Coinffeine takes Bitcoin to the European Commission

European Commission
Photo: Andrew Gustar, CC BY-ND 2.0, (Not changes made)

Regulatory experts from the European Commission, representatives of European banks and Bitcoin startups coincided last week in Brussels at the Blockchain and Digital Currencies Workshop. Alberto, our CEO, was a speaker at the event to present the prototypes of financial products based on the blockchain technology, currently being developed by Coinffeine for some Spanish banks, and he used the occasion to show how the latest version of the application works. It was made available from our downloads page just a few days later.

The event began with an introduction to the technical aspects of Bitcoin, and an analysis of its legal nature and its regulation. The attendees were interested in knowing more about the initiatives created by companies in the ecosystem such as Coinffeine, Circle or Ethereum and how they are generating business. A special interest was shown for the initiatives from Bitcoin companies that are working with banks, as is the case of Coinffeine. This is understandable, because among the participants were representatives from many major European banks, as for example the director of BBVA’s European Affairs Office in Brussels.

AlbertoGT en la Comision Europea

During the subsequent networking Alberto provoked reaction of the audience by presenting an assumed scenario that symbolically represented the paradigm shift that the blockchain technology represents. He asked the audience to think of the possible publication of the name of their children and the school they attend on the internet. He further explained how this message can not be deleted if it was written in the blockchain. The attendees were alarmed by this fact, and reasoned that to use the well-known right to be forgotten and ask Google to remove information from the internet, is not possible with the blockchain.

The conclusion we draw from our intervention is that members of the commission understood the importance of knowing more about a technology like Bitcoin. They support the need to develop an approach to new entrepreneurial initiatives and businesses emerging in the ecosystem. It was especially relevant to see the importance given by attendees to the synergies between banks and Bitcoin companies currently happening in Spain. Spain is home to some of the largest banks in world, so it is not a coincidence that two spanish banks are partners with Bitcoin companies: Bankinter with Coinffeine and BBVA with Coinbase.

The title of the panel was precisely the point of Alberto’s intervention: “Why banks should (not) be afraid of cryptocurrencies”. And we believe that the presentation and the example of Coinffeine helped to emphasize just that.

Coinffeine takes Bitcoin to the European Commission

Coinffeine attends the Digital Currency Summit in Madrid, Spain

Madrid
Photo: Roberto Taddeo, CC BY 2.0, (Not changes made)

Madrid, our home city, will host the Digital Currency Summit (DCS) tomorrow, an event that the organizers describe as “the gathering point for banks, governments and investors to debate about Cryptocurrencies”. Coinffeine does not want to miss it!

DCS is a unique event organized by banks and for banks, which it is not a precedent but a symptom. Spain is home to some of the world’s largest banks and financial institutions that have greater interest in developing new products with Bitcoin. The B2B in Spain is possible, and the DCS conference is one of the best places to meet the protagonists of this ecosystem.

The event will be attended by banks and companies from Spain like BBVA, Banco Santander and Banco Sabadell and international names such as UBS, Lloyds Banking Group, Fidor Bank, Accenture, Rabobank, Osborne & Clarke and Rakuten, to mention a few. In addition the event will also be attended by leading Bitcoin companies such as Blockchain, Circle, KncMiner and MeXBT.

A lot of news to share

The one-day event will analyse the Bitcoin´s legislative and legal framework, its overall impact and its integration in the banking system, a framework in which Coinffeine has a lot to say. We are one of the few Bitcoin startups with a product that fits the banks’ business models and that has managed to gain their trust and confidence. After closing our private Trial program and finalizing the details of the next launch of our Technical Preview version, we have a lot of news to share.

It is expected that many of the conversations revolve around the recently published binding response of the Spanish Tax Agency which states that Bitcoin is not encumbered with the Value Added Tax (VAT) when used as means of payment or donation.

Coinffeine will attend as audience to listen and share experiences with speakers and attendees about our work with Spanish banks; what products and services are being created around our protocol, our experienes meeting with regulators in New York and the progress with the Spanish politicians after attending the debates in the Spanish Congress on the process of Bitcoin regulation in Spain.

Coinffeine wants to congratulate Alex Puig, executive director of the event, which has successfully transformed charisma and talent into a unique event of its kind.

In addition, Puig is also the organizer of Blockchain and Digital Currencies Workshop at the European Commission, where Coinffeine has been invited as a speaker. So our CEO Alberto will be in Brussels on Monday April 27th to participate in this important event. He will, along with Fidor Bank, discuss emerging partnerships being developed between the Bitcoin ecosystem and banking in a panel entitled ” Why Banks Should (not) be afraid by cryptocurrencies – experience from an early adopter bank”.

Coinffeine attends the Digital Currency Summit in Madrid, Spain

Banks join the cryptocurrencies

Future
Photo: Kristian Bjornard, CC BY-SA 2.0 (not changes made)

Banks join the cryptocurrencies. As with any major change, the steps that are being taken are very cautious, but nevertheless significant.

It is increasingly evident that Bitcoin and the blockchain technology are here to stay. Internet needs to find a payment solution that is similar to cash, and that is exactly what Bitcoin is. Banks are starting to see the potential, and far from turning their backs to it, they are joining this technological transformation.

 Is 2015 the year of the transformation?

During the first months of 2015 we have seen a series of moves in this direction. The European Central Bank published its second report on cryptocurrencies early March, which defines them as “a representation of value (…) that can be used as an alternative to money” and described them as “potentially transformatives” in the field of payments. The Bank of England recently published a paper studying how to adapt the Bitcoin technology for the eurozone, and recognized that cryptocurrencies have shown the possibility of transferring value safely without the need of a third party. Furthermore, IBM ‘s next big project was made public a few days ago:  They are looking at the possibility of adopting the Bitcoin technology for the major currencies in cooperation with the central banks.

In 2015 we have also seen the investment of BBVA Ventures in Coinbase, and the alliance between the German based Fidor Bank and Bitcoin.de to enable sending and receiving bitcoins directly between bank accounts.

We are convinced that this is just the beginning. Not surprisingly, Coinffeine´s technology was born with this philosophy. Our protocol turns the services traditionally offered by a service provider into contracts between individuals, and thereby gives banks a privileged place to explore the new cryptocurrencies and digital goods market.

From last year Coinffeine rely on a big Spanish bank among its partners. Bankinter commited to Bitcoin with Coinffeine, and it was one of the first banks in the world to enter the ecosystem. We are also currently working with other major banks to reach similar agreements, as we believe that the future lies on the alliance between banks and Bitcoin.

Coinffeine to the European Commission

In the same way that banks are showing more interest in learning about the potential of Bitcoin and the blockchain technology, the authorities and the regulators are also moving in this direction. And for that they are considering the opinion of experts. Invited by a political party, Coinffeine has already been in the Spanish Parliament to bring our vision of the regulatory process. Maybe that’s why it did not surprise us that we have received an invitation to participate in a workshop about Bitcoin organized by the European Commission next month. This also demonstrates the increasing interest that exists about the progress made by the Spanish Bitcoin community.

On April 27th, Coinffeine will be in Brussels to participate in the event Blockchain and Digital Currencies Workshop, along with Alex Puig, founder of Digital Currency Summit and the event organizer, other important companies in the ecosystem such as Ethereum and Circle and experts of the European financial sector. Alberto, our CEO, will take part in the panel dedicated to banks “Why Banks should (not) be afraid by cryptocurrencies – experience from an early adopter bank”, which will also be attended by Fidor Bank. The panel will discuss about the early and incipient experiences in the alliance banking – Bitcoin.

The transformation is underway and Coinffeine expects to be among its protagonists.

Banks join the cryptocurrencies

Coinffeine visits Congress to talk about Bitcoin regulation in Spain

Congreso de los Diputados
Photo: Wikipedia, CC BY 3.0, (Not changes made)

Spain is proving to be one of the most attractive places for Bitcoin companies to set up.
Unlike what happens in other countries, Bitcoin fits in the Spanish legal framework as a digital commodity. The proof of that is that our startup could be created with bitcoins as social capital just eight months ago, something we did consciously to start a dialogue with regulators and the Central Bank of Spain.

Despite the fact that Bitcoin can be considered a digital commodity, as explained by Coinffeine’s law advisors Abanlex, there are small details that are still unclear and some potential uses that might concern regulators.

Because of these concerns, the political party UPyD has on several occasions urged the government to start a process in which these details are studied. On Monday February 16th, I accepted UPyD’s invitation to attend a meeting at the Congress of Deputies in Madrid, where we presented our vision as experts on the regulatory process.

We attended this meeting with other experts in the field. Most notably Pablo Fernández Burgeño, expert in technology law and co-founder of Abanlex (a firm that recently won the case of “right to oblivion” against Google) and Jorge Ordovás, Director of the Department of Innovation of Means of Payment in the Digital Economy Forum.

In the meeting, Deputy Carlos Martínez Gorriagán and UPyD parliamentary technicians agreed with Coinffeine that the main use of Bitcoin is currently as a speculative vector.
To this end, and because one of the most common ways to acquire bitcoins is through traditional Bitcoin exchanges bearing cryptocurrency deposits, UPyD members were concerned about the limited guarantees that exists for users who make this kind of deposits. This is a very different scenario to the deposits of FIAT money, where a license that provides guarantees and counterparties are required.

Coinffeine explained that Bitcoin fortunately fits in the Spanish regulations as a digital commodity without being required a specific regulation. We explained that the two issues that are still unclear are how Bitcoin should be taxed and if it should be compulsory to identify the customers in companies that support cryptocurrency deposits.

The current regulation for digital commodities only brings uncertainty on these two points. These can be solved with simple questions to the Tax Agency and the SEPBLAC -Spain’s Financial Intelligence Unit (FIU) and AML/CFT Supervisory Authority-. On the other hand, a specific regulation on all legal aspects of Bitcoin could add friction to the entire industry, raise the level of complexity and requirements for the creation of new startups and jeopardize complex legal inconsistencies with other countries.

We also discussed concerns about delays and responses that do not contribute clear solutions, as in the responses obtained by Coinffeine from SEPBLAC, or the possibility that the answers are inconsistent, as the response from the Tax Agency to the question formulated by Abanlex last September 2014. The lack of answers from the administrations, have made many Spanish companies explore the possibility to set up in the United Kingdom.

The United Kingdom has been able to identify problems of inconsistency between administrations and the need to expedite responses to the Fintech industry. In October 2014, the UK finance minister announced the creation of Innovate Finance. UPyD has shown interest in the experience and decisions made in the UK to tackle the same problem that Spain is facing, and they have the intention of collaborating to replicate these success stories in Spain.

Although Bitcoin is a digital commodity in Spain, the fact is that under the current rules it is taxed with VAT. This means that companies that sell bitcoins in Spain, such as Bitcoin exchanges or ATMs, must sell at price at least 21% higher than their American counterparts. This makes this business unviable in Spain.

Coinffeine is at the moment the only legal solution that allows to buy bitcoins without paying the 21% VAT. It is all due to the magic of contracts between individuals.

Coinffeine visits Congress to talk about Bitcoin regulation in Spain