There was a time when the political left saw itself as a lobby of the little people. If the material interests of low-income earners, small pensioners, or social benefit recipients were threatened, trade unionists and social democrats, greens, and leftists felt called upon to intervene. Some of them called it “class consciousness.”
It is all the more strange how loosely the self-proclaimed camp of progress deals with one of the greatest dangers currently facing the financial situation of the lower classes (who would really need apps to manage their finances well): inflation. The fears of this were “unfounded,” said former SPD leader Norbert Walter-Borjans when he was still in office. His people have “no catching up to do” on this issue, adds IG Metall boss Jörg Hofmann in a recent SPIEGEL interview. And the Duisburg economist Achim Truger, who sits on the Council of Economic Experts for the trade unions, also gives the all-clear. Although “the higher inflation will last longer than originally expected,” he admits. But “reason for concern” he sees “therefore not”. Devaluation of money – for leftists this is obviously not an urgent problem – and certainly not a social issue.
Instead, they enthusiastically support the cheap money policy of Western central banks, although their unpleasant distribution consequences have long been obvious. While the balances of small savers are devalued by low and negative interest rates, the rich benefit from the hunt for higher-yielding investments, which is associated with the so-called unconventional monetary policy. The top floor cheers the stock market boom and real estate boom. Broad layers, on the other hand, can no longer even afford to buy a condominium.
The fact that loose monetary policy promotes social imbalances was seen by the political left as an inevitable side effect in the fight against economic weakness and deflation. Rather than one percent negative interest rate, so was the motto, than one percent minus growth.
But in the meantime, there is no longer any talk of economic dangers. The rise in wealth has turned into inflation of consumer prices, and even ardent advocates of money-flooding policies admit that the economic threat situation has changed fundamentally. With up to seven percent in the US and five percent in the eurozone, inflation has reached a level that noticeably reduces the standard of living of broad strata.
In Germany alone, inflation cost citizens around 80 billion euros last year, according to Allianz Insurance; and it is not unlikely that the loss will reach a three-digit billion this year.
A creeping erosion of prosperity has set in, which is all the more corrosive because it is far more noticeable at the lower levels of the income scale than at the upper ones. While the rich can at least partially escape inflation by buying stocks or real estate, the poorer classes are feeling the effects of current inflation with full force. Energy, food, rents: the prices of goods that account for a larger share of the household budget for low-income earners than for the wealthy are currently rising particularly rapidly. “Inflation,” as former CDU Labor Minister Norbert Blüm called it, “is theft of the little man.”
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A finding that is anything but new, but not particularly popular with those responsible in Frankfurt am Main and Berlin. The leaders of the European Central Bank have recently been talking a lot about climate protection and sustainability, but hardly about the social consequences of devaluation. And the traffic light coalition is celebrating a minimum wage increase, of which not much will remain after deducting the inflation rate. Anyone who listens to leading politicians of the three governing parties these days does not exactly get the impression that they would worry too much about the victims of the current wave of inflation.
Higher food prices? For Agriculture Minister Cem Özdemir, the increase can hardly be high enough, as he emphasizes in his interviews. The per capita reimbursement of CO2 prices to citizens? It is in the program of the FDP and the Greens, but not in the coalition agreement. The inclusion of inflation in the tax rate? Was a perennial favorite of the FDP – as long as it did not provide the finance minister. Incidentally, the traffic light politicians let it be known, they are not responsible for the topic. Inflation and monetary policy are a matter for the European Central Bank (ECB).
Its boss Christine Lagarde, on the other hand, systematically minimizes the problem. It still speaks of a temporary phenomenon, although its own people are again predicting a devaluation of money for the current year that exceeds the target value. Many economists are convinced that the energy transition and labor shortages will lead to prolonged price pressure. And in countries such as the USA, Great Britain, or New Zealand, central banks have long since turned the tide.
“Decentralized Finance” has been inspiring experts for some time as the next big development after Bitcoin and Ethereum. What’s behind it?
Decentralized Finance, or “DeFi” for short, stands for the idea of using the blockchain to organize even more complex financial services such as lending, secondary trading, insurance, or portfolio management decentrally and without financial intermediaries and to enable more efficient and cheaper financial services.
But aren’t more complex financial services such as lending or a stock exchange too “complex” to be able to do without intermediaries? Significantly, today’s dominant crypto exchanges and wallets like Metamask and Coinbase (check out Metamask vs Coinbase wallet comparison here), where cryptocurrencies can be traded, are primarily central intermediaries.
