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5 TIPS TO SECURE YOUR CRYPTO-WALLET: 2020 EDITION

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– Amy Cavendish, Content Strategist at the TechFools

 

Introduction

The anonymity of cryptocurrency means that storing crypto isn’t as easy as storing it all in your bank account. Specialized software is required; this software is known as “crypto-wallets”.

Crypto-wallets allow users and investors to store all of their cryptocurrency, no matter if they’re using Bitcoin, Ethereum, or even Dogecoin. Unfortunately, however, crypto-wallets suffer from major security issues. Some of these issues lie on the user, and some of them deal with the wallets themselves.

But what exactly are these security issues? Let’s go over a few.

 

3 Security Risks Threatening Crypto-Wallets

1. Crypto-Fraud

Scammers litter the Internet, and the cryptocurrency market is no exception. Crypto-fraud runs rampant. Phishing scams threaten the financial state of many users, fake trading platforms steal millions of dollars’ worth of cryptocurrency, and the recent COVID outbreak means these scams have increased tenfold.

Learning how to identify a crypto-fraud scam from regular offers and trading platforms is key to keeping your wallet safe.

2. Vulnerable Wallets

Choosing a crypto-wallet service is a big decision. Not only does your choice affect the convenience you experience while using cryptocurrency, it affects how secure your funds are.

Certain crypto-wallet platforms suffer from major security issues, such as lax security standards and major vulnerabilities that allow cybercriminals to hack and breach other crypto-wallets.

For example, the Ledger crypto-wallet suffered from a double-spend vulnerability, a vulnerability that allows a hacker to spend the same currency more than once.

Amy Cavendish

3. Lost Wallet Information

One vulnerability that plagues thousands of users is less a vulnerability and more of a user issue. See, crypto-wallets require an ID and password—similar to logging into an account—to access and use.

If someone were to lose this information or accidentally show it on the Internet, their wallet would be at risk, if not lost forever. User error plays a big role in wallet security, and it’s up to the user to secure their wallet.

 

5 TipsTo Secure Your Crypto-Wallet

However, securing your crypto-wallet doesn’t have to be difficult. There are plenty of ways to secure a crypto-wallet: practicing proper user safety, taking advantage of certain security software, educating yourself on trading platforms, and so on and so forth.

Let’s go over 5 tips you can secure your crypto-wallet right now so you can make sure your crypto-wallet is as secure as your physical wallet.

1. Multi-Signature Address

The first thing you should do is use a wallet that allows for multi-signature addresses (MSA). If your current wallet allows for an MSA, use it. If yours doesn’t, I recommend looking into a new crypto-wallet.

A multi-signature address is, to be frank, the two-factor authentication of crypto-wallets. A multi-signature address requires there to be multiple sign-offs on a transaction before it can be officiated.

2. Stick to Reputable Wallets

According to an article from TechCrunch.com, tech startup ZenGo detected multiple vulnerabilities in multiple crypto-wallets. These vulnerabilities allow double-spending attacks, incorrect balance displays, and transactions being revoked.

Dozens of crypto-wallets exist, but only a few of them are truly safe.  Doing proper research and brushing up on which wallets promise user security is a good way to avoid any vulnerable wallets.

3. Use a VPN

The concept of cryptocurrency revolves around anonymity, a lack of ways to trace the currency back to the user. But just because your financial activity is anonymized doesn’t mean your presence is anonymized.

Fortunately, certain software allows you to anonymize your presence on the Internet. Simply downloading a VPN is enough to maintain anonymity while making transactions, especially if you often connect to public networks.

4. Keep Your Wallet Information Safe

In the tech industry, the acronym PEBCAK makes an appearance every so often. But what does it mean? PEBCAK, standing for “Problem Exists Between Chair And Keyboard”, is used when a tech issue—minor or major—is caused by user error.

A lot of tech issues can be traced back to the user, and cybersecurity is no different. Losing your crypto-wallet information, for instance, puts your wallet at great risk and is considered user error. Be sure to keep your wallet information locked up and away from others.

