the investment bank whose collapse is considered to be a major part of starting the 2008 global financial crisis.

Now the German bank appears to be struggling again, with some commentators fearing it will not be able to survive. Just this month it was announced that Deutsche will undergo a major reorganization in order to stop the bleeding. As was widely reported, the restructuring process of the company will include downsizing about a fifth of its employees around the world, approximately 18,000-20,000 people. Additionally it was revealed that Deutsche will cut its investment in information technology by over a billion dollars per year, a move that will hinder it from catching up with competitors or being able to face new challengers in the fintech domain. Moreover, there are also reports in the market that some institutional investment funds are pulling out their assets from the bank, which might signal a lack of trust in the success of the reorganization efforts.

Costly Scandals and Billions in Fines
Before we ponder how the situation might unfold, let's review how Deutsche Bank got to its current state. Over the last few years it has been involved in a number of scandals such as facilitating money laundering which cost the bank a fortune in legal expenses, reputational damage and massive fines. Its stock is now trading at a 30-year low, having lost over 70% in value since 2007. The bank also suffered frequent changes at the top because of this, replacing CEOs and other top executives at an alarming rate for a company of its kind in its industry. In November 2018, its headquarters were even raided by law enforcement officers and representatives of the German tax authority.

The myriad of legal troubles it's faced have cost Deutsche Bank an incredible amount of money in the last few years. For example, in April 2015 it had to agree to pay a combined $2.5 billion in fines to American and British authorities for its involvement in the Libor scandal, where several banks were accused of colluding to fix interest rates widely used around the world. And in January 2017, Deutsche reached a $7.2 billion settlement with the U.S. Justice Department over its sale and pooling of toxic mortgage securities. In total, Deutsche Bank has paid more than $13 billion for litigation since 2012.

What Happens When Too-Big-to-Fail Fails?
So what will happen if Deutsche Bank does not succeed with its reorganization efforts and can no longer survive on its own? If it was operating in an economy governed by real free market principles, the bank would just go out of business the same way other companies do all the time. However, it is more than possible that politicians and bureaucrats will feel a need to intervene to prevent that from happening.

Bodies such as the German government and the European Central Bank (ECB) can say that the failure of the largest commercial banking institution in the economic heart of Europe would have disastrous ramifications for the continent and the world as a lack of investor trust will send an economic shockwave from Germany outward. For this reason they may claim to have no choice but to rescue Deutsche Bank with other people's money. This can be done by several ways, including forcing other banks to buy out Deutsche (there were attempts to merge it with Commerzbank AG in the past), printing more fiat money and giving it away to Deutsche or even outright nationalizing the bank.

Whatever the case may be, it will have lasting implications on the global economy. Besides the knock-on effect on other financial institutions, a collapse of Deutsche Bank, as well as a rescue of it with European citizens' money, could create serious political fallback. As we have seen with the last global crisis financial, disillusioned voters might feel that those in power are sacrificing their savings in order to help rich bankers from too-big-to-fail institutions, fueling a drift to populism in extreme right and left parties, further destabilizing the established order.

A new financial crisis triggered by a collapse of Deutsche Bank can also drive more people to discover cryptocurrency as an alternative to fiat, as the faults of the old system become obvious to understand. A costly and unfair rescue of the failing system will also have such an effect, evoking the Times headline "Chancellor on brink of second bailout for banks" from January 3, 2009, enshrined by Satoshi Nakamoto in the Bitcoin genesis block for a reason.

Monday, July 15, 2019

Crypto Terminals Offer Venezuelans a Bridge to Economic Prosperity


Arley Lozano, founder of the cryptocurrency based startup Panda Group, recently explained how his firm is spreading cryptocurrency adoption throughout Colombia and Venezuela. Panda Group has deployed 10 hybrid cryptocurrency point-of-sale (PoS) terminals that also act as automated teller machines (ATM). Four of the machines are situated near the border of Venezuela, giving refugees from the country and Colombian citizens access to cryptocurrencies like BCH, DAI, and BTC.

