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Cryptocurrency and Blockchain

quotes Both Ireland and the UK continue to rank highly in the world as jurisdictions for both established businesses and startups in the cryptocurrency and blockchain sector.

The cryptocurrency and blockchain sector is evolving at an unprecedented rate – the primary focus has devolved from purely developing alternatives to the existing monetary system, with Defi, DEX and NFTs taking centre stage in 2020 and 2021. Companies and individuals operating in this area need lawyers who understand the fundamentals as well as the technical language involved and who have the ability to address complex legal issues without the cost of extensive research and investigation. Having lawyers that have worked in this sector since 2013 means that our experience and skill set at Philip Lee adds real value.

Philip Lee’s presence in both Dublin and London combined with the team’s cryptocurrency and blockchain experience, uniquely positions us to meet the ever-changing demands of companies and individuals involved in this area.

A snapshot of the type of clients we work with include:

  • companies launching STOs (Security Token Offerings) or other projects that involve the digital tokenisation of “real world” assets (whether as a private pre-sale or on a public basis);
  • those engaging in IEOs (Initial Exchange Offerings);
  • individuals and/or venture capital funds investing in the sector;
  • blockchain businesses partaking in a more traditional equity investment round or a full buy-side/sell-side process.

In tandem with our growing network of cryptocurrency and blockchain advisors, we are also able to provide a full “turnkey” STO service that encompasses:

  • legal, regulatory/financial promotion compliance;
  • project strategy and marketing (including pre-STO launch strategy);
  • white paper/investor memorandum construction;
  • blockchain/technical architecture; and
  • fundraising.

We have the skills and experience to understand the technical details whilst seamlessly assisting you through the challenging and complex legal landscape that surrounds this sector.


Array ( [0] => WP_Post Object ( [ID] => 21383 [post_author] => 14 [post_date] => 2022-05-30 16:02:42 [post_date_gmt] => 2022-05-30 16:02:42 [post_content] => Intro In our latest briefing on ‘MiCA’ the European Union’s proposed Regulation of Markets in Crypto-Assets, we noted some of the regulatory requirements for firms classified as a crypto-asset service providers (“CASPs”) or crypto-asset issuers under the new legislation. One such requirement under Title II, III, IV and V of the draft regulations is the obligation to publish a white paper. Many in the crypto community will be familiar with the term ‘white paper’, stemming initially from the now infamous Bitcoin white paper published by Satoshi Nakamoto in late 2008. For those unfamiliar with the term, it is essentially a prospectus of sorts which sets out the aims, purpose and technology behind the cryptocurrency or blockchain project at hand. Whilst many CASPs and crypto-asset issuers have long been issuing white papers in respect of their ICOs/STOs (often without compliance with any regulatory structure – due perhaps to an absence of tailored legislation), MiCA now provides a substantive framework to be adhered to. Different rules will attach to white papers under the new regulatory package depending on the type of service provided and also the type of token being issued. We explore what this will mean in practice for firms operating in this space.   Classification of tokens For a number of years now, the idea of ‘tokenisation’ of products and services has been growing in the Blockchain community and at times has been met with opposition by regulators, especially surrounding the security vs utility token divide. At a basic level, a ‘token’ may share similarities to a ‘coin’ in that it can represent a store of value similar to regular fiat (traditional currency), however ‘tokens’ can represent much more, including for example in a company, voting rights, property rights and access to future products and services. Different categories of tokens have therefore emerged, though they largely fall into two camps - utility and security tokens, with the classification of such having important consequences for both issuers and investors. MiCA expands on existing terminology and defines a number of particular types of token:
  • “Asset-referenced token” means a type of crypto-asset that purports to maintain a stable value by referring to the value of several fiat currencies that are legal tender, one or several commodities or one or several crypto-assets, or a combination of such assets; examples would include Diem (formally known as Libra) which was Facebook’s proposed digital currency.
  • “Electronic money token” or “e-money token” means a type of crypto-asset the main purpose of which is to be used as a means of exchange that purports to maintain a stable value by referring to the value of a fiat currency that is legal tender; examples would include USDC and USDT which are pegged to the value of the US Dollar.
  • “Utility token” means a type of crypto-asset which is intended to provide digital access to a good or service, available on DLT (Digital Ledger Technology), and is only accepted by the issuer of that token; examples would include Binance Coin (BNB), Basic Attention Token (BAT) and Chainlink (LINK).
It is important to note that ‘security’ tokens are not dealt with by MiCA as these tokens are considered financial instruments and are caught be existing legislation such as the Prospectus Directive, Markets in Financial Instruments Directive (MiFID) and the Electronic Money Directive (EMD).   White paper and additional requirements Firms that issue ‘asset-referenced’, ‘electronic money’ or ‘utility’ tokens must all produce white papers in line with MiCA requirements. In addition, further requirements attaching to these white papers may also apply (depending on the particular token involved) such as prior approval by a competent national authority. MiCA leaves it up to Member States to designate their own competent national authority, but the legislation provides a list of wide-ranging administrative, supervisory and punitive powers for these competent authorities. The competent authorities will cooperate closely with the EBA (European Banking Authority), ESMA (European Securities and Markets Authority) and the other Member States authorities in their investigation, supervision and enforcement activities. Crypto/blockchain businesses must be prepared for their reporting and regulatory requirements, as some are more onerous than others. For example:
  1. Issuers of asset-referenced token issuers: under this category a white paper must be published, and it must also be approved by its competent national authority. Moreover, firms in this category must be incorporated in the form of a legal entity and tokens cannot be offered to the public on any platform without the entity being registered. Exemptions do apply for tokens being issued to qualified investors.
  2. Issuers of e-money tokens: e-money tokens are dealt with at Article 46 of MiCA, which lists the specific form and content that must be included in the white paper. Firms must be authorised as a credit institution or an electronic money institution within the meaning of article 2(1) of Directive 2009/110/EC.
  3. Issuers of utility tokens: The obligation to publish a white paper also extends to ‘offerings and marketing to the public of crypto-assets’ other than asset referenced and e-money tokens’, and this will include ‘utility tokens’ as they fall under the definition of a “crypto-asset”. However, exemptions do arise for offerings to qualified investors and also for smaller firms who will not issue crypto assets above €1 million within a one-year period.
  Utility v security token Issuers of utility tokens must also be aware that MiCA states that the white paper must be notified to national competent authorities not less than 20 working days before publication for an assessment whether the crypto-asset in question is in fact a financial instrument, therefore making it a ‘security token’ and subject to MIFID. In the USA, the SEC has highlighted on a number of occasions, notably in SEC vs KIK, that the distinction between a ‘utility’ and security’ token can often be fine lines. The US Supreme Court’s ‘Howey’ test is often a good starting point to aid interpretation, but it will be interesting to see how this will play out in practice across EU member states and how stringent national authorities will be. Crypto and blockchain businesses that operate in the ‘utility token’ space, which does make up a sizeable majority of the market, must understand that simply stating that a crypto asset is a ‘utility’ token rather than a ‘security’ token may not suffice. Failing to give proper thought to the tokonomics could cause significant issues and legal advice should always be obtained to clarify whichever camp (utility/security) it falls into.   Conclusion Regulatory obligations, such as the requirement to register as a VASP in Ireland and FCA registration requirements within the UK if you operate an exchange, already apply to larger and more established crypto/blockchain focused businesses and MiCA should not cause too many issues in terms of further compliance protocols. However, smaller firms that incorporate tokens to access their products and services must be aware of how MiCA (or potentially MIFID) classify and regulate token offerings, particularly if their business grows and the value of their ‘tokens’ grow with it.   For more information in relation to this article please contact partner Andrew Tzialli.   [post_title] => MiCA white papers – What obligations will crypto firms have under the new European legislation? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => mica-white-papers-what-obligations-will-crypto-firms-have-under-the-new-european-legislation [to_ping] => [pinged] => [post_modified] => 2022-05-31 22:16:20 [post_modified_gmt] => 2022-05-31 22:16:20 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

Intro In our latest briefing on ‘MiCA’ the...

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Array ( [0] => WP_Post Object ( [ID] => 21227 [post_author] => 14 [post_date] => 2022-05-05 14:00:45 [post_date_gmt] => 2022-05-05 14:00:45 [post_content] => Web3 and DeFi – Overview
  • When blockchain technology emerged, those seeking to build products utilising the technology predominantly focused on creating alternative forms of traditional currencies. The technology has now morphed into that which is capable of underpinning services and products in a vast range of sectors, though its place in both DeFi and Web3 start-ups is currently taking centre stage.
  • As the name suggests ‘Web3’ refers to the third iteration of the internet and has become an umbrella term for products and companies working in, amongst other things, the blockchain/decentralised space (as many believe it will be this technology that will shape our future version of the internet). Cryptocurrencies, digital assets, decentralised crypto exchanges, decentralised social networks (such as Steemit and Sapien), decentralised autonomous organisations (DAOs), and a sizeable focus on virtual worlds and metaverse platforms/offerings, are some examples of the tech helping to fuel this Web3 movement.
  • Decentralised finance (DeFi) encapsulates new financial products that are built on new and existing blockchain technology. This new class of ‘disruptive tech’ is set to rival traditional financial products and form an integral part of ‘Web3’. Some of the areas which DeFi could impact include:
    • Derivatives and other financial instruments
    • Exchanges
    • P2P and retail lending
    • Prediction markets
    • Asset management
    • Compliance functions (AML/KYC/CTF)
Emerging investor interest
  • 2021 was a breakout year for Web3 with a surge in interest for cryptocurrencies, non-fungible tokens (NFT), and decentralised finance (DeFi). Recent figures from Coinbase show a global cryptocurrency market cap of $1.86T (exceeding $3 trillion at one stage in 2021) and venture capital investors are keen to get in on this market share with PitchBook[1] reporting that crypto start-ups received $30B+ globally in VC investment.
  • It is also worth noting the recent $150m investment by well-established investors and funds (and those perhaps considered more “traditional”) into metaverse company Improbable may be a sign that it’s not just emerging funds that have an interest in the sector.
  • According to PitchBook’s Emerging Tech Indicator report for Q4 2021, Defi and Web 3 had outperformed all other emerging tech sectors in both the volume and value of early and seed-stage deals. Focusing on Q4 of 2021, the volume (26) and value ($2.4 billion) of Web3 and DeFi transactions doubled compared to the same metrics in Q3 – illustrated below.