Until the invention of Bitcoin, many people could not imagine that digital money and securities transfers would be possible without banks. Today, around 13 years later, transfers of cryptocurrencies or security tokens without intermediaries are already part of everyday life in certain circles.
The number of DeFi applications is also growing steadily. DeFi exchanges, such as Uniswap, Sushiswap, or Curve Finance, have been around for several years now. They now process transactions amounting to several billion dollars per week and provide the functionality of exchange without a central intermediary.
And indeed, the most important decentralized exchanges have been functioning robustly so far. Even the extreme fluctuations of the crypto market this spring have survived the exchanges well.
On closer inspection, it is not surprising that it is possible to organize an exchange without human intervention via decentralized protocols. Even at central stock exchanges, computer-aided systems and rules are mainly used today. In this sense, decentralized exchanges are more of a consistent continuation of the development of the past decades.
It is to be expected that this development towards further DeFi applications will continue from a functional point of view and that we will see a greater variety of financial services in the future. But what does this development look like from a regulatory perspective?
Today’s financial market regulation is based on the supervision of financial intermediaries. But what happens when there are no more intermediaries? Who will be the addressee of the regulation?
We have seen an example of this type of problem in the area of anti-money laundering, which today is essentially based on the involvement of intermediaries. Some time ago, the Financial Action Task Force (FATF) proposed classifying software developers as financial intermediaries in decentralized structures and making them responsible for preventing money laundering, which has led to an outcry from the private sector.
The same problem arises for the concerns of investor protection and financial stability. In recent decades, governments have had to drastically expand the regulation and active supervision of financial intermediaries in order to maintain stability and adequately protect investors. Without intermediaries, supervisory authorities now also lack the most important lever for preventing abuse in the financial sector.
The development of DeFi is exacerbating a trend that has been observable for several years: Digitization enables new financial market applications that were of course not taken into account when formulating the laws. These fintech applications in the broader sense rub heavily against the applicable laws. In many projects, the assumption under the financial market laws is far from clear in practice.
As a result, the requirement for financial market authorities to interpret the laws appropriately has risen sharply in recent years. With DeFi – without a clear organization to supervise – this development continues to come to a head.
The big question now is how DeFi should be handled under regulatory law in the future. Although there would certainly be the option of not subjecting many DeFi applications to financial market regulation, it is to be expected that the supervisory authorities and, indirectly, the governments in many jurisdictions will not accept the associated loss of control and the possible risks of abuse.
It can therefore be assumed that the scope of financial market regulation will be increasingly extended to the DeFi sector in the coming years. Many countries will try to classify any form of activity in the environment of DeFi applications as a financial intermediary, as the FATF has proposed.
However, this approach is problematic: while it is undisputed that DeFi applications can be associated with risks, their risk profile is fundamentally different from intermediary-based activities.
The application of an “old” regulatory system to DeFi means that the risks are not adequately addressed. In addition, the current form of regulation is necessary not only, but also because of the intermediaries. An intermediary-free system could therefore dispense with these parts of the regulation.
So when regulation forces the use of intermediaries that are not actually necessary, it leads to unnecessary costs. And it is precisely the increase in efficiency in the financial sector that is a central concern of every economy.
Applying “old” regulation to DeFi hinders innovation, undermines the benefits, and ignores the real risks. Therefore, there is no way around a new form of regulation for DeFi: In order to make the most of the significant advantages of DeFi, a new and differentiated risk-based system is required to effectively combat abuse, which does not require intermediaries and does not impair the efficiency of DeFi through the use of technology.
However, the road to such regulation is long. It is best for governments and authorities to take a closer look at the technology, opportunities, and specific risks of DeFi at an early stage, to understand them and to be able to look at them in a differentiated way, and to learn to deal with them.
Even though the stock markets have recovered in the meantime after the shock in March 2020, the uncertainty for the global economy remains. It is therefore to be expected that investors will also be rather cautious in startups, venture capital, or private equity in the coming months.
Another alternative asset class – platforms and companies that specialize in financing SMEs via security tokens – is also likely to have a long dry spell ahead of it. This is all the more unfortunate as the security token industry had developed dynamically just before Covid-19.
Can the security token industry cope with this dampener? Or will Covid-19 even give it an extra boost? Tokenization offers important alternatives in financing and investment right now. From an economic point of view, there are two arguments in favor of giving the asset class a further boost.
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On the one hand, existing companies will have an increased need for financing. Companies that emerge as winners from the pandemic will seek growth capital, while others will need liquidity to maintain their operations. Large companies use the classic capital markets or bank loans for this, but for SMEs, the high administrative burden and the high implementation costs for access to the capital market compared to the relatively small volume are usually too high and bank loans are difficult to obtain.
