The European Banking Association (EBA) has called for more details regarding the European Union's (EU) plan to impose tighter anti-money laundering (AML) controls on digital currency exchanges and custodial wallet services.

The group, which counts more than 100 major banking institutions as members, offered comment yesterday on a prior proposal from the executive branch of the EU to bring exchange and wallet services under the Anti-Money Laundering Directive. Proponents say the move would end the perceived anonymity of purchases and transactions conducted using the technology.

Still, critics have attacked the proposal by the European Commission as too onerous or redundant, as it would ultimately fall on services already subject to national regulation. The European Commission has been publicly exploring options since earlier this year.

In comments, the EBA largely welcomed the European Commission's recommendations, but said that overall the proposal falls short, and that provisions focused on data collection should be strengthened.

The organization said:

"...the Commission and co-legislators should ensure that competent authorities have the appropriate tools at their disposal to ensure the effective supervision of [custodial wallet providers] (CWPs) and [virtual currency exchange providers] (VCEPs) compliance with their AML/CFT obligations."

Licensing vs registration

The EBA also suggested that the European Commission should provide greater clarity on whether digital currency services ought to be supervised under a broader European Union licensure or registration scheme.

The group said that this distinction should be drawn as EU member states are likely to "adopt very different regimes".

In the EBA's view, this would lead to a more complicated regulatory environment.

"The EBA therefore considers that the EU Commission and co-legislators should take a decision whether either a licensing or a registration regime is most suitable and conducive to the aim of deterring terrorist financing across the EU or, should this not be achievable, at least provide clarity about the features that a national registration or authorisation regime should have," the group said.

Sanction powers pushed

Notably, the EBA said that it believes that regulators in European nations should retain the ability to impose sanctions on non-compliant exchange and wallet services that handle digital currencies.

According to the text of the directive, these sanctions may include financial penalties, public admonishments, bans on particular business employees or the rescinding of any nation-level licensure a company may have received.

"In order to ensure that VCEPs and CWPs comply with the requirements, national authorities should have at their disposal effective, proportionate and dissuasive sanctions for failure of these new type of entities to respect key requirement of the directive, including the reporting of suspicious transactions," the group said.

The EBA also raised doubt about when the measures would be formally adopted, calling on the European Commission to extend a January 2017 deadline for their approval to next year.

This, the EBA said, would give member states more time to absorb the changes and adopt the policies in question.

EU flag image via Shutterstock

EuropeEuropean CommissionEuropean UnionRegulation

Russian authorities are reportedly planning to abandon efforts to institute criminal penalties for bitcoin users.

The news comes from a report issued today by Russian news agency Interfax in which it asserts that representatives from the country's Ministry of Finance, central bank and other government bureaus are increasingly supportive of this action.

According to the report, representatives from these groups are planning to submit a report to Russian President Vladimir Putin containing this recommendation sometime in 2016.

If true, the report would end nearly two years of speculation that Russia would seek to actively discourage the use of cryptocurrencies and other "money surrogates" through administrative fines and labor penalties.

As outlined in 2014 and 2015, "legal entities" that introduced their own digital currencies would have faced fines of up to $25,000, while those who distributed the digital assets could have been punishable by correctional labor.

However, it appears such a proposal will require additional research by the involved parties.

The report states:

"At the same time, the meeting decided that it is necessary to monitor the use of virtual currency and further [analyze] the risks [associated with] using money surrogates for criminal purposes. With this in mind, it can be presented a proposal to amend the regulations if necessary."

The latest statements come amid a softening by the Russian Ministry of Finance, formerly the most aggressive regulator domestically to push for the prohibition.

In July, deputy finance minister Alexei Moiseev went so far as to suggest cryptocurrencies could be regulated as a kind of foreign currency, a development that can be seen as stemming from the larger interest in blockchain domestically in recent months.

Paper ball image via Shutterstock

RegulationRussia

The robots are coming, and they’re getting smaller, smarter and cheaper.

While today, businesses may own just a single drone, one day, large parts of whole industries could be overseen by a new generation of robots. But, how will groups of these robots perform useful tasks like collecting crop data or organizing around a common goal?

That's one role for the blockchain proposed in a new white paper from MIT Media Lab research affiliate Eduardo Castelló Ferrer. The eight-year robotics veteran believes that by using the blockchain to distribute information, whole armies of robots could solve problems and accomplish tasks more efficiently.

The idea is that in robotic swarms, each robot follows basic rules, drawing inspiration from creatures like ants and fish that often clump together. These small rules then add up to collective behaviors, such as distributed sensing or search-and-rescue missions, that emerge as a result of the interactions between robots.

So far, these ideas haven’t been deployed on a large-scale. But researchers have high hopes for use cases such as so-called "precision farming," where fleets of drones could be used to inspect crops and paint a more granular picture for farmers.

As researchers are moving forward with this futuristic idea, they’re facing many security and logistical problems that have prevented robot swarms from moving from research labs to the real world. But, Ferrer thinks that the blockchain could lead to "serious progress" in swarm robotics.