2022 trends Whilst the price of Bitcoin and other leading cryptocurrencies has been stagnating (by its own high standards) in recent months, the wider blockchain sector has been continuing to grow with PitchBook also reporting that VC investment in Web3, metaverse and DeFi projects has already hit $10 billion globally in quarter one of 2022. We expect investment activity in Q2 to continue on this upward trend and will continue to keep a close eye on developments. [1] Source: PitchBook’s Emerging Tech Indicator report for Q4 2021   For more information in relation to this article please contact Andrew Tzialli. [post_title] => Briefing note - Web3 and DeFi M&A [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => briefing-note-web3-and-defi-ma [to_ping] => [pinged] => [post_modified] => 2022-05-06 09:12:18 [post_modified_gmt] => 2022-05-06 09:12:18 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

Web3 and DeFi – Overview When blockchain technology emerged, those...

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Array ( [0] => WP_Post Object ( [ID] => 21121 [post_author] => 14 [post_date] => 2022-04-19 16:07:59 [post_date_gmt] => 2022-04-19 16:07:59 [post_content] => ‘MiCA’ the European Union’s proposed Regulation of Markets in Crypto-Assets has now entered its next stage of discussions. In the coming weeks EU officials from the European Commission, Council and Parliament will further debate the regulatory framework that is set to dramatically change the crypto landscape across the 27 member states. Importantly, the latest draft bill has removed a provision that was set to prohibit crypto assets that rely on ‘proof of work’ (one of the mechanisms used to mine new currency and maintain crypto networks) because of its links to high energy consumption. If incorporated, it would have essentially resulted in a de facto ban on the biggest mining-based cryptocurrencies such as Bitcoin, Ethereum (though this is in the process of converting to a ‘proof of stake’ consensus mechanism) and Litecoin and would also have impacted crypto services acting as custodians for these coins. Whilst this update to the MiCA package was welcomed by the crypto community, any settling of tensions with EU lawmakers were short lived with the early April announcement of further EU proposals to extend KYC/AML measures to outlaw anonymous crypto transactions. MiCA – a reminder of its objectives MiCA will enact a single licensing regime across the European union for crypto assets that are not currently caught by existing financial regulation. Whilst not completely devoid of legislation in this jurisdiction (see our article ‘Is cryptocurrency’s legislation-free run over?’ from last year) MiCA will harmonise the European framework and provide a tailored suite of laws for this ever developing sector. As noted in the explanatory memorandum to the regulation, MiCA has four broad objectives:
  1. Instil appropriate levels of consumer and investor protection and market integrity.
  2. Provide legal certainty for crypto assets not covered by existing EU financial services legislation.
  3. Support innovation by promoting the development of crypto-assets and the wider use of DLT (distributed ledger technology).
  4. Ensure financial stability with specific rules for so-called ‘stablecoins’, including when these are e-money.
Who will be caught by the legislation? Crypto-Asset Service Providers (“CASPs”) are defined in MiCA as “any person whose occupation or business is the provision of one or more crypto-asset services to third parties on a professional basis.” The European legislators have opted for the term ‘Crypto’ as opposed to ‘Virtual’ which is used both in Ireland and internationally by the Financial Action Task Force (“FATF”). Under MiCa, the definition of crypto-asset services is such that a business providing at least one of the following activities, may be classed as a CASP:
  • exchanging crypto assets and fiat currency (e.g. using Euro to buy Bitcoin);
  • exchanging one class of crypto assets for another (e.g. using Bitcoin to buy Ethereum);
  • the custody and administration of crypto-assets on behalf of third parties;
  • the operation of a trading platform for crypto-assets;
  • the execution of orders for crypto-assets on behalf of third parties;
  • the placing of crypto-assets;
  • the reception and transmission of orders for crypto assets on behalf of third parties; and
  • providing advice on crypto-assets.
The final category encapsulates the broad nature of MiCA as ‘providing advice’ and could be construed as a catch all for any operator in this space. These categories also go a lot further than the existing definition of a Virtual Asset Service Provider (“VASP”) under the Irish Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021. Still time to ‘get the house in order’ Despite different regulatory regimes applying to whatever category of ‘CASP’ crypto businesses fall in to, the common theme throughout is that firms operating in this space must get used to the obligations that come with being a regulated entity. Depending on the type of services being offered, this could include minimum capital requirements, liability cover (if lost in result of a hack etc.) and adherence to market abuse rules, to name but a few. Importantly, crypto service providers, whether established or new market entrants, must factor risk and compliance into every decision being made. Given the impending legislative landscape, companies in the sector can get ahead of the competition by implementing policies and procedures to try and minimise a future culture shock – the process will be a lot smoother if such businesses “act” like a regulated firm before becoming a regulated firm (see our podcast for more discussion in this regard). NFTs, MiCA & FATF recommendations The removal of language that would limit proof-of-work coins is a welcome development, but it certainly won’t be the last change before we see a finalised version of MiCA. Since the introduction of the draft legislation in 2020, we have seen rapid growth in other uses of blockchain, with a boom in popularity of decentralised finance (DeFi) and non-fungible tokens (NFTs). NFTs continue to generate considerable debate as to whether they can be classified as a security, a crypto/virtual asset or whether they escape classification as a financial instrument at all. The FATF has stated that NFTs are “generally not considered virtual assets” in its report from October 2021, but that regulators need to treat this on a case-by-case basis and “consider the nature of the NFT and its function in practice, not the terminology or marketing terms used.” The FATF recommends that if an NFT is used for “payment or investment purposes” then they could be classified as a virtual asset. As it stands, there is no specific mention of NFTs in the MiCA package, in fact the requirement of publishing a white paper for the issuance of crypto assets does not apply to “crypto-assets that are unique and non-fungible”. However, NFT providers should still be aware that their product may still be caught by existing legislation like MIFID II if deemed either as an alternative investment fund (AIF) (or even MiCA’s “crypto-asset” definition if we drill down and look behind the NFT label). Recent EU AML/KYC proposals In a previous post on MiCA, we noted that as soon as you introduce rules and require firms to seek authorisation, you can immediately stifle innovation. Similar sentiments have been expressed by the crypto industry in relation to recent announcements that EU Lawmakers are to extend AML rules to anonymous crypto transactions. Under the new requirements agreed by MEPs, all transfers of crypto-assets will have to include information on the source of the asset and its beneficiary, information that is to be made available to the competent authorities. The rules would also cover transactions from so-called unhosted wallets (a crypto-asset wallet address that is in the custody of a private user). The rules will not apply to person-to-person transfers conducted without a provider, such as bitcoins trading platforms, or among providers acting on their own behalf. Conclusion Recent warnings made by both European supervisory authorities and the Irish Central bank of the ‘highly risky and speculative’ nature of crypto assets highlight an urgency to finalise the MiCA package and, we therefore expect to see the legislative process moving forward without any delays. As it stands, it is anticipated that MiCA will be finalised later this year and will apply to EU member states by 2024. [post_title] => EU crypto regulation update (April 2022): EU Bitcoin ban shelved – and MiCA moves forward [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => eu-crypto-regulation-update-april-2022-eu-bitcoin-ban-shelved-and-mica-moves-forward [to_ping] => [pinged] => [post_modified] => 2022-04-19 22:52:50 [post_modified_gmt] => 2022-04-19 22:52:50 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

‘MiCA’ the European Union’s proposed Regulation of Markets in Crypto-Assets has now...

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Array ( [0] => WP_Post Object ( [ID] => 19679 [post_author] => 9 [post_date] => 2021-06-10 08:32:46 [post_date_gmt] => 2021-06-10 08:32:46 [post_content] => Virtual asset service providers (“VASPs”) operating in Ireland are now subject to Ireland’s AML/CFT framework following the commencement of the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 with all new market entrants required to register with the Central Bank of Ireland (“CBI”) before commencing trade. Existing VASPs were given a grace period of three months to apply for registration, however, the deadline to register is fast approaching and existing VASPs are required to apply to the CBI for registration before 23rd July 2021. Any person or entity carrying out VASP activities by way of business in Ireland without registration is at risk of facing a Class A fine (not exceeding €5,000) and/or imprisonment for a term not exceeding 12 months if charged on summary conviction, or a fine not exceeding €500,000 and/or imprisonment for a term not exceeding 5 years for an indictable offence. Should you require further information on the steps involved in the registration process, please contact Andrew Tzialli or Rachel McCausland to discuss how our team can assist. [post_title] => Requirements for crypto businesses in Ireland to submit applications to the CBI by 23 July 2021 [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => requirements-for-crypto-businesses-in-ireland-to-submit-applications-to-the-cbi-by-23rd-july-2021 [to_ping] => [pinged] => [post_modified] => 2021-06-10 14:51:24 [post_modified_gmt] => 2021-06-10 14:51:24 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

Virtual asset service providers (“VASPs”) operating in Ireland are now subject to...

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Array ( [0] => WP_Post Object ( [ID] => 19628 [post_author] => 9 [post_date] => 2021-06-08 13:25:18 [post_date_gmt] => 2021-06-08 13:25:18 [post_content] => Published in the Irish Independent, June 6 2021. Article written by Jonathan Keane. Head of cryptocurrency and blockchain, Andrew Tzialli, features in Sunday’s Irish Independent discussing the evolving regulatory landscape in Ireland and the UK for virtual asset service providers. Full article available here. (Behind paywall). [post_title] => World financial watchdogs are coming for crypto [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => world-financial-watchdogs-are-coming-for-crypto [to_ping] => [pinged] => [post_modified] => 2021-06-08 13:25:18 [post_modified_gmt] => 2021-06-08 13:25:18 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

Published in the Irish Independent, June 6 2021. Article written by Jonathan Keane. Head...

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Array ( [0] => WP_Post Object ( [ID] => 19536 [post_author] => 9 [post_date] => 2021-05-21 14:34:51 [post_date_gmt] => 2021-05-21 14:34:51 [post_content] => As part of Blockchain Ireland Week 2021, Andrew Tzialli will be participating in a virtual panel discussion on the emergence of real estate tokenisation. Andrew will be addressing the legal considerations. Also speaking will be Brian Elders and Alexander Rapatz (Black Manta Capital Partners), Mahesh Harilela (LABS Group), Peter Augustin (Tigris Property) and Pete Townsend (Norio Ventures). The event will run from 11.00 to 13.00 on Monday, May 24. To register, please visit Blockchain Ireland's website. [post_title] => Tokenisation of Real Estate - Panel Discussion [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => tokenisation-of-real-estate-panel-discussion [to_ping] => [pinged] => [post_modified] => 2021-05-21 14:35:52 [post_modified_gmt] => 2021-05-21 14:35:52 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

As part of Blockchain Ireland Week 2021, Andrew Tzialli will be participating...