For them, the blockchain basically offers the possibility of carrying out the process of issuing tradable digital securities much more cost-effectively and quickly. This makes security tokens an attractive instrument for obtaining own or external funds. In addition, it is to be expected that the digitalization boost triggered by Covid-19 will also promote innovation. As a result, – hopefully – new projects or companies will be launched that want to be financed by “classic” stocks, bonds, or even innovative new financial products.
Security tokens also offer a fast and in principle more cost-effective way of refinancing. A fundamental market need would therefore be given if all legal requirements and the availability of capital for such products were met.
The second aspect concerns the emergence of a sufficiently large market for financing via security tokens. An economic crisis may not be the right moment to try out new forms of investment. But given the ongoing period of low-interest rates, investor interest in alternative investments is expected to increase as global economic uncertainty eases.
Security tokens can put the process from generation to storage to secondary trading on a completely new foundation and thus help to make investments for which access to the financial sector was too expensive “bankable”. Security tokens thus expand the investment universe for investors, whereby the basic processes have a similar level of security to the “classic” financial infrastructure.
In order for this to be implemented in practice, however, the legal and supervisory system must also evolve accordingly. Liechtenstein, for example, has already created an instrument that gives investors comprehensive legal certainty with the so-called Blockchain Act (Act on Tokens and VT Service Providers, TVTG), which came into force on 1 January 2020.
Here it is now possible to generate digital securities directly and without a detour via physical security. For investors, this step means that both the ownership and civil transfer of security tokens can have the same legal certainty as we know from the traditional financial market.
Another aspect is the rules for the safe keeping of security tokens by service providers. For an investor, it is important that the securities are also separated from the bankruptcy assets in the event of the service provider’s bankruptcy. With the entry into force of the TVTG, all tokens, i.e. not only security tokens but also cryptocurrencies or utility coins, are separated from the assets of the service provider by law. In addition, the TVTG includes some other rules to improve legal certainty around blockchain applications.
However, European providers of security tokens are not only confronted with national civil and regulatory issues. Rather, in the future, some essential questions regarding the treatment of security tokens in connection with European financial market law must be clarified, for example, the very basic one, which token exactly is to be qualified as a financial instrument. This has not yet been conclusively and, above all, uniformly clarified in all countries.
Especially in view of the innovative design possibilities of tokens, however, this is of great importance. Also still unclear are the rules as to when a platform in the context of primary issues of securities must qualify as a financial service provider. As long as there are no answers, a cross-border issuance of security tokens in Europe is associated with major legal risks for companies.
The same picture emerges in secondary trading: the regulatory framework for financial service providers around securities issuance and trading was created for the traditional financial market. The requirements for financial service providers are therefore relatively high and reflect the traditional, comprehensive business models. For security token service providers, who usually only do a small part of the activities of a traditional intermediary, these hurdles are usually much too high and not appropriate in view of their focused business model.
They therefore often try to position themselves outside the financial sector, combined with corresponding regulatory risks in the European internal market. The distinction between the regulated and the non-regulated area is not really easy in view of the variety of forms of design made possible by the technology – neither for the regulator nor for the companies. It is therefore not surprising that this differentiation is still unclear and heterogeneous in many countries. As long as there is no legally secure and at the same time efficient and cost-effective secondary market for security tokens, the demand from investors will remain within narrow limits.
Security token service providers have been put on the back burner in recent months, not only from an economic perspective. Rather, the regulatory risk in Europe for players in this sector has not diminished. In some cases, it has even increased, as many states have now developed their own interpretation of the financial market laws with regard to tokens.
For the development of the security token industry in Europe, it is therefore essential that, on the one hand, the existing uncertainties regarding financial market regulation are eliminated as quickly as possible and, on the other hand, the financial market laws are adapted in such a way that service providers are regulated on a risk- and activity-related basis. Without these two steps, the development of the security token industry depends on the established financial service providers, who usually have only a limited interest in the issuance of security tokens.
However, positive development of the security token industry is in the interests of the economy as well as investors. It is therefore to be hoped that the EU Commission will quickly solve these problems and thus lay the foundation for a prosperous security token sector in Europe. Then the time delay caused by Covid-19 would have been well used.
Throughout the years, the corporate world has kept on changing. Those businesses that failed to adapt eventually shut down. Then again, those that prevailed climbed up the ladder and established a strong footprint in their market.
