Archive | Economics

European Parliament to tackle virtual currencies and Blockchain

This week, the European Parliament will debate (Wednesday) and vote (Thursday) on a report on virtual currencies.

First of all, this is a report – not legislation. But it will be handed over to the European Commission for consideration.

It is interesting to see how the EP seems to think that virtual currencies can be regulated and incorporated in existing regulations and legal frameworks. Of course, a new virtual currency can do that. But when it comes to Bitcoin and other existing currencies – I cannot understand how this is supposed to be done. (And it shouldn’t.)

The EP also seems to believe that virtual currencies have some sort of governing bodies, that could be held accountable in front of the EU and national authorities.

On the positive side, the report states that no special legislation for virtual currencies is needed – for the time being. (More tailor-made legislation might be needed.”)

Here are some parts of the report that might be of interest. (VC = virtual currencies. DLT = distributed ledger technology = Blockchain.)

19. Welcomes the Commission’s suggestions for including VC exchange platforms in the Anti-Money-Laundering Directive (AMLD) in order to end the anonymity associated with such platforms; expects that any proposal in this regard will be targeted, justified by means of a full analysis of the risks associated with VCs, and based on a thorough impact assessment;

20. Recommends that the Commission draw up a comprehensive analysis of VCs and, on the basis of this assessment, consider, if appropriate, revising the relevant EU legislation on payments, including the Payment Accounts Directive (PAD), the Payment Services Directive (PSD) and the Electronic Money Directive (EMD), in light of the new possibilities afforded by new technological developments including VCs and DLT, with a view to further enhancing competition and lowering transaction costs, including by means of enhanced interoperability and possibly also via the promotion of a universal and non-proprietary electronic wallet;

21. Observes that several virtual local currencies have been created in Europe, not least as a response to the financial crises and the related credit crunch problems; urges particular caution when defining virtual currencies, in the context of any future legislative proposals, with a view to taking proper account of the existence of ‘local currencies’ of a not-for-profit nature, often having limited fungibility and providing significant social and environmental benefits, and to preventing disproportionate regulation in this area, as long as taxation is neither avoided nor circumvented;

22.Calls for the creation of a horizontal Task Force DLT (TF DLT) led by the Commission, consisting of technical and regulatory experts, in order to:

i) provide the necessary technical and regulatory expertise across the various sectors of pertinent DLT applications, bring together stakeholders and support the relevant public actors at EU and Member State level in their efforts to monitor DLT use at the European level and globally;

ii) foster awareness and analyse the benefits and risks – including to end-users – of DLT applications in order to make best use of their potential, including by aiming to identify a core set of attributes of DLT schemes conducive to the general interest, such as non-proprietary open standards, and by identifying standards for best practice where such standards are emerging;

iii) support a timely, well-informed and proportionate response to the new opportunities and challenges arising with the introduction of significant DLT applications, including by means of a roadmap for future steps at EU and Member State level which would include an assessment of existing European regulation, with a view to updating it in response to significant and systemic DLT use where appropriate, also addressing consumer protection and systemic challenges;

iv) develop stress tests for all relevant aspects of VCs and other DLT schemes that reach a level of use that would make them systemically important for stability;

23. Stresses the importance of consumer awareness, transparency and trust when using VCs; calls on the Commission to develop, in cooperation with the Member States and the VC industry, guidelines with the aim of guaranteeing that correct, clear and complete information is provided for existing and future VC users, to allow them to make a fully informed choice and thus enhance the transparency of VC schemes in terms of how they are organised and operated and how they distinguish themselves from regulated and supervised payment systems in terms of consumer protection;

The devil is in the details. (My emphasis above.)

Apparently the EP has found something new to regulate. The fact that its’ members don’t seem to grasp the concept of virtual currencies and Blockchain will not stop them. And that is not an unusual approach when it comes to EP reports…

At best this report is a waste of time. But it can be used by the Commission to justify future legislation.

/ HAX

• The report, 2016/2007(INI) »
• As PDF »
• EP summary »

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The War on Cash

Holger Steltzner in Frankfurter Allgemeine...

Beim Feldzug gegen das Bargeld geht es um mehr als das Bezahlen. Ginge es nur darum, könnte man die Leute einfach selbst entscheiden lassen, wie sie künftig zahlen wollen. Es geht um das Ende von Privatheit und selbstbestimmter Entscheidung, um Lenkung von Verhalten und um den Zugriff auf das Vermögen. Der Bevormundung des Bürgers wäre in einer solchen Welt keine Grenze gesetzt, Geld wäre kein privates Eigentum mehr. Der Übergewichtige könnte mit seiner Karte auf einmal die Kalorienbombe nicht mehr zahlen, der Alkoholiker sich die Weinflasche nicht mehr besorgen, und am „Veggie Day“ dürfte man mit seinem Smartphone kein Fleisch mehr kaufen. Der Zugriff des Fiskus auf das Konto des Bürgers wäre selbstverständlich. Und in totalitären Staaten gäbe es kein Entrinnen vor Überwachung und Unterdrückung. (…)

Andere Motive sind für den Krieg gegen Cash wichtiger, aber über sie wird weniger geredet. Hier kommen die Notenbanken ins Spiel, auch die Europäische Zentralbank, deren Präsident Draghi schon laut darüber nachdenkt, wie er am besten die Abschaffung der 500-Euro-Note kommuniziert, die der EZB-Rat noch gar nicht beschlossen hat. Ohne Bargeld wären die Bürger den Negativzinsen der Zentralbanken ausgeliefert. Davon träumen auch viele Finanzminister und keynesianische Ökonomen.

Bargeld ist Freiheit » | Google Translate »

Update: Translation to Swedish in the comments, thanks to Christian Engström.

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Big Brother and Your Money

Many governments are getting very nervous. They struggle with debt, over spending, currency emergencies and new strains on the economy like the European refugee crisis.

So they are keen to make sure that all tax revenues that can be collected will be collected. And mass surveillance gives them a tool to do so.

Also, the move towards a cash free society makes it easier for politicians and bureaucrats to keep track of you and your money.

For years, we have sent bulk data about European bank transfers to the US security bureaucracy under the pretext of fighting terrorism and organized crime (TFTP). In the EU, plans are to replace this system with a European one — aimed to register, control and analyze all of our bank transfers.

In some high-tax countries with submissive population, like Sweden, information from data retention of telecommunications is already being used for taxation purposes.

And this is not just about taxes. If your government controls all your monetary assets, it owns you. Which might come in handy if, someday, people in power would like to curb opposition, limit your civil liberties — or just make your life very difficult.

With no private economic sphere, people are totally in the hands of their whimsical governments and its functionaries.

When it comes to “regular” surveillance concerns, having access to information about your transactions will provide the authorities with a cornucopia of information about you. More so than just surveillance of your electronic and telecommunications.

The government will always be able to give some reasons for its actions. Sometimes even seemingly rational ones. Like striking down on tax evasion. But even these reasons must be weighed against your right to privacy. Just passively accepting them could be used for introducing live surveillance of everybody 24/7.

It’s your life. And it’s your money. Period. The government should just get out of everybody’s hair.

If people could get themselves together and bring about a broader use of Bitcoins, we can bypass all of this governmental economic Big Brotherism.

/ HAX

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PayPal joins the Dark Side?

PayPal just updated their User Agreement – and went barking mad.

The new paragraph at section 1.3 reads as follows:

“When providing us with content or posting content (in each case for publication, whether on- or off-line) using the Services, you grant the PayPal Group a non-exclusive, worldwide, perpetual, irrevocable, royalty-free, sublicensable (through multiple tiers) right to exercise any and all copyright, publicity, trademarks, database rights and intellectual property rights you have in the content, in any media known now or in the future. Further, to the fullest extent permitted under applicable law, you waive your moral rights and promise not to assert such rights against the PayPal Group, its sublicensees or assignees. You represent and warrant that none of the following infringe any intellectual property right: your provision of content to us, your posting of content using the Services, and the PayPal Group’s use of such content (including of works derived from it) in connection with the Services.”

Whut!?!

And what is “content” supposed to be? PayPal is a payment service. So the only content there is, is the online stuff people and companies sell using PayPal as payment provider. Did PayPal just claim control over all of that?

/ HAX

Links:
• Bitcoin is the Future: PayPal Changes Terms of Service to Take Your Content
• PayPal

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The coming War on Cash

War on terror has become an convenient excuse for governments to start a war on cash.

Naturally, cash can be used by terrorists. But it will not mainly be terrorists who suffer from tighter control. It will be ordinary people.

One of the real reasons behind tighter cash regulations are convenient is quite obvious: taxation.

If you want support for this theory, take a look at the EU directive against money laundering. Where implemented strictly (like in Sweden) it makes handling of any substantial amount of cash almost impossible.

The latest is the French tightening the regulations on cash. From Mises.org…

“These measures, which will be implemented in September 2015, include prohibiting French residents from making cash payments of more than 1,000 euros, down from the current limit of 3,000 euros. Given the parlous state of the stagnating French economy the limit for foreign tourists on currency payments will remain higher, at 10,000 euros down from the current limit of 15,000 euros. The threshold below which a French resident is free to convert euros into other currencies without having to show an identity card will be slashed from the current level of 8,000 euros to 1,000 euros. In addition any cash deposit or withdrawal of more than 10,000 euros during a single month will be reported to the French anti-fraud and money laundering agency Tracfin. French authorities will also have to be notified of any freight transfers within the EU exceeding 10,000 euros, including checks, pre-paid cards, or gold.”

The whole idea is based on the presumption that people are up to something suspicious. This seems to be the new default mode, replacing the presumption of innocence (that happens to be one of the fundaments of rule of law).

But this is not just about distrusting citizens with their own money. The common European currency, the Euro, is in a precarious state. Cash regulations can (and will) be used to stop people from rescuing their own money when the shit hits the fan. Just see what happened when the Euro-crisis overwhelmed Cyprus. The government confiscated money directly from peoples bank accounts — and most people had no possibility to rescue their savings.

“Coincidentally” mass surveillance is an excellent tool for governments to enforce financial regulations aimed at the general public…

Is this the moment when people finally will have to turn to free digital currencies in a big way? Is this the tipping point?

/ HAX

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