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Array ( [0] => WP_Post Object ( [ID] => 19404 [post_author] => 9 [post_date] => 2021-04-27 14:34:25 [post_date_gmt] => 2021-04-27 14:34:25 [post_content] => As from 23rd April 2021, all crypto and blockchain businesses in Ireland classified as Virtual Asset Service Providers will need to complete the Central Bank of Ireland registration process. This will apply to entities providing the following services:
  1. exchange between virtual assets and fiat currencies;
  2. exchange between one or more forms of virtual assets;
  3. transfer of virtual assets, that is to say, to conduct a transaction on behalf of another person that moves a virtual asset from one virtual asset address or account to another;
  4. custodian wallet provider; and
  5. participation in, and provision of, financial services related to an issuer’s offer or sale of a virtual asset or both.
Further information is available on the Central Bank of Ireland website.   For advice or assistance in relation to the registration process, please contact Andrew Tzialli or Rachel McCausland. [post_title] => Update - Regulation of providers of services relating to virtual assets [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => update-regulation-of-providers-of-services-relating-to-virtual-assets [to_ping] => [pinged] => [post_modified] => 2021-04-27 14:34:25 [post_modified_gmt] => 2021-04-27 14:34:25 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

As from 23rd April 2021, all crypto and blockchain businesses in Ireland...

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Array ( [0] => WP_Post Object ( [ID] => 19272 [post_author] => 9 [post_date] => 2021-04-15 14:45:38 [post_date_gmt] => 2021-04-15 14:45:38 [post_content] => The EU’s Regulation of Markets in Crypto-Assets (MiCA) will have significant regulatory implications for any firm operating, or planning to operate, in the European crypto/digital asset space. In the latest Funds Ireland MiniCon Podcast, our head of crytpo and blockchain, Andrew Tzialli, discusses all things MiCA with host Daniel Lawlor, including regulatory requirements, timing, costs and the likely impact on the European crypto assets market. [embedyt][/embedyt]   Podcast also available on Spotify.   [post_title] => The FIMC Podcast: The Markets in Crypto Assets Regulation (MiCA) [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-fimc-podcast-the-markets-in-crypto-assets-regulation-mica [to_ping] => [pinged] => [post_modified] => 2021-04-15 14:45:38 [post_modified_gmt] => 2021-04-15 14:45:38 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

The EU’s Regulation of Markets in Crypto-Assets (MiCA) will have significant regulatory...

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Array ( [0] => WP_Post Object ( [ID] => 19244 [post_author] => 9 [post_date] => 2021-04-08 08:35:38 [post_date_gmt] => 2021-04-08 08:35:38 [post_content] => In this episode of the Funds Ireland MiniCon (FIMC) Podcast, host Daniel Lawlor and our head of crypto and blockchain, Andrew Tzialli, discuss the realities for firms in the crypto and digital assets space who are interested in obtaining (or by virtue of their services, require) authorisation from the financial regulator.   [embedyt][/embedyt]   This podcast is also available on Spotify. [post_title] => The FIMC Podcast: The Realities of Regulation [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-fimc-podcast-the-realities-of-regulation [to_ping] => [pinged] => [post_modified] => 2021-04-08 09:12:35 [post_modified_gmt] => 2021-04-08 09:12:35 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

In this episode of the Funds Ireland MiniCon (FIMC) Podcast, host Daniel...

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Array ( [0] => WP_Post Object ( [ID] => 19182 [post_author] => 9 [post_date] => 2021-03-18 12:52:13 [post_date_gmt] => 2021-03-18 12:52:13 [post_content] => The European Central Bank (ECB) has recently published its opinion and suggested amendments, on the draft EU legislation for crypto-assets (MICA). Whilst welcoming a harmonised EU framework, there was a recognition from the ECB that aspects of the draft legislation required revision. The opinion was notable for its comments around the definition of “crypto-assets” and “asset-referenced tokens” (and regarding the latter in particular, the scope and the applicability of MICA to such tokens) as well as on the role of EU authorities in enforcing the legislation. The full ECB opinion can be viewed here. [post_title] => European Central Bank publishes its opinion on upcoming crypto-asset regulation (Markets in Crypto Assets – MICA) [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => european-central-bank-publishes-its-opinion-on-upcoming-crypto-asset-regulation-markets-in-crypto-assets-mica [to_ping] => [pinged] => [post_modified] => 2021-03-18 12:52:13 [post_modified_gmt] => 2021-03-18 12:52:13 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

The European Central Bank (ECB) has recently published its opinion and suggested...

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Array ( [0] => WP_Post Object ( [ID] => 19157 [post_author] => 9 [post_date] => 2021-03-15 12:02:49 [post_date_gmt] => 2021-03-15 12:02:49 [post_content] => Introduction The need for clarification of the legislative landscape governing cryptocurrency is one of the world’s worst kept secrets. Bitcoin in particular recently earned its place on a global platform by exceeding a $1trillion market cap and investors (and recently converted cynics) suddenly find it very difficult to ignore the potential for returns. It is this realised potential which makes the need to address the chasms in regulation even more demanding. As is often the case where the potential to make greater monetary gains exists, interest has peaked not only for sophisticated investors but the public at large. By virtue of this fact alone, global governments and regulators have a greater responsibility to protect potential investors from a new and sometimes volatile, investment market. In essence, much of this changes with new legislation being introduced into Ireland (following that in place across the EU), with a broad range of crypto-related services providers now being subject to registration obligations. What’s new in the regulatory space - 5AMLD Directive (EU) 2018/843 is the 5th anti-money laundering directive published by the European Union (“5AMLD”) and at its core, it aims to better equip European member states to prevent financial systems from being used for money laundering and for funding terrorist activities. In the context of “digital assets”, 5AMLD seeks to enhance transparency by establishing publicly available registers for companies operating in the space and also in respect of the beneficial owners of those companies. These measures are coupled with protocols which seek to curtail the anonymity relating to virtual currencies and digital wallet providers, with combative measures against the potential exploitation of digital assets for fraud and criminal activity. Implementation in Irish law The Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2020 which amends the draft Criminal Justice (Money Laundering and Terrorist Financing) Act 2010 (“CJA 2010”) gives effect to the provisions of 5AMLD and is currently before the Houses of Oireachtas for debate. The Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Bill 2020 (“2020 Bill”) Whilst still in draft form and not yet implemented into Irish law, notable aspects of the 2020 Bill in relation to digital assets include the following:
  1. The definition of a “Virtual Asset” as “a digital representation of value that can be digitally traded or transferred and can be used for payment or investment purposes but does not include digital representations of fiat currencies, securities or other financial assets” (which as it stands would suggest that “stable coins” pegged to say USD (such as Tether) or gold (such as Paxos Standard), are excluded);
  2. The introduction of the concept of a “Virtual Asset Service Provider” (“VASP”) which is discussed below in greater detail;
  3. Categorising a “VASP” as a “Designated Person” which carries an imposition of anti-money laundering and counter-financing of terrorism obligations; and
  4. A requirement for VASPs and their beneficial owners to register with the Central Bank of Ireland (“CBI”).
If a business provides at least one of the following activities, they may be classed as a VASP and subject to the obligations imposed on VASPS in the 2020 Bill:
  • Exchanging Virtual Assets and fiat currency (e.g. using Euro to buy Bitcoin);
  • Exchanging one class of Virtual Assets for another (e.g. using Bitcoin to buy Ethereum);
  • Transfers of Virtual Assets (this need not necessarily be a transfer of cryptocurrency, this may also include the transfer of digital tokens from one wallet to another);
  • Custodian wallet providers (providing investors with a wallet for holding different classes of Virtual Assets); and
  • Financial services relating to the offer or sale of Virtual Assets (e.g. ICOs, STOs, derivatives and DeFi services).
CBI registration VASPs will be required to register with the CBI and it will be a criminal offence to carry on business as a VASP, claim to be a VASP, or represent oneself as a VASP, without being registered. Beneficial owners of VASPs must also register with the CBI and any direct or indirect change to the beneficial owner of a VASP will require prior approval of the CBI. As VASPs will be considered Designated Persons for the purpose of CJA2010, they will be required to comply with the AML regulations to the same standard as other financial institutions. Register of Virtual Asset Service Providers The CBI will establish and maintain a “Register of Virtual Asset Service Providers” of all persons registered to carry on business as a VASP in Ireland and the register will be available to the public. In order for approval of an application for registration, the CBI must be satisfied that (amongst other things):
  • the firm’s AML policies and procedures are effective in combatting the money laundering and terrorist financing (ML/TF) risks associated with its business model; and
  • the firm’s management and beneficial owners are fit and proper.
Firms applying for registration will have to submit an application form to the CBI together with supporting documentation including:
  • a copy of the firm’s AML policies and procedures;
  • a copy of the firm’s ML/TF risk assessment;
  • details of all direct and indirect ownership and management in the firm;
  • individual questionnaires to assess the fitness and probity of all individuals who are proposed to hold preapproved control functions (PCFs) in the firm;
  • a business plan setting out the firm’s proposed activities, transaction flows, projections and any outsourcing arrangements envisaged;
  • details of the firm’s proposed organisational structure, AML reporting lines and staffing arrangements; and details of the firm’s AML/CTF training plan.
Conclusion Whilst the 2020 Bill is still in draft form and remains subject to further amendment by the Oireachtas (though it is anticipated to be in force as soon as April 2021), one cannot deny the visible efforts of the 2020 Bill to provide for closer supervision of businesses operating within the Virtual Asset space. Whilst we await confirmation of the finer details, one can certainly take comfort in the fact that the impending clarification will not be in oblique terms.   For further information in relation to the above article, please contact Andrew Tzialli or Rachel McCausland.
[post_title] => Is cryptocurrency’s legislation-free run over? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => is-cryptocurrencys-legislation-free-run-over [to_ping] => [pinged] => [post_modified] => 2021-03-18 12:44:26 [post_modified_gmt] => 2021-03-18 12:44:26 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

Introduction The need for clarification of the legislative landscape governing...