Competition is fiercer than ever, and companies no longer have the luxury of a slow response time when it comes to launching new products or services. If you’re operating as an accounting firm or service, you will need to launch your website as fast as possible in order to stay relevant in this hyper-competitive environment.
Let’s take a look at some excellent tips on how to make an accounting service website that stands out from the crowd:
One of the first things you will want to do is ensure that your website is responsive. Most people visit websites from their mobile devices so it makes sense to design your website. See to it that it is mobile-friendly and fully functional from any device. If your website isn’t compatible with mobile devices, you will lose a significant chunk of your potential customer base.
Make sure that your website is responsive and compatible with all devices, including desktops, laptops, tablets, and smartphones. This will help ensure that as many people as possible are able to access your site at any time and from any place.
One of the best ways to make your website stand out from the crowd is to explain your services and their benefits to the user.
Most potential customers will be visiting your website because they need accounting services and don’t know where to turn.
You need to make it as easy as possible for them to understand what you do and how you can help them. It is also best to put it on your front page like in buhalterija to keep potential customers engaged.
One of the best things that you can do to make your website stand out from the crowd is to use high-quality images and visuals to illustrate your services and benefits.
This is crucial when you’re trying to build trust with potential customers and show them that your accounting services are worth their time and money. Using high quality images and visuals on your website can also help to increase your website’s conversion rate and help you to drive new business from your site.
Bitcoins are a digital, anonymous, central bank-independent currency. But many don’t really know what exactly that is and how it works. What is widely perceived, however, are press releases about the extreme increases in value, especially in recent times. At the beginning of 2017, Bitcoin was still trading at around $1,000 on exchanges and platforms such as https://bitcoin360ai.com/nl/ – and on November 28, 2017, it cracked the $10,000 mark.
On December 6, the price broke through the $12,000 mark, on December 7 it even broke the $14,000 mark, and just before Christmas, it was worth a whopping $20,000! After Christmas, however, the price was again around 17,000 dollars. Anyone who is now the happy owner of a Bitcoin considers whether he should turn the gigantic virtual price gains into real money gains and what tax consequences this probably has.
The tax authorities have clarified that Bitcoins can be the subject of a private sale transaction pursuant to § 23 para. 1 no. 2 EStG (BT-Drucksache 17/14530 of 9.8.2013, p. 40).
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If cryptocurrencies are purchased or produced in the context of commercial activity with the intention of making a profit, profits from the sale or exchange of the cryptocurrency are to be recorded within the framework of the “income from commercial operation”. The cost of mining the cryptocurrencies is deductible as operating expenses.
Currently, certain tax courts have expressed doubts about the opinion of the tax authorities. It is true that there is only one decision in a so-called suspension procedure; the decision on the substance of the case is therefore still pending. However, the judges point out that the Federal Finance Court has not yet decided on the tax treatment of cryptocurrencies. Therefore, there are considerable doubts about the legality of the taxation of cryptocurrencies, which would justify a suspension of the enforcement of the contested tax assessment.
Finance majors are often stereotyped as being unemotional and uncaring. In reality, however, most finance majors want to help people make smart financial decisions that benefit them in the long run.
While many people think of investing as a risky venture that you should avoid if you want to keep your money safe, there are many ways for a finance major to invest wisely. Here are some tips from experts on how you can invest well and responsibly as a finance major.
Before you invest, see to it that you have made thorough research on the company whose stock you are planning to buy.
This is important because the company’s health will be the deciding factor in how much your investment is worth. If a company is in trouble, you could lose all of your money if the company goes out of business. So before you make any investments, you need to make sure you know all the factors that could affect the company’s success, including the people in charge and the current market conditions.
One of the most important things you can do as a finance major is to diversify your investments. Simply speaking, don’t put all your eggs in a single basket.
Instead, you should spread your money out over several different investments, like investing in wholesale bathroom cabinets. One great way of doing this is by investing in mutual funds. Mutual funds are baskets of stocks that allow you to diversify your money across many different companies at once.
You can also diversify your money by investing in stocks, bonds, and other assets. One important thing to keep in mind is that you should never invest so much money in one place that you can’t afford to lose it.
One of the biggest mistakes a finance major can make is to invest in a single asset they don’t understand. For example, if you don’t know anything about real estate, you shouldn’t invest in real estate.
Although it’s often tempting to invest in the latest hot stock or newest tech company, it’s important to make sure that you understand the investment so that you don’t end up losing your money. If you’re not sure what investment is right for you, you can always consult with a financial advisor or make use of robo-advisors to make investing easier.