The week’s developments in the crypto currency world including HSBC is first bank to finance transaction via hyperledger on We.trade

HSBC is first bank to finance transaction via hyperledger on We.trade

HSBC has reportedly become the first bank to complete financing transaction on European blockchain trade platform we.trade. Since we.trade started the project back in 2017, HSBC recently financed a transaction on the platform within a second round of pilots that started in June 2019, economics magazine Global Trade Review (GTR) reported on Aug. 22. The transaction involved HSBC’s client Beeswift, a Midlands-based producer of protective equipment, and their sale to a Rabobank-banked Dutch firm, the report notes.

Based in Dublin, we.trade provides a Hyperledger Fabric-based tool for managing, tracking and securing open account trade transactions between SMEs in Europe. The platform intends to facilitate three major steps in SME trade, including access to trusted counterparties for direct online transactions, so-called bank payment undertaking, which is an online equivalent of a letter of credit, and financing requesting, according to the report.

Source: “HSBC Is First Bank to Finance Transaction Via Hyperledger on We.trade”, available at https://cointelegraph.com/news/hsbc-is-first-bank-to-finance-transaction-via-hyperledger-on-wetrade

Constellation Network signs deal with US Air Force to provide blockchain solutions

Constellation Network Inc., a San Francisco based technology and blockchain company, signed a working contract with the United States Air Force as part of USAF Small Business Innovation Research (SBIR) Phase I program. Constellation’s technology will help securely unlock traditionally siloed and non-accessible data and data sources. Multi-domain, cross-service stakeholders are disbursed, disconnected and complicated and the data created by each domain is either non-accessible or requires significant manpower to handle data forensics, planning, and collection. Constellation will create a leap in the USAF’s current capabilities with a focus on the agile interoperability of both legacy and future data types. It is a scalable and secure approach to Big Data processing while enabling the merging of legacy system data with existing cloud infrastructure data. Constellation is one of the unique technologies attempting to bridge the gap of real-world adoption for blockchain technologies by enterprise and business use cases.

Source: “Constellation Network signs deal with USAF using blockchain to provide solutions around interoperability between legacy infrastructure and emerging data technology”, available at https://www.intelligent-aerospace.com/military/article/14038932/usaf-air-force-blockchain-for-legacy-systems

Swiss regulator issues banking license to two blockchain firms

Switzerland’s Financial Market Supervisory Authority (FINMA) has issued banking and securities dealers’ licenses to two new blockchain firms – SEBA Crypto and Sygnum. The regulator announced the news on Monday, saying that this is the first time it has issued such licenses to “pure-play blockchain service providers. The licenses will allow SEBA Crypto Sygnum to provide services to institutional and professional customers.

“Sygnum’s plans for corporates include the ability to raise new capital by producing asset tokens based on existing financial assets, thereby lowering capital raising costs and improving liquidity for issuers and investors,” the firm said in a separate statement.

SEBA Crypto said that the license is a “milestone for the entire digital asset market ecosystem,” and that the bank is expected to officially go-live in early October 2019.

FINMA today also issued guidance, which says that existing anti-money laundering (AML) laws apply to blockchain payments, as the “inherent anonymity of blockchain technology presents increased risks. “Institutions supervised by FINMA are only permitted to send cryptocurrencies or other tokens to external wallets belonging to their own customers whose identity has already been verified and are only allowed to receive cryptocurrencies or tokens from such customers,” the regulator said, adding, “FINMA-supervised institutions are thus not permitted to receive tokens from customers of other institutions or to send tokens to such customers.”

Source: “In first, Swiss regulator issues banking license to two blockchain firms”, available at https://www.theblockcrypto.com/tiny/in-first-swiss-regulator-issues-banking-license-to-two-blockchain-firms/

Portugal Tax Authority: Bitcoin Trading and Payments Are Tax-Free

Portugal’s Tax Authority has clarified that both cryptocurrency trading and payments in crypto will not be taxed in the country, Cointelegraph en Español reported on Aug. 27.

According to a report published on Aug. 26 by Portuguese business newspaper Jornal de Negócios, the Portuguese Tax and Customs Authority have confirmed that crypto transactions or payments are exempt from Value Added Tax (VAT).

The agency reportedly provided the clarification to a local crypto mining company, publishing an official ruling document. In the document, the authority states that the exchange of crypto for fiat money is free of VAT, adding that crypto users do not have to pay any income tax.

Source: “Portugal Tax Authority: Bitcoin Trading and Payments Are Tax-Free”, available at https://cointelegraph.com/news/portugal-tax-authority-bitcoin-trading-and-payments-are-tax-free

Dutch Central Bank: Crypto Firms to Be Regulated as of January 2020

The Dutch central bank has today revealed it will begin regulating firms that offer cryptocurrency-related services as of Jan. 10, 2020. Reuters reported on Sept. 3 that De Nederlandsche Bank clarified that relevant firms in the sector must register with the institution if they wish to continue to operate. The bank’s official statement reportedly reads: “In concrete terms, firms offering services for the exchange between cryptos and regular money, and crypto wallet providers, must register with De Nederlandsche Bank.”

As reported, Dutch ministers had urged the country’s government this July to regulate cryptocurrencies and certain cash payments due to money laundering concerns. In January, Dutch Minister of Finance, Wopke Hoekstra, received official advice from the Netherlands’ Authority for the Financial Markets and De Nederlandsche Bank that a licensing system should be introduced for cryptocurrency services. The Netherlands does not recognize cryptocurrency as legal tender, although in 2018 a Dutch court ruled that Bitcoin (BTC) was a legitimate “transferable value” in a penalty payment case.

Source: “Dutch Central Bank: Crypto Firms to Be Regulated as of January 2020”, available at https://cointelegraph.com/news/dutch-central-bank-crypto-firms-to-be-regulated-as-of-january-2020

Claire Cummings

Claire practises financial services law with a focus on regulatory issues, cryptocurrencies and tokens, trading and brokerage documentation and advising both existing and start-up funds and fund managers.

If you would like to discuss any of the points we raise, please contact me or one of our other lawyers.

Phone: 0207 585 1406
Email: claire.cummings@cummingsfisher.com

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