Spreading Crypto Adoption Throughout Colombia and Into Venezuela
In January, news.Bitcoin.com reported on Panda Group installing a hybrid PoS terminal that also works as a digital currency dispensing automated teller machine (ATM). At the time the machine was dubbed the "Exeler," but since then the product has been rebranded as Pandabtm. Panda Group's founder Arley Lozano said his team so far has installed 10 Pandabtms around Colombia and four machines are on the border of Venezuela in Cucuta city. The machines can be located on Coinatmradar.com and devices installed near the border are meant to help Venezuelan refugees who cross the Simon Bolivar International Bridge every day

Panda Group emphasized that the machines process VES (Venezuela soberanía bolívar ) and COP (Colombian pesos). The devices allow anyone to process payments through the Xpay.cash payment system, which provides users with the ability to avoid fiat currency volatility. The machines process sales using a digital asset like bitcoin cash (BCH) or visitors can also purchase coins from the Pandabtm. Lozano told news.Bitcoin.com that the company has 15,000 users and three new partnerships. Panda Group is collaborating with Cobru, Gracon, and Pagos Inteligentes. Panda Group's founder explained that the new alliances are meant to bolster true cryptocurrency adoption throughout Latin America.

Opening Operations in Our Own House
In addition to the Pandabtm installations, Lozano said that Panda Group's trading platform Panda.exchange is allowing all Colombians to deposit and withdraw COP. On July 15, accounts will be able to trade 113 different cryptocurrencies and tokens against the local tender. The founder said that this is the first time the door has opened in his country as the team, based in Colombia, have previously worked throughout Panama, Europe, and Portugal.

The founder of the cryptocurrency based startup Panda Group, Arley Lozano, showing off a Pandabtm.
"Panda Group is a Colombian and Venezuelan company that started its operations almost three years ago with the hope of opening our operations in Colombia and generating true Latin American adoption. However, thanks to the slowness and fears we ended up operating outside of Colombia, in regions like Panama and Portugal," Lozano explained, adding:

Now we come to open operations in our own house and we hope that the Colombian government and the local banks see us as allies. Panda Group wants to encourage the true education of bitcoin and cryptocurrencies and heal the wounds caused by Ponzis and pyramid schemes that plagued Colombia.

Pushing the Orange Economy to the Blockchain
Lozano insisted that Panda Group wants the country's citizens to know what true blockchain innovation and cryptocurrency solutions are. He noted that the Panda team is filled with passionate and talented individuals willing to work hard for that goal. The Panda Group founder detailed that Latin America was an "orange economy" filled with cultural and creative entrepreneurs. Between the Panda Group team, the Panda.exchange, Ccoins.io, Pandabtm, and Xpay, his crew is ready to take the "orange economy to the blockchain level." Lozano commented further:
We will help all the individuals who want to learn what cryptocurrency technology is or assist them in buying their first digital currency using one of our many services where you can buy BCH, BTC, and more.

Pandabtm locations situated near the Venezuelan border according to Coinatmradar.com.
The demand for digital assets in Colombia exceeds many other Latin American countries and the region is second to Brazil in terms of adoption. In fact, Rodolfo Andragnes, executive director of NGO Bitcoin Argentina, explained that there is clamor surrounding bitcoin and its "popularity has been impressive considering that it's been only ten years and hundreds of new cryptocurrencies have been created." "Brazil, Argentina, Mexico, Venezuela, and Colombia are the countries with the highest activity and growth in the use of cryptocurrencies throughout Latin America," Andragnes said in June. "Colombia has great potential and more and more people see the benefits of Bitcoin," the NGO Bitcoin Argentina executive explained . Situated in Bogata, Lozano agrees that Colombia is a force to be reckoned with when it comes to digital asset usage and overall activity in Latin America.

One of the Pandabtm machines located in Cucuta near the Simon Bolivar International Bridge is aimed at helping Venezuelan refugees escape the hardships of their stricken economy. The 300-meter-long bridge spans the Táchira River which covers the Colombian and Venezuelan border. Cucuta is an access point for many Venezuelans seeking safety from the country's economic crisis. The Simon Bolivar International Bridge sees a lot of foot traffic as Venezuelan president Nicolás Maduro closed the bridge to vehicular traffic.