The white paper explains:

"The combination of blockchain with other distributed systems, such as robotic swarm systems, can provide the necessary capabilities to make robotic swarm operations more secure, autonomous, flexible and even profitable."

Applying bitcoin to robotics has been theorized before for autonomous networks of driverless cars or drones that would deliver packages.

But this is different; the white paper sketches a blockchain-based system where robotic "nodes" organize in a secure, distributed way. One potential role for the blockchain is to help the robotic groups to come to agreement about a decision without a central authority.

It outlines a model where the robotic swarms use the blockchain by serving as nodes in a network and "encapsulating their transactions in blocks". Blockchain-based applications described in the white paper include secure communications between robots, distributed decision-making, behavior differentiation and new business models.

Robotic possibilities

With the declining costs of robotics, Ferrer argues that possibilities abound for robotic swarms.

"Hardware is getting better. We can now make thousands of robots for research purposes, but also for industrial purposes," Ferrer said.

But one problem with current distributed algorithms, as the white paper describes, is that there are tradeoffs between speed and accuracy.

The idea is to leverage the blockchain for the best of both worlds.

"Blockchain is an outstanding technology for ensuring that all participants in a decentralized network share an identical view of the world," the white paper explains.

Robots might come to agreement about which direction to move or which shape to transform into by voting on the blockchain, a use case that political groups, such as Australia’s Flux Party, have been experimenting with.

Say that a group of sensor drones are debating whether an image is of a cup or a two faces. (This example from the white paper uses the classic rubin vase visualization). One of the robots will detect the need to make a decision and issue a vote using a special transaction creating two addresses that represent each choice: a cup or two faces.

The outcome is determined by majority rule. Each robot casts a vote in the form of a transaction sent to the address that represents their choice. Since the blockchain is public for all the robots to view, they can quickly verify the result of the vote. The robots repeat this process for each decision the robotic swarm needs to make.

Each vote, of course, would need to happen in a timely manner, which is one of the issues with blockchain technology as it currently stands, as public blockchains often require a minimum amount of time to ensure that the transactions are secure.

Sidechain hopping

Robotic swarms will also need to jump from behavior to behavior to accomplish their objectives, according to the white paper.

To accomplish this, the groups of robots could use interoperable blockchains to swap control algorithms in a process the white paper calls "behavior differentiation". (Developers are currently trying to make this possible with ideas like pegged sidechains).

So, robotic swarms might switch behaviors when they move to another sidechain, as sketched out in the white paper. One blockchain might rely on decentralized control based on round-robin mining, for example, while another would have a "leader-follower" control mechanism.

Another differentiator might be private and public blockchains.

One sidechain might be a private company blockchain used for testing purposes and filled with company information, but it could be pegged to a public one. (Ferrer offers MultiChain, the build-your-own-blockchain company, as an example).

Those aren’t the only ideas described in the white paper. Blockchains could help create a system of trust to combat the rise of robots with malicious intent within the group, and these robotic swarms could also form Internet of Things markets, collecting information together and sending it to interested users.

Current limitations

But blockchains have some fundamental limitations, that Ferrer believes could block widespread use of blockchain-based swarm of robots.

For example, the 10-minute transaction confirmation time (roughly) of bitcoin stands in the way of quick voting on decisions. Robotic swarms probably don’t have 10 minutes to determine which way to move if they’re 30 feet from a potential obstacle.

Furthermore, if the bitcoin blockchain continues to grow, it might be too burdensome for each robot to carry or fly around with a copy of the full ledger.

Still, the white paper is optimistic about future of combining blockchains and robotic swarms:

"This step could open the door not only to new technical approaches, but also to new business models that make swarm robotics technology suitable for innumerable market applications."

Robot child image via Shutterstock

Academic ResearchMIT Media LabTechnology

Election season has begun for the Hyperledger project, the open-source, Linux Foundation-led blockchain initiative.

The project is preparing to elect a new technical steering committee (TSC) as well as a new chairperson for that committee this month. The transition comes less than a year after the Hyperledger project publicly launched in December 2015 as a way to create a "business blockchain" for use by enterprises.

The nomination process for the committee began yesterday, and runs through 18th August. Voting among the project's active contributor base – those participating in the development of the Hyperledger codebase – begins that day, and runs through 24th August.

To facilitate the vote, the project is turning to a platform called the Condorcet Internet Voting Service (CIVS). Developed by Cornell, it allows participating voters to create a slate of their preferred candidates.

The results will be announced on the 25th.

Once the committee is selected, those new members will vote between themselves on the a new chairperson, Hyperledger executive director Brian Behlendorf said.

The committee membership is currently composed of some of the project's biggest backers, including IBM, DTCC, Intel and JPMorgan. The TSC, in turn, is currently chaired by Christopher Ferris of IBM.

According to Behlendorf, the hope is to staff the TSC with those who contribute the most to the initiative.