5. Use Trustworthy Trading Platforms

Trading platforms allow cryptocurrency to flourish, giving investors a place to spend, trade, and sell cryptocurrency. Unfortunately, not all of these trading platforms practice proper cybersecurity or even work!

Certain trading platforms exist solely to scam users, in fact. When looking for trading platforms, be sure to read up on scandals, controversies, and their security practices.

 

Amy Cavendish is a writer at Assignyourwriter from the UK. As an outspoken advocate for digital freedom, she is dedicated to empowering her readers to take control of their digital lives with her thought-leadership articles

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Finance

Why indirect tax continues to cause headaches for the finance, IT, and tax teams

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By Roger Lindelauf, Director, SAP Centre of Excellence, Vertex Inc

 

Businesses across Europe continue to navigate a complex tax landscape as they attempt to automate their indirect tax determination and calculation requirements. However, many tax professionals use the limited functionality offered by their organisations’ ERP systems, or the in-house software developed by their IT departments to perform the task.

Unfortunately, these solutions are just not sophisticated enough to keep up with the frequent changes to the tax rules and regulations businesses are often subjected to across Europe.

Companies need to deliver accurate and timely finance reports to avoid being fined by tax authorities or being ear-marked for an audit. As a result, tax teams are under increasing pressure to make sure their calculations are right first time, every time. But with organisations typically reliant on the solutions available to them to automate the process, errors are all too frequent and leave businesses wide open to compliance failures.

To look in more depth at the raft of challenges experienced by tax, finance and IT professionals across Europe who use SAP to manage their indirect tax automation process, we recently surveyed their views. The research showed that one of the biggest challenges for 38% of our respondents, is managing tax requirements for multiple geographic jurisdictions, and for a 30%, it’s staying on top of legislative changes to tax and ensuring they’re applied effectively within the solution. And if the tax landscape wasn’t already complicated enough, 30% of respondents cited managing disruption caused by COVID-19 as an ongoing issue, closely followed by Brexit for 29%. Managing accounts payable (AP) determination was also highlighted as a painful task for 29%.

Another cause for concern flagged in the research is the lack of connection between the needs of the tax team and IT’s ability to understand and act upon these requirements using their tax automation solutions. Almost 30% of respondents admit that IT’s lack of knowledge in recognising how to keep up with the solution updates is a real issue. When asked about the limitations of their current indirect tax solutions, 41% agree that there are insufficient internal skills within the business to manage them effectively.

 

Joining forces for a future-proofed tax automation

The frustrations felt by tax and IT when it comes to tax automation are made abundantly clear in the research. Along with finance, tax and IT need to work together to find a better way to manage their indirect tax calculation and determination needs. They also need to agree on a future-proof solution capable of managing whatever changes are likely to be applied to tax rules and legislation further down the line.

When asked about their key requirements from a third-party indirect tax automation solution, tax and finance pointed to reliability, usability, and efficiency for integration as their key priorities. APIs are another future requirement to help build system implementation processes that are more streamlined and create scalability throughout all business and global operations.

Increasingly, we’re seeing more and more businesses across Europe turn to more sophisticated third-party tax automation solutions, accelerated by the adoption of SAP S/4HANA. There’s been a real shift towards organisations opting for a solution that integrates into SAP, improving accuracy for VAT applications on transactions, automatically.

Joining forces with key stakeholders is a crucial step to finding an approach that works successfully for all. However, with tax regulation complications showing no signs of diminishing any time soon, can businesses really afford to stay as they are and take a chance on tax compliance or is it time to invest in a new, more reliable, efficient, and future-proofed approach?

A study carried out by independent market research specialist Vanson Bourne. 420 finance, tax and IT decision makers were questioned across Europe.

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Banking

Cryptoassets and the European Central Bank’s new “PISA” Framework

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Alpay Soytürk, Chief Regulatory Officer Spectrum Markets

 

The European Central Bank has published a new oversight framework for electronic payment instruments, schemes and arrangements: “PISA”. In doing so it is further expanding its supervisory portfolio and entering into an area of significant public interest as the framework includes crypto-assets.