"Thousands of Venezuelans cross the bridge," Lozano told us. "No cars are allowed to cross the bridge and only people can cross taking basic stuff like medicine, food, and supplies. They pass through to buy food and some of them are crossing to reach Peru or Ecuador. They pass and sometimes stay a few days — Some pass to work and return home in the night."

The Pandabtm positioned across the Táchira River is in Villa del Rosario City which sees vast numbers of Venezuelan travelers daily. Lozano is pleased with the strides Panda Group has been making and concluded that the company's goals include increasing cryptocurrency ease of use and spreading economic prosperity. The Panda Group founder added:

Our products are designed so that even our grandparents can use them and we are always thinking of our Venezuelan brothers and sisters.

Monday, July 8, 2019

India to Educate High-Ranking Police Officers on Cryptocurrency


India's national police academy has launched a cryptocurrency course for high-ranking officers of the Indian Police Service. Among the objectives of the course are the functioning and legal aspects of cryptocurrencies, as well as investigations of cases involving digital coins. The Indian police continue to regularly uncover crypto-related schemes as the government deliberates on the regulatory framework for cryptocurrency.

Crypto Course for Indian Police Officers
As the Indian government prepares the regulatory framework for cryptocurrency, the country's police force is working on educating law enforcement officers on cryptocurrency. India's premier police training academy, the Sardar Vallabhbhai Patel National Police Academy (SVP NPA), has announced a course on the subject to train officers of the Indian Police Service (IPS).

The course entitled "Investigation of cases involving cryptocurrencies" is scheduled to be held on Sept. 5 and 6 at the institute which is located in Hyderabad. Enrollees will be nominated IPS officers of the rank of Additional Superintendent of Police to Inspector General of Police, the institute explained. The academy has begun accepting nominations for the course; self-nominations are not accepted.

According to the institute's announcement, the course has four objectives. In addition to the "Introduction of [the] functioning of cryptocurrencies and blockchain technology," officers will learn the "legal aspects of cryptocurrencies, crimes committed using cryptocurrencies, [and] investigation of cases involving cryptocurrencies."

The Sardar Vallabhbhai Patel National Police Academy trains IPS officers "who have been selected through an All India based Civil Services Examination," the institute's website describes. The IPS cadre is controlled by the Home Ministry of the Government of India and officers of this service can only be appointed and removed by an order of the President of India, the institute emphasized. "The trained officers will be posted as Assistant Superintendent of Police (ASP) in their respective states under whom the other sub-ranks of [the] police force will be working."

In February, India's Union Home Minister Rajnath Singh inaugurated a national cyber forensics lab, which included a crypto forensics lab, and the Delhi Police's cybercrime unit called the Cyber Protection Awareness and Detection Center (Cypad). It is "the first cybercrime awareness and detection center opened in the country," Delhi Police Commissioner Amulya Patnaik said. "We are now equipped with technology to recover data from damaged hard disks, cryptocurrency analysis, malware forensic and data can be retrieved from 33,000 kinds of mobile models available in the market."

Recent Crypto-Related Schemes Busted by Police
The Indian police have regularly uncovered scams involving digital coins. Over the past two weeks, at least three crypto-related schemes were busted. The Times of India reported on July 5 that the Criminal Investigation Department (CID) has registered another crypto scam from Surat, a large city beside the Tapi River in the west Indian state of Gujarat.

"The CID officials said that the accused had launched 'KBC coin' six months ago and had lured investors with the promise of converting their 10 paise [~$0.0015] into Rs 10 [~$0.15] in no time," the publication detailed. "The value of KBC coins never increased and within six months, the promoters went underground," said CID Director General of Police Ashish Bhatia. This is the sixth crypto-related fraud registered in Surat in two years, the news outlet noted, adding that the police arrested four people in this latest case.