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Array ( [0] => WP_Post Object ( [ID] => 18819 [post_author] => 9 [post_date] => 2021-01-25 15:38:10 [post_date_gmt] => 2021-01-25 15:38:10 [post_content] => As published in The Sunday Times, 24 January 2021. Article by Graeme Lennox. As the value of the world’s most famous digital currency soars amid economic uncertainty, Graeme Lennox asks if now is a good time to invest in cryptocurrencies. Featuring head of our cryptocurrency and blockchain group, Andrew Tzialli. It has been called “digital gold” and has been most synonymous with drug dealing, ransomware and inept criminals, as well as innocent investors losing fortunes in lost hard drives. Whether bitcoin is the best get-rich-quick scheme in town or the next financial bubble waiting to burst, is usually just a matter of opinion — but either way, investors have been on one hell of a rollercoaster ride this past fortnight. Values of the world’s most famous digital currency have risen by more than 700% during the pandemic, as economic uncertainty spreads. Bitcoin prices exploded at the end of 2020, doubling in less than a month before reaching a peak of $42,000 on January 8. Values have since fallen back amid fears the newly inaugurated US president Joe Biden will seek tighter regulation, but remain at about €26,000 a coin. For every story of life-changing fortune, though, there is also a tale of heartbreak. In 2013, Welsh IT worker James Howells accidentally threw out a hard drive containing the keys to 7,500 bitcoins. At the time, they were worth around $5m. Now, they would be worth more than $250m. Meanwhile, San Francisco-based programmer Stefan Thomas received more than 7,000 bitcoins as payment for making a video on how cryptocurrency works. They cost between $2 and $6 at the time, but could now be worth up to $220m. Having realised he was sitting on a fortune, Thomas has entered the wrong password on his hard drive eight times and has just two chances left before it encrypts itself and he loses everything. Cryptocurrency data firm Chainalysis estimates about 20% of the 18.5 million bitcoins in circulation are either lost or stranded in inaccessible wallets. Meanwhile, Wallet Recovery Services, a firm specialising in finding lost digital keys, says inquiries from bitcoin owners have tripled in the past month. Lory Kehoe, adjunct assistant professor at Trinity College Dublin and founder of Blockchain Ireland, has been approached by several desperate Irish investors in the past week who have lost digital wallets containing bitcoin fortunes. “We’re not talking €240m, but one guy has lost €500,000 moving bitcoin between wallets,” he says. “He called me asking for help saying his wife was crying in the background. Often the problem is people are looking in the wrong place. The user interface is not as good as something like Revolut and it’s easy to make things look like they have vanished when in fact they haven’t.” Kehoe, who previously set up Deloitte’s Europe Middle East and Africa blockchain lab and headed up blockchain technology company ConsenSys, has first-hand knowledge of the perils of cryptocurrency. “In 2014 I ended up buying a few at a very affordable rate,” he says. “It was nothing life changing, but I was in New York in 2016 and went to pay for lunch with a friend using my Bank of Ireland Mastercard. For some reason it didn’t go through so I repaid her in bitcoin. That $50 lunch has cost me $35,000 now.” Invented in 2008 by a person or group of people — no one knows to this day — using the pseudonym Satoshi Nakamoto, bitcoin was an attempt to create a decentralised digital currency, but was viewed by some as a way of moving illicit money without being traced. With bitcoin’s value slowly nudging towards €1 trillion, cryptocurrency is now considered a valid investment tool, with hedge funds and banks steadily getting on board in recent weeks. There are more than 3,000 cryptocurrencies in total and amateur investors often fall prey to fraudsters posing as cryptocurrency exchanges. Andrew Tzialli, a partner in venture capital and corporate technology for Dublin-based legal firm Philip Lee, regularly receives inquiries from private investors who have been scammed. “Often, they have bitcoin with an investment group they found online that is no longer responding to calls,” he says. “We dig into them and what they thought was a crypto firm based in Ireland is actually based in Cayman, Panama or Russia.” He believes cryptocurrency is here to stay but needs proper regulation if it is to be taken seriously. “I have been working in the sector since 2013 and have tremendous faith in it, but I’d still rather bet my mortgage on gold,” Tzialli says. “I know a lot of people who bought bitcoin in 2013 when it was €300. It crashed soon after and they sold up, so now most of them are crying into their empty wallets. Bitcoin was an attempt to create a decentralised digital currency “Interest levels are high right now because the value has gone through the roof. Regulation is in its infancy but people see the value go up and don’t think twice about the risk. The reality is even the legitimate firms have provisions in their terms and conditions saying your money is not secure.” Joshua Goodbody, regional director at Binance says the firm has seen a record surge of activity during the pandemic, as investors hedge against turbulence in traditional markets. “They have watched governments printing record amounts of money and are conscious that inflationary pressures are growing,” he says. “We have seen with volumes hitting a record daily high of over $80bn in the first few days of the year. Alongside this we have seen record numbers of new users.” With some analysts predicting bitcoin value to exceed $100,000 by the end of the year, Kehoe understands the clamour to jump on the bandwagon. “Fear of missing out is a big factor,” he says. “In October, when Paypal got involved in bitcoin, I told people to watch this space. It was around the $11,000 mark at that stage and then the billionaires and hedge fund guys started investing parts of their portfolios in it. “We’re seeing global banks providing crypto services to their clients. I think bitcoin could be worth anywhere between $50,000 and $100,000 by the end of 2021.” With financial firms deserting London in droves following Brexit, Kehoe says we are ideally placed to take advantage. “It’s a huge chance for Ireland Inc to become a European cryptocurrency hub,” he says. “We already have reputable exchanges like Coinbase, Revolut and Gemini based here. “When one company of that nature comes, others follow.”   [post_title] => Bitcoin: is it fool’s gold or time to buy? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => bitcoin-is-it-fools-gold-or-time-to-buy [to_ping] => [pinged] => [post_modified] => 2021-01-25 15:49:19 [post_modified_gmt] => 2021-01-25 15:49:19 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

As published in The Sunday Times,...

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Array ( [0] => WP_Post Object ( [ID] => 18607 [post_author] => 9 [post_date] => 2020-12-04 14:00:24 [post_date_gmt] => 2020-12-04 14:00:24 [post_content] => Andrew Tzialli is a partner in the Corporate team and head of the firm’s Cryptocurrency and Blockchain Group. Andrew’s practice primarily involves working on corporate transactions, including private equity and venture capital investments, mergers and acquisitions, corporate re-structuring, corporate finance and banking. Many of the transactional matters Andrew works on are for clients that are involved in disruptive technologies, including blockchain, cryptocurrencies and eSports. As part of a series of interviews, Andrew has spoken with a range of businesses and organisations to explore the current blockchain landscape in Ireland and the UK. In the third instalment, he speaks with Arthur Stolk (Founder and CCO) and Erin Grover (Brand Ambassador) of crypto-asset investment firm, Icoinic Capital about about their experience of the blockchain environment, and the biggest challenges to blockchain adoption.   AT: Erin and Arthur, thank you for joining us today. Firstly, can you tell us more about your business, the work you do and the verticals you operate in?  AS: Icoinic Capital is an investment firm committed to generating exceptional returns for investors. We offer a diversified range of crypto asset exposure through high frequency trading and cryptocurrency fundamentals. Icoinic Capital is fully registered by the Dutch Authority for the Financial Markets under the AIFMD-light regime. Our investment products meet the due diligence requirements of traditional funds, including third party auditing and best practices in compliance. This supports investors with trusted exposure with ‘best in class’ investment policies. AT: Excellent. That must be a really interesting space to be in at the moment. What makes your business different or unique? EG: After years of researching crypto funds around the world with the help of my due diligence team, I have backed Icoinic Capital with my reputation and voice in the crypto industry because their attention to the customer experience, compliance, transparency and regulatory standards is as real as their dedication to incredible gains. As a crypto asset advisor, I would not place my clients in most of the crypto funds out there. Thankfully, Iconic Capital does meet the standards of all my investors, including High-net-worth individuals to first-time investors starting with smaller amounts. AT: Great. It’s really positive to see companies like Icoinic doing things a lot more “by the book” than many others in the crypto sector. That can only be a good thing for the industry.   On a personal level, what was your first experience of cryptocurrencies or blockchain? EG: I first saw a hand-written sign on a coffee shop window in Portland, Oregon back in 2009 that said, “Will accept Bitcoin for coffee”. I always wonder how that guy faired in the long-term game. AS: My first experience with crypto was in 2013 when Bitcoin had a boom. We experienced gains of $30 to $1000 in no time. My interest in crypto disappeared after the market crashed. I picked it up again in 2016 when the market started to rise. This is when I began the journey to create Icoinic Capital. AT: Excellent. Erin – it’s amazing to hear that even then there was an appetite for Bitcoin. Which blockchain platforms are you utilising? AS: We’re only trading on the top cryptocurrency exchanges. The future AT: What are your biggest business challenges in the next 12-18 months? AS: The biggest hurdle could be when regulation kicks in, and it would be a major leap forward in this industry. We as a company are compliant as we can be, but you just don’t know what regulation will bring. It will not only be a hurdle for us, but for this industry as a whole. Our philosophy from day one was to be the most compliant knowing that regulation is unavoidable. This is why we integrated best practices from traditional finance. AT: I’d agree with that. Regulation remains somewhat of an unknown for large parts of the entire sector but the likes of the proposed EU Cryptp-Assets Regs (being MiCA) will be all encompassing. Still, as you said, the regulatory hurdles will be much less of a shock to your business as you may well be complying with future regulations to an extent, already. Going further ahead to say 5 years into the future, how widespread will blockchain be adopted in Europe? EG: I see the mainstream adoption on the horizon, yet I don’t see full integration of blockchain technology in five years. MiCA, Europe's proposal for regulating crypto assets, is a step in the right direction. I’m optimistic for its activation within the next two years. AS: This is always difficult to forecast. I think blockchain is going to be a technology that will be widely used. Most people who use it will never see the actual technology. For example, with the Internet, you send a message, but you don’t necessarily think about the technology behind what it took to send the message. AT: Thank you both. Great to hear about Icoinic and your journey through blockchain and crypto.   To find out more about Andrew Tzialli and the services offered by Philip Lee please click here. To learn more about Icoinic Capital, please contact Erin Grover. [post_title] => Blockchain Interview Series - Part 3 [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => blockchain-interview-series-part-3 [to_ping] => [pinged] => [post_modified] => 2020-12-04 14:25:52 [post_modified_gmt] => 2020-12-04 14:25:52 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

Andrew Tzialli is a partner in the Corporate team and head of...

