Digital Jersey Debate ‘Cryptocurrencies: changing the face of finance?’

Digital Jersey are hosting the 2nd part of their Cryptocurrency Workshop on 9th September (see summary of Part 1 here). This debate aims to provide an update on the latest developments happening in this area as well as engaging with the finance sector to debate Cryptocurrencies specificlally and FinTech (Financial Technology) in general.

They will also be speaking to the wider business community and general public about the role of technology in the development of the economy with a view to:
• Clarifying the Jersey’s position on cryptocurrencies
• Promoting business opportunities
• Supporting Jersey’s economy

Issues that will be discussed:

• Update on the latest developments in cryptocurrencies sector Jersey
• The wider picture in respect of peer-to-peer business models and cryptocurrency regulation – is it needed?
• The impact of crypotcurrencies globally – is ‘do nothing’ an option for the finance sector?

Speakers:

Chair: Advocate Vicky Milner, Callington Chambers

If you wish to attend, please register via EventBrite here.

Bitcoin Meetup 5

So after missing one of our fortnightly meetups (due to holidays) we managed to get together yesterday to discuss what’s been happening recently in the Bitcoin space.

It was an interesting meetup as Ian Jauncy, representing Digital Jersey, took the floor to discuss a report he will be putting together to look at the opportunities that Cryptocurrencies could offer Jersey. It became clear during the conversations that the one thing that Jersey needs to sort out is the ‘bitcoin-business-friendly bank’.

As those of you who follow what’s happening in the Bitcoin world, the ‘bank’ issue is by far the biggest problem, and more importantly the first jurisdiction to solve this problem would have the world beating down it’s door. One message we’ve had from the banks is that although they’d be interested, until the government can provide guidance (and a positive approach) they will have to opt for the current stance of ‘wait-and-see’.

Jersey has a unique opportunity, starting with a consistant push from Digital Jersey, to produce a positive message to the world that they would welcome a progressive bank that would want to work with crypto-based businesses. Sadly, it seems that not all grasp just how short the time frame is for this message to be given. The UK are already starting to push towards London’s Fintech startup scene becoming more and more crypto-centric. I would estimate that we have a maximum of 6 months before a jurisdiction gets a bank on-board and all of business heads there. You only need to look at the amount of interest that the Isle of Man is generating.

The other big bit of news was that our Lamassu has arrived!

Currently we are continuing internal testing as well as adding a few functions to the software (to help with the concerns that have been raised by the JFSC), but we did decide to do a quick demo for those present. And of course, a live tech demo ended up with a ‘no connection found’ message! It seemed that powercycling the server sorted this out but we’d run out of time so the demo will have to wait until next meetup (we should have our stand made by then).

If you want to keep informed as to when the next meetup will be, please signup to our mailing list here.

Blockchain.info back on the iOS App Store

Great news! With Apple finally starting to embrace iOS Bitcoin Wallets, the one that a lot of us have been waiting for to return is the Blockchain.info wallet. And now finally, it’s back!

They’ve done a great job of updating the styling and implementing a couple of great features.

Although it’s an online wallet, I’ve found the Blockchain.info wallet service to be one of the easiest ways to get someone up and running with Bitcoin (although it being an online wallet I’d only keep the same amount you’d keep in your pocket, paper wallets and cold storage are much better for storing higher amounts).

Edit – latest version 2.0.2 has now a few more, including a merchant directory (which I’ll add our brick & mortar bitcoin businesses to soon). They’ve also just hit 2million wallets!

Global Advisors announces world’s first regulator approved Bitcoin Investment Fund.

GABI has been approved by the JFSC as the world’s first fully regulator approved Bitcoin Investment Fund. Kudos has to go to the GABI team as I know they’ve been working on this for a very long time and it’s great to see that Jersey’s regulators are embracing Bitcoin in this way.

There have already been some great articles on this so yet again, I’ll try to post a list of the articles below.

http://www.bbc.co.uk/news/world-europe-jersey-28247796

http://www.coindesk.com/first-regulated-bitcoin-investment-fund-launch-island-jersey/

http://cointelegraph.com/news/112048/bitcoin-investment-fund-gabi-boosts-jerseys-bitcoin-isle-hopes

http://www.reddit.com/r/Bitcoin/comments/2aer6w/bbc_news_jersey_approves_first_regulated_bitcoin/

http://www.reddit.com/r/Bitcoin/comments/2ablk6/jersey_welcomes_global_advisors_bitcoin/

http://www.ibtimes.co.uk/cryptocurrency-news-round-bitcoin-hit-2000-first-regulated-fund-approved-1456254

http://www.businesslife.co/BusinessNews.aspx?id=global-advisors-announces-worlds-first-regulator-approved-bitcoin-investment-fund

http://www.bignewsnetwork.com/index.php/sid/223695999

http://www.opalesque.com/industry-updates/3869/global-advisors-announces-first-regulator-approved-bitcoin.html

http://www.mondovisione.com/media-and-resources/news/global-advisors-announces-worlds-first-regulator-approved-bitcoin-investment-fu/

http://www.newsweek.com/ex-jp-morgan-trader-joins-bitcoin-bulls-launching-hedge-funds-258494

http://www.jtglobal.com/Jersey/super-footer/Latest-News/2014/JT-welcomes-the-launch-of-Bitcoin/

http://moneymorning.com/2014/07/24/bitcoin-hedge-funds-multiply-as-big-money-sees-opportunity/

http://www.forbes.com/sites/alisoncoleman/2014/08/03/europes-bitcoin-entrepreneurs-winning-investor-seal-of-approval/

 

Bitcoin works – time for Jersey to act?