Another crypto-related case was reported on July 3. "Delhi Police arrested a private bank manager in Gurugram for his alleged involvement in several financial frauds using shell companies and other cryptocurrency scams," Mumbai Press wrote. The financial fraud surfaced when a resident of Delhi's Ghonda filed a complaint against a gang that cheated him out of more than Rs 14 lakh (~$20,453) to invest in "Kashhcoin," Additional Commissioner of Police (Crime Branch) AK Singla explained.

The accused Sandeep Singh Dua currently works as a manager at Standard Chartered Bank in Gurugram, the publication noted. He confessed to being an active member of the scheme. Six of his accomplices were also arrested, Singla revealed.

Further, The Times of India reported on June 26 that the Rajasthan Anti-Terrorist Squad (ATS) "unearthed a major bitcoin scam" after four members of an interstate gang that conned several people offering hefty returns were arrested. Multiple complaints were filed alleging that over Rs 15 crore (~$2.2 million) belonging to local investors were swindled on the pretext of extraordinary returns from investing in the scheme. "The investors were assured of soaring profits at an exponential rate. Their unsuspecting victims invested in monivo.com but did not get their returns. The gang then told investors to put their money into another website identified as bet2bet," ATS Director General Bhupendra Singh said.

Legal Aspects of Cryptocurrency
The Indian government is in the process of deliberating on a proposed regulatory framework for cryptocurrency drafted by an interministerial committee headed by Finance Secretary and Secretary of Economic Affairs Subhash Chandra Garg. He said in last month that his committee's report was ready to be submitted to the finance minister for approval.

Indian Finance Minister Nirmala Sitharaman (center) and Finance Secretary Subhash Chandra Garg (right).
However, the government has yet to announce the details of the recommended crypto regulation, leaving room for speculation and rumors including reports of the draft bill entitled "Banning of Cryptocurrency and Regulation of Official Digital Currency." We recently provided a preliminary analysis of the leaked content of this bill. Last week, India participated in the G20 meetings and joined other G20 countries to declare its commitment to applying the crypto standards set by the Financial Action Task Force (FATF).

Meanwhile, the country's supreme court is scheduled to hear the crypto case on July 23. The court is expected to address the banking ban by the central bank after repeatedly postponing the case. The Reserve Bank of India (RBI) issued a circular in April last year banning regulated financial entities from providing services to crypto businesses. The court may also ask the government for the report with the recommended crypto regulation it previously gave the government four weeks to submit this report.

Tuesday, July 2, 2019

Satoshi Comparisons Surface After Grin Founder Exits in Similar Way


Pseudonymous Grin founder Ignotus Peverell has stepped away from the project, reassuring the privacy coin's community that it is in "safe hands." The move has sparked inevitable Satoshi Nakamoto comparisons. Bitcoin's pseudonymous creator used almost identical language eight years ago, writing in an email that "I've moved on to other things," before adding "It's in good hands with Gavin and everyone."

Ignotus Peverell Pulls a Satoshi Nakamoto
Digital currency obsessives love a good mystery, and in Satoshi Nakamoto and to a lesser extent Ignotus Peverell, they've got a couple of crackers. The former needs no introduction, while the latter is the founder of Mimblewimble cryptocurrency Grin. The privacy technology underpinning the coin was posted to a bitcoin IRC chat in 2016 by someone called Tom Elvis Jedusor (Voldemort's real name in the French version of Harry Potter), who then disappeared. It's possible that Jedusor is also Ignotus Peverell (aka Igno), who posted an introduction to Mimblewimble and its Grin implementation on Github in March 2017.

Igno may or may not have created Mimblewimble, but it was he who got the ball rolling by turning Jedusor's concept into a reality. The fact that the two share Harry Potter names is of course no coincidence. Ignotus Peverell was a pure-blood wizard from the 13th century, the youngest of three brothers and recipient of the invisibility cloak that eventually found its way to Harry Potter. It's an apt moniker for a privacy coin developer who's made a point of concealing his identity.