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Array ( [0] => WP_Post Object ( [ID] => 15622 [post_author] => 9 [post_date] => 2020-10-20 14:22:05 [post_date_gmt] => 2020-10-20 14:22:05 [post_content] => Article co-written by Andrew Tzialli, Corporate M&A Group and Head of Cryptocurrency and Blockchain at Philip Lee, and Daniel Lawlor, Managing Director, Aquest. As it stands, numerous activities regarding the supply, purchase, and exchange of cryptocurrencies and crypto-assets often fall within the regulatory “cracks” across the EU. Whilst there is an acceptance that certain crypto-asset related activities are captured by exiting e-money regulations, (specially EMR (European Communities (Electronic Money) Regulations 2011)) or by the broader regulation of EU financial markets on the issue of securities and/or other financial instruments, (for example, MiFID (Markets in Financial Instruments Directive)), a detailed and tailored regulatory regimen for crypto-assets is broadly absent. The EU’s proposed Regulation of Markets in Crypto-Assets (MiCA) seeks to address these issues with a new comprehensive framework. If MiCA is passed into law, the EU would likely become the world’s most significant regulated area for crypto-assets. Here are five things you need to know about the new proposals. 1. EU-wide standardisation, application, and clarification Whilst a number of EU countries have adopted (or plan to shortly adopt) rules governing crypto-asset activities, a harmonised EU approach is currently absent. The implementation of an EU-wide framework will help to provide legitimacy and transparency to a sector regularly accused of lacking both. It will also allow certain passporting rights for compliant businesses across the EU. With this increased transparency, prospective investors will be better placed to assess risks that have thus far been inherent in an often volatile sector. It is also clear that MiCA does not seek to overlap with existing regulation (being that referred to above), and is aimed at regulating three specific classes of crypto-asset: asset-backed/referenced tokens (i.e. those backed by commodities, fiat or other crypto stable coins); utility tokens; and e-money tokens (now newly defined to clearly distinguish them from traditional e-money as we know it). 2. Who will this apply to? MiCA will provide for regulatory obligations and requirements in respect of a broad range of services, including: trading platforms for crypto-assets; the exchange of crypto-assets for fiat currency or for other crypto-assets; custody of crypto-assets; receiving and transmitting orders for crypto-assets; the execution of orders for crypto-assets on behalf of third parties; and advice on crypto-assets. The regulations will apply to anyone providing any of the above activities within the EU. 3. What sort of obligations will MiCA impose?  Many of the requirements will mirror those already in place for other financial services providers (in accordance with MiFID) including: having an EU presence; minimum capital requirements; rules regarding holding client funds; risk management; and having a range of policies and procedures in place governing the service offering, complaints, etc., to name but a few. For issuers of crypto-assets, a form of prospectus will also need to be published. Whilst this prospectus is referred to as a “whitepaper”, the contents will be far more substantive than many of the whitepapers published by crypto-asset issuers in the past. Details of the assets in question, clarity around the risks, communicating in a clear, honest, professional, fair, and non-misleading manner, will all be essential. Requirements for issuers of asset-referenced tokens and e-money tokens will go further. A notable requirement in the MiCA proposal, for example, is that e-money tokens must be issued with a 1:1 redemption guarantee (i.e. if you paid €1 for your token, you must have a guarantee that you can get your €1 back at any time). 4. Will this have an impact on innovation? Regulating to facilitate innovation is an oxymoron.  As soon as you introduce rules and require firms to seek authorisation, you immediately stifle innovation.  The tricky thing about regulating in an innovative space is to set the bar at the right level.  Set it too low, and you don’t achieve what you set out to - investor protection and legal certainty. Set it too high and you cut the initiative off at the knees by making the cost of entry so high that no one can afford to enter this space and create and innovate. When it comes to MiCA then, the devil will be in the detail.  The current draft text includes references to de minimus thresholds and proportionality but much of the technical detail remains to be written by EBA and ESMA in Level 2 measures.  Once regulators get down to drafting the minutae of technical rules, they tend to look for more rather than less; to push for the greatest levels of investor protection and transparency rather than balance against the need for greater innovation and lower barriers to entry. It will be interesting to see if regulators can resist their natural tendencies to set the bar so high that it kills the initiative before it ever gets anywhere.  It will be the job of the legislators to make sure that that doesn’t happen.  However, looking at the levels of detail and prescriptiveness across all European financial services legislation (e.g. MiFID, PRIPS and CRD) would not fill you with too much hope. Unregulated firms come from a world where they are used to being innovative, agile and dynamic.  Upon moving into the regulated space, these firms will immediately find that their flexibility and time to market are constrained.  They now have a regulator looking over their shoulder who will want to pre-approve anything that they do.  Getting used to that culture shift can be an enormous challenge for firms who are used to doing their own thing. 5. What else do crypto issuers or crypto service providers, need to watch out for as the implementation of MiCA progresses? The biggest single difference between a regulated financial services firm and an ordinary operating company is that while operating companies act in their own best interests (in the interests of their shareholders), regulated firms must act in their clients’ best interests. This means favouring their clients’ interests even if that is against their own best interests and even if it hits them in the pocket.  Again, this is a huge cultural and mindset shift for firms that are not used to being in the regulated space – but firms that fail to grasp this will hit compliance issues sooner or later.   For further information or advice in relation to the above article, please contact Andrew Tzialli or Daniel Lawlor.           [post_title] => Top five things the crypto-asset sector needs to know about the European Regulation of Markets in Crypto-Assets (MiCA) [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => top-five-things-the-crypto-asset-sector-needs-to-know-about-the-european-regulation-of-markets-in-crypto-assets-mica [to_ping] => [pinged] => [post_modified] => 2020-10-24 17:21:45 [post_modified_gmt] => 2020-10-24 17:21:45 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

Article co-written by Andrew Tzialli, Corporate M&A Group and Head of Cryptocurrency...

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Array ( [0] => WP_Post Object ( [ID] => 11731 [post_author] => 9 [post_date] => 2020-08-31 09:18:57 [post_date_gmt] => 2020-08-31 09:18:57 [post_content] => As published in The Irish Independent, August 29 2020. OneCoin garnered billions in investment before its leader disappeared. Tanya Sweeney writes about the hunt for the 'Missing Cryptoqueen', featuring head of our cryptocurrency and blockchain group, Andrew Tzialli. Article available here. [post_title] => The Irish Independent - On the hunt for the cryptocurrency conwoman who stole billions [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-irish-independent-on-the-hunt-for-the-cryptocurrency-conwoman-who-stole-billions [to_ping] => [pinged] => [post_modified] => 2020-09-01 14:53:52 [post_modified_gmt] => 2020-09-01 14:53:52 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

As published in The Irish Independent, August 29 2020. OneCoin garnered billions in...

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Array ( [0] => WP_Post Object ( [ID] => 10431 [post_author] => 9 [post_date] => 2020-01-31 18:55:17 [post_date_gmt] => 2020-01-31 18:55:17 [post_content] => On February 5th, Head of our Cryptocurrency and Blockchain Group, Andrew Tzialli, will be participating in a panel discussion on tokenisation of equity in Ireland and the opportunities it presents. This event is co-hosted by AKASHA Innovation Hub and SORS Digital Assets. For further details on the speaker line up and how to register, click here. [post_title] => Tokenisation of Equity in Ireland - Panel Discussion [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => tokenisation-of-equity-in-ireland-panel-discussion [to_ping] => [pinged] => [post_modified] => 2020-01-31 18:55:17 [post_modified_gmt] => 2020-01-31 18:55:17 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

On February 5th, Head of our...

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Array ( [0] => WP_Post Object ( [ID] => 10309 [post_author] => 9 [post_date] => 2020-01-08 11:31:07 [post_date_gmt] => 2020-01-08 11:31:07 [post_content] => Andrew Tzialli is a partner in the Corporate team and head of the firm’s Cryptocurrency and Blockchain Group. Andrew’s practice primarily involves working on corporate transactions, including private equity and venture capital investments, mergers and acquisitions, corporate re-structuring, corporate finance and banking. Many of the transactional matters Andrew works on are for clients that are involved in disruptive technologies, including blockchain, cryptocurrencies and eSports. As part of a series of interviews, Andrew has spoken with a range of businesses and organisations to explore the current blockchain landscape in Ireland and the UK. In the second instalment, he speaks with Brian Manning, CEO of ExSilico, about his experience of the blockchain environment, and the biggest challenges to blockchain adoption.   AT: Brian, thank you for joining us today. Firstly, can you tell us more about your business, the work you do and the verticals you operate in? BM: We are ExSilico - founded by myself, Clodagh McCarthy Luddy and Jon Centurino. We help our customers to secure their own high-value digital assets. Some of the verticals we operate in are digital asset custody, password management and secrets management. AT: Great. So, given there are a growing number of businesses looking to expand into this area, is there anything that makes your business different or unique? BM: Our focus on the secure backup, recovery and usage of high value digital assets is how we differentiate ourselves. We help our customers to identify choke points in their digital asset management systems and we fix them using our suite of tools. We are in the process of building out this suite into a product offering called Sharehold™. AT: Thanks. Moving on, what do you think are the biggest challenges that you are working through, that need to be overcome in order to achieve widespread adoption and understanding of your offering? BM: Education is our biggest challenge. It is all too common that individuals and organisations don’t appreciate cybersecurity threats until they really understand the dangers or worse - fall victim to them. Education is also a strength of ours and we are building a helpful knowledge base into our Sharehold™ product. AT: There are lots of platforms/framework options out there but, which ones are you utilising and why? BM: We are technology-agnostic and when it comes to blockchain we focus on cryptographic key management - which is a feature of all such platforms to date. Consequently, we don’t actually use any blockchain components in our own technology stack but we do interface with whatever blockchain our customers are working with. AT: Great, that certainly gives you some flexibility. Away now from Exsilico and on a personal level, what was your first experience of cryptocurrencies or blockchain? BM: I read the Bitcoin whitepaper early on and I was lucky that my previous interests and education in maths, cryptography and engineering allowed me to quickly understand it (on a technical level at least!). AT: Given the complexities of the sector, that combination of interests and skill sets would certainly put you in a strong position to be a leader in the field! Given your experiences, do you have a sense of the unique challenges that blockchain businesses face in Ireland (if any)? BM: I’m not so sure that there are any unique challenges to blockchain business that are not experienced by other Irish businesses and start-ups in particular. I think raising adequate funds, especially for early stage ventures in a nascent industry, is the challenge faced by all. AT: So on that point, do you have a feel for the appetite from investors/VC’s in Ireland to look at blockchain based businesses? BM: We have our own sense of it certainly, though we haven’t spoken to everyone yet. As above, I think the inherent risk associated with a nascent industry and early stage ventures is a cause for reasonable apprehension from local, and indeed, foreign investors. Our own focus is on cybersecurity - an area which is seeing plenty of growth and investment, including in Ireland. AT: All start-ups face challenges in their growth cycle but what do you think are your biggest business challenges in the next 12-18 months? BM: Ramping up our customer base and helping people to understand that they can reduce stress that they don’t necessarily know they have - the constant worry that they might lose their digital assets. AT: And finally, going 5 years into the future, how widespread will blockchain be adopted in Ireland? BM: We don’t predict the future, we’re just building it!  AT: Excellent! Is it too soon to award you with the answer of the year?! Thanks Brian, I have no doubt you and your team will play a significant role in the sector, in the years to come.   To find out more about Andrew Tzialli and the services offered by Philip Lee please click here.   For further information on ExSilico or on anything referenced above, please contact Brian Manning. [post_title] => Blockchain Interview Series – Part 2 [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => blockchain-interview-series-part-2 [to_ping] => [pinged] => [post_modified] => 2020-01-08 12:56:14 [post_modified_gmt] => 2020-01-08 12:56:14 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