This is a repost from DQ Magazine by Vicky Milner.

Bitcoin works.  Until last week, using cryptocurrencies was something that other people did, like space travel or botox.  On 27 June 2014 though, I went to a bit.coin.je meet up and afterwards progressed with the othe attendees to the Forum Bar in St Helier, conveniently located directly opposite Digital Jersey’s Hub.  Robbie Andrews, Jersey’s very own King of Crypto, bought me a glass of wine, paying with bitcoin.  The process was simple and took no longer than using a credit card.  The wine tasted very much like any other glass of pub wine.

Digital Jersey and local entrepreneurs, including Robbie Andrews, Jon Day, Mark Loane and Danny Masters, have been looking at cryptocurrencies for some time.  From a lawyer’s perspective, cryptocurrencies are fascinating.  Is bitcoin a currency, a payment mechanism or an asset?  It depends, is the rather unhelpful answer.

According to the European Central Bank’s 2012 report on virtual currencies:

“Modern economies are typically based on “fiat” money, which is similar to commodity-backed money in its appearance, but radically different in concept, as it can no longer be redeemed for a commodity. Fiat money is any legal tender designated and issued by a central authority. People are willing to accept it in exchange for goods and services simply because they trust this central authority. Trust is therefore a crucial element of any fiat money system.

Regardless of the form of money, it is traditionally associated with three different functions:

  • Medium of exchange: money is used as an intermediary in trade to avoid the inconveniences of a barter system, i.e. the need for a coincidence of wants between the two parties involved in the transaction.
  • Unit of account: money acts as a standard numerical unit for the measurement of value and costs of goods, services, assets and liabilities.
  • Store of value: money can be saved and retrieved in the future.”

Cryptocurrencies are significantly different from fiat currencies.  They have not been officially issued or approved and their legal status is uncertain.  The question of categorization and the meaning of “currency” were addressed in a December 2013 report by Bank of America Merrill Lynch:

“…To the extent that Bitcoin offers users many benefits and efficiencies as a medium of exchange, this means it possesses some fundamental value that may increase over time as it gains wider use. However, as a unit of account and store of a value, it has considerable shortcomings which we believe will ultimately hinder it from ascending to international currency status.”

Volatility is just one issue and there are other understandable concerns around cryptocurrencies.  However, one might argue that these are of no greater significance than concerns around other commodities and payment systems.  Cash has always been used for illegal transactions, just as it has always also been used for legitimate reasons.  Our response is not to say “let’s get rid of sterling and go back to trading in shells”.  We’ve built up meticulous regulatory regimes to provide consumers and businesses with proper protection.

An unstoppable force

Use of cryptocurrencies is not going to stop.  Attempts to ignore it are as constructive as King Canute’s efforts to turn back the tide – and this is a spring tide.  Numerous international companies are starting to engage with this new technology.  Just look for example, at Expedia’s decision of 11 June 2014, to accept bitcoin transactions as a form of payment.

Jersey has a history of financial innovation, most notably with the development of the Trusts (Jersey) Law 1984.  In 2012 Bailliff Sir Michael Birt described this law as: “…one of Jersey’s success stories…”  He noted that:

“…the law did not try to provide a detailed code so as to provide an answer to all the problems which might arise. It is in fact a surprisingly short law given the complexity of the subject with which it has to deal.”

Issuing guidance or consulting on implementation of a legal framework would be in the interests of the public and is eminently do-able.  In June 2014 Canada announced that it will be regulating use of digital currencies, while in the same month the Financial Action Task Force (FATF), an intergovernmental body of high standing, published a paper providing (amongst other things) “a common definitional vocabulary that clarifies what virtual currency is”.  Even the Isle of Man is in on the act, having announced its intention to bring in legislation later this year.

Addressing all of this head on, by publicly confirming how Jersey’s Comptroller of Income Tax will deal with bitcoin and whether there are any consumer protection measures which the Jersey Financial Services Commission or Trading Standards would like to see implemented, would provide an opportunity to shine light on the flaws and strengths of cryptocurrencies.  Such transparency would be consistent with Jersey’s reputation as a mature and responsible jurisdiction.  Whether or not such an approach is consistent with the concept of bitcoin as a decentralized currency is a different question.  The starting point is that bitcoin is here and it works.