On June 22, Grin member Yeastplume posted on the project's forum: "As some have already noticed, Igno has not been very active over the past few weeks. He recently communicated to us in the council that he needs to be away from the project for a while for personal reasons. We do not have further details on his situation or a timeline for his return, but we anticipate he will be absent for at least a few months, possibly more. As Grin is open source and not reliant on any single person or group in order to progress, our work continues uninterrupted in his absence." He added:

In his message to the council members, Igno stated that Grin was "in the best hands possible" … We individuals in the current council are as committed as ever to doing our part, putting in our best work, and moving Grin forward in the spirit in which Igno started this project. We look forward to Igno's return, and, as always, invite you to join us and help us in making Grin the best it can be.

The departure of Grin's founder has given observers plenty to ponder. While little is known about Igno, his persona has some striking similarities with Satoshi. The first and last names of both characters are of the same length. Moreover, when 'Ignotus' is flipped and a few liberties are taken

In Harry Potter, Ignotus Peverell was described as the wisest and humblest of the three brothers, qualities that could easily be applied to Satoshi, who lasted just 13 months on the Bitcointalk forum he founded before stepping away. Igno, in comparison, lasted 16 months on the Grin forum before bowing out.

Like Satoshi, Ignotus could write lucidly and code proficiently, but had little interest in self-promotion. In his only interview, Grin's founder dismissed certain aspects of Bitcoin's design, asserting "There is no evidence that bitcoin's supply curve is optimal. But there is a growing body of solid research showing that several aspects of it are problematic." He did profess to "believe in the bitcoin ideals" however and stated that he saw Grin as being "much closer to Monero or bitcoin" than to fellow Mimblewimble coin Beam.

Intriguing as the parallels between Satoshi and Ignotus are, the likeliest explanation is that Grin's founder drew his cues from Bitcoin's creator. Any similarities between the two are likely either a deliberate ploy on Igno's part or mere coincidence. What's not a coincidence is that the creators of three of the most innovative and fairly distributed cryptocurrencies to date – bitcoin, monero, and grin – are anonymous. Those who place the greater good over personal glory, it seems, leave a lasting legacy.

V20 Summit Concludes With Promises for Crypto Industry


As the G20 leaders' summit came to a close, the nearby V20 summit concluded with a set of promises for the crypto industry in response to the global crypto standards set by the Financial Action Task Force. A group of national crypto associations aims to engage with government agencies and global policymakers to ensure the industry's best interests are understood and valued at an international level.

V20's Commitment
The two-day Virtual Asset Service Providers Summit or V20 in Osaka, Japan, wrapped up Saturday. Policymakers and representatives of major companies in the crypto industry gathered "to develop a clear roadmap toward full compliance with a new set of recommendations from the Financial Action Task Force (FATF) for the global regulation of crypto asset transactions," the V20 declared. At the same time and in the same city, the G20 leaders' summit also wrapped up Saturday.

At the conclusion of the summit, the V20 announced that a group of national trade associations representing virtual asset service providers (VASPs) signed a Memorandum of Understanding (MOU) "to establish an association to provide a global unified voice for the virtual asset industry." Ronald M. Tucker, convenor of the V20 and founder of the Australian Digital Commerce Association (ADCA), commented:

We've brought everyone on the journey to create a new body that will assist in establishing a means to engage with government agencies and the FATF to ensure our best interests are understood and valued at an international level.

Tucker explained that the agreement signals a commitment to develop a "cooperative regime to underpin dialogue with government and regulators to promote VASP." In addition to supporting "industry-wide information exchange and best practice" and an increased "awareness of the industry and its economic value," it promotes and facilitates "compliance with global industry standards."

The signatories include the ADCA, Singapore Cryptocurrency and Blockchain Industry Association (ACCESS), Japan Blockchain Association (JBA), Korean Blockchain Association (KBCA), Hong Kong Blockchain Association (HKBA) and Taiwan Parliamentary Coalition for Blockchain & Industry Self-Regulatory Organization. A former FATF president, Roger Wilkins AO, witnessed the signing ceremony.