Andrew Tzialli is a partner in the Corporate team and head of...

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Array ( [0] => WP_Post Object ( [ID] => 10112 [post_author] => 9 [post_date] => 2019-11-27 11:39:19 [post_date_gmt] => 2019-11-27 11:39:19 [post_content] => Andrew Tzialli is a partner in the Corporate team and head of the firm’s Cryptocurrency and Blockchain Group. Andrew’s practice primarily involves working on corporate transactions, including private equity and venture capital investments, mergers and acquisitions, corporate re-structuring, corporate finance and banking. Many of the transactional matters Andrew works on are for clients that are involved in disruptive technologies, including blockchain, cryptocurrencies and eSports. As part of a series of interviews, Andrew will talk to a range of businesses and organisations to explore the current blockchain landscape in Ireland and the UK. In the first instalment, he speaks with Fiona Delaney, CEO and Founder of Origin Chain Networks, about her experience of the blockchain environment, and the biggest challenges to blockchain adoption.     AT: Fiona, thanks for talking to us today. To start, can you tell us more about your business, the work you do and the verticals you operate in?  FD: Sure. Origin Chain Networks bring the benefits of emerging technologies to the agri-food sector. We enable digital supply transparency to foster consumer trust and assurance. We are committed to delivering our services in a way that aligns to the Sustainable Development Goals, in particular, goals: 9 - Industry, Innovation and Infrastructure; 11 - Sustainable Cities and Communities and 17 - Partnerships to achieve the goal. While we are focused on agri-food for the medium term, our underlying platform is designed and developed to scale to different vertices in the long-term e.g. pharmaceuticals: to address counterfeit medicines; fashion and tech: to underpin quality and brand authenticity. AT: Great! Track and trace is becoming a popular use of blockchain within multiple sectors. What makes your business different or unique? FD: Right now we offer three services: D7Food Ecosystem - a local store platform offering sustainable, short-supply chain as a service. Authenteer - a track and trace platform for sustainable agri-produce. KiBleep - a family-friendly mobile food app that scans ingredient lists to display allergen alerts and flags popular consumer categories eg. suitable for vegetarians, dairy-free. In each case, we seek to empower data-owners with our secure, privacy-first approach. We remove as many barriers to adoption as possible by providing easy integration with existing ERP and CRM systems and we have placed a ban on any feature that creates friction for our users. Lastly, our team! My co-founder Saad Shahid and I are both technical and comfortable in the disruptive tech space with prior experience as entrepreneurs in Europe and Asia. We are on the same page when it comes to offering real value in the marketplace. AT: Excellent. It’s always good to see several real world use cases on multiple levels. With the use of any emerging technology there are bumps in the road. Perhaps you can share some of the biggest challenges that you are working through, that need to be overcome in order to achieve widespread adoption and understanding of your offering? FD: People and business culture. Ours is a disruptive and innovative way of doing business, people need time to adapt. This plays out into finding suitable partners in the industry. AT: On to the technical side of things, which blockchain platforms/framework are you utilising and why? FD: We are fairly agnostic on this front and have worked with numerous blockchains, public, private and hybrid including Hyperledger, Ethereum, Hashgraph and IOTA. Our ultimate goal is to enable our users to be able to select their preferred platform for their vertical. Community means a lot in our sector and can determine the choice of a platform, e.g. IOTA is an important player in smart energy and cleantech. If you are in the sustainability game, promoting shared mobility solutions or re-selling community-generated electricity, there is a benefit to aligning with a foundational service provider committed to energy efficiency into the future. AT: On a personal level, what was your first experience of cryptocurrencies or blockchain? FD: Anyone who has studied software engineering in depth will have come across the blockchain concept fairly early on. A blockchain is simply a data structure with a unique set of attributes that make it an excellent data storage solution in distributed business contexts. My first experience with a cryptocurrency was with Bitcoin. My first crypto wallet, one of the early Tip Bots on Github / Reddit / Twitter called Changetip was built on the Bitcoin network. It was 2013, transaction fees were low and all the nerds were crypto-tipping each other for great content and collaboration. ChangeTip was bought by Airbnb in 2016 (aqui-hired for their team know-how) and ChangeTip closed shortly afterwards. From crypto micro-financing to creating ‘micro-hosting’...  it’s a fairy story for our age! AT: In terms of the environment you’re working in, what are the unique challenges that blockchain businesses face in Ireland (if any)? FD: We work extensively with European and global partners, particularly in innovation and R&D. Our experience is that the Irish scene is at least 5 years behind in taking advantage of the opportunities afforded by new technologies. I would say there is a strong native caution towards disruptive business models. There’s a ‘bite-the-coin-to-see-if-it’s-real’ approach here, as if something needs to happen in the Irish business context first, before industry or Irish investors will take a leap. New tech just doesn’t operate like that anymore - market culture is a matter of product localisation not a strong determinant of product spec. There is a generalised distrust of deep-tech expertise and this plays out quite visibly in a lack of public sector engagement with new-tech innovation. I've just returned from Hyderabad in India where I represented NSAI at the ISO Blockchain Plenary, hosted by the Telengana Goverment. It was held in the 'Blockchain District', an initiative that supports and nurtures the development of blockchain solutions and integrates them with government services. The aim is to enhance trust, optimise efficiency and improve communications. There were examples of microfinance systems, organised CHIT Funds, anti-counterfeit pharmaceutical supply chains and much more. All this is in a country that has banned cryptocurrencies altogether. There's a lot we could learn from the Hyderabadi approach. Do you have a sense of the appetite from investors/VC’s in Ireland or the wider sphere, to look at blockchain-based businesses? FD: In the latter half of 2019, we’ve seen considerable interest in sustainability-focused investment and a lot of interest in us. Google’s Kate Brandt recently announced a new climate-change accelerator for sustainability-focused start-ups at Web Summit. Similarly, Alltech, Finistiere and Enterprise Ireland are all looking closely at this space. Blockchain along with AI and sensor-based nanotech are key foundational technologies that can deliver proven, measurable and trusted results. The future is Blockchain+ AT: Looking at what might be in store for you, what are your biggest business challenges in the next 12-18 months? FD: Our challenges are two-fold: meeting the demands of our integration pipeline and connecting/ adding new partners in order to broaden our route to market. AT: Finally and more generally, looking further ahead and going 5 years into the future, how widespread will blockchain be adopted in Ireland? FD: Judging by past performance, I’d anticipate Ireland Inc. will be a follower of new tech. There will be a few companies, including our own, who will make the leap from the Irish sandbox into the global marketplace but I anticipate in the main, that widespread adoption will come about almost by stealth. There are big players integrating blockchain into their stack adding value to their offerings: IBM, Oracle, Microsoft all have blockchain components as-a-service. The big food multiples, Carrefour, Walmart, Wholefoods, M&S have all adopted blockchain pilots, as have many logistics companies and port authorities. In each case, we’re not seeing cryptocurrency adoption, rather we are seeing blockchains used to increase supply transparency and optimise data-sharing across decentralised business environments. In these markets, consumers are already purchasing on blockchain-enabled supply chains without even knowing it. If I’m to make one prediction, it is that the Irish artisan food sector will benefit greatly from the (potential) integration of Facebook’s Libra/Calibra payments feature. So many Irish artisan food brands use Facebook platforms to manage and connect with consumers. I anticipate a surge in mCommerce for them with in-app frictionless payments alongside the high-visibility afforded by Facebook/Instagram/ Messenger/WhatsApp social channels.   To find out more about Andrew Tzialli and the services offered by Philip Lee please click here.   For further information on anything referenced above, please contact Fiona Delaney. [post_title] => Blockchain Interview Series - Part 1 [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => blockchain-interview-series-part-1 [to_ping] => [pinged] => [post_modified] => 2019-11-27 11:39:19 [post_modified_gmt] => 2019-11-27 11:39:19 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

Andrew Tzialli is a partner in the Corporate team and head of...