He told CoinDesk:

"We bootstrapped the TSC with kind of the initial premier members of the organization, but we didn’t want that to hard-code in. We really wanted to instill, across the project, a 'do-ocracy', which is a term we brought over from Apache."

Since launch, the Hyperledger Project has explored a range of blockchain use cases, with a number of notable companies involved submitting proposals for their own approach to the technology.

To date, more than 40 companies are taking part in the project.

Image via Shutterstock

ElectionsHyperledgerLinux Foundation

Distributed ledger tech will play a key role in the foundation of next-generation financial services according to a new report by the World Economic Forum (WEF).

Released today, the 130-page report aims to provide a “clear view” of how financial services could be reimagined by combining blockchains and distributed ledgers with existing and emerging technologies including mobile, machine learning and robotics.

Overall, the WEF report stressed that distributed ledgers should not be viewed as a "panacea" or held back by existing financial "orthodoxies". It further emphasized that applications of the technology will differ by use case, but that all will bring a great simplicity and efficiency to the global financial system.

Finally, the WEF sought to call on the full diversity of industry stakeholders to collaborate to bring about this future, stating:

"The most impactful distributed ledger technology applications will require deep collaboration between incumbents, innovators and regulators, adding complexity and delaying implementation."

Perhaps the defining feature of the report, however, is the clarity with which it outlines the benefits for distributed ledgers, calling immutability, transparency and autonomy "transformative characteristics" that are unique to the tech.

It identifies nine use cases that highlight its potential and six value drivers it believes are powerful enough to fuel transitions in these areas.

Participants in the report included a wide range of financial industry leaders including BlackRock, MasterCard and Visa. Further, startups as diverse as Bitfury Group, Consensys, Eris Industries and R3CEV provided subject matter expertise.

The report builds on previous work by the WEF to better understand the technology. To date, this has included mentioning blockchain as part of its 2015 ‘mega-trends’ report and holding distributed ledger workshops this year in Australia and New York.

Also identified in the report are three primary hurdles for the technology. These include an uncertain and "unharmonized" regulatory environment, nascent standardization efforts and the absence of legal frameworks.

For instance, the report theorizes that in order to best reimagine global payments, banks will have to make additional considerations, such as how they would hold cryptocurrencies running on a distributed ledger as assets on their books.

In this light, the WEF stressed that bringing distributed ledgers to life will require infrastructure replacement, legal and regulatory changes and the alignment of industry participants who may today be driven by different interests.

Additional research is also needed, according to the WEF, which went on to outline four questions it believes need to be answered moving forward.

These included determining the "financial viability" of distributed ledgers, creating roadmaps for market collaboration, working on improved governance models and better understanding regulatory challenges ahead.

For more information, read the report in full here.

Images via the World Economic Forum; Shutterstock

BankingPaymentsResearchWorld Economic Forum

CoinDesk today announced plans to double its current headcount from six to 12 full-time employees by the end of 2016.

In order to capitalize on the momentum of its emerging events and research products, the New York-based team is looking to staff up with new technology, marketing, research and editorial hires.

"We have an incredible opportunity to become both the paper of record and the leading forum for the blockchain and digital currency industry," said Ryan Selkis, Managing Director of CoinDesk.

"We are focused on constantly improving the quality of our news coverage, the technical depth of our research, and the relevance of our events for our global audience. These hires will help us solidify our position as the industry's leading media company for years to come."

The company is expected to further grow its headcount to 20 by the end of 2017.

Open positions include:

Director, Technology

Responsible for development projects, overall maintenance and the optimization of our servers, website and APIs. As a multi-disciplinary, full-stack developer, we are looking for someone to help us improve the performance of our back-end, experiment with new products, and manage the revamp of our website and mobile products.

Preferred: 5-7 years of development, preferably at a digital media company with a WordPress CMS.

Director, Digital Marketing 

Responsible for crafting the email, social and search campaigns that attract new audiences to our website, and convert our engaged readers to research and events customers. This person will work with our development team on UX optimizations; grow our funnel of marketing qualified leads (MQLs) across product lines; and improve our social media and syndication performance.

Preferred: 5-7 years digital marketing strategy experience, preferably at a fintech or media company.

Research Analyst 

Responsible for setting the direction and building the team for our research product, this hire will also produce evergreen content for the CoinDesk website. This person will evaluate new applications and technical developments, interview subject matter experts, analyze trends and data, and synthesize findings into professional-targeted reports.

Preferred: 4-5+ years of research, strategy or consulting experience, preferably with a technology and/or financial services focus.

Journalists (2-3) 

Responsible for chronicling the most substantive daily developments in the blockchain and digital currency industry, these hires will help tell the story of the emerging "Internet of Value".

Preferred: 2-3 years of academic research or journalism experience focused on financial services or technology, preferably with proficiency in digital currencies and blockchain technology.

Applicants can apply to CoinDesk with cover letter and CV via [email protected].

Image via Shutterstock

Hiring