Representatives from a number of major cryptocurrency exchanges, media outlets, law firms, and other crypto service providers participated in the event. They include Bitfinex, Circle, Coinbase, Huobi, Kraken, Okcoin, Coins.ph, B2c2, Bitcoin.com, Bitcoin Australia, Crypto Garage, Deloitte, Diginex, Norton Rose Fulbright, Sentinel Protocol, Anderson Mori & Tomotsune, and Pwc. Several regulated crypto exchange operators in Japan also participated such as Bitflyer, Bitpoint, Coincheck, Huobi, Rakuten Wallet, and SBI Group.

Implementing Controversial FATF Guidelines
The FATF released its new guidance for the risk-based approach for crypto assets and related service providers on June 21. However, some industry participants, particularly service providers such as crypto exchanges, have raised concerns regarding the implementation of some recommendations.

"What we are hearing from industry is that the new rules may have the opposite effect to which they were intended, effectively forcing crypto transactions off the controlled platforms," said the former FATF president. Industry participants believe that applying these requirements "could result in potential unintended consequences, including encouraging P2P transfers via non-custodial wallets, which are significantly harder for law enforcement to track or control," the V20 explained.

Daniel Kelman, Bitcoin.com's resident legal advisor, spoke at the V20. He shared with news.Bitcoin.com that, in essence, the FATF wants VASPs to be regulated and "only licensed and regulated exchanges could participate in a SWIFT-like network for payments between VASPs." He remarked, "Of course this makes no sense, since this is not how crypto works. No one uses an exchange to send money, they'll withdraw to their own wallet and send it anywhere," stressing the need to address this issue first and foremost. Kelman added:

One quote from a regulator stands out: 'combating money laundering will always trump innovation and financial inclusion.' I couldn't disagree more.

"Most importantly, it was clear FATF did not know much about our industry and were just forcing bank rules cookie-cutter style onto crypto. Case in point was my discussion about using the public ledger to assess risk as opposed to the 'Travel Rule,' which is basically impossible for crypto exchanges to implement. I raised the prospect of blockchain analysis to achieve the same result and they were dumbfounded, had never even considered this," he recalled. "The conference was not really about debating these rules. They were essentially forced on us and they wanted to use this event to try to claim 'consensus' that they were fair and valid."

The FATF Standards Summarized
Following the publication of the FATF guidance, blockchain forensics firm Chainalysis gave its feedback on the recommendations. The firm previously made it clear that there are challenges to implementing the FATF standards, as news.Bitcoin.com reported. The full FATF report can be found in this article.

One of the most controversial proposals is Recommendation 16 which mirrors the Travel Rule in the U.S., the firm explained, adding that it requires VASPs to send originator and beneficiary information to other VASPs or financial institutions involved for transactions over 1,000 EUR/USD. The firm emphasized:

There is a substantial technical obstacle to implement the 'secure' and 'immediate' transfer of information to other obliged entities.

The FATF requires countries to regulate and monitor crypto activities and register or license crypto service providers. Financial Intelligence Units need to modernize systems and have a regime to freeze and seize accounts when necessary. In addition, financial institutions, including retail and corporate banks, must not de-risk VASPs or customers with crypto activities, but should instead apply the FATF's risk-based approach and find ways to mitigate risks associated with these activities.

The guidance requires VASPs to have enhanced "due diligence" procedures in place, and include that information in their reporting. Regulators must be able to receive and investigate Suspicious Activity Reports generated from financial institutions and crypto service providers from their compliance efforts.

Moreover, AML compliance needs to be consistent with local privacy laws. "FATF calls upon countries to coordinate and ensure that recommendations are compatible with national data protection and privacy rules," Chainalysis remarked. Anonymity-enhancing cryptocurrencies were highlighted for higher AML risk, the firm described, elaborating:

Guidance leaves room for truly decentralized exchanges and applications with no natural person connected to them to be excluded.

The importance of international information sharing to mitigate the risk of money laundering is also highlighted in the guidance.