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Array ( [0] => WP_Post Object ( [ID] => 9346 [post_author] => 9 [post_date] => 2019-07-02 14:15:36 [post_date_gmt] => 2019-07-02 14:15:36 [post_content] => Highlights:
  • Repsol to be cornerstone investor in UK/Spain based Finboot’s latest fundraising round
  • The legal advice to Finboot was led from the London office of Philip Lee, by Andrew Tzialli, Partner and head of the Cryptocurrency and Blockchain Group
  • Finboot will supply Repsol with its blockchain technology solution BlockLabs
  • Finboot’s proprietary software (“MARCO”) uses blockchain to certificate products and increase supply chain efficiencies
The Philip Lee cryptocurrency and blockchain group, led by Partner Andrew Tzialli, has continued its ongoing growth in advising exciting new companies in the blockchain sector. Its role as leading legal advisor to Finboot, on its investment from global energy giant Repsol, is an example of the high level of work the group is undertaking.    As part of the transaction, Repsol acquired a c.8% stake in the company through its strategic investment fund. The funds will be used to support the enhancement and extension of Finboot’s product offering in line with the company’s growth strategy. Finboot also secured a commercial contract with Repsol. Since Andrew Tzialli joined the firm as a partner in early 2018, Philip Lee (having also recently been named Ireland Law Firm of the Year) has continued to see rapid growth in the number of companies that it is working with in the blockchain sector. Finboot is the latest such company, with blockchain focused investment funds, exchanges, custodian and “anti-money laundering” service providers, product verification and other supply chain service providers, already existing clients. Finboot facilitates and simplifies the adoption of blockchain technologies into daily business operations, focusing on industrial supply chains. It is one of the first tech startups to deliver value in the enterprise blockchain arena and overall distributed ledger ecosystem, with the capability to verify products’ sustainability credentials. Finboot predominantly focuses on the Oil & Gas, Chemicals, Consumer Goods/Retail and Automotive sectors, with plans to extend its industry reach. Finboot will supply Repsol with its blockchain technology solution BlockLabs, which was developed by Finboot as a pilot during Fundación Repsol’s startup acceleration program in collaboration with Repsol Technology Lab. The solution uses blockchain technology to improve the certification process of petrochemical products, thereby driving supply chain efficiencies. It is powered by Finboot’s flagship product MARCO, a blockchain agnostic SaaS which effectively combines business workflows with blockchain core functions. Repsol estimates that the solution will save approximately €400,000 per annum, even with a limited rollout. Blockchain technology has the potential to accelerate the complex mix of processes that comprise industrial supply chains, enabling secure data sharing and improving auditability. This, in turn, could result in dramatic time and costs savings, and potentially even drive revenue growth. Relatively few enterprises have unlocked the full potential of digital technologies, yet companies that digitise their supply chains can expect to boost annual earnings growth by 3.2% - the largest increase from digitising any business area[1]. Andrew Tzialli, Partner and head of the Cryptocurrency and Blockchain Group at Philip Lee said: “Blockchain has long been regarded as having the ability to revolutionize efficiencies that can be achieved through complex global supply chains, with reducing cash cycle time, reducing overheads and increasing visibility, all being possible. Finboot’s enterprise solution achieves all three limbs, and so much more. It’s also great to add Finboot to the growing list of companies we are working with across the globe, that are successfully harnessing the potential uses of blockchain to its fullest.”  Nish Kotecha, Chairman and Co-Founder of Finboot, said: “We are delighted to have received this double endorsement from Repsol, a global leader in the energy industry. The investment cornerstones our latest fundraising round, while the contract is testament to the capabilities of our technology and its ability to support and enhance efficiencies across enterprises. This partnership represents a significant milestone for Finboot and augurs well for our future growth ambitions.”  [1] Source: The case for digital reinvention, McKinsey (February, 2017). [post_title] => Philip Lee Blockchain Group advises Finboot on Investment from Global Energy Giant, Repsol [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => philip-lee-blockchain-group-advises-finboot-on-investment-from-global-energy-giant-repsol [to_ping] => [pinged] => [post_modified] => 2019-07-02 15:05:04 [post_modified_gmt] => 2019-07-02 15:05:04 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

Highlights: Repsol to be cornerstone investor in UK/Spain based Finboot’s latest fundraising...

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Array ( [0] => WP_Post Object ( [ID] => 9117 [post_author] => 9 [post_date] => 2019-05-28 15:08:06 [post_date_gmt] => 2019-05-28 15:08:06 [post_content] => As published in the Irish Examiner, Monday 24th June 2019: It is now a decade since the publication of the infamous bitcoin white paper (Bitcoin: A Peer-to-Peer Electronic Cash System) and the launch of the bitcoin blockchain. Ten years on and with the imminent launch on Friday 24th May of Blockchain Week in Ireland, how have things changed?  Is the early promise from crypto evangelists that blockchain technology will “change the world” getting closer or is it still a far-fetched dream? That is the question posed by Ireland’s leading legal expert in the sector, Andrew Tzialli, partner at law firm Philip Lee and head of the firm’s Cryptocurrency and Blockchain Group. The last 3 years in particular, have been a rollercoaster ride for the world of world sector.  2016 and early 2017 saw crypto currencies become much more mainstream, which then lead to hysteria and relentless “FOMO” (fear of missing out) being the rationale for many investors who entered the market during Q3 2017 to Q1 2018.  This was followed by a monumental crash. Some of the most prominent cryptocurrencies saw values decrease by 90% from December 2017 peak prices.   Around half of blockchain companies that ran ICOs during mid-2017 to mid-2018, are estimated to have now failed all together. However, fast-forward to now in 2019... According to Andrew Tzialli, “Blockchain can already improve businesses efficiency and processing times in a secure manner.  As adoption and innovation grows, the technology will be hugely disruptive to several industries – not least, Banking and Real Estate. Everything from cybersecurity, healthcare, car leasing and sales, energy, IoT, cloud storage, Government and Governance, Supply Chain, Music and IP ownership are all rife for change and all from blockchain technology that has only just had its 10th birthday.”   Banking Whilst early predictions that the existence of cryptocurrencies would bring financial institutions to their knees was wildly overstated, blockchain technology still stands to significantly impact the banking sector in the same manner that the internet affected publishing. The ability to transfer huge sums of money, quicker, cheaper and more securely than currently on offer will be made possible. Whilst this may impact the profits of certain banks and clearing houses, customers will inevitably favour those institutions offering the transparency of these improved services. For this reason, it is estimated that 25% of banks will adopt or plan to adopt some form of blockchain technology during 2019.   Real Estate By its very nature, the processes in place to rent or own property is fraught with bureaucracy (and therefore slow). It requires the involvement of multiple intermediaries and large capital outlay, with the end result being the ownership of an illiquid investment. Over decades, very little has changed in transactional methods. Given its somewhat archaic processes, blockchain stands to transform the sector. Smart contracts (written on a blockchain protocol), can simplify the rental and purchase process, removing several intermediaries.  Since use of a blockchain can create an immutable record that is public, storage of title deeds also represents a good use for the technology. Perhaps the most important change will be the ability to create fractional ownership of property through digital tokenisation of assets. This will bring property ownership to an even bigger audience and allow individuals from all over the world to easily own a small piece of some of the most exciting construction projects or lucrative developments. The biggest difference will be that owners of these digital tokens won’t need to wait for sale of the property to realise their investment, with secondary markets being available for trading of those tokens, via exchanges.   Next steps for blockchain? Endless names from the banking and financial services world recognise the potential. Now that Microsoft, Intel and IBM have announced the development of their own blockchain solutions, JP Morgan has developed its own digital currency, eBay announced plans to do the same and Whole Foods will start accepting digital currency with the underlying technology being based on an ethereum based payments network. Andrew Tzialli concluded: “For those involved in the sector a little longer, the volatility of markets is nothing new, though the highs and lows have of course never been quite so drastic. Rather than faith being placed purely in cryptocurrencies as a means of replacing traditional fiat currencies and becoming the primary use of the technology, many of those same people knew the real promise is in blockchain technology – an important distinction frequently overlooked.”   For more on this topic, please contact Andrew Tzialli.   A version of this article was also published on 1st June 2019 on [post_title] => Blockchain, Hype or Hope? [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => blockchain-hype-or-hope [to_ping] => [pinged] => [post_modified] => 2019-06-24 08:29:58 [post_modified_gmt] => 2019-06-24 08:29:58 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

As published in the Irish Examiner, Monday 24th June 2019: It is...

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Array ( [0] => WP_Post Object ( [ID] => 9009 [post_author] => 9 [post_date] => 2019-05-08 13:25:28 [post_date_gmt] => 2019-05-08 13:25:28 [post_content] => Raising Finance as a Blockchain Business - Securitised Token Offerings and Initial Exchange Offerings vs Venture Capital for Equity Are you assessing your options for raising finance via the STO or IEO route? Or are you exploring the more traditional route of equity finance from VC funds, angel investors or crowdfunding? As part of Blockchain Ireland Week 2019, Partner and Head of the firm's Crypto and Blockchain Group, Andrew Tzialli, is hosting a walk-in clinic at our Dublin office on May 27th. Andrew is offering free consultations to discuss options available to blockchain companies looking to raise finance and to answer other legal questions you may have in respect of your startup. To register, please click here. [post_title] => Raising Finance as a Blockchain Business Walk-in Clinic [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => blockchainclinic [to_ping] => [pinged] => [post_modified] => 2019-05-17 08:30:44 [post_modified_gmt] => 2019-05-17 08:30:44 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

Raising Finance as a Blockchain Business - Securitised Token Offerings and Initial Exchange...

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Array ( [0] => WP_Post Object ( [ID] => 8804 [post_author] => 9 [post_date] => 2019-04-17 09:30:44 [post_date_gmt] => 2019-04-17 09:30:44 [post_content] => The AKASHA Foundation announced the opening of a new blockchain innovation hub in Dublin. This new location is a regional branch of the Foundation, which has its headquarters in Crypto Valley, Switzerland, and was founded in 2015 by Ethereum co-founder Mihai Alisie. The opening of this co-working space adds another physical location to a developing network of innovation hubs that the Foundation is working to create around the world. The Dublin hub will serve as a place for Blockchain development, training, education, incubation, and acceleration support. To celebrate the opening of this new, strategically-important innovation hub, the AKASHA Foundation is holding ‘Open House’ events in Dublin and Galway as part of Ireland's Blockchain Week. “We are delighted to see an internationally renowned Blockchain project such as AKASHA establish a presence in Dublin,” said Andrew Tzialli, Partner at Philip Lee who heads up the firm's Cryptocurrency and Blockchain Group, and who is collaborating with the AKASHA Foundation. AKASHA Founder, Mihai Alisie, said “We are really excited about our new presence in Dublin since Ireland as a whole promises great potential when it comes to the future development of blockchain technology. We already have a presence in Zug and Barcelona, and we are sure that Dublin will be a fantastic addition to the global blockchain innovation network.” AKASHA's presence in Dublin aims to catalyze the local blockchain community by connecting them with individuals, groups, and projects in the space, enhancing collaboration through events, activities and access to a network of innovation hubs. Building upon the success of AKASHA Barcelona, the Dublin space will nurture and encourage open innovation and collective action within the Irish blockchain community and beyond. Mihai Alisie is one of the early pioneers in the blockchain space. Mihai created Bitcoin Magazine in 2011 together with Vitalik Buterin, later joining him as one of the original four Ethereum Founders in late 2013. The AKASHA Foundation is a non-profit born at the intersection of blockchain and collective intelligence. The Foundation nurtures projects helping individuals unlock their potential through open systems that expand our collective minds at local, regional and global scales.   For further information, please contact Andrew Tzialli. [post_title] => The AKASHA Foundation, established by Ethereum co-founder, opens new Blockchain Innovation Hub in Dublin [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => the-akasha-foundation-established-by-ethereum-co-founder-opens-new-blockchain-innovation-hub-in-dublin [to_ping] => [pinged] => [post_modified] => 2019-05-07 12:58:53 [post_modified_gmt] => 2019-05-07 12:58:53 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

The AKASHA Foundation announced the opening of a new...

