The Italian carmaker explained in a statement that this move will better address the “evolving needs of its clients.”

Ferrari has said that it will begin accepting crypto transactions in other countries where crypto is currently legal tender by the end of 2024, after launching in the US last year.

“Ferrari is leveraging the expertise of various companies active in the cryptocurrency payment sector to ensure transaction security,” the Italian carmaker said in its statement.

“These solutions will facilitate dealers in accepting payments without the need to manage cryptocurrencies directly, as these will be converted immediately into traditional currency.”

In the US, Ferrari uses the crypto payment platform ‘Bitpay’, which performs this conversion.

Ferrari said that this approach allows it to verify the source of funds and protect transactions from price fluctuations related to exchange rates.

The high energy usage of cryptocurrencies has deterred other car manufacturers, such as Tesla, from accepting them as a form of payment – although it now accepts the cryptocurrency ‘Dogecoin’ for merchandise purchases.

In 2021, Tesla began accepting Bitcoin before its CEO, Elon Musk, halted it citing “environmental concerns.”

When Ferrari first accepted crypto payments in the US last year, its chief marketing and commercial officer, Enrico Galliera, told Reuters that cryptocurrency providers have made efforts to reduce their carbon footprint.

“Our target to reach for carbon neutrality by 2030 along our whole value chain is absolutely confirmed,” he said in an interview.

Galliera added that the decision came in acknowledgement that many of its clients have invested in crypto.

“Some are young investors who have built their fortunes around cryptocurrencies,” he said. “Others are more traditional investors who want to diversify their portfolios.”

The post Ferrari to accept crypto payments in Europe appeared first on TechInformed.

The amount is double that of the first half of 2023 when $657 million was stolen in crypto.

As in 2023, the first half of this year was dominated by a small number of costly attacks, with the top five hacks and exploits accounting for 70% of the total amount stolen.

In May, Japanese cryptocurrency DMM Bitcoin suffered the largest attack of 2024, resulting in the theft of over 4,500 BTC, which was valued at over $300 million at the time.

While the cause of this attack is unknown, like many victims in the last six months, it is speculated that a stolen private key or address poisoning may be the cause.

Hacks and exploits in 2024 are a third below the same period in the record year of 2022.

TRM Labs said in its report: “Crypto projects can protect themselves from hacks and exploits by implementing a multi-layered defence strategy, such as regular security audits, robust encryption, multi-signature wallets, and secure coding practices.”

The firm advised crypto wallet owners to stay up to date on the latest threats, educate employees, and have a comprehensive incident response strategy.

Read more: Navigating the line between crypto surveillance and privacy protection

The post Crypto hackers have already stolen almost $1.4 billion this year appeared first on TechInformed.

Reasons to invest and use the digital currency are varied, some believe its value will stay with inflation, others appreciate the minimal extra cost when transferring money abroad. The fact that it’s decentralised also offers privacy, control, and security compared to fiat money.

While fiat (cash) transactions are shared with the bank, which is often backed by a recognised government entity, cryptocurrencies are less traceable and not as easily accessed by third parties.

The reason for this is to secure an individual’s transactions and ensure autonomy over their finances.

Businesses using these services benefit by keeping their transactions confidential, shielding the details from competitors, and assuring consumers that their transactions are protected from any leaks or breaches.

As Peter Wood, chief technical officer at Web3 recruitment agency, Spectrum Search explains: “Privacy in cryptocurrencies is fundamentally about protecting individual autonomy and security a private sphere of economic activity from unwarranted observation and interference.”

Wood believes that the privacy crypto offers is crucial – not just for personal privacy but also as a defense against potential governmental overreach and financial surveillance, particularly in regions where personal assets are at risk from arbitrary governmental actions.

This may be a reason cybercurrencies remain banned in countries including China, Qatar, and Saudi Arabia. Russia is making efforts to ban cryptocurrencies, too.

Controversially, the US Department of Justice (DOJ) recently arrested and charged two founders of Bitcoin privacy wallet Samouri Wallet with conspiracy to money laundering and conspiracy to operate an unlicensed money service business.

Private wallets hold cryptocurrencies and are solely accessible to those who have the digital ‘key.’

Here, presents the issue. While Samouri Wallet aimed to keep its users completely anonymous in the name of financial privacy, the US DOJ claimed its level of concealment allowed unlawful activity to run on its platform.

The arrest went down negatively with crypto enthusiasts, with the argument that the government is forbidding the right to privacy.

At the time, high profile whistleblower Edward Snowden chimed in by posting on X: “The Department of “Justice” has once again criminalised the developers of an app that restores financial privacy.

“The way to fix this [is] to make money private by default. Privacy must never be ‘exceptional,’ or they will make it criminal.”

Fintech-loving criminals

We see cryptocurrencies mentioned regularly in relation to unlawful transactions. Ransomware gangs, for instance, will almost certainly demand funds to be transferred via cryptocurrency to avoid traceability, and those trading illicit goods and services will predominantly use it for money laundering purposes, too.

According to Chainalysis, an estimated $24.4 billion was received by illicit addresses in 2023.

“Cryptocurrencies certainly make it easier for cybercriminals to receive their cyber attack ransoms and are able to launder the ransoms with less chance of being monitored and caught along the way,” says Chris Hauk, consumer privacy advocate at Pixel Privacy.