Vicky Milner is an advocate at Callington Chambers and Chair of Digital Jersey’s Regulation & Legislation TAG.

The world learns about #BitcoinIsle

Last week I was interviewed, alongside Giles Day from Tiffin, by BBC Jersey about Bitcoin and how it’s being used in Jersey as well as the potential future opportunities. I will try to get a copy of it up here but in the meantime, a full article has been produced by Ryan Morrison. This was very well received and immedieately started getting noticed by a huge amount of news sites (including front page on Engadget, Motherboard & Cnet).


It was also great to have our Treasury & Resources Minister comment on Bitcoin in such a supportive way:-

“[This] is a sector that could hold significant opportunities for Jersey.

“Our infrastructure of world-class financial services and digital expertise gives us the tools to be an early leader in the field. Innovation will be central to Jersey’s future prosperity.

“We are keen to support local businesses by helping to create a well-regulated and responsive environment for investment in the sector.”

– Senator Phillip Orzouf


 

I’ve tried to compile all the links in a list below, so if there’s one missing, please add to the comments and I’ll add it.

http://www.engadget.com/2014/06/23/jersey-bitcoin-island/

http://www.cnet.com/news/bitcoin-isle-might-be-next-on-jerseys-docket/

http://www.coindesk.com/jersey-rival-bali-next-bitcoin-island/

http://motherboard.vice.com/read/an-offshore-tax-haven-plans-to-become-the-worlds-first-bitcoin-island

http://www.cityam.com/1403609801/isle-bitcoin-jersey-take-bali-best-place-cryptocurrency

http://cointelegraph.com/news/111912/offshore-tax-haven-jersey-aims-to-become-bitcoin-isle-

http://news.insidebitcoins.com/can-scenic-tax-haven-become-bitcoin-isle

http://www.siliconrepublic.com/business/item/37373-jersey-aims-to-be-worlds-f

http://www.itproportal.com/2014/06/23/jersey-aims-to-become-worlds-first-bitcoin-isle/

http://www.ibtimes.co.uk/bitcoin-island-campaign-aims-create-cryptocurrency-haven-1454037

http://www.reddit.com/r/Bitcoin/comments/28v3nk/bbc_news_campaign_to_create_jersey_as_a/

http://bitcoinagile.com/4CBF6/jersey-to-become-the-worlds-first-bitcoin-isle-cryptocoinsnews_stream

http://bitcoindaily.com/jersey-in-pursuit-to-become-the-bitcoin-isle/

https://coinreport.net/isle-of-jersey-adopt-bitcoin-official-currency/

http://siliconangle.com/blog/2014/06/26/jersey-bids-to-become-the-worlds-first-bitcoin-isle/

http://www.gizmodo.co.uk/2014/06/jersey-wants-to-rebrand-itself-as-bitcoin-isle/

http://bitcoinexaminer.org/bitcoin-isle-horizon-jersey-plans-radically-adopt-cryptocurrency/

http://thecoinfront.com/jersey-wants-to-become-a-bitcoin-haven/

 

 

CIISF announce review into potential of Cryptocurrencies

Today the Channel Island Information Security Forum (CIISF) announced that they will be working on a paper outlining the potential for Cryptocurrencies in the Channel Islands. We will be working with them to research this topic

News Release – Channel Islands Information Security Forum

20/06/2014 14:00 – For Immediate Release

CRYPTOCURRENCY INVESTIGATION LAUNCHED BY CHANNEL ISLANDS SECURITY FORUM

The Channel Islands Information Security Forum (“CIISF”) has launched a review of cryptocurrencies and how Jersey and Guernsey could benefit.

IISF Chairman, Matt Palmer, said “Cryptocurrencies are much misunderstood but have the potential to revolutionise the financial system. That may be good news or bad, but a ‘wait and see’ strategy is not an option. Cryptocurrencies such as bitcoin could well underpin the future of offshore finance centres.”

“The Forum will be undertaking an in-depth review of the issues and opportunities around cryptocurrencies, including both the technical and administrative barriers, and presenting our findings back to government and the digital community.

“There is an opportunity to create a trusted regulatory and legislative environment in which cryptocurrencies can be established, operated and traded. However, whilst some jurisdictions are rushing ahead there are considerable risks that need to be addressed.”

Arthur Mainja, Deputy Chair of the CIISF, added “The CIISF has access to over 100 specialists in cybersecurity, and this will provide critical advice and guidance to the States in developing their strategies for the digital and financial services sectors.”

Anyone wishing to contribute to the study should contact the CIISF secretariat at admin@ciisf.org.

About the CIISF

The Channel Islands Information Security Forum is a not-for-profit organisation established to support government, residents and businesses in addressing cybersecurity issues in the Channel Islands. It undertakes public policy research and operates a growing community education programme in both Jersey and Guernsey.

Further information

Please contact Matt Palmer – Chairman on 07700 899900 or the CIISF secretariat at admin@ciisf.org