Crypto payments

The PISA framework will cover crypto-asset-related services but only to the extent they are relevant to the task of promoting the smooth operation of payment systems, which is as central an element of the ECB’s mandate as the definition and implementation of monetary policy, foreign exchange operations or the management of the euro area’s foreign currency reserves.

As an example of the scope of crypto-payments subject to the PISA framework, the ECB has highlighted the acceptance of crypto-assets by merchants within a card payment scheme and the option to send, receive or pay with crypto-assets via an electronic wallet. There seems to be a clear focus on payment tokens that does not include utility tokens, security tokens, Initial Coin Offerings or Security Token Offerings.

 

Out of scope

PISA excludes services where the transfer of value has only an investment focus. It also excludes services for which the transfer of value is executed solely in banknotes and coins, paper cheques, paper-based bills of exchange, promissory notes or similar. Paper-based vouchers or cash card issuance are also not in scope. The latter refers to cards that are issued for the purpose of depositing funds on it at the disposal of the receiver of a payment.

In other words, PISA focuses on all mechanisms that are based on electronic payment instruments with a general purpose, i.e., whose value transfer function is not limited to a single type of payment recipient or specific use, including instant payments and payment mechanisms in the B2B-sector, plus the usage of electronic payment instruments to place or withdraw cash.

 

Regulatory context

The ECB defines electronic payment instruments as (sets of) personalised devices, software or procedures agreed between the end user and the payment service provider to request the execution of an electronic transfer. In practice, this covers payment cards, credit transfers, direct debits, e-money transfers and digital payment tokens.

Consequently, there are overlaps with the PSD2[1] rather than with the MiCA[2] or the DLT Pilot Regime[3] proposals. As such, the ECB is expanding the scope of definitions to take into consideration the technological progress of recent years.

For the ECB, all representations of value backed by claims or assets denominated or redeemable in euros are in scope as well as other digital assets that are accepted under the rules of a scheme for payment purposes or to discharge payment obligations in euros.

 

Oversight and enforcement

The ECB maintains a Crypto-Assets Task Force, and it was this body’s analysis that led to the conviction that there are potentially material financial stability risks, and risks to the safety and efficiency of the payment system as a whole, should payments via stablecoins remain unregulated.

Following a 2020 public consultation, this finally led to the establishment of the PISA framework. However the ECB lacks the infrastructure to perform all the relevant surveillance and enforcement tasks to ensure the very highest levels of governance.

Consequently, for oversight purposes, i.e. the collection and assessment of information and implementation measures, the ECB assigns primary oversight responsibility to the national central banks within the Eurosystem.

The ECB has explained that, in this assignment, it emphasises proximity to the entity subject to oversight (e.g., the country of incorporation, national laws attributing specific oversight responsibilities to central banks concerned, subject to any Treaty-based requirements).

“Schemes” and “Arrangements”

PISA aims at the governance bodies of so-called “schemes” and “arrangements”, ensuring they behave in compliance with the ECB’s oversight expectations.

A scheme is defined as “a set of formal, standardised and common rules enabling the transfer of value between end users by means of electronic payment instruments”, managed by a governance body – while in practice, the governance body and the payment services provider are identical. Examples of schemes are card payment schemes, e-money schemes, digital payment token schemes, credit transfer schemes and direct debit schemes.

The ECB defines an “arrangement” as “a set of operational functionalities which support the end users of multiple payment service providers in the use of electronic payment instruments”. An example of an arrangement is an electronic wallet. The definitions, which are cryptic in the most literal sense, are designed to cover the entirety of the relevant area which would be difficult with classic categorisations where a service is provided organisationally and physically decentralised.

Looking to 2022

PISA was approved by the ECB’s Governing Council on 15 November 2021 and becomes applicable as of 15 November 2022 for schemes that are already subject to oversight by a national central bank within the Eurosystem. New schemes and arrangements have to abide by the PISA rules within one year after being informed that they fall within its scope.

 

[1] Directive (EU) 2015/2366, the “Payment Services Directive (PSD2)”
[2] Regulation on “Markets in Crypto-assets”
[3] Regulation on a “pilot regime for market infrastructures based on distributed ledger technology (DLT pilot regime”)

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