FATF Recommendations Are Not Laws

FATF Secretariat Tom Neylan provided the V20 with an update on the new guidance for VASPs. Emphasizing the importance of regulation, he said that at the current stage they are still looking for an appropriate regulatory framework relating to cryptocurrency which would include not only centralized exchanges but also decentralized exchanges and P2P transactions, Coinpost reported. The publication quoted him as saying, "The regulation on the virtual currency industry is not a 'monster' that causes panic," noting that "If implemented, the virtual currency market will become more open."

However, lawyer Jake Chervinsky pointed out soon after the FATF released its guidance that the money-laundering watchdog simply "makes recommendations, not laws," emphasizing that the organization "doesn't have any regulatory authority of its own." He detailed:

Member countries can adopt all, some, or none of FATF's recommendations. There are basically no repercussions for not adopting (or for violating) FATF recommendations.

Speaking at the V20 conference, Takato Fukui, Director General of the Japan Virtual Currency Exchange Association (JVCEA), shared with attendees the best practices for establishing a self-regulatory organization (SRO) for the crypto industry. His association received approval from Japan's top financial regulator, the Financial Services Agency (FSA), to operate as an SRO in October last year.

The FATF was clear in its new guidance that "only competent authorities can act as VASP supervisory or monitoring bodies, and not self-regulatory bodies." The FSA explained to news.Bitcoin.com that it is working closely with the JVCEA on self-regulation. "We expect that through self-regulation, clearer and more detailed rules will be provided as to provisions that are not specified under the existing laws/regulations, as well as self-discipline in areas that are not covered by the laws and regulations," the FSA shared.

Operators of crypto exchanges are expected to follow similar rules to those set by the SRO regardless of whether they are members of the organization. The FSA also clarified that registration of non-SRO members that have not established internal rules equivalent to the SRO's rules can be refused or canceled.

How Japan Regulates Crypto
Japan has often been referred to as the leader when it comes to crypto regulation, having legalized cryptocurrencies as a means of payment back in April 2017 and requiring crypto exchanges to register with the FSA. The country currently has 19 registered crypto exchanges.

At the summit, Bitflyer CEO and Chairman of the JBA Yuzo Kano was on stage describing his country's regulatory landscape, Coinpost reported. He explained that, in Japan, the FSA is in charge of multiple areas so it can respond to any issues flexibly and quickly. With the country's Revised Fund Settlement Act, passed in 2016, the agency succeeded in providing the legal definition for cryptocurrency ahead of most other countries worldwide, Kano detailed. He noted that the industry has been through various twists and turns as it grows such as the Mt. Gox debacle and a couple of major hacks last year. Coincheck, one of the country's largest crypto exchanges, was hacked in January last year and Zaif, a regulated exchange, was hacked in September.

Kano also noted that the term "virtual currencies" will be changed to "crypto assets" from April 2020 since the revised Act on Fund Settlement and the Financial Instruments and Exchange Act were passed the Plenary Session last month. He added that the crypto industry continues to develop year-after-year.

Some Embrace FATF Standards
Huobi Global, which was represented at the V20, openly embraces the FATF standards. "The crypto industry should embrace industry standards & compliance," the company announced Friday. "FATF's guidelines are a chance to develop progressive industry standards, create innovative tech that weeds out abuse while preserving access for legitimate actors, and more."

Elaine Sun Ye Lin, Huobi's Head of Compliance, commented: "We see this as the starting point in an ongoing conversation between the cryptocurrency industry and G20 regulators … we believe direct dialog with FATF will help clarify the unique nature of the crypto industry and allow us to find industry-wide solutions to the problems we face." Huobi Global CEO Livio Weng elaborated:

While it's true these changes do present a challenge to the industry in terms of immediate implementation, they present real opportunities as well.

He believes that "This is a chance for us to develop industry standards to promote growth and protect user rights, develop technology to identify and weed out the bad while preserving the access for legitimate users, and to develop our ability to respond as a community to the issues that the cryptocurrency and blockchain industries face."