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The EU to impose rules on virtual currencies such as Bitcoin

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July 4, 2014

The European Commission is saying that it will try to impose new rules on virtual currencies such as Bitcoin and Dogecoin after the bloc’s banking regulator ordered lenders to shun them down.

“It’s imperative to move quickly on this issue,” said Chantal Hughes, a spokeswoman for Financial Services Commissioner Michel Barnier.

“The potential for money laundering, illicit drugs, illegal arms sales and terrorist financing activities is too serious to ignore,” she added.

The Commission, the EU’s executive arm, moved after the European Banking Authority said that banks shouldn’t buy, hold or sell virtual currencies such as Bitcoins until regulators develop safeguards to protect their integrity.

The watchdog identified more than seventy risks linked to the digital currencies ranging from identity theft to the strong possibility that hackers could target a trading platform in specific.

Overall, virtual currencies such as Bitcoin and the Dogecoin have come under increased scrutiny from financial regulators and prosecutors around the globe.

Mt. Gox, once the world’s biggest Bitcoin exchange trading platform located in Tokyo, filed for bankruptcy in Japan earlier this year amid claims it lost more than 850,000 Bitcoins valued at close to US $400 million.

China’s central bank barred financial firms from handling virtual currency like Bitcoin transactions last year.

“Regulators have become alert to the potential for fraud and disruption,” said Richard Reid, a research fellow for finance and regulation at the University of Dundee, Scotland.

“Such attention from regulators is bound to curb the growth of markets such as Bitcoin,” he added.

The EBA called on the EU to devise rules for trading platforms and start groups to oversee each internet currency to ensure that no individual can manipulate a currency.

The EU should consider extending the scope of anti-money laundering law to better cover virtual currencies, according to the EBA.

“The EBA is of the view that a regulatory approach to addressing the risks it has identified would require a substantial body of regulation,” the agency warned.

The widespread use of these digital currencies and of Bitcoins could also make it more difficult for central banks to steer the economy by making the effects of monetary policy harder to predict, the EBA warned.

Bitcoins emerged in 2009 out of a paper authored under the pseudonym Satoshi Nakamoto. Since then, retailers selling items from Gummi Bears to luxury homes have started accepting Bitcoins, and new companies have begun offering ways to ease its use as a valid payment system.

The currency gained credibility after law enforcement and securities agencies said in U.S. Senate hearings that it could be a legitimate means of exchange.

The price of Bitcoins topped US $1,000 for the first time earlier this year as speculators anticipated broader use of digital money. It is currently trading at around US $632 today, though its price can fluctuate wildly.

It is estimated that it would cost around $8.4 billion to buy all the Bitcoins in existence today, according to some sources.

The EBA’s announcement is “not very helpful” and may only deter individual users of virtual currencies, according to Simon Dixon, a director of the U.K. Digital Currency Association, a group representing the country’s virtual currency industry.

“Banks are not engaging with digital currencies yet as it is a person-to-person network that operates outside of banking regulations and outside governments,” he said.

“The more likely result of the announcement is to scare people from using digital currencies rather than banks,” he added.

In other high tech news

Some probably thought they would never see this, but the city of San Francisco is now cracking down on mobile apps that allow users to illegally buy and sell public parking spaces.

To be sure, city attorney Dennis Herrera said late yesterday that his office has sent a cease-and-desist notice to the developers of Monkey Parking, a mobile app which lets users sell their public parking spaces in crowded urban areas.

The Monkey Parking application, available for iOS and Android, allows users to set a price for their parking spot which is then listed for other drivers who can make offers to buy the parking space.

Upon agreeing to the transaction, users can then chat and confirm the deal for the parking spot.

The app, which currently operates only in Rome and San Francisco, would seek to provide users an easy way to get a spot in cities notorious for being extremely short of parking spaces.

Officials in San Francisco say that the app runs afoul of local city regulations. Herrera also noted that while San Francisco residents are free to sell off the rights to their private parking spaces and garages, the city's police code expressly forbids selling access to city-owned public spaces on streets and sidewalks.

Should the company not drop support for San Francisco parking from its app, Herrera said that Monkey Parking users would face penalties of $300 each time they sell access to a spot, while the company could be held liable $2,500 for each illegal transaction it facilitates.

"It's simply illegal and it puts drivers on the hook for $300 fines, and it also creates a predatory private market for public parking spaces that San Franciscans will simply not tolerate," said Herrera.

"Worst of all, it encourages drivers to use their mobile devices unsafely – to engage in online bidding wars while driving."

Herrera also said that the city would petition Apple to take the Monkey Parking App off of the App Store on the grounds that it violates local laws.

As of early this morning, the Monkey Parking App was still available for download, but it should be removed shortly we are assured.