Using cryptocurrency to move money allows criminals to bypass sanctions put in place through traditional financial systems like banks and makes the transaction much more difficult for the police to track.

Ransomware gangs, for instance, will often ask for money to be transferred via Bitcoin, and although this is known to be easily visible now, it can be moved instantly to a few private wallets without little approval.

There are efforts to tackle this by governments. Most major exchanges within cryptocurrency require proof of identity now, thanks to “Know-Your-Customer” measures the US’s Internal Revenue Service (IRS) and the EU are introducing.

This has helped enforcement step up on bad actors using the cyber currency, including a child exploitation ring, seizing a good portion of $4.5 billion in Bitcoin stolen in 2016.

But, Paul Bischoff, consumer privacy advocate at cyber security firm Comparitech states that it will be impossible to completely criminalise cryptocurrencies since they are decentralised, often open source, and easy to create for those with the skills.

Plus, it only tackles criminals within their countries. It remains difficult for government agencies to disrupt those outside.

Maintaining privacy

For context, while criminal activity runs through crypto platforms, it only made up 0.34% of crypto transactions last year according to Chainanalysis.

Surveys reveal that over a third of users use private wallets, and a tenth hold theirs offline in a hardware wallet, proving privacy is something normal users still care for.

“While it’s tough to track cryptocurrency payments, the government could introduce legislation to monitor and manage cryptocurrencies,” says Hauk.

However, the balance between maintaining privacy for the normal citizen, and monitoring cybercrime and fraud is a tricky one to get right, according to Wood.

“These regulations necessitate a delicate balance for providers, as they must align their operations with privacy assurances while adhering to regulatory frameworks designed to prevent illicit financial activities,” he says.

Wood calls for innovative solutions that reconcile privacy with transparency, pushing the boundaries of what can be achieved within the confines of the law.

Hauk adds: “My only concern about the government getting involved is that they’ll likely find ways to use any new laws to monitor the average citizen, who may simply be dipping their toe into the cryptocurrency pool.”

“The history of any cyber-related legislation we’ve seen in the past 30 years has simply led to increased surveillance on the average citizen,” he adds.

However, he also points out that money moving around in crypto won’t get very far in the real world: “Eventually, cryptocurrency must be converted to fiat currency, which are the transactions we should be monitoring most closely.”

Ben Stickland, member at cyber security firm CovertSwarm adds that at least  many UK banks now have policies in place that prevent the purchase of cryptocurrencies or have higher levels of security before allowing those transactions to take place.

According to Wood, there are still many cyber-enabled crimes which rely on traditional methods such as moving money via gift cards and stolen banking information.

“It is critical to understand that these technologies themselves are not inherently geared towards facilitating criminal activities any more than traditional financial systems,” says Wood.

“This requires a collaborative effort among all stakeholders in the cryptocurrency ecosystem to develop balanced solutions that safeguard privacy while preventing abuse,” he concludes.

The post Navigating the line between crypto surveillance and privacy protection appeared first on TechInformed.

Panama-based Towerbank is a fifty-four-year-old family-run institution serving a largely Latin American customer base in a region that is experiencing a higher than average inflation rate.

It’s a conservative organisation, according to Gabriel Campa – the commercial bank’s head of digital assets – and one that prides itself in being free of money laundering scandals.

Nonetheless, Towerbank’s president and CEO recognised that the bank needed to reboot its business model: all banks were offering the same products and services, and it was getting harder to compete with bigger players.

During an analysis of customer activity was carried out as part of the bank’s next ten-year plan, Campa noticed that more were buying cryptocurrency on their credit cards.

“Initially this was a risk for us, because we had no idea where the money was coming from,” he recalls. “We want to serve our customers – but we needed transparency.”

So, Tower started asking its clients what they were doing with the crypto and how the bank could help. It transpired that most uses were similar to regular bank services. Customers were using crypto to buy, to sell, for custody (secure storage), loans and overdrafts – ”All the normal standard banking products, but in the crypto space,” Campa observes.

While this might not seem like a radical use of crypto, in Latin American markets where inflation is still high (Venezuela’s inflation rate hit nearly 190% last year; Argentina’s hit 287% this March), people are turning to cryptocurrencies to protect their economic security.

To investigate further how the bank could help its customers who were buying crypto, Campa invited forty of them into the bank to find out more about what their clients needed.

The vision

Following its initial research, Tower kept the proposal simple to begin with, but broadly crypto friendly. If customers were transparent about their uses of crypto and its origins, it was willing to accept fiat currency that had initially come from crypto, so long as the crypto wallet it came from could be verified by [blockchain data platform] Chainanalysis.

At this point, the bank also got the regulators involved as well as other banks and informed them of its intentions to work with crypto. For Campa, this was about building trust.

“They know we are going to do things right. We are going to report what we find. That trust has allowed us to work behind the scenes without making much noise,” he says.

The next step was to enable crypto-to-fiat transfers. Campa says that one of the first transfers Towerbank received in crypto was from a client who had funds in the ill-fated cryptocurrency exchange FTX – just at the point where it was collapsing.

“He had to make payments in Panama. He called us and said, ‘I have $10K I need to make payments I have no way of sending my money’. We had the basic model in place by this point. So, we’d receive $10K in fiat currency and we’d ask them to show us the crypto wallet where that $10K came from. Which was verified by Chainanalysis.

“We gave him a deposit address he sent us his money in crypto we exchanged it into fiat in four hours,” Campa recalls.

While it was possible to handle this new service for 40 or so clients, it was still a time-consuming process. To scale, the bank needed to create an app-controlled crypto wallet that operates as a bank account, and to automate as much of this process as possible.

Campa’s vision was for this app to do all the things a bank offers – ACH transfer, SWIFT payments etc, but one which also handle clients’ crypto so that they can buy and sell in one place.

“The only policy we’ve established in the bank is that we don’t buy or sell or take custody of crypto,” Campa adds. “ We are not an exchange, and we don’t believe that banks should have crypto on the books. That’s too risky.”

To separate digital from fiat the bank set up its own trust to handle its clients’ crypto.  Campa explains: “That way if something were to happen to the bank the crypto is safe. Or let’s say crypto goes to zero – it’s the client’s crypto. We don’t put our any of our customers’ funds at risk.”

The bank plans to make its money on conversion fees rather than charging for the bank account. In terms of the type of crypto, Tower will accept Bitcoin, ether (ETH) and US dollar backed stablecoins Tether (USDT)and USD Coin (USDC). The plan is to allow more over time, Campa adds.

The tech

To achieve Campa’s vision of offering a hybrid banking service “that acts as the bridge between the fiat and the crypto ecosystem” Towerbank needed to build a scalable and flexible model. And one that was capable of handling two entirely different worlds – the crypto users who view traditional banks as “way too complicated” (in Campa’s words) and the traditional banking community.

Initially, Tower started building a model in AWS Cloud, but soon realised it needed a more robust solution. After attending Amazon’s re:Invent conference in Las Vegas, he was introduced to low-code no-code platform Appian.

Campa explains that this platform has enabled the bank to automate many of the process (96% in total, he claims) that were taking its team hours to do manually.

“Appian runs our entire onboarding process. It opens a bank account and a crypto account at the same time all in one shop. Before it would take our team around seven hours per client: one hour with the client and then six in the background doing paperwork. Now it’s 10 minutes with the client,  and an hour and a half of paperwork. We are feeling the impact immediately,” he says.

Appian also handles the crypto backend – as well as the transfers and execution of ACH and SWIFT, debit card processing and due diligence and compliance.

Campa adds that another advantage of using the process management system, is its ability to connect the bank’s other partners via APIs, which include its cloud banking platform provider Mambu;  payment gateway provider, Frame Banking and verification tool Chainanalysis.

In the background the Appian system also collates data and sends it to the bank’s data lake to enable deeper analytics in the future, to create more products and services to support these clients.

Another key tech provider was the crypto wallet, ikigii, which claims to be the only crypto wallet that is also a US dollar bank account.

Campa enthuses: “There’s nothing like it. It’s the only wallet where you can put both currencies into one place to allow payments for conversion to send and received; for P2P; custody and digital finance space loan and overdraft. International wires and payments.”

The results

According to Campa, the bank has already managed to on board around 700 clients with this system – and that’s before the app‘s official launch, which is scheduled for next month.

He estimates that the bank handled about US$30m in transactions from crypto clients last year: “We might have US$2m to US$3m in deposits. We have around 2,000 new clients with around 200 to 300 of these constantly transferring fiat to crypto, crypto to fiat.”

Campa maintains that if clients send over their crypto today, they will receive the cash in their accounts “within 50 seconds”. The bank is forecasting 2x growth this year and is hoping to enhance its hybrid platform with blockchain and generative AI technology, launching new products that include asset tokenisation and e-commerce with crypto.

While there are other means of converting crypto, Campa concludes that, even in the decentralised world of crypto and blockchain, banks can have a key role in acting as a trusted intermediary. This is especially true, he adds, in territories where crypto scams are so common that many banks won’t touch the currencies – leading to a great vulnerability among users and investors and a rise in Peer-to-Peer (P2P) crypto scams.

“There are lots of P2P scams that involve the seller accepting crypto and then ringing up the buyer’s bank and trying to get the money back. With a transparent relationship at the bank, a relationship with the regulators and corresponding banks, Tower can verify transactions and push back against refunds knowing that it was a legitimate transaction.

“We’ve got to this point because our clients trust us and are willing to tell us they are using crypto,” says Campa.

The post Towerbank builds hybrid crypto-fiat platform for LatAm clients appeared first on TechInformed.

Over the last year, words like ‘Web 3’, ‘blockchain’, and ‘NFT’ have all slipped off the radar — party due to the boom in AI excitement — but mainly because it took a reputational hit following fraudulent marketplace charges and a series of loss making initiatives.

Recent headlines have seen reports claiming footballer Cristiano Ronaldo had been hit with a billion-dollar lawsuit after launching his NFT collection; the internet laughing as singer Justin Bieber’s ‘Bored Ape’ NFT plunged from $1.3 million to just $70,000; X removing support for NFT profile pictures just at the beginning of this year; and gaming firm GameStop announcing it is to close down its NFT marketplace next month.

Nonetheless, some brands are still trying to keep their digital tokens in the spotlight, like luxury watch brand IWC Schaffhausen.

In collaboration with Arianee, a Web 3 platform, IWC launched its NFT range in 2022. The range comes with a metaverse-style membership called IWC Diamond Hand Club, offering access to exclusive online and in-person events.

Looking back, its chief digital transformation officer, Katharina Doepke-Schelling, wanted to clarify that they didn’t launch it to join the hype at the time.

“So, I’m taking us back to 2021. It was right in the middle of the pandemic; it was winter, our boutiques were closed, our events were about to be cancelled, but we were also about to launch a collection,” explained Doepke-Schelling.

“We were brainstorming about how to get this experience towards the customer when they might be staying at home. That’s when we started partnering up and brainstorming how to use that new technology to support our strategic goals,” she said.

According to Doepke-Schelling, the watchmaker didn’t just want to jump on the hype train: “We didn’t want to just launch an NFT for the sake of launching an NFT. Rather, we wanted to emphasise our brand.”

Arianee’s co-founder, Pierre-Nicolas Hurstel, explains that when a customer purchases a watch, they will acquire a new blockchain-based wallet in their account.

“Inside this wallet is a digital passport, which an NFT is dropped into for each purchase. Super seamless, easy to use, no questions asked, not one more click,” he said.

Previous customers can also join the community and claim their NFTs by using their existing products or attending in-person events. After launching the NFTs, IWC invited customers to a small private concert with composer Hans Zimmer.

“We had two students that found us on an NFT forum join us there, and they were sitting next to the marketing manager helping to build this programme. He could give them all of the insights, and we recently got a message from one of the students who just graduated telling us his first watch was [an IWC] watch,” added Doepke-Schelling.

She explained how this example showcases the type of community IWC wants for the brand to build a loyal fanbase, “We don’t just use it to build loyalty within the customers we have, but also as an acquisition of the actual insignia.”

NFTs in 2024

In defence of NFTs, Hurstel highlighted the faults in how the Web 3 tool was previously viewed.

“The hype was all about a new kind of fully digital product that people get, that allows them to make more money in the future maybe,” he explains. “A lot of it was trying to make a little more money than the next guy.”

“When you look at what IWC has now as a marketing capability, it is the capability to distribute data.” Brands have a tokenisation engine built inside customers’ information systems with NFTs, says Hurstel.

Within that, brands have immediate access to dynamic data owned by the user.

“Normally what you do is collect emails, you collect birthdays, and you end up with this already immediately obsolete data that’s hard to protect and update,” he adds. “All of a sudden, when you change that towards data distribution capabilities, you’re able to put data in the hands of your users and let them use this data in a dynamic way.”

The co-founder enthuses that with this, brands can get to know their customers “like never before.”

“That has nothing to do with hype; that has to do with regaining control over the brand’s digital presence and relations while giving it back to them at the same time.”

The post Is it time again for NFTs? appeared first on TechInformed.

The study analysed over 300 organisations from various sectors that accept cryptocurrency payments, finding that 60 companies in retail have adopted crypto, including H&M, Adidas, Yankee Candle, and popular online marketplace Etsy.

The food and dining industry secured second place, with 54 companies allowing crypto transactions. Players like Hard Rock Cafe, Domino’s, Chipotle, and Chuck E Cheese have all hopped on the digital currency bandwagon, the study found.

Burger King’s operations in Venezuela began accepting Bitcoin payments as early as 2020. Delivery services such as DoorDash and Uber Eats are also integrating this technology.

The Luxury retail sector rounded out the top three with 35 companies, including high-end fashion brands like Gucci and Ralph Lauren. Luxury watch retailer Hublot and jewellers like CRM Jewelers and Jewelry Affairs are also part of this cryptocurrency shift.

Need more context? As FTX founder is convicted, can regulation revive crypto’s reputation?

Travel and hospitality, and internet and online services, make up the top 5. Norwegian Air, Vueling and a spate of jet hire services like LunaJets represent the former category, while the likes of Google Play, Spotify and VPN providers such as ExpressVPN and FrootVPN are among the 28 companies making up the latter.

David Kemmerer, co-Founder and CEO of CoinLedger, spoke to the significance of these findings. “The increasing number of companies accepting cryptocurrency payments underscores the rise of digital currencies in the mainstream economy,” he said.

“This not only resonates with the advancing preferences of tech-driven customers but also offers benefits like decreased transaction charges and enhanced security. The cross-sector uptake of cryptocurrencies underscores their versatility and reflects just how important blockchain technology has become.”

He predicts that the increasing trends will lead to greater acceptance of cryptocurrencies and a more decentralised financial landscape.

For more TI reporting on Blockchain developments, click here.

The post The top five industries leading the cryptocurrency transition appeared first on TechInformed.

The 31-year-old crypto billionaire now faces decades in prison following his arrest last year after his exchange, FTX, went bankrupt. He had pleaded not guilty to all seven charges.

Bankman-Fried’s stunning fall from grace coincided with a difficult 2022 for the crypto sector. Stablecoin Terra – touted as one of the most reliable digital currencies – dropped 96% in value in a single day.

Bitcoin – possibly the best known of all cryptocurrencies — lost over 60% of its value last year. It was the second worst year in the digital currency’s history (it fell 73% in 2018).

But the biggest negative news story for crypto was FTX — which was promoted by prominent stars such as supermodel Gisele Bundchen, comedian Larry David and NFL star Tom Brady, lending an ‘acceptable’ face to what is still considered by many to be a risky investment.

‘Wild West’

Michael Lewis — author of books such as Moneyball and The Big Short, both of which later went on to be adapted into Oscar — nominated films, has recently written a book on Bankman-Fried. Speaking to The News Agents podcast, he said “Cryptoland is the Wild West” and speculated that other exchanges are also structured like FTX, but are out of the reach of US prosecutors.

The challenges of 2022 led to an increase in calls to introduce regulations — or even specific regulators — for cryptocurrency and digital assets, but what will that look like, and can it work?

“Unfortunately, scandals in this space, and lack of clarity on regulation, have resulted in crypto almost becoming a dirty word in the financial services world,” explains Sasha Skoryk, head of banking at Clear Junction.

“The word ‘crypto’ is used in such a generic way without really understanding all the components of digital assets and blockchain technology.

“What is a blocker to this mass adoption of digital ledger technology is the fact that some of these crypto assets are so volatile and the price can change very rapidly. That makes it risky and not something that can be easily adopted by businesses as an example. But there are so many elements of crypto that have the ability to transform the way we make payments.”

Effective regulation can “provide the foundational trust that both institutions and individual investors need to confidently enter or re-enter a market,” adds Spectrum Search founder and CTO Peter Wood.

“The crypto space is nascent and therefore highly susceptible to volatility, misinformation, and fraudulent activities. Introducing a dedicated regulator, can indeed act as a stabilising force by setting clear standards, enforcing compliance, and ensuring consumer protection.

“Such oversight not only adds credibility but also streamlines processes, making it easier for new entrants to adopt and innovate. On the flip side, the challenge is to strike the right balance.”

However, he warns that there’s a fine balance to be struck.

“Overly restrictive regulations can stifle innovation and push potential investors and tech leaders away, which is counterproductive to restoring the reputation of the crypto world.”

VARA

For the United Arab Emirates, cryptocurrency and digital assets are seen as a huge opportunity. In fact, at the recent GITEX conference in Dubai, one senior from the local government told TechInformed that the aim is to make the Emirate the “Switzerland of Cryptocurrency” by acting as a neutral and welcoming home for digital asset firms.

To achieve this, Dubai became the first region to launch its own independent regulator for virtual assets — after several years of development, Virtual Assets Regulatory Authority (VARA) went live in March 2022.

VARA’s mission statement includes the aim to make Dubai a “regional and international hub for virtual assets and related services” but also to “promote a shared responsibility in developing efficient and bespoke regulations for the protection of customers and to curb illegal practices in coordination with the concerned entities.”

TechInformed asks VARA vice chairperson Deepa Raja Carbon to outline why Dubai opted to create a sector-specific regulator for virtual assets.

She explains: “When we were set up, crypto wasn’t seen in the same way it has been the last six months. It was one that every jurisdiction globally wanted to foster and nurture to help grow.

“Part of the Dubai 2033 plan, which was set out last year, included targeting new economy sectors, and everything from blockchain and metaverse to AI and virtual assets fell under that remit.”

The 2033 plan was set out by ruler Sheikh Mohammed bin Rashid Al Maktoum to pivot Dubai’s economy to new areas and opportunities, which include turning the city into one of the leading smart cities in the world.

New economy sectors make up around $100 billion of that goal, according to these plans.

“One of the obvious elements missed by that formulation is any regulation around virtual assets,” adds Raja Carbon. “So, if you stopped thinking about virtual assets as a vertical, and started to see this as a horizontal, almost a transversal, none of the others would be able to be attractable or grow as a consequence. For that scalability, we needed to build a foundation – and that is VARA.”

In February this year VARA issued the much-anticipated Virtual Assets and Related Activities Regulations 2023, setting out the regulatory framework governing Virtual Assets and all related activities in the emirate, with several updates announced since. Its remit is only for the Emirate of Dubai.

Now, more than 800 companies operate in Dubai within the space covered by VARA without licences, although Raja Carbon has set a goal that by the end of the year, all of these entities will either have the correct registration, or will be in the process of registering, for a VARA licence to operate.

“So, by the end of the first quarter of next year, you’re either going to have them formally applying for our licence, or winding down completely,” she adds.

To deal with the wider market and those companies who may be related to virtual assets but not directly in that remit, VARA has launched the Dubai legacy programme, which should impact around 850 companies. This will allow them to go through a transition period to align activities with VARA regulations through a temporary licence.

VARA only covers the Emirate of Dubai – the rest of the UAE has its own crypto rules under the Emirates Securities and Commodities Authority (ESCA) while payments are still regulated by the UAE Central Bank.

So how does VARA balance Dubai’s goal to become the leader in this sector, with the need to protect from bad actors through regulation?

“We set ourselves up to be a very agile regulator,” explains Raja Carbon. “I don’t mean agile just in terms of the response to market but also the regulations having to be tweaked, knowing that this is not a static industry. It’s dynamic, it’s going to change, and regulators are only as good as their awareness of what the market can do.

“Our regulations are going to constantly evolve, but we need to protect those that need most protecting, and that means not being completely loose so that a person isn’t sure where they are going to land.”

Dubai: We built this city on block and chain

Around the world

Now, there is little sign that other countries are going to follow Dubai’s route with a dedicated regulator, but several are making moves.

Spectrum Search’s Wood points to Switzerland and Singapore as two nations who stand out as having embraced a “proactive, yet balanced, approach” to cryptocurrency.

He explains: “Singapore’s Monetary Authority provides clear guidelines and fosters innovation while ensuring investor protection. Switzerland’s ‘Crypto Valley’ in Zug has become a global hub thanks to its forward-thinking regulatory framework that is both business and investor friendly.

“It’s the synergy of clear rules, accessibility to regulators, and an overall progressive mindset that makes these countries stand out in the crypto legislative landscape.”

The post As FTX founder is convicted, can regulation revive crypto’s reputation? appeared first on TechInformed.

The city of Dubai – known perhaps for its wealth, skyscrapers, luxury, and instagrammable sites – is looking to position itself as the smart city of the future, a utopia between the desert and the sea where tech drives the life of all residents.

Digitisation is a key part of ruler Sheikh Mohammed bin Rashid Al Maktoum’s 10-year plan to catapult Dubai into the world’s top cities by economic strength in the next 10 years – known as D33.

The plan envisages a programme to support 30 private companies to achieve unicorn status ― worth more than $1 billion (about Dh3.67 billion). Other business incubators will support the growth of private companies, with 400 of the most promising identified.

The plan has also seen an overhaul of the way Dubai’s government runs the city, moving almost 100% of departmental services online, and giving citizen’s access through their smart phones and devices. Underpinning much of this, according to city executives who spoke to TechInformed on a recent press trip to Dubai, is the blockchain.

“Dubai was quite early in terms of blockchain adoption,” claims Marwan Al Zarouni, who sits down with TI as part of the Gitex and North Star conference in Dubai. Al Zarouni is CEO of the Dubai Blockchain Center, a position he has held since 2018.

“We held our first Bitcoin conference in 2014, and his highness (Sheikh Rashid) launched our first blockchain strategy in 2016. This was to utilise all applicable use cases of blockchain within government by 2020.”

According to Al Zarouni, this target was achieved. At present, the digitisation rate of government services is at 99.5%, while the paperless government objective has been achieved 100%. Digital transactions account for 87% of total government service transactions overall, according to figures from the Dubai Trade board.

Use cases enacted by the city government include value exchange (including monetary value and property), land deeds and any other ownership certificate being passed from one person to another, smart contracts, and governmental records. These are, he says, all decentralised and running on a blockchain ledger system, allowing residents and businesses to see the history of any deed or contract as it passes through multiple hands.

E-Pass

Central to Dubai’s interaction with its citizens is a digital application called the UAE Pass. The pass offers access to various government services by any federal or local government entity through one application, but also allows users to complete transfer of documentation, such as land leases, by way of a digital signature tool which is built in.

Launched in 2018, the UAE Pass is a key element of the UAE’s long-term development strategies, explains Al Zarouni, and is a joint project led by Smart Dubai, Telecommunications Regulatory Authority (TRA) and the Abu Dhabi Digital Authority. It replaced DubaiID or SmartPass solutions as a unified login credential for all online government transactions across the UAE, including paying utility bills and filing residence visa applications.

“Your pass has your digital identity,” adds the blockchain chief. “It’s verified, qualified, abiding by the US as well as European [privacy] standards.

“You, as an individual, have sovereignty over your own data and your own identity. You can even share any information you want with others through a QR code which the app generates.

On the public side, it operates on the Ethereum blockchain, while also using Quorum open source blockchain technology to offer the private access not available through Ethereum.

Dubai has also signed up a number of partnerships: during our conversation, Al Zarouni cited the Adobe Consortium as one example ― to allow other tools to interact with documents stored on the UAE pass.

This means that a user looking to sell their house can officially sign off on documents such as a lease directly through the app. This is done through the blockchain to allow oversight on who has made what changes to the document, but in a way that protects the private data of each user.

One use case highlighted at the conference was for workers looking to emigrate to Dubai to set up a business there. At a booth at the North Star conference, people could run the full gamut of services and checks necessary to both live and work in the emirate, only needing to leave the conference hall to do medical checks. This includes registering personal details, creating or transferring documents needed to work, and even finding a home – much of it done through the UAE Pass.

Though there is no cryptocurrency involved, UAE Pass allows for activities such as payments of governmental services and bills, money transfers, documentation, and even advice on prayer.

But, one pressing question as ever, when someone says they have built a solution on blockchain, is whether it actually needs the blockchain at all to function. Al Zarouni claims that it does.

“We don’t just use blockchain for the sake of using it,” he says. He goes on to explain that the identity itself isn’t built around blockchain ― rather, it uses SHA-256 (a secure hashing algorithm), which generates a unique digital fingerprint that can then be used on each block of data on a chain.

“We use the same technology as the likes of Bitcoin, but it is reliant on the same SSL encryption technology that you can trace back to the ‘80s. So it is a tried-and-tested base technology, and this allows for better encryption on mobile devices. Couple this with the blockchain technology we are using, you get the best of both worlds.”

Vegas bets big on smart city future

Uptake

The number of projects that are connected to blockchain or crypto and have some link to Dubai is staggering ― Al Zarouni claims there are over 1800 that fall within the purview of the Dubai Blockchain Center, but this number is “growing every day” he adds.

This spans enterprise, private companies, and public bodies. They are from both legacy firms and start ups and span software, hardware and beyond. Some are local businesses that were founded in the city, while others are international projects that have either moved their head offices here or set up a regional hub.

DBC’s remit includes supporting these start ups, attracting businesses to Dubai by promoting the emirate, offering advice and training around blockchain use cases, and organising and leading events on crypto matters in the region.

One example he points to is in the healthcare sector, where the UAE Pass helps connect patients with organ donors, through a hierarchical process that prioritises need, without any private data being shared. It uses Human Leukocyte Antigens (HLA) matching to check relevant blood types, DNA and any other relevant physical attributes to confirm a donor and recipient are a safe pairing.

“Blockchain propelled this to new heights,” he says. “We use HLA matching ― which is DNA based ― which allows us to match people safely without breaching their privacy. It has transformed the way we keep health records. But there is no value exchange there ― it shows that blockchain doesn’t just have to be about value exchange.”

If it sounds like Dubai is using a lot of blockchain, that’s because it is – the total blockchain market was estimated at around $7.4 billion in 2022, according to MarketsAndMarkets analysis. So is it just a case of Dubai jumping on the blockchain bandwagon?

Al Zarouni denies this, saying “we focus only on applicable use cases” in Dubai. “We practice what we preach ― we don’t tell companies to use blockchain unless they need to or would benefit from it.

“At the same time,” he adds, “we have built a lot of the city’s smart infrastructure on blockchain so it is at the core of everything we do. But not everything uses it ― not everything needs it.”

So why has Dubai succeeded in implementing blockchain to underpin its smart city projects, when so many of those ideas floated during the so-called blockchain boom fell away?

“Digitisation is key,” explains Al Zarouni. “Part of the Digital Dubai strategy is that everything from the government has to be digitised and paperless, so it makes the integration of new digital projects much easier.”

Regulation is also important. Dubai is one of the first regions to set up its own crypto and virtual assets regulator, tasked specifically with regulating what is a key focus for the city. This, he claims, gives more clarity to start-ups looking to operate or thrive in a Web3 world.

“A lot of people thinking of creating businesses in the Web3 ecosystem might be looking at challenging existing markets or jurisdictions, and having a friendly regulator and an open environment helps. We see a lot of companies moving from the US or opening offices here in Dubai because of the government support.”

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To save us all from the shortcomings of traditional finance, the world of DeFi, or decentralised finance, has emerged. Utilising blockchain and smart contracts, DeFi comes with the promise to resolve some of the key issues with existing finance such as high transaction fees, long processing times, and financial exclusion, and could render traditional finance institutions such as banks and credit card issuers obsolete.

By removing traditional intermediaries such as banks, DeFi challenges the dominant centralised financial system, empowering everyday individuals through peer-to-peer transactions.

Just think of this scenario: With DeFi, individuals can directly lend their savings to others, and earn an interest rate usually between 3% and 8%. Compare this to the easy-access savings rates provided by some of the biggest banks in the UK, which are between 0.7% and 1.35%.

This new world represents an unbundling and democratisation of traditional finance by placing financial services such as lending, borrowing, and trading, in the hands of individuals.

Despite its many promises, DeFi hasn’t gone mainstream. Stubborn inflation and unsettling macroeconomic conditions have led to a declining interest in Bitcoin, the world’s largest and best-known crypto currency. This has prompted many to refer to this period as yet another ‘crypto winter’.

Further, DeFi still accounts for approximately only 1% of the total global financial assets market. In fact, research states that only 15 to 20% of small businesses are utilising DeFi services for financing or lending.

So, several factors must be tackled before the DeFi movement can progress.

Crossing the chasm

One issue that arises is the usability of DeFi applications. Consumers are familiar with how traditional banking works as they have been exposed to financial services in their day-to-day life.

The sector also worked hard to ensure that online banking, trading systems and any novel applications (e.g., peer-to-peer payments) are user-friendly. The challenge for DeFi providers is to exceed that level of usability to drive fast consumer adoption.

Scalability issues, surrounding both technical and environmental perspectives, remain another challenge. Widespread discussions have revolved around the computational and energy efficiency hurdles in Bitcoin mining. While improvements have been made with, for instance, Ethereum’s move to its less energy intensive proof-of-stake consensus mechanism, much more work is needed to manage a substantial surge efficiently and sustainably in growing transactions.

There are also the issues of interoperability between distinct blockchains. In centralised finance, regulation has eased the process of transferring funds between providers, while open banking standards hold the potential to further simplify this procedure.

It will be crucial for DeFi platforms and blockchain protocols to have the ability to seamlessly communicate and integrate with one another to unlock enhanced liquidity, user-friendliness and innovation.

Regulation and security

Despite the immutability of a blockchain, which makes it exceptionally difficult to tamper with, the broader landscape of DeFi faces notable vulnerability to hacking, thereby exposing the possibility of funds being stolen or lost.

If DeFi’s full potential is to be unlocked, it requires security improvements of the blockchain protocols supporting these platforms to make them less susceptible to hacking. On top of this, there is a general lack of consumer protection for investments in DeFi today.

While regulators guarantee deposits in mainstream centralised finance, no such protection exists for individuals involved in DeFi. Therefore, when banks failed during the 2008 financial crisis, consumers were heavily protected from the fallout, but a different scenario unfolded when the crypto exchange FTX collapsed, leading to consumers losing billions.

This user protection needs to extend to consumers falling victim to fraud and scams, sadly common within the sector – for instance, during the wave of Initial Coin Offerings (ICOs) a few years ago.

Building trust among mainstream users involves protection measures against potential risks, providing easily accessible solutions.

Financial inclusion

DeFi’s acceptance will be based on various social factors, such as the growing concern for financial inclusion. Questions remain whether DeFi is effectively fulfilling its pledge to offer financial services to otherwise excluded groups.

It is essential to broaden access for individuals currently excluded from traditional financial systems, such as those labelled unbanked or underbanked, to achieve mainstream adoption.

Are there enough educational resources available to help users understand DeFi concepts and associated risks? DeFi should be clarified by widespread education and awareness campaigns, encouraging more individuals to explore these technologies.

DeFi providers must enhance their value proposition to guarantee substantial and tangible advantages over traditional providers. To attract users away from traditional alternatives, its benefits, such as reduced fees, faster transactions, greater financial control, or increased returns are required and should be made clear.

If DeFi can address all the issues addressed here, then it stands a better chance of achieving mainstream acceptance.  Doing so will require a combination of regulatory developments, user behaviour shifts, technological advancements, and broader societal changes.

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New information is added to a product’s DPP at each stage of its supply chain and lifecycle, which can be accessed by relevant authorities, owners and third parties. DPPs permit customers and sellers to verify sustainable claims, ethical sourcing, and ensure the quality and authenticity of products via the product lifecycle information stored within the DPP. They also facilitate resale by enabling the authentication of products or outlining recycling instructions and end of life disposal of a product, closing the loop and helping transition to a more circular economy.

In 2020, the European Commission implemented the Circular Economy Action Plan (CEAP). The CEAP, expected for full approval next year, will mandate DPPs in a variety of sectors, with industrial and EV batteries industry first in 2027. After that, industry-specific policy will apply to other sectors as soon as 2030.

It is becoming increasingly important to participate in the circular economy, and businesses are taking this into account when planning their long-term strategy and ESG goals in order to demonstrate their sustainability claims and avoid greenwashing. To ensure regulatory compliance and a smooth rollout, DPP planning should be included in an organisation’s ESG strategy.

However, compliance with regulation is only one reason to explore DPPs at this stage. Implementing DPPs can be very beneficial in terms of operation and reputation; reassuring customers of sustainability claims, ensuring better oversight of supply chains and providing a verifiable audit trail for regulators, amongst others. With this in mind, businesses should act now to reap the most benefit – and take the competitive edge that comes with being a first mover.

The same regulation applies to all companies of different sizes. However, larger businesses will face different challenges to smaller or mid-sized businesses (SMEs) by virtue of the scale of their operations. On the other hand, SMEs may face more financial and human investment challenges involved with implementing DPPs. Nevertheless, SMEs could reap the largest rewards if they use their size to their advantage and move more efficiently than larger businesses once the regulation is enforced.

The ESPR adds another layer of complexity, as it sets up standards and criteria for the environmental performance of products sold within the EU, and is related to the standards for information that will be added in a DPP. The ESPR sets out a range of requirements including product durability, reusability, upgradeability and reparability, carbon and environmental footprints, and recycled content. All these requirements can be verified within a DPP.

For example, a DPP can record the “repairability score” of a product. If this changes over time as some parts become obsolete, then a customer can make an informed decision about whether to purchase the product, or check for information on recyclable and upgradable parts to help responsible dispose of an old product or renew it for future use. The next buyer in the product’s lifecycle can check which updates and repairs have been made, and see whether they were executed by a responsible, ethical business. In this manner, the DPP can also prove that the product is ESPR compliant, giving peace of mind to businesses and buyers alike.

The CEAP and ESPR are just two of several pieces of regulation, both of which can influence the final implementation of mandatory DPPs. Businesses can get started now building flexible and scalable solutions, by seeking expertise in Digital Product Passport development – particularly in terms of technical and regulatory knowledge. Then, once final regulation is enacted, and details of how DPPs should be implemented are available, they can make small adjustments that ensure compliance, rather than scrabbling to build a DPP solution quickly once all unknowns are addressed.

Blockchain and Cloud-Based DPPs

Businesses all along the supply chain could hold the responsibility for maintaining DPPs. Suppliers, manufacturers, sellers, and third parties are also involved along the way. With multiple touchpoints, it becomes difficult to divide responsibility for different aspects of a DPP. Some of the more uncertain factors in current draft regulation involve data security, transparency, and trust. Thankfully, blockchain technology exists, helping solve many of these implementation issues.

A business can maintain a DPP in many ways. One way is through storing a majority of a DPP’s information on cloud, passing the record to the next business along the supply chain to update, building a holistic picture over time. However, in this way, there is scope that the next businesses can retroactively amend the data with its own agenda. If there is no permanent, immutable record of when a DPP was updated or changed, it becomes less legitimate, hindering any perceived benefit to ensure that ethical, sustainable practices were embedded in each step of the product’s lifecycle.

Blockchain DPPs overcome this challenge due to the technology’s immutable nature. Once that hash of the data is recorded,  future buyers and businesses along the supply chain can verify that the information in the DPP has not been retroactively amended, reassuring them that their suppliers have been compliant with EC regulation from the beginning. This ensures that the DPP is additive, with new information being contributed at each stage, rather than amended.

Preparing for the Future of DPPs

The implementation of DPPs is soon becoming compulsory, and with so much regulation to consider, this may seem intimidating. An efficient DPP solutions provider should have its finger on the pulse on the latest regulation, even in the drafting stage, and how the DPPs they build will stay compliant. The best time to start preparing is now, even with some decisions yet to be made by the EC. If such preparation does not occur in advance, a business could face more challenges. Regardless of these uncertainties, one thing is clear: DPPs represent the future of product accountability and transparency.

By Lars Rensing is CEO of Protokol

The post The EC is mandating DPPs – what happens next for your business? appeared first on TechInformed.