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Array ( [0] => WP_Post Object ( [ID] => 8027 [post_author] => 13 [post_date] => 2018-11-08 13:44:42 [post_date_gmt] => 2018-11-08 13:44:42 [post_content] => Malta, the country with the 32nd highest global GDP per capita, recently achieved what all other international financial and economic powerhouses have either failed or been reluctant to do: it passed a bill introducing a set of rules which formalise the regulation of Initial Coin Offerings (“ICOs”) and cryptocurrency exchanges.  Whilst the Virtual Financial Assets  Bill (the “Bill”) has not yet become law, the bill provides much needed guidance for those involved in the sector.   To date, many of the major financial regulators of the world have taken the stance that investment in cryptocurrency should be avoided. Others have adopted the position that the issue of tokens or “virtual financial assets”, pursuant to an ICO; (1) either may constitute the issue of a security (which would be subject to local regulation on the issue of securities); or (2) may or may not be classified as the issue of a “utility token” (which would be subject to a separate regulatory regime),  with a decision on the utility vs security status  often taken after the event (if at all). Conversely, the position taken by the Malta Financial Services Authority (“MFSA”) aims to provide regulatory certainty for ICOs, cryptocurrencies and blockchain technology businesses in setting out a clear framework as to what constitutes cryptocurrency and an ICO, necessary steps for compliance and penalties for non-compliance.   Financial regulators can (and do) give warnings to potential investors, however, in reality, the influx of  new cryptocurrencies and the ease with which they can be purchased, means that these warnings are often ignored.  Whilst the global market capitalisation of cryptocurrencies has suffered a fairly spectacular fall from grace during 2018, this is still an industry that has a market capitalisation of over $210 billion (down from a peak of around $800 billion in January 2018).  Given the scale of growth and sector value, there was an expectation that other jurisdictions would have followed Malta’s approach but generally, that has not yet been the case.  Perhaps regulators believe that the virtual currency market could all be a “hyped-up bubble” that would have disappeared by now.  Indeed, the pace at which bitcoin in particular has gained recognition over the last 18 months may have caught many regulators by surprise and they may still be coming to terms with what this heightened profile means for the way businesses and individuals transact financially in the future.   Certain financial authorities have begun to take steps forward.  The SEC in the US has attempted to clamp down on illegitimate ICOs and cryptocurrency traders and South Korea has started taking steps towards regulation. Still, the position remains that the lack of global regulation means that ICOs continue to be a popular choice for fraudulent companies and individuals posing as entrepreneurs who raise large sums of money from investors without any realistic prospect of a return on investment.  This may well add fuel to the well-trodden and misplaced argument that cryptocurrency is a hotbed of criminal activity.   Some of the key features of the Bill are outlined below:  
  • licencing requirements – individuals or entities proposing to issue virtual financial assets or who carry out certain specified activities in relation to virtual financial assets must apply to the MFSA for a licence prior to carrying out such activities;
  • appointment of agents – an individual or entity proposing to issue virtual financial assets must appoint an “agent”, being a lawyer, accountant or auditor, who is approved by the MFSA;
  • whitepaper –prior to offering virtual financial assets, issuers shall be required to publish a detailed “whitepaper”, which must contain certain information (outlined in the Bill), including the following:
    • a background on the issuer(s), agents and service providers associated with the offering;
    • characteristics of the virtual financial assets;
    • the amount and purpose of the issue;
    • a description of the issuer(s) wallet(s) used; and
    • security safeguards against cyber threats.
  Whether or not the attempts by the MFSA to lead the way in cryptocurrency regulation, resulting in Malta becoming a global cryptocurrency superpower, remains to be seen.  Opinions are also divided as to whether the legislation is being proposed to encourage inward investment or simply to prevent rogue ICOs from taking place within the jurisdiction.  Either way, the steps taken by the MFSA can only be positive for a multibillion dollar industry which is distinctly lacking in a widely recognised legal framework and which may only be at the beginning of its journey. [post_title] => Cryptocurrency and ICO Regulation [post_excerpt] => [post_status] => publish [comment_status] => closed [ping_status] => closed [post_password] => [post_name] => cryptocurrency-and-ico-regulation [to_ping] => [pinged] => [post_modified] => 2018-11-08 13:44:42 [post_modified_gmt] => 2018-11-08 13:44:42 [post_content_filtered] => [post_parent] => 0 [guid] => [menu_order] => 0 [post_type] => post [post_mime_type] => [comment_count] => 0 [filter] => raw ) )

Malta, the country with the 32nd highest global GDP per capita, recently...

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Array ( [0] => WP_Post Object ( [ID] => 7452 [post_author] => 9 [post_date] => 2018-07-06 09:17:38 [post_date_gmt] => 2018-07-06 09:17:38 [post_content] => In as little as 12 months, Bitcoin has gone from a little known alternative form of e-money to the next “must have asset”. However, some prominent investors are now saying it was a fad whose bubble has burst before it even got going. In my opinion, the reality could not be more different, with cryptocurrency and more importantly mass adoption of part of its underlying technology (blockchain), set to change countless global industries. It has been said that at its inception, the internet principally disrupted one industry – the publishing sector. By way of contrast, as many as 160 services/sectors have potential use cases (and disruption) as a result of the impending rise of blockchain technology. So where did this all begin? At the time when many of the world’s biggest financial institutions were on the brink of collapse, a paper was published on the concept of a “peer-to-peer electronic cash system” (that crucially, would not require the services provided by a traditional bank). This was shortly followed by the release of the Bitcoin network in January 2009 which initially experienced a slow and then stratospheric rise in its value ($100 of bitcoin purchased in January 2011 would be worth around $2,164,000 at the time of writing). However, many are unaware of the sheer number of other cryptocurrencies that are currently available on the open market. Leading Cryptocurrencies In addition to bitcoin, the top 10 “coins” in terms of market capitalisation (value) include, ethereum, ripple, litecoin and steller, with even the lowest coin in the top 10 (TRON), having a total value of over $2.5 billion. New Financing - Initial Coin Offerings (ICO’s) Now Initial Coin Offerings (or ICOs – a form of financing similar to crowd funding utilised by cryptocurrency and blockchain businesses) are happening at a rate of six per week with an average raise of $24 million. Bitcoin is now just one of over 1,600 cryptocurrencies and whilst their aggregate value has recently sharply fallen to $280 billion (down from nearly $800 billion in early January 2018), this is an increase from around $30 billion at the start of 2017 (which itself was an increase from around $20 billion in 2016). A common misconception is that all of these cryptocurrencies are attempting to position themselves as additional alternatives to traditional currency. In reality most of these are targeting entirely different markets. However, the vast majority of all current cryptocurrencies have one common characteristic – they are all based on the same underlying technology, namely the use of a ledger system known as “blockchain” (in combination with decentralisation and cryptography). So, what is blockchain and why is it regularly referred to a technology that has the potential to be “bigger than the invention of the internet”? In its simplest form, a decentralised blockchain is a form of database technology, where records in that database are not stored or maintained by a single intermediary or administrator, like a bank or an online payment system (note that this example would not apply for a centralised blockchain). Another way of viewing it is a method for recording a transaction which is verified by potentially thousands of independent sources. For example, if the holder of bitcoin (person A) wants to transfer 2 bitcoins to a recipient (person B), persons A and B can complete the transaction directly between themselves with the record of that transaction being maintained on what is essentially a public database. The equivalent would be like having the ability to transfer money from your bank account to another bank account but without relying on the transferring bank and recipient bank to process the transaction. The public database does not show information such as an individual’s name or even their IP address. Rather it records the transfer from person A’s digital wallet address to person B’s digital wallet address, as well as the date and time of the transfer. A permanent record of the transaction is stored on the Bitcoin blockchain which, crucially, is close to tamper proof (the reason for this is that the record is not maintained in a single location but in potentially thousands of locations around the world). For records (or blocks) to be added to that database (and transfers to take place, as in the example set out above), the approval and verification of a peer-to-peer network of computers (known as “nodes”) is required. Once verified by those nodes, a new block recording the transaction is created and added to the existing database (being the blockchain ledger). Blockchain – The Future The potential use cases for blockchain are extensive and go far beyond currency, with any industry or organisation that deals with some sort of transaction or maintenance of any mass record keeping, conceivably being capable of disruption. Some of these industries include:
  • Banking/finance – streamlining of global transactions; speeding up payments; removing restrictions posed by currency borders;
  • Automotive – tracking vehicle history for both new and used cars; supply chain of parts;
  • Travel – passenger identification and passport digitised and verified;
  • Property – property title registers; digitisation of property transactions;
  • Medical – drug supply chain management; patient databases on blockchain;
  • Media – evidence of ownership rights; anti-piracy / copyright infringement;
  • Legal – “smart contracts” with defined rules and accessibility;
  • Voting – reduce voter fraud; minimise government fraud; increase accountability and compliance for government officials; and
  • Donations/Charity – provide auditable trail for donations; ensure intended recipient for donations are received.
  • Whilst cryptocurrency has many critics that question its longevity and feasibility of mass adoption, given the sheer number of use cases, blockchain is most definitely here to stay. Note that investment in any cryptocurrency is, currently, a very high risk investment and should only be undertaken by sophisticated investors. If you have any queries on this topic, please contact Andrew Tzialli.
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In as little as 12 months, Bitcoin has gone from a little...

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We are delighted to announce Partner Andrew Tzialli will...

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