In other high tech news

Generalized Anxiety Disorder (GAD) is a common and widespread type of anxiety affecting tens of millions of people around the world.

How do you know you have it? You are constantly on edge, worried or stressed and it’s beginning to disrupt your life you are losing your ability to trust in people and more painfully, in yourself.

This general distrust is spreading and the worrisome part is that no one knows it is spreading. This anxiety is being spread by the absence of control over one’s personal data, or perhaps, data that one is supposedly responsible for.

And we do this, by pushing everything into a cloud. Our distrust of letting our confidence on what we can’t see then kicks in, leading to a vague unease – am I doing the right thing by giving away my life’s work to a computer farm managed by faceless people (or robots for all one knows), in a remote location not easily accessible.

Whom do we hold responsible for erasing our existence? I mean, look at what digital cameras have done. They have created megabytes of images all stored on DVDs or hosted on some social networks, with no access to glossy prints in 4 x 6 neatly arranged in a photo album.

This is the closest analogy to cloud storage I could relate to in the real world. So where do you go to pick up that treasured memory of your daughter’s first birthday celebration?

Well, it is somewhere in the cupboard, in one of the DVDs that are sequentially numbered with date ranges and you need the appropriate media to open them and scroll and double click on the one image you wanted to see.

Much like the data you have encrypted and stored on the cloud. And unless you have the data all backed-up and stored in a separate location, you are in danger of losing a lifetime of memories.

On the other hand, I have easy access to my wedding album and I periodically pick it up and leaf through the pages, if only to remind myself that so many years ago, I took a step without an inkling of the consequences of my actions.

Do I regret it? More often than not, I don’t. In fact, I am in a reasonable state of bliss. And perhaps, it is this leap of faith that is really what is required to embrace this business of getting lost in the cloud.

Let it play out the way it will, adjust to the circumstances, and the system admin willing, all will be well...

But what if you don’t adapt? For one thing, technology will make you obsolete. Where have the cameras with film gone? Where are the companies that buried their heads in the sand and pretended that digital was a passing fad?

When big data has become a reality and software is offered as a service, where is the old order heading? The cost of sticking to legacy systems is skyrocketing-– hardware, real estate, and management fees are all heading north.

In order to stay financially nimble, companies need to keep a tight rein on capital expenditure; this is where shared resources and the cloud positively impact financial and operational performance.

The order of the world as we now know it is changing. And the new order demands compliance, even if it is reluctantly given.

Once you accept the new way of working and consequently optimize time and money, you are also saved the bother of a constricted airway, a tightening of the muscles of the chest and a palpitation of the heart.

Get a great deal on a fully dedicated Linux or Windows server. Order here.

My advice is that you take the first step to the future. Embrace the cloud!

Bio -- Sridharan Narayan is the Head of Creative Services at Regalix. He has over 24 years of experience working in the advertising and IT Services industry such as Frank Simoes Advertising, Maitri Advertising, Triton Communications, Ion Idea Interactive and many others.

In other technology news

A company based in Australia called Shark Mitigation Systems has developed a sonar-equipped buoy that can detect sharks and then send the information about their presence to lifeguards over a mobile phone network.

The simple but at the same time smart concept behind this is that the buoys will be installed off Australia beaches for two purposes.

The first item is to learn more about shark behaviour, which is undoubtedly worthy. The second is to offer real-time information about the dangerous predators to lifeguards and swimmers.

In the past several months, there's been many shark attacks towards humans, especially in Australia.

To help swimmers beyond the beach, the alerts will also be sent out over Google Plus.

Before we analyse this, let's acknowledge the clever integration concept-- building this system would have required plenty of scientists. Let's also acknowledge that it's a smart concept to prevent any injury or worse, human death.

Overall, statistics reveal that the average Australian has a 1 in 3,362 chance of drowning at the beach and a 1 in 292,525 chance of being killed by a shark in an entire lifetime.

Australian citizens are understandably paranoid about sharks. But technology to help prevent drowning would save more lives.

Additionally, Google Plus has a small active population in Australia. The Yellow Pages Social Media Report suggests that about 15 percent of social media users are on the network, fewer in the beachgoing demographic of 14 to 29 year olds.

The report has Facebook in at around 92.4 percent. Socialmedianews.com.au estimates that Facebook has 13.2 million users in Australia.

Twitter has about 2.5 million, while MySpace still has about 180,000, although that number is falling rapidly. Google Plus has aboout 65,000 but the company expects that number to rise to at least 500,000 by sometime next year.

Choosing Google Plus makes it difficult to see this project as purely a public safety exercise, but the concept is still clever from what we've seen so far.

Source